4 Reasons Why Buying House Early Isn’t a Good Idea
You’re fresh out of college, and you’re thinking of buying a house? While you may believe that owning a property at the start of your life is essential, there are four reasons why it may not be the best decision.
Consider renting out the first home you buy, converting a liability into an asset (in the true sense) that will provide you with a second source of income.
TheMoneyTimes offers a few reasons why buying a house as an investment rather than a residence early in life is a good idea.
1. You’ve still got a long way to go
You’re young and have a lot of freedom regarding how you live your life and how you spend your money. When your family grows, and you have additional responsibilities to meet, it may seem impossible to minimize costs the way you can now. So now is the time to adopt a few lifestyle changes that will help you develop cash reserves for the future. It is therefore natural that you save and buy a house not to turn it into your home, but as an investment that will pay off in the future as well as appreciate at a pace that will allow you to sell it and purchase your dream home when you wish to have one (perhaps at even a down payment).
2. Take Your Time When Looking for Your Dream House
When you’re young, you may not have a clear idea of the type of home you want to live in for the rest of your life. And if you haven’t met your future life partner yet, you might want to think about getting your significant other’s opinion before investing in what will be your love nest for a big portion of your life.
As a result, we recommend that you keep an eye out for distressed properties that you might be able to get a good deal on until you find your “dream home.” You will be able to purchase a home for a substantially lower cost than the market rate if you purchase a distressed property.
3. Income from a Second Source
It’s simply an issue of locating suitable tenants. Once that’s in place, investing in real estate early in life provides a constant stream of income until you decide to sell it. As a result, it will serve as your secondary source of income in the future. I’m sure you agree that a little additional cash never hurts, and when your financial obligations grow, it will serve as a sort of rescuer in terms of paying off your bills and debts.
4. Assets that have depreciated in value
When do you have the most need for a new home with the most up-to-date conveniences, a home that is easy to maintain and meets your requirements? You nailed it – when you get old. When people buy a house early in life, however, they often end up spending their golden years in a place that has depreciated with time and is no longer as good as it once was. Furthermore, the community may no longer meet their requirements.
As a result, it could be better to do things the opposite way around. Use your money as an investment rather than putting it into a home that will be your home for the rest of your life. Property can always be purchased later in life if you have the financial means and are certain of what you want.
“It always makes sense to take a loan against an investment primarily because it will reap you benefits in the future, but a loan on something you want to use for yourself is a major liability,” someone once warned me.