The Millennial Mindset never wants to be tied down. If you are a like me, a millennial, you know what I’m talking about. You could say we have a fear of commitment, but it’s much more than that. Our generation has a tremendous need for new experiences and a spirit of exploration.
Today I’m here to talk to you about homeownership. Already, I know what you’re thinking.
As a millennial, you are telling yourself that nothing is holding you back right now. There is a whole world to explore and you need to be free to sow your wild oats as some say. Maybe you’ve never lived anywhere else but your hometown and you want to spend several months a year traveling the United States or even the world. Owning a home might stop you and why would you want that? After all, you always planned to move away or travel the world after school, homeownership would be a hindrance.
Still, In the back of your mind, you know that homeownership has many benefits and can help set you up for a solid financial future. You like that idea too. But, by now you’re thinking it’s impossible to have the best of both worlds.
Or is it?
What Happened To All Your Money?
In 2017 the average cost to rent a home was $1082 a month*. Don’t get me wrong, renting does have its benefits especially to those of us with a millennial mindset. There’s a set monthly payment and you’re only committed for the length of the lease. If you decide to move because you want a change of scenery, you can. Don’t like the management company or their leaky faucets? You can get up and leave at lease end. Another great benefit is that all the problems with the property are your landlord’s and not yours.
You can see that renting does, in fact, have perks. But, what about your rent money? Where does it go? Certainly not to you.
Let’s say you pay 1000 a month in rent and you either lived in the same property or changed locations. You are spending $12,000 a year! Ouch. Feel bad yet? How about this. Over the course of 5 years, you’ve now given $60,000 of your money to someone else. That’s a lot of loot!
Think about it like this. You have a landlord, his name is Bill. Bill owns the property and has a mortgage payment of $700 a month. Bill needs to make his monthly mortgage payment but also wants to make a profit so he charges you $1000 in rent. Seems like a win-win for your landlord. He basically has a free house while bringing in an additional $300 a month in income.
At this rate, in 10 or 15 years you may have completely paid off Bill’s mortgage. (Or at least half.) Let that sink in. During that time the property has also appreciated. Bill pockets every dime you give him and benefits from all the equity. He’s really set himself up nicely, right?
What do you have to show for the $100,000 you spent in rent? The answer is, nothing, except maybe a feeling of remorse.
Now that we’ve completed our daily dose of math class you might be reconsidering the idea of renting vs. buying. That is unless you’re the one collecting the money.
Homeownership vs. The Millennial Mindset
Back to our topic of homeownership vs. the millennial mindset. Can you have the best of both worlds? I think you can. What if I told you that you could avoid paying rent, own a home and still have the luxury of time for travel and exploration? That would be a win-win-win!
Want to know what I’m talking about? It’s simple. One word: Multi-unit.
To take advantage of all the benefits I just listed a bit earlier in this blog, consider buying a multi-unit property. Multi-unit properties are homes that have more than one unit attached. It’s possible to buy a 1- 4 unit property with a traditional mortgage with as little as a 3.5% down payment. As long as you live in one of the units, you can rent out the other units. Pretty cool, right?
Let me show you how that might look. You decide to buy a 3 unit property for $150,000. You live in one of the units and will rent the other 2 units. A monthly mortgage payment on a $150K property with 3.5% down would be about $1200. If you rent the other two units out for $1000 each you have $2000 a month of rental income. After you pay your mortgage you are left with a profit of $800 a month and you are living in your home free of charge.
Finally! You can have the best of both worlds. You are living rent free, have additional income and taking advantage of the benefits of homeownership. Your financial future is already looking brighter.
Multi-unit Housing, The Key To Your Freedom
Hey, I haven’t forgotten I’m talking to other millennials out there, like myself. We’ve been labeled as drifters at heart. Individuals that don’t want to be tied down to a single location. We’ve also been known to have more of an entrepreneurial spirit and are always looking for extra ways to make money. We don’t want to sacrifice too much of our precious time because we want to explore, have new experiences and enjoy our lives.
Think about. Owning and living in a multi-unit can help give you some financial freedom and allow you to travel more. You can leave your home for a week, two weeks or even a month all while your home is still being paid for. The best part is that you will always have a home to come back too no matter how far you travel or how long you’re gone.