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Becoming a Homeowner At a Young Age

By Erik Folgate

Is it possible to own a home right out of college?  Well, it depends on your situation.  It is true that a single young person will have a much harder time owning a home than a young couple with two incomes, but do not be discouraged by that.  Homeownership is the American dream, and I think that everyone should be working towards owning a piece of property, or mayb even two, three, or ten pieces of property.  The fact is that real estate is a great investment, even in the post real estate boom era.  Real estate very rarely goes down in value, and it gives you more control over your investment by being able to build an extra bathroom that may cost you $6,000, but it will increase the homes value by $15,000. 

The problem is that it is getting harder and harder for young people in their twenty’s and thirties to own a home.  The median price of a home in the United States is about $220,000.  It is okay to rent for a little while, but do not get comfortable renting and throwing away your money for too long.  Here are three tips for owning a home quicker than expected. 

  1. Go for something modest, and try to find a great deal.  At a young age, you may want to start off with a townhouse or a condominium.  This is still homeownership, and these kind of places go up in value just like free-standing homes.  The upside to buying a place like this is that keeping it up is less intense, because you do not have a yard to worry about.  Always ask about the HOA fees if there is a homeowner’s association.  You need to factor this into what your monthly payment will be.
  2. Save up some cash!  You will always need cash to buy a piece of property.  There’s no way you’ll be able to get into a house without a penny down and not paying any fees without doing something really screwy.  Don’t ever let mortgage lenders con you into their no money down plans that make you pay a private mortgage insurance and get a horrible interest rate.  My suggestiong to saving up some cash for a house quickly is to tell yourself that any money you get that is not part of your regular paychecks should go toward the fund.  This would include job-signing bonuses, yearly bonuses, and that $10 your grandma sent you for your birthday.
  3. The most important tip for becoming a homeowner quickly is to keep your eye out for that once-in-a-lifetime deal.  There is always someone out there whom is about to foreclose on their house or has to move to germany next week.  Also, look for a fixer-upper.  If you know anyone or you have construction knowledge, you can turn the entire interior of a home into a beautiful place for $5000 – $6000.

I don’t want anyone to rush into buying real estate, because it is a huge step.  I am telling myself right now that i should have waited a little longe before I bought my most recent condo, but you live and learn.  The purpose of this post was to encourage people agest 21 – 35 that homeownership is not as far fetched as it may seem. 

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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Comments

  • ib

    wow, a “young people’s” article that includes my age! thanks for the post.
    i still don’t own a home yet. have always wanted to. very difficult to get past 1/5 the amount i have saved – i would need 5x what i have to begin the process, but at least i am saving good $ into retirement accts. & at least i have around 1/5th! net worth was in the minus just a couple yrs ago.

  • http://www.thebargainqueen.org The Bargain Queen

    I completely agree about not rushing into it. I’m living in a place my husband and his brother bought as an investment when they were 24 and 22 respectively. Kudos to them for buying a place so young, but they could’ve picked a little more carefully!

    The owners corporation (HOA) here has a few problems and the complex hasn’t been properly maintained in years. The fees have been so low that whenever work needs to be done, special levies have to be imposed.

    I’ve now spent six months of my life trying to sort the whole complex out and am making slow progress. Wish the boys had bought into a well-run complex!

    Some warning signs if you’re thinking of buying an apartment:
    - rubbish all over front yard
    - garden ripped out for maintenance and never replaced
    - rising damp, peeling paint
    - timber floor building with no fire alarms
    - heritage complex – Council regulations make it near-impossible to do anything
    - HOA has no money in accounts
    - the manager they’re paying to run the place doesn’t return calls or respond to email

    Hmm, this is getting long, might have to turn it into a post on my own blog…

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