When people think about a house they normally think about starting a family, which means that a 25-year-old isn’t thinking of owning properties anytime soon. The younger generation or in other words “Millennials” have this idea in their heads that they aren’t going to own a house until they are settled down in a nine to five job. Most people in the 18-32 age bracket don’t stop to think about how much of an investment real estate can be.
Indulge me in a hypothetical. Let’s say you are 25 and just finished college so you rent a 3 bedroom, 2 baths, 2 car garage house that is under 1700 square feet. You pay a $1,200 rent. You have no control of whether your lease will get renewed. No control over if you can paint the walls, and you will have to pay pet and security deposits. The control and stability are lacking, and for someone who just got out of school control and stability is highly sought after. This is not the ideal situation.
Now think of this hypothetical. After school, you rent for the minimal amount of time possible. Once you save up enough you purchase the same house discussed above for $230,000. Since you are a first-time home buyer you would qualify for an FHA loan. This means the minimum you can put down is 3.5% compared to a more conventional 10%. After adding up the rest of the costs such as closing costs, lender fees, and insurance you would have to put down approximately $14,000 to complete the purchase. Your monthly mortgage payment would be approximately $1,100 based on the average 4.125 loan rates (less than your rent).
You live in the house until it has outgrown you and when you leave you don’t sell it. You rent the house with a dependable property management company. Now instead of being the tenant who gets no say you become the owner who has all the say. You get people in your house to pay your mortgage with their rent. Paint the walls yellow while you’re at it, it is your house. Once you have had your fair share of other people paying your mortgage, you then sell the house when the market is high for more money than you bought it in the first place.
These specific numbers were pulled from the Nevada real estate market so the numbers may vary depending on where you live. The important thing to note is that this offer of a 4.125 loan is the best it has been in a very long time. You are not going to find an opportunity like this for a while. The market is great, these numbers have stayed stable even before November of 2016. Jump on this investment while you have the chance. House appreciation is coming back from the drop in 2007 and prices are going to continue to go up.
Millennials, this moment, right now, is the perfect time. Start doing research, think about your future, get involved. What 25-year-old wouldn’t want to say that they own a house and have equity in real estate?