4 Reasons Why Buying House Early Isn’t a Good Idea
You are young, straight out of college and it’s a house that’s on your mind? While you might be convinced as to how important it is for you to own a house at the very beginning of your life, here are 4 reasons as to why it might not be the wisest thing to do so soon.
Consider renting out the first house that you buy thus, turning a liability into an asset (in the real sense) that becomes your second source of your income. TheMoneyTimes brings you a few reasons as to why it is prudent to buy a property as an investment rather than your home early in life.
1. You Have a Long Way to Go
You are young and are pretty much in control of how you want to lead your life as also where you want to spend your money. In future, when the size of your family grows and you have larger obligations to cater to, it might seem impossible to cut costs the way you can do right now. So, it is only now that you can make a few lifestyle adjustments that can go a long way in building cash reserves for your future. It is hence quite logical that you save and buy a house not to convert into your home, but as an investment that can reap benefits in future as also appreciate at a rate that allows you to sell it off and buy your dream house when you decide to have one (perhaps at even a down payment).
2. Take Your Time to Hunt Your Dream Home
When you are still young you might not have a clear view of the kind of house you might wish to spend the rest of your life in. And if you have still not met your would-be-life-partner, chances are that you might like to consider having your significant other’s view point too before putting your money into what will be the love nest for large part of your life.
We therefore suggest that you until you have found that ‘dream home’, keep track of distress properties that you might be able to lay your hands on at a good bargain. A distress property will allow you to own a house at a price which is significantly lesser than the market rate.
3. Second Source of Income
It’s just a matter of finding tenants. Once that is in place, an investment in a property early in life ensures a steady source of income until you decide to do away with it. It will thus act as your second source of income for times to come. I’m sure you agree that a little bit extra money never hurts and especially as your financial responsibilities mount on, it will act as a savior of sorts to pay off your bills and debts.
4. Depreciated Asset
When do you most need a new house with the most modern amenities, a house that is easy to maintain and also suits your needs? You got it right – when you grow old. However, in most cases when people buy a house to live in early on in their life, they often end up spending their old age in a house that has already depreciated with time and isn’t as good as it used to be. Also, the neighborhood might not suit their needs any more.
It might hence be wiser to do it the other way around. Rather than putting your money into a dwelling that will be your nest for the rest of your life early on, use it as an investment. A house can always be bought later on in life when you have the resources and are sure what exactly you want.
As someone once advised me “It always makes sense to take loan against an investment primarily because it is going to reap you benefits in future, but a loan on something that you plan to use for self is a huge liability.”