You’ve probably heard this question asked multiple times, but this is probably the first time you’ve heard this answer. Is buying real estate a good idea or should you rent? Here’s an answer from the perspective of what jobs skills and education you have.
Why You Should Rent for Now and Buy Real Estate Later
First, before we talk about buying real estate, let’s begin with renting. You’re likely living at home or renting while you consider the big move into investing in a property. Many factors go into a decision like this, including your income, cash flow, and future plans. Renting makes more sense if your situation is the following:
- You won’t be living in the same location for a long time or you aren’t certain how long you will be at that location.
- Your income is unstable. For example, you have been hired on a short-term contract, you work hours fluctuate from month to month, or you are still on probation with a new job in a new career that you may/may not like.
- Market conditions are not ideal. Factors to consider are inflated market prices, mortgage rates, and available inventory on the market. (If you don’t like what’s available to buy, it’s best to wait.)
But let’s say all the ideal conditions line up. You’ve found the city that you want to live in for the next few years, you’ve been working for a while for the same company, and there are a few listings on the market that look like a possible dream home. Buying real estate now may be a good idea.
Why Buying Real Estate Now is a Good Idea
Buying property is a great investment if you’ve got the cash flow, income, job skills, and a stable future.
First, you’ve found a city that you want to settle down and call home for a while. You’ve had your eye on a few neighbourhoods that you would feel comfortable living in. The market and economy are in your favour, with interest rates and a price you can afford.
Second, you have job skills that are in high demand. It’s easy for you to find work because companies are hiring for your job description or you have specialized skills that companies want. You will be able to find a steady income no matter what condition the economy is in. If you can’t find a job, you will have enough experience to be able to freelance and find work on your own.
Now, say you want to take real estate investing a step further. You can find ways to pay down your mortgage faster and turn it into a business investment.
At the end of the workday (or whenever you have free time), read books and learn about investments. Increase your cash flow by investing in stocks or something else you have strong knowledge in to help with mortgage payments. A financial education isn’t just about what you learn in a course. You can increase your knowledge by taking initiative.
Another option you have is to turn your home into an investment by renting out a room or suite in your house. If you have a side business, such as freelancing, or you own a business, you can write off the areas of your home that you use for business. For example, a room that you use as an office or a meeting room to meet with clients.
Some people will buy a new house without considering their own personal preferences when choosing furnishings. For example, when deciding on types of appliances, type of finish for kitchen cabinets, and interior paint colour, they will choose what most people want to buy. A few years after they buy and live on the property, they plan to sell it for a profit.
Buying real estate is not a simple decision because of all the factors involved. Two factors that will impact when and if you buy are your job skills and financial knowledge. The more skills and knowledge you have, the more options you have for paying down the mortgage or turning your home into an investment.
If you enjoyed this article, subscribe to make sure you don’t miss the next post!