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Young Professionals usually face the toughest decisions when it comes to housing.
If you are a young professional and reading this section you can only be in one of the following situations.
Freeloader You currently do not pay cash compensation for your housing.
Renter You pay money for housing that you do not own.
Owner You pay money for housing that you do own.
Investor You own your own housing as well as investment property.
Let me say to start that it really does not matter what situation of these four you are in. As I am quite sure everyone has been a freeloader at some time or another. My goal in this section is to go over the options that we all face.
Freeloader
I do not plan on covering this section other than to give a few bits of advice. You may be a freeloader by choice or by circumstance. The choice is yours and hopefully you are making good use of your excess funds and looking forward to moving directly into the Owner category. If it is by circumstance and you spend all of your money to pay down bills and other expenses take a look at the Debt Section of this site. The third type of freeloader will get no remorse from me and will hopefully grow up eventually. The third spends their money on things that have no value or on social experiences (i.e. partying). This group needs to go to the Budgeting Section and start saving towards becoming a renter or owner.
Renter
Now lets take a look at the economics of renting versus owning. In some areas of the country this is the only option as housing prices are so ridiculous a young professional has very little chance of breaking into the ranks of home ownership without making a serious six figure income while saving and investing wisely. I am going to cover what I call the Renting Cycle.
The Renting Cycle
I use this term whenever someone is in a situation where they feel that after paying all their other bills they have just enough left every month to pay the rent. This situation is familiar to most young professionals who pay rent. You want a nice place and you want to live in a nice area, you cannot be faulted for these desires.
It can be a vicious cycle as you start out a career you are not always the highest paid, and rent is usually the largest expense you have every month. Not to mention landlords and management companies always lock you into yearly leases and nail you with increases after you have already settled in and do not want to schlep around your stuff again.
The biggest misconception is that you need to save a 20% down payment to become an owner. Up until recently you were able to buy a place for no money down. Now most lenders are requiring a minimum 3% down, while some are going to 5-10% down. Even at those percentages you can find a way to save enough to become an owner. Check out our budgeting and debt sections to learn some ways to save. Also check out any (DAP) down payment assistance programs you may be eligible for, if you know a good real estate agent or broker they may be able to assist. If not I plan on adding a section here in the future.
Go to the Owners Section or Go to the Investors section.
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