Deciding when to jump into the real estate market for the first time isn't always an easy decision. There are many compelling reasons why it is a good idea to buy your first condo or house before you are 30.
1. "For most, investing in real estate before 30 is their best opportunity to create significant wealth. The primary advantage of real estate as an investment, is that you can borrow most of the funds needed to make a large investment. As an example, if you invest $100,000 of your cash in the stock market (i.e., an S&P500 Index fund) and the market increases 10%, you've earned $10,000 on your money. A healthy investment.
Alternatively, if you take the same $100,000 and use it as a down payment on a house, you will likely be able to borrow an additional $400,000 to purchase a $500,000 dollar home. If that home appreciates 10%, you've made $50,000 on your money. That translates to a 50% return on your cash investment of $100,000, an even more healthy investment," states Joe Day of Bear Mountain Capital in Seattle.
2. The tax benefits for home ownership can be tremendous. According to Elizabeth Mance from Accountability Services in Seattle, "Home ownership provides a tremendous tax savings. Consider this: a single taxpayer who does not own a home, gets a $6,300 “standard” tax deduction from Uncle Sam. But when that same person buys a home, the mortgage interest, along with the real estate taxes, allows them to take “itemized deductions”- which are much greater. In most cases, home ownership creates at least a $25,000 annual deduction! That means they reduce their taxable income by another $18,700. If that person’s tax bracket is 25%, they have an annual tax savings of nearly $5,000. Multiply that over 30 years and they have a significant lifetime tax savings!"
What a great way to fund trips, renovations, retirement, or other investments!
3. If you start to buy real estate at an early age and realize the savings and investment growth above you have a great start at building a strong real estate portfolio. As your income grows and your life changes, your first home or condo can be a great rental property if you decide to move. It offers you more income potential as well as a strong addition to your retirement portfolio.
4. One of the drawbacks of renting a house or condo is that you are limited in the finishes, layout, palette and design. When you own your own house or condo you have carte blanche to customize each and every detail you like. Owning your own home allows you to express your self, to change your space to reflect you.
5. There is a lot to be said for pride of ownership. There is a feeling when you own a home or condo that you are working for something. You create your own space that is a reflection of you, it welcomes you home, and makes you feel great because you know you were able to save enough and live smart enough to now be building equity and financial security for yourself.
6. When you own your own house or condo the rent is always the same. There is no landlord who can change your rent or ask you to leave. As long as you faithfully pay your mortgage you have a place to live with a consistent payment every month. This gives you the freedom to budget, plan ahead and even plan investments.
7. Buying a home under 30 allows you to build long term relationships with a real estate firm who can then be there for you as your life changes and you decide to move or build your real estate portfolio. The right firm will always be available when you need them, and have recommendations for all types of service professionals who can all work together to help you acheive your long term goals.
While it may seem like an overwhelming thing to do, The Warmack Group will be there to insure buying a house or condo when you are under 30 will be the beginning of great things.
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