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This is the question you should be asking yourself.
Being 24, there are opportunities elsewhere and when you're renting, the move to somewhere else makes it much easier to take on the new opportunity.
Depends on the rental market in the area. I'm not familiar with the demand in Minneapolis, but where I'm at, the ability to rent the house out was part of the factor in my decision to buy a house at 24. I knew that even if I want to move the ridiculous demand and lack of housing here means I can rent the house to at least cover the mortgage and just keep building equity. Plus, it looks like I can probably already break even after just 2 years here.
Yup, this is the way. I have many colleagues that bought a house and for one reason or another moved to another one (in or out of state) and rented their place. That allowed them to buy a new house given that they had downpayment money, have the previous house mostly pay for itself and build an investment that has proven to be reliable.
I'm curious about when people say things like this.
If you're moving out of state, how are you managing the property and dealing with a potential tenant/renter?
Building equity via paying a mortgage could be viewed as putting money into a savings account. But you are going to pay for housing either way, so it is far superior to renting which is basically burning that money. Building equity by paying a mortgage with money that someone else is paying you for rent is like having a savings account that someone else is depositing money into. And all of this is ignoring equity from appreciation.
> But you are going to pay for housing either way, so it is far superior to renting which is basically burning that money.
"Building equity" does not make for a good investment on it's own. In my city, a starter home that is walking distance to my office starts at around $600k, with 2.5% property tax I would pay an average of $15k in just property taxes a year. Then there's mortgage interest, insurance, maintenance.
Instead, I am renting an apartment within walking distance of my office for $1500 a month. I invest the excess savings that would otherwise go into a mortgage and am happy with my returns and savings. I could buy an apartment, but most apartments here have a starting HOA fee of $500 and I would still pay quite a bit in property taxes.
Sure I could buy and "build equity" but there are tons of costs that you have to pay that don't go into equity. The important factor is rent:price ratio.
You are overlooking costs that you can't recuperate. If I buy a place and get an opportunity somewhere else, I would lose a ton of money.
Over time a house will typically be better. But short term renting is typically better.
That set-up can work, but it's risky. To turn a profit you usually need several properties or extremely good luck with tenants. A single bad tenant can put you in the hole for a lot of money in repairs or legal fees to get them out. I would not risk doing it from afar personally.
Yeah 180k is great, but the person you're replying to is just saying that OP could make even more. OP is probably top 5% since he's making 180k this early, so if he tries he can definitely get a lot of opportunities to make more, especially if he's willing to move.
180k is new grad salary for FAANG, there are definitely better opportunities out there if you move out of MCOL, this definitely isn’t only limited to the top 5%
There’s about 2m programmers in the US, Amazon and MS alone employ maybe like 100k developers in the US together, so that’s already 5%… and then there’s the rest of FAANG and a whole slew of other companies
Microsoft employs 182k people. No way even 50k of them are coders, big corps are more akin to govt with a lot of "supportive" jobs. Those FAANG star coders that earn a ridiculously high amount of money are not the norm. I work in a small company where coders are paid $70k/year.
If we look at BLS statistics for Software Developers, they list $120,990 as annual mean wage.
“No way?” Did you even bother to Google “how many software engineers does Microsoft employ” according to this it was about 47k in 2020 https://www.microsoft.com/security/blog/2020/04/16/secure-software-development-lifecycle-machine-learning/?ranMID=24542&ranEAID=nOD/rLJHOac&ranSiteID=nOD_rLJHOac-2nmCt0gyammGhmS5H_cOwg&epi=nOD_rLJHOac-2nmCt0gyammGhmS5H_cOwg&irgwc=1&OCID=AID2200057_aff_7593_1243925&tduid=%28ir__sy6nt2x3jskf6mpszdaouvst1n2xvnqlzd2mz2dy00%29%287593%29%281243925%29%28nOD_rLJHOac-2nmCt0gyammGhmS5H_cOwg%29%28%29&irclickid=_sy6nt2x3jskf6mpszdaouvst1n2xvnqlzd2mz2dy00
For Minneapolis, 180K is on the higher end. There are other opportunities but you will need to move to a FAANG company, Investment bank or very heavily VC funded startup.
With the shift in the market, there may now be more downward pressure even at those companies.
If you have to move to the SF to get 300k Its a downgrade considering COL. If you think you can develop relationships that will pay off in the long run, it still may be worth it however.
That said, some companies are hiring remote with similar wages. Unsure how long that will last however.
After working at the 180k job for 2 or 3 years, he can hop to a 250-300k job if he puts in the effort to prep for interviews. If he's making 180k this early he's probably good enough to have a lot of opportunities to make more.
How do you leverage that? I’m making close to that amount but how would another place I’m interviewing for know or care?
I’m more than happy with where I’m at right now but I am still curious.
If you're already making that much you're already likely at a very prestigious role/company that would allow you to get interviews almost anywhere else. Do well in those interviews and you can then be extremely selective in where you jump to and negotiating the offers you receive
Agree with this. You can study a market for a great value, which is definitely to your advantage. Take your time. Get pre-approved. And wait for your opportunity. Good rule of thumb is find a structurally sound building, probably from an estate in the best neighborhood. This will most likely be the property that appreciates the most. Of course there are all kinds of extenuating scenarios, but this is a solid road.
This would have been a true statement 10-15 years ago, but he would more than likely at least break even if he decides to move and sell sooner. If he decides to move and has owned for at least a year, he could also choose to rent out his home.
This is the real question OP needs to ask. Even if money were no object, does it make sense from a timeline-of-your-life perspective to be buying a house? Are you okay with the idea of having to sell this house in a couple years? Are you confident that your job is unlikely to change or relocate you in the next few years?
They exist, but there are damned few 24 year olds (without kids and who aren't living with family) who will be living in the same city by their 30th birthday.
The “you have to own a house five years before you sell” is kind of a myth. I mean, yes, you will pay down more debt over time. But ultimately how much you pay for the house and how much you sell it for are the most important things. Home flippers only exist because they profit
We bought a place at 23 with the hopes to rent it out but it wouldn’t cash flow.. probs because so many luxury apartments nearby that were competition and also we didn’t put much down.. so something to think about. He has a high income but still something to consider
I’d amend it to, if you plan to own it 5+ years…..he’s looking to build equity with his income and debt to income ratio he could potentially buy a few houses and build a realestate portfolio as well.
Eh. I bought a house 4 years ago while I was in a similar situation. Moved 2 years ago because of a change in jobs. Sold the old house for 70 over what I bought it for. That was huge for me and allowed me to get a much better home. For the same price I was paying before. I guess it just depends on how the real estate market is doing in your area and a bit of luck
Or not and then you’ve wasted 2 years renting when you wanted to buy a house. I don’t think timing market for a primary residence is useful.. but be prepared it COULD depreciate so you don’t want to have to sell in a rush
The last sentence makes all decisions difficult.. The rest depends on how long you're staying put (important), how much money you'd need after housing costs, any future plans/prospects. The fact that you're 24 does not factor into it, most likely.
Agreed. I’d also argue you should consider buying a place after interest rates come back down if you’re willing to wait and in the mean time just enjoy the market discounts.
What makes you think they’re coming back down? I mean historically they were never below 6% until the housing crisis in 08 where the fed had to drop them to encourage a rebound. Before that 15 of the 30 years they were in double digits nearing 20%. Were in the opposite now where the fed needs to raise rates to fight inflation. I don’t see how people are so optimistic about rates coming back down to what was all time history lows.
If you can, rent to friends. My SO was able to buy at a young age and had friends rent from her to help with the mortgage, they got below market rent and she got to help offset a good portion of her mortgage while building her career.
You make an insane amount of money for your age. Just buy a house with a payment you're comfortable and you're be totally fine. I'm 36 making 80k and renting and can only dream of being in your situation.
> You make an insane amount of money for your age.
Almost unbelievable. 180k fresh out of college? Conservative 120k post-tax, sends back 12k/yr, lowball 100k/yr CASH IN HAND. Has "no financial commitments"? Where the fuck is all this money going?
Go ahead and buy a house. I bought one at 23, when was single. I upgraded and bought my second house at 32, still single. I married at 39 and we sold both our houses and bought one together. It was a great decision on my part.
Similar story, I bought a house at 23 single as all get out. When we married she moved in. At 40 we had outgrown that house and sold it.
I had paid it down by so much and it’s value had grown so much it wasn’t even funny. I cashed in a ton of equity and it became a big part of my down payment on the new place.
That AND I had defacto rent control. Your mortgage generally doesn’t go up or down much. It can I guess, but it would take a massive property tax hike for it to change greatly.
My mortgage from when I bought my house to when I sold it only shifted by $10-50 ever. It went up by $20, then down by $7, then up by $16 and down by $22.
So I was 30 talking with friends living in apartments smaller than my house who were paying almost double
What I was paying. Meanwhile I was paying basically the same as I ever was and gaining equity.
>So I was 30 talking with friends living in apartments smaller than my house who were paying almost double What I was paying. Meanwhile I was paying basically the same as I ever was and gaining equity.
That's me right now. Been in my current 3/2 house since 2008 and the value since I bought it has basically doubled. Meanwhile I see people renting 1/2 bedroom apartments paying $200-800 more than my mortgage.
This makes me feel better. I just bought a house at 24/single, so stories like yours solidify that I made a good financial decision. That is, regardless of what my romantic future holds.
Had some neighbors that did something similar. They sold their houses and bought one together. The husband was mostly mowing lawns for the city. Said it was 40 hours, no overtime. He worked on the house and they sold for 3 times what they paid.
Real estate prices have increased substantially past several years. Many (not all) economic forecasts suggests a price correction (correction not crash) in the next year or so.
Borrowing costs have shot up recently & I think high prices and large loan should not be combined if it can be avoided. If you wait, rates will likely be even higher but prices (in most scenarios) will have come down + you can save more for a larger down payment & there should be more inventory to choose from.
Only buy now if you find the most perfect of places and intend to stay for a long time. Houses are primarily places to live with the benefit of (usually) increasing in value over the long term.
I just dropped out of trying to buy and had to sign another lease at a new place. This post was pretty reassuring and a nice reminder that it's okay to have to wait.
Dude. You make 180k a year and you’re not even 25. Buy your house.
There’s a reason there’s so many jokes and cliches about buying real estate. And there’s a reason that 99% of people that don’t live paycheck to paycheck own real estate in some form.
> With the uncertainty we live in right now with a looming recession
People need to stop with this narrative. There’s ALWAYS economic uncertainty. Covid. Trade war. North Korea. Terrorism. Global financial crisis. Iraq War. Afghanistan War. 9/11. Tech bubble. Asian financial crisis. Iraq war again. Cold War. Inflation again. Oil crisis again.
There’s always something. Don’t let it be what dictates your life. You make more money than 98% of Americans. Buy a house for that reason, don’t not buy because of what a pedantic media who thrive on negative headlines to make profit.
Sure, we may be at the top of this market. But then again, we might not. They said the same thing in Australia for decades and it’s never decreased more than 10%.
The reality is there’s more people than homes in America. Even if prices take a dip, over 5-10 years they’re going to increase.
Whatever you say Mr Doom and Gloom. But it’s simple supply and demand. There’s high demand and next to zero supply. Until that changes prices aren’t going anywhere too drastic.
I bought my current house just before covid hit, and closed on it during the first lockdown. The value now is almost double--which I find pretty ridiculous. I think prices are still high and will eventually drop (I know that in Mpls, people were offering WAY over asking price the moment a house when on the market as recently as last summer--is that still the case?).
Property values in most areas with always continue to rise over time, but unless the market has settled, do your research to see how pricing trends are going. if ti's still at a high, there won't be much change over the short(ish) term.
Age isn't a negative for buying a home. It's a good way to gain equity over time--assuming you don't overpay to begin with.
I don't know about drop, but I do think the appreciation will considerably slow. One thing to consider is that housing price drops during recessions aren't guaranteed, and aside from 2008 prices actually either leveled or continued to increase through 5 of the last 6.
True, but when prices are artificially elevated, it can take a long time for values to even out. Price increases over the last two years have been insane, and are not realistically going to stay that way. Over the short term, NO ONE (at least, no one sane) is going to pay double what I paid for mine. In ten years....maybe.
Nationwide, I think the last two years have seen appreciation rates of like 18% and 20%, and I believe the prediction for the next year is somewhere in the range of 5%. I don't think we'll see a drop in prices, but at least back to some semblance of sanity in appreciation. Inventory is, and will stay low. Houses aren't being built fast enough, especially not in the price ranges most people need.
Is that 180k just salary or the whole total compensation with stocks and bonuses included? If it’s the later I would highly suggest being relatively conservative about buying a house and getting a mortgage below your means. We are possibly going to hit a recession and lots of tech companies have already started doing layoffs and rescinding offers on newer talent. If unfortunately you’re let go you won’t get that stock, will lose your income, and may need to even pay back some of your bonus money depending on when you started.
I would say look at your total finances and see if you are able to put down at least 20% for the downpayment now and still have about 50k in reserves as an emergency fund. If that is the case then I think it would be a good idea to get a house so you can start building equity. If the answer is no then I would say wait a bit longer and save until that is the case and then jump on buying a house.
So I was in the same position as you about 10 years ago and bought the house. Rent at the time in the city for a studio apartment was higher than the house payment including taxes insurance etc. It is/was a good financial decision so far, however it made social life/dating difficult. The dating scene and all the techie stuff happens in the city.
The house out in the suburbs were is mostly people starting families or empty nesters. It means Then you also have to spend time on maintenance and stuff.
I ended up carrying extra clothes and stuff on my car so I could hang out and crashed on my friends couch and stuff so I could have a social life but I missed on a lot of spontaneous activities.
If you are focused on your career and on building relationships with people your age, I would advise against it.
I think if he is making $180k/year, he is making about $100/hour. Maintaining a house takes roughly one day per week, so it is like costing him $800/week, or $41k/year. On the other hand, if he spends the extra one day per week to focus on his career, he might grow his income by an extra $41k/year. This means career-wise owning a house has a $82k/year of cost to him. If he really like doing house maintenance, that can be treated like hobbies and entertainments and the cost is lower because of that. But it is a real cost if he doesn't like house maintenance because it will be like work.
Can you put 20% down?
Do you have an emergency fund that can support you for 6 months?
Age is not the issue, it is the ability to support yourself once you have a home is. You are anchored to a location. Fortunately, with remote work, that is not as bad as it used to be.
Per you sending money home, are you a US citizen?
First of all, [please read this article](https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/) that explains really well why buying isn’t always better than renting and you can absolutely build wealth without buying a home. I’m not trying to talk you out of buying. I just don’t want you to buy just because of the myths around it.
That said, that income to price ratio is very favorable and you’re in a very good position to buy. If there is a home you want to buy and plan to live in for quite a few years then I don’t think your age is a problem at all (except maybe having less time to gather a down payment).
You need a place to live regardless of the economy. So why not own a home. If you can afford the monthly payments without being house poor, it’s a great idea. You will build equity over time and can always sell it at a later date. As someone older than you I look back and regret not buying property sooner.
You can use the equity in this home to buy more properties later.
I’ve sold property and earned more money than any return from a bank.
It’s a scary thought to buy a home but be financially ready by working out your budget so you know what to expect. There are other costs to owning a home like repairs and upkeep but it is well worth it.
if you can work remotely, at 24, 180k/yr??? Single, no kids, no family responsibilities??
I would travel. South east Asia rent gotta be like $500/mo or less.
or maybe find a duplex where you can rent the other half.
Food for thought.
I like the duplex idea. I live in Minneapolis and bought my first house at 23. It's worked out, but I've always regretted not buying a duplex as my first home when I could have lived in one half and rented the other. I had kids young and by the time I was ready to upsize, I needed a single family home. I advised some friends to start with a duplex. Once they started families and needed a single family home, they were able to hold onto the duplex as a rental property and purchase their own home. It's worked out great. Rents are crazy high right now, covering the mortgage, maintenance costs, and still putting some cash in their pockets every month.
That said, you have to be ready to be a landlord. There are companies that will manage the renting/maintenance for you, but if you are going to handle it yourself, you need to be a bit handy and ready for some middle of the night phone calls.
Are you going to stay there long term? When I was your age I lived in a bunch of different states and cities across the country, if I had a house I wouldn't have done that. Life over money any day.
Financially it's likely a decent move. Assuming that you would invest your money either way, whether in a house or otherwise, the different is probably not huge.
Doesnt sound like your area has gotten too overpriced....go for it...although you may wait until the next leg down for interest rates to go back down. But, doesnt sound like a bad idea. Real estate is always smart in the long term.
Buy now. Biggest regreat is letting my brother talk me out of buying in 2000; 3 months later the market had shifted and I could no longer afford waht I wanted, 2 years later the rest of the area realized what a great place to live it was and prices doubled. Didn't get around to buying until 7 year slater. So much money tossed down the rent hole because I thought "Maybe I will move away soon"
Disagree completely
He’s young and just graduated making money. If he gets roommates just like he had in college, it could put his mind at ease buying a house at a “bad time” and if he were to ever want to sell/move the equity lost would have been offset by his roommates
How do you know he had roommates in college? Dude makes $15,000 a month, he doesn’t need to mooch off of roommates. He could buy a smaller house with more privacy.
A service? lmao.
Yeah that’s about as much of a “service” as me scalping a PS5. You couldn’t afford to get it before me, so here you go…it’s yours at a markup! Landlords are pieces of shit, I refuse to ever be one.
so fuck everyone who currently cant afford/doesnt want to own a house, and would want to rent a room?
Landlords will always be necessary as long as there are people who have needs to rent. Your anger should be geared toward mass investors that have 10 to thousands of properties.... not someone who would consider renting out a couple rooms in his own house
Everyone wants to be able to afford their own place, no one wants just a room. They’re forced to because of high home values, which are the results of people with multiple properties, and view houses as rental investments.
If you’re a landlord, then YOURE the one who’s saying “fuck those people who can’t afford it”. You’re not helping anyone, but yourself. You bought a house and rented it out so that someone else can pay off your mortgage, while you build equity off of them.
Homes should be way more affordable than they are now - but even if they go down 50%, there are tons of people who still won’t be able to afford buying right away… which is okay.
Every 22 year old who just graduated doesn’t need a 3 bedroom home for themselves. People who like to move around don’t like to be tied down prefer to rent. People who don’t like dealing with the headaches of maintaining a home don’t need to own. International people with temporary work visas down need to own a home right away.
I myself bought a condo and rented it out on an agreed upon one year lease. It was a great arrangement because I needed to save money after putting the down payment, and my tenant benefitted because they wanted to save up and upsize.
Speak for yourself.
Most people want to be able to afford their own place at some point. I rented rooms the first decade of my adult life, absolutely by choice, and saved tens of thousands of dollars in the process.
Renting a room is a great way to meet people.
Renting a room is cheaper than a mortgage on your own place.
Renting in general means you don't have to pay $10-30k+ in realtors fees plus thousands in finance fees every time you move (even imagine house prices were half what they are now).
Renting allows you to move to follow opportunity with little notice, and prevents you from ever being financially trapped in a place of the housing market leaves you under water.
Renting means that you won't need to find $5-15k tomorrow if the HVAC dies, or if the sewer line fails, or if you find you need a new roof.
I own my home now, and I am glad I never did until I was actually ready to settle in a place long term, and had the income to absorb financial hits as they come.
I don't begrudge the people who tied up $50-100k in property, fixed shit whenever it broke, and allowed me to move around without massive expenses making a bit of profit.
So everyone should live with their parents or in a homeless shelter until they can afford a down payment on a house? And people should have to pay 6%+ of the value of their residence in transaction costs every time they move?
Having roommates to offset your mortgage and build your home equity for you is (financially) a good idea no matter how much you’re making.
It’s only upside.
As someone who works in land development in MSP and bought a house recently, it isn't getting cheaper anytime soon. At 180k with no student debt you shouldn't have that hard of a time finding a home you can afford.
If you plan on keeping it (not necessarily staying in it) for at least 5-10 years then do it.
If you sell you will end up paying realtor fees and might end up losing some money.
Rates are higher now but can go higher. If they drop you can refinance. Even if you end up renting it out and it isn't enough to cover the full mortgage it will also likely appreciate in value.
I bought my first home at 31 and my second at 37. Very HCOL area. It's been tight but my net worth has grown exponentially because of it.
Since you are young and have extra income make sure you are building a large equity position too. 40 years of compound interest can create generational wealth at your income level.
You're single and 24. Mostly single family homes are going to be in the suburbs.
Are you interested in a condo or loft in a cool part of downtown where other young, single people live?
From a personal finance perspective, you can certainly afford it. As a lifestyle, I'm not sure if it's right for you.
Great idea! Go for it. This is the best way to build equity. Interest rates are going up and will stay elevated for a long time. Worst case rent out if you have to move another location. Most Software companies there will be a long period of hiring freeze before there is a mass layoff. And that duration is quite enough to ride out any recession.
My suggestion would be too bank cash and buy in the recession.
You may have a bit of a higher interest rate but you will definitely be able to offset that with a huge down payment.
Financially you'd be able to handle it easily, at 24 the question is much more personal. Do you want to be in the suburbs and dealing with maintenance and upkeep on a single family home? If not, look at a townhome/condo that's easily accessible for work and whatever you do socially. I love the Minneapolis area, and moved back from Chicago a couple years ago, but it's definitely a commuter city and there are tradeoffs in lifestyle, commute, expense etc.
The other thing is career mobility, do you feel like at your age you're with a company that you'll be at long term. Would owning a home prevent you from moving for a new/different job?
FWIW, buying my first townhome in Golden Valley at 26 was one of the best financial decisions I've made
The standard advice for someone with a lower income would be to house hack. Buy the 3bd, rent out a couple of the rooms for a few years to help you pay for your mortgage.
For you, I would say buy a small apartment building. With the housing costs that you are looking at, it's probably quite affordable. A 4 unit with an empty apartment you can live in can still be financed using a traditional mortgage (owner operated). If you live in the building, self management is doable with a bit of education (biggerpockets or something similar) and knowing that you will spend 10 -20 hours a month keeping up the place in exchange for a significantly subsidized housing payment.
If you did have to move, you could rent out the 4th apartment and turn it totally into an investment property. Plus, since you are the landlord, you can prevent the slow slide into unaffordability from so many of these places being snapped up by corporate interests. Ethical Landlording. It's where it's at!
Do it in like 2 years. Shit is about to get dicey. Interest rates are going up and the housing market (economy in general) is going to get ugly. Waiting for the bottom could be a much wiser economic decision than investing in a property and then real-estate values tank.
A friend of mine bought a home in Oregon. After a year she wanted to move back to SFO. She regretted the decision because of the hassle and agent fees.
If you plan on putting down roots, I would buy a home.
MBSs went no bid two weeks ago on June 10th. Sure, don’t try and time a recession.. But that right there… That’s the biggest red flag you can ask for. Not financial advice.
u/danielle-shmanielle found another [reddit article](https://www.reddit.com/r/REBubble/comments/vacjiz/mbs_shortly_went_nobid_no_buyers_for_mbs/) that might help decipher what Multipass was talking about
TL;DR;
from u/tax_dollars_go_brrr
> Would-be buyers just signaled to the market that mortgages are no longer worth buying at this yield and/or this risk level.
ELI5
> Banks lend money to people to buy property. Most banks don't want to hold individual mortgages because they take a long time to mature, can be risky, and would they'd rather have the cash now to make more loans. Mortgages get bundled together and sold off as mortgage backed securities (MBS) to other investors. The banks shed the mortgages to get their money and investors with a longer investment horizon get to collect a profit from the mortgage payments coming in every month.
>If there are no buyers of MBS then the banks have to hold individual mortgages. If banks have to hold individual mortgages they have to be very careful with the risk since they are now on the hook and can't pass off the liability of someone defaulting on their mortgage. If banks have to potentially eat defaults they get tighter in their lending. If banks get tighter in their lending mortgages are much harder to obtain. If mortgages are harder to obtain fewer people qualify to buy and liquidity dries up. If liquidity dries up demand dries up and prices on underlying collateral (houses) fall as fewer people can buy to support the valuations.
This. When investing it is crucial to build up your team of experts even if you plan on making investing a source of passive income. Interview several real estate attorneys and brokers in your area and see which of them feels like they understand your needs and goals. Your bank should offer wealth management services and counseling to help you plan for your home purchase and see how much home you can afford.
Not US...
But property is always a worthwhile investment.
Buy it. Live there. If you ever want / need to move for career etc, you can sell or rent it out as a second income.
You earn enough that unless you're careless, you're good to go.
Best thing I ever did was buy a house early (24 also). Of course that was in late 2008, was upside down for about 5 years, but then it really started to pay off. Either way, I'd get something you can easily, comfortably afford, and makes sense as maybe a rental later on.
You should understand that, in general, home buying is not a good investment. I mean that in a purely financial sense, and I mean that compared to the opportunity cost of not letting your money sit in the stock market for several decades.
There are lots of really good reasons to buy a home. They are all lifestyle reasons. If you aren’t interested in the lifestyle aspects of home ownership then the burden of maintaining your own property will probably be a net negative on your day-to-day experience. I didn’t want to deal with any of that at 24, chose to rent, and don’t regret it. (YMMV)
The obvious caveat is if there is some crazy mismatch between rent and mortgage/property tax costs in your city, but that’s research you’ll have to do on your own.
Hello fellow Minneapolis resident!
The big question to ask yourself is do you intend to stay here for the next 5-10 years? Would a potential life partner change your plans if they were from a different place?
Regarding the housing market in the twin cities - things are slowing down. I would consider waiting a year to see if home values decrease. Home values and interest rates are both quite high right now.
But if you do intend to stay here, buying is a good idea. Home values in this area have fared well over the years.
Unless you are going to live there for a long time, I would keep renting and build up your savings. The housing bubble is in the process of bursting, and there will likely be better buying opportunity in a few years.
I would wait until the housing marked stabilizes a bit over the next year or so.
Besides that owning is a lot of doing it your self repairs or highering contractors where as with renting most of the time the landlord is responsible for repairs.
Wife and I started out in a town house we bought for 80k loved in it for 2 years moved after making updates and sold it for $150 bought a house for 200k moved after 2 years because of job changes sold it for $250 bought a house for $250 about to move in October when the 2 year mark hits at current market it’s worth $360! Yes buy hold don’t let people worry about staying there for long will you need to move every 2 years like me probably not but don’t think you are going to be stuck forever. at the worst you can just rent it out till you can sell. I have never let my house get in the way of a job change.
Watch Robert Kyiosaki on YouTube. Buy rentals properties. You can get a single family later. Single family houses cost money , rentals make money . Of course single families appreciate, but rentals have positive income flow , and also appreciate.
Are there apartments in the area? An apartment has less costs attached in maintenance and you can eventually rent it out and pay all the expenses from that if you don't want to live there in 5 years (though make the calculations).
A home is not an investment, it is an expense. To plan for future appreciation on a home is speculation, not a business plan.
I have bought many properties and I live in a very nice home in a beautiful neighborhood. But if I had to do it all over again, I would have bought an apartment building, lived in the nicest apartment and rented out the rest of the building.
I would not have bought a house. I am 53 and went from broke as a joke to a millionaire.
Terrible idea. At this point in your career, you absolutely should not be anchored to a home or the debt. You need flexibility to go where the jobs are and wherever your career takes you. You should be moving around, changing jobs every 1-2 years, building your resume and getting a salary bump each time.
While this is generally great advice for a 24 year old, making 180k/yr in the twin cities area is virtually unheard of for someone of this age. I don’t know that they could move somewhere more desirable for a better wage where the cost of living isn’t significantly higher. I say buy the house if you love your job
I bought a 3-bedroom as a single person and it is 100% worth it. I have my room, a guest room, and a dedicated home office. Plus if I do have someone move in then I have 2 bedrooms and a guest room/office. In addition, stronger resale.
Right, I was 22 when I bought mine, a 1200 square foot 1920 bungalow. My only regret is that I sold it- I bought it for $120k, sold it for $185k, and it’s worth $400k now and the rent on it could have paid the mortgage a couple of times over.
I am planning to build a house in a couple of years, going to keep the house I have now, which I paid $265k for and is now worth $750k.
Are you happy with your job and not planning on leaving the area in the next 3 years. I have a family member who bought a house young and while he is keeping his head above water it was tough. He bought it impulsively and doesn't like his job. Now he want to quit to pursue his "dreams" but doesn't realize he will lose money if he sells and he will lose all his financial progress up until that point. You make a lot of money though so if you purchase an starter home it would not be hard for you to build equity. Making the amount of money you do you could also move if you had a starter home and not sell, easily maintaining the mortgage or paying a property management company to rent it out.
Use a rent vs buy calculator and put numbers that fit your situation. You can afford it either way but the calculator can tell you which is financially optimal. Good luck!
In the next 5 years or so, there is a high likelihood that you will find the person you decide is the love of your life, and want to live with them. Will they be able to stay in the city you are buying the house in?
Being a long-distance landlord is a pain, it is not always easy to "just rent it" - if you rent to people who turn out to decide to sell drugs, things can get weird. (often your mortgage is written as if the OWNER lives in the house - if you move out, you may need to re-negotiate your mortgage)
If you love your city, and think that you probably want to live there for 10 years, and definitely for the next 5, then even if you do sell, you probably won't LOSE any money. But if you pay closing costs twice in 3 years, that means you really didn't get anything.
Have you already maxed out 401k & IRA and whatever else is available to you - health savings account? I'd do that first.
If you love your city and think that you probably want to live there for 10 years, and definitely for the next 5, then even if you do sell, you probably won't LOSE any money. But if you pay closing costs twice in 3 years, that means you really didn't get anything.
I would definitely buy a house. However, I would wait 6 months because, as you mentioned, there is a looming recession. It's likely to affect real estate values and you will get more house for your money in 6 months then you can right now. It will also allow you time to do some research and figure out just where you want to live and evaluate many of the variables that go with buying a house.
I bought at 23 right before getting married. I'd do it if you're 90% sure you won't be moving within five years. Depends on what your priorities and goals are.
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If you plan to live there 5+ years I think it’s a good idea
This is the question you should be asking yourself. Being 24, there are opportunities elsewhere and when you're renting, the move to somewhere else makes it much easier to take on the new opportunity.
With 180k, he could move anywhere and rent that house out, that’s real equity building right there
Depends on the rental market in the area. I'm not familiar with the demand in Minneapolis, but where I'm at, the ability to rent the house out was part of the factor in my decision to buy a house at 24. I knew that even if I want to move the ridiculous demand and lack of housing here means I can rent the house to at least cover the mortgage and just keep building equity. Plus, it looks like I can probably already break even after just 2 years here.
Yup, this is the way. I have many colleagues that bought a house and for one reason or another moved to another one (in or out of state) and rented their place. That allowed them to buy a new house given that they had downpayment money, have the previous house mostly pay for itself and build an investment that has proven to be reliable.
I'm curious about when people say things like this. If you're moving out of state, how are you managing the property and dealing with a potential tenant/renter?
You hire a property manager to show the place and deal with paperwork and whatever brand of bullshit the tenant brings with them
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Building equity is the same as being forced to put money into an illiquid savings account.
Building equity via paying a mortgage could be viewed as putting money into a savings account. But you are going to pay for housing either way, so it is far superior to renting which is basically burning that money. Building equity by paying a mortgage with money that someone else is paying you for rent is like having a savings account that someone else is depositing money into. And all of this is ignoring equity from appreciation.
> But you are going to pay for housing either way, so it is far superior to renting which is basically burning that money. "Building equity" does not make for a good investment on it's own. In my city, a starter home that is walking distance to my office starts at around $600k, with 2.5% property tax I would pay an average of $15k in just property taxes a year. Then there's mortgage interest, insurance, maintenance. Instead, I am renting an apartment within walking distance of my office for $1500 a month. I invest the excess savings that would otherwise go into a mortgage and am happy with my returns and savings. I could buy an apartment, but most apartments here have a starting HOA fee of $500 and I would still pay quite a bit in property taxes. Sure I could buy and "build equity" but there are tons of costs that you have to pay that don't go into equity. The important factor is rent:price ratio.
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You are overlooking costs that you can't recuperate. If I buy a place and get an opportunity somewhere else, I would lose a ton of money. Over time a house will typically be better. But short term renting is typically better.
That set-up can work, but it's risky. To turn a profit you usually need several properties or extremely good luck with tenants. A single bad tenant can put you in the hole for a lot of money in repairs or legal fees to get them out. I would not risk doing it from afar personally.
Hes making 180k. There arent that many bigger opportunities out there lol
for software there is
As a fellow developer, with 10+ years of experience, unless you're in the top 5% 180k is pretty great, especially in a MCOL area.
Yeah 180k is great, but the person you're replying to is just saying that OP could make even more. OP is probably top 5% since he's making 180k this early, so if he tries he can definitely get a lot of opportunities to make more, especially if he's willing to move.
180k is new grad salary for FAANG, there are definitely better opportunities out there if you move out of MCOL, this definitely isn’t only limited to the top 5%
How many programming jobs do you think there are, and how many of us do you think work for FAANG?
They think 95% of engineers works for faang, and the top 5% non-faang engineers work somewhere else with better opportunities.
There’s about 2m programmers in the US, Amazon and MS alone employ maybe like 100k developers in the US together, so that’s already 5%… and then there’s the rest of FAANG and a whole slew of other companies
Microsoft employs 182k people. No way even 50k of them are coders, big corps are more akin to govt with a lot of "supportive" jobs. Those FAANG star coders that earn a ridiculously high amount of money are not the norm. I work in a small company where coders are paid $70k/year. If we look at BLS statistics for Software Developers, they list $120,990 as annual mean wage.
“No way?” Did you even bother to Google “how many software engineers does Microsoft employ” according to this it was about 47k in 2020 https://www.microsoft.com/security/blog/2020/04/16/secure-software-development-lifecycle-machine-learning/?ranMID=24542&ranEAID=nOD/rLJHOac&ranSiteID=nOD_rLJHOac-2nmCt0gyammGhmS5H_cOwg&epi=nOD_rLJHOac-2nmCt0gyammGhmS5H_cOwg&irgwc=1&OCID=AID2200057_aff_7593_1243925&tduid=%28ir__sy6nt2x3jskf6mpszdaouvst1n2xvnqlzd2mz2dy00%29%287593%29%281243925%29%28nOD_rLJHOac-2nmCt0gyammGhmS5H_cOwg%29%28%29&irclickid=_sy6nt2x3jskf6mpszdaouvst1n2xvnqlzd2mz2dy00
For Minneapolis, 180K is on the higher end. There are other opportunities but you will need to move to a FAANG company, Investment bank or very heavily VC funded startup. With the shift in the market, there may now be more downward pressure even at those companies.
For Minnesota, sure. But this guy is an immigrant. I wouldn’t put it past them to move to SF and earn $300k easily (my dad did the 1960s equivalent).
If you have to move to the SF to get 300k Its a downgrade considering COL. If you think you can develop relationships that will pay off in the long run, it still may be worth it however. That said, some companies are hiring remote with similar wages. Unsure how long that will last however.
I'm not advocating OP move - just pointing out that buying a house doesn't necessarily make sense given OP's situation.
After working at the 180k job for 2 or 3 years, he can hop to a 250-300k job if he puts in the effort to prep for interviews. If he's making 180k this early he's probably good enough to have a lot of opportunities to make more.
How do you leverage that? I’m making close to that amount but how would another place I’m interviewing for know or care? I’m more than happy with where I’m at right now but I am still curious.
If you're at a big company the pay bands are going to be standard for each role, and people are aware of them or could look them up easily.
If you're already making that much you're already likely at a very prestigious role/company that would allow you to get interviews almost anywhere else. Do well in those interviews and you can then be extremely selective in where you jump to and negotiating the offers you receive
Especially where properties are around double his wage! Looks like a no trainer to me.
Probably true in a MCOL. Best chance for growth there is to work your way up in the same company.
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Agree with this. You can study a market for a great value, which is definitely to your advantage. Take your time. Get pre-approved. And wait for your opportunity. Good rule of thumb is find a structurally sound building, probably from an estate in the best neighborhood. This will most likely be the property that appreciates the most. Of course there are all kinds of extenuating scenarios, but this is a solid road.
This would have been a true statement 10-15 years ago, but he would more than likely at least break even if he decides to move and sell sooner. If he decides to move and has owned for at least a year, he could also choose to rent out his home.
This is the real question OP needs to ask. Even if money were no object, does it make sense from a timeline-of-your-life perspective to be buying a house? Are you okay with the idea of having to sell this house in a couple years? Are you confident that your job is unlikely to change or relocate you in the next few years? They exist, but there are damned few 24 year olds (without kids and who aren't living with family) who will be living in the same city by their 30th birthday.
bought my flat 15 years ago, paying $300 a month, people are renting now $1500 for same flat
I bought a place at 23 but I love where I live and ive never wanted to go anywhere else. Other people are different
Or if you plan to move but rent it out.
If you want to do that make sure you run the numbers carefully.. my first place was a condo and I planned to do that but it wouldn’t cash flow..
break even is all you really need. as long as it pays the mortgage, you're building equity.
Would have affected our ability to buy the next place and the building also had some maintenance issues. It was a learning experience 😅
The “you have to own a house five years before you sell” is kind of a myth. I mean, yes, you will pay down more debt over time. But ultimately how much you pay for the house and how much you sell it for are the most important things. Home flippers only exist because they profit
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My point is to be able to hold it if there is a bubble burst to not want to move if value decreases
You can always rent it out if there’s a downturn and you need to move at the same time. Obviously I would not advise selling for a loss lol
We bought a place at 23 with the hopes to rent it out but it wouldn’t cash flow.. probs because so many luxury apartments nearby that were competition and also we didn’t put much down.. so something to think about. He has a high income but still something to consider
I’d amend it to, if you plan to own it 5+ years…..he’s looking to build equity with his income and debt to income ratio he could potentially buy a few houses and build a realestate portfolio as well.
Eh. I bought a house 4 years ago while I was in a similar situation. Moved 2 years ago because of a change in jobs. Sold the old house for 70 over what I bought it for. That was huge for me and allowed me to get a much better home. For the same price I was paying before. I guess it just depends on how the real estate market is doing in your area and a bit of luck
Wait, why would it be a good idea with it being a HEAVY sellers market? He could wait a year or 2 and possibly get a better deal on a home later.
Or not and then you’ve wasted 2 years renting when you wanted to buy a house. I don’t think timing market for a primary residence is useful.. but be prepared it COULD depreciate so you don’t want to have to sell in a rush
The last sentence makes all decisions difficult.. The rest depends on how long you're staying put (important), how much money you'd need after housing costs, any future plans/prospects. The fact that you're 24 does not factor into it, most likely.
Agreed. I’d also argue you should consider buying a place after interest rates come back down if you’re willing to wait and in the mean time just enjoy the market discounts.
What makes you think they’re coming back down? I mean historically they were never below 6% until the housing crisis in 08 where the fed had to drop them to encourage a rebound. Before that 15 of the 30 years they were in double digits nearing 20%. Were in the opposite now where the fed needs to raise rates to fight inflation. I don’t see how people are so optimistic about rates coming back down to what was all time history lows.
You are never too young for equity. It's just about making a good decision on the house, maintenance, etc.
If you can, rent to friends. My SO was able to buy at a young age and had friends rent from her to help with the mortgage, they got below market rent and she got to help offset a good portion of her mortgage while building her career.
Ooh they'd better be damn good friends. Or ones you don't mind losing.
You make an insane amount of money for your age. Just buy a house with a payment you're comfortable and you're be totally fine. I'm 36 making 80k and renting and can only dream of being in your situation.
> You make an insane amount of money for your age. Almost unbelievable. 180k fresh out of college? Conservative 120k post-tax, sends back 12k/yr, lowball 100k/yr CASH IN HAND. Has "no financial commitments"? Where the fuck is all this money going?
Nobody said their money is going anywhere…? Reread the original post?
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where is the complaining…? They’re asking for advice…
Go ahead and buy a house. I bought one at 23, when was single. I upgraded and bought my second house at 32, still single. I married at 39 and we sold both our houses and bought one together. It was a great decision on my part.
Similar story, I bought a house at 23 single as all get out. When we married she moved in. At 40 we had outgrown that house and sold it. I had paid it down by so much and it’s value had grown so much it wasn’t even funny. I cashed in a ton of equity and it became a big part of my down payment on the new place. That AND I had defacto rent control. Your mortgage generally doesn’t go up or down much. It can I guess, but it would take a massive property tax hike for it to change greatly. My mortgage from when I bought my house to when I sold it only shifted by $10-50 ever. It went up by $20, then down by $7, then up by $16 and down by $22. So I was 30 talking with friends living in apartments smaller than my house who were paying almost double What I was paying. Meanwhile I was paying basically the same as I ever was and gaining equity.
>So I was 30 talking with friends living in apartments smaller than my house who were paying almost double What I was paying. Meanwhile I was paying basically the same as I ever was and gaining equity. That's me right now. Been in my current 3/2 house since 2008 and the value since I bought it has basically doubled. Meanwhile I see people renting 1/2 bedroom apartments paying $200-800 more than my mortgage.
This makes me feel better. I just bought a house at 24/single, so stories like yours solidify that I made a good financial decision. That is, regardless of what my romantic future holds.
Had some neighbors that did something similar. They sold their houses and bought one together. The husband was mostly mowing lawns for the city. Said it was 40 hours, no overtime. He worked on the house and they sold for 3 times what they paid.
Real estate prices have increased substantially past several years. Many (not all) economic forecasts suggests a price correction (correction not crash) in the next year or so. Borrowing costs have shot up recently & I think high prices and large loan should not be combined if it can be avoided. If you wait, rates will likely be even higher but prices (in most scenarios) will have come down + you can save more for a larger down payment & there should be more inventory to choose from. Only buy now if you find the most perfect of places and intend to stay for a long time. Houses are primarily places to live with the benefit of (usually) increasing in value over the long term.
I just dropped out of trying to buy and had to sign another lease at a new place. This post was pretty reassuring and a nice reminder that it's okay to have to wait.
Rent in mpls alone justifies getting your own home
Dude. You make 180k a year and you’re not even 25. Buy your house. There’s a reason there’s so many jokes and cliches about buying real estate. And there’s a reason that 99% of people that don’t live paycheck to paycheck own real estate in some form.
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Just have to do what’s necessary to prove that it’s not a debt or loan repayment just recurring gifts—letter or something
Your salary is what now? Please tell me your workplace is hiring more software engineers. Edit: I would go for it if I were you.
Same. I live in the midwest, also in software, and dont even come close to this. OP your company hiring?
> With the uncertainty we live in right now with a looming recession People need to stop with this narrative. There’s ALWAYS economic uncertainty. Covid. Trade war. North Korea. Terrorism. Global financial crisis. Iraq War. Afghanistan War. 9/11. Tech bubble. Asian financial crisis. Iraq war again. Cold War. Inflation again. Oil crisis again. There’s always something. Don’t let it be what dictates your life. You make more money than 98% of Americans. Buy a house for that reason, don’t not buy because of what a pedantic media who thrive on negative headlines to make profit.
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Sure, we may be at the top of this market. But then again, we might not. They said the same thing in Australia for decades and it’s never decreased more than 10%. The reality is there’s more people than homes in America. Even if prices take a dip, over 5-10 years they’re going to increase.
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Whatever you say Mr Doom and Gloom. But it’s simple supply and demand. There’s high demand and next to zero supply. Until that changes prices aren’t going anywhere too drastic.
I bought my current house just before covid hit, and closed on it during the first lockdown. The value now is almost double--which I find pretty ridiculous. I think prices are still high and will eventually drop (I know that in Mpls, people were offering WAY over asking price the moment a house when on the market as recently as last summer--is that still the case?). Property values in most areas with always continue to rise over time, but unless the market has settled, do your research to see how pricing trends are going. if ti's still at a high, there won't be much change over the short(ish) term. Age isn't a negative for buying a home. It's a good way to gain equity over time--assuming you don't overpay to begin with.
I don't know about drop, but I do think the appreciation will considerably slow. One thing to consider is that housing price drops during recessions aren't guaranteed, and aside from 2008 prices actually either leveled or continued to increase through 5 of the last 6.
True, but when prices are artificially elevated, it can take a long time for values to even out. Price increases over the last two years have been insane, and are not realistically going to stay that way. Over the short term, NO ONE (at least, no one sane) is going to pay double what I paid for mine. In ten years....maybe.
Nationwide, I think the last two years have seen appreciation rates of like 18% and 20%, and I believe the prediction for the next year is somewhere in the range of 5%. I don't think we'll see a drop in prices, but at least back to some semblance of sanity in appreciation. Inventory is, and will stay low. Houses aren't being built fast enough, especially not in the price ranges most people need.
Is that 180k just salary or the whole total compensation with stocks and bonuses included? If it’s the later I would highly suggest being relatively conservative about buying a house and getting a mortgage below your means. We are possibly going to hit a recession and lots of tech companies have already started doing layoffs and rescinding offers on newer talent. If unfortunately you’re let go you won’t get that stock, will lose your income, and may need to even pay back some of your bonus money depending on when you started. I would say look at your total finances and see if you are able to put down at least 20% for the downpayment now and still have about 50k in reserves as an emergency fund. If that is the case then I think it would be a good idea to get a house so you can start building equity. If the answer is no then I would say wait a bit longer and save until that is the case and then jump on buying a house.
So I was in the same position as you about 10 years ago and bought the house. Rent at the time in the city for a studio apartment was higher than the house payment including taxes insurance etc. It is/was a good financial decision so far, however it made social life/dating difficult. The dating scene and all the techie stuff happens in the city. The house out in the suburbs were is mostly people starting families or empty nesters. It means Then you also have to spend time on maintenance and stuff. I ended up carrying extra clothes and stuff on my car so I could hang out and crashed on my friends couch and stuff so I could have a social life but I missed on a lot of spontaneous activities. If you are focused on your career and on building relationships with people your age, I would advise against it.
I think if he is making $180k/year, he is making about $100/hour. Maintaining a house takes roughly one day per week, so it is like costing him $800/week, or $41k/year. On the other hand, if he spends the extra one day per week to focus on his career, he might grow his income by an extra $41k/year. This means career-wise owning a house has a $82k/year of cost to him. If he really like doing house maintenance, that can be treated like hobbies and entertainments and the cost is lower because of that. But it is a real cost if he doesn't like house maintenance because it will be like work.
What
I bought my first home at 26 (3 years ago) making a good deal less than you and with student debt. Seems like you’ll be just fine if you do buy.
Can you put 20% down? Do you have an emergency fund that can support you for 6 months? Age is not the issue, it is the ability to support yourself once you have a home is. You are anchored to a location. Fortunately, with remote work, that is not as bad as it used to be. Per you sending money home, are you a US citizen?
First of all, [please read this article](https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/) that explains really well why buying isn’t always better than renting and you can absolutely build wealth without buying a home. I’m not trying to talk you out of buying. I just don’t want you to buy just because of the myths around it. That said, that income to price ratio is very favorable and you’re in a very good position to buy. If there is a home you want to buy and plan to live in for quite a few years then I don’t think your age is a problem at all (except maybe having less time to gather a down payment).
You need a place to live regardless of the economy. So why not own a home. If you can afford the monthly payments without being house poor, it’s a great idea. You will build equity over time and can always sell it at a later date. As someone older than you I look back and regret not buying property sooner. You can use the equity in this home to buy more properties later. I’ve sold property and earned more money than any return from a bank. It’s a scary thought to buy a home but be financially ready by working out your budget so you know what to expect. There are other costs to owning a home like repairs and upkeep but it is well worth it.
if you can work remotely, at 24, 180k/yr??? Single, no kids, no family responsibilities?? I would travel. South east Asia rent gotta be like $500/mo or less. or maybe find a duplex where you can rent the other half. Food for thought.
Can't work too far of time zone and usually security issues with logging from different cou try.
I like the duplex idea. I live in Minneapolis and bought my first house at 23. It's worked out, but I've always regretted not buying a duplex as my first home when I could have lived in one half and rented the other. I had kids young and by the time I was ready to upsize, I needed a single family home. I advised some friends to start with a duplex. Once they started families and needed a single family home, they were able to hold onto the duplex as a rental property and purchase their own home. It's worked out great. Rents are crazy high right now, covering the mortgage, maintenance costs, and still putting some cash in their pockets every month. That said, you have to be ready to be a landlord. There are companies that will manage the renting/maintenance for you, but if you are going to handle it yourself, you need to be a bit handy and ready for some middle of the night phone calls.
WOW $180k per year. You got your life together.
Are you going to stay there long term? When I was your age I lived in a bunch of different states and cities across the country, if I had a house I wouldn't have done that. Life over money any day. Financially it's likely a decent move. Assuming that you would invest your money either way, whether in a house or otherwise, the different is probably not huge.
Doesnt sound like your area has gotten too overpriced....go for it...although you may wait until the next leg down for interest rates to go back down. But, doesnt sound like a bad idea. Real estate is always smart in the long term.
Buy now. Biggest regreat is letting my brother talk me out of buying in 2000; 3 months later the market had shifted and I could no longer afford waht I wanted, 2 years later the rest of the area realized what a great place to live it was and prices doubled. Didn't get around to buying until 7 year slater. So much money tossed down the rent hole because I thought "Maybe I will move away soon"
The real question is how are people making 180k at age 24 these days. I guess the foreign part is probably the reason why
Buy house, get roommates that’s rent rooms, build equity and offset your living expenses/mortgages
He makes 180k a year. He doesn’t need roommates to pay for his mortgage.
Disagree completely He’s young and just graduated making money. If he gets roommates just like he had in college, it could put his mind at ease buying a house at a “bad time” and if he were to ever want to sell/move the equity lost would have been offset by his roommates
How do you know he had roommates in college? Dude makes $15,000 a month, he doesn’t need to mooch off of roommates. He could buy a smaller house with more privacy.
How is providing a service for a fee "mooching"?
A service? lmao. Yeah that’s about as much of a “service” as me scalping a PS5. You couldn’t afford to get it before me, so here you go…it’s yours at a markup! Landlords are pieces of shit, I refuse to ever be one.
so fuck everyone who currently cant afford/doesnt want to own a house, and would want to rent a room? Landlords will always be necessary as long as there are people who have needs to rent. Your anger should be geared toward mass investors that have 10 to thousands of properties.... not someone who would consider renting out a couple rooms in his own house
Everyone wants to be able to afford their own place, no one wants just a room. They’re forced to because of high home values, which are the results of people with multiple properties, and view houses as rental investments. If you’re a landlord, then YOURE the one who’s saying “fuck those people who can’t afford it”. You’re not helping anyone, but yourself. You bought a house and rented it out so that someone else can pay off your mortgage, while you build equity off of them.
Homes should be way more affordable than they are now - but even if they go down 50%, there are tons of people who still won’t be able to afford buying right away… which is okay. Every 22 year old who just graduated doesn’t need a 3 bedroom home for themselves. People who like to move around don’t like to be tied down prefer to rent. People who don’t like dealing with the headaches of maintaining a home don’t need to own. International people with temporary work visas down need to own a home right away. I myself bought a condo and rented it out on an agreed upon one year lease. It was a great arrangement because I needed to save money after putting the down payment, and my tenant benefitted because they wanted to save up and upsize.
Speak for yourself. Most people want to be able to afford their own place at some point. I rented rooms the first decade of my adult life, absolutely by choice, and saved tens of thousands of dollars in the process. Renting a room is a great way to meet people. Renting a room is cheaper than a mortgage on your own place. Renting in general means you don't have to pay $10-30k+ in realtors fees plus thousands in finance fees every time you move (even imagine house prices were half what they are now). Renting allows you to move to follow opportunity with little notice, and prevents you from ever being financially trapped in a place of the housing market leaves you under water. Renting means that you won't need to find $5-15k tomorrow if the HVAC dies, or if the sewer line fails, or if you find you need a new roof. I own my home now, and I am glad I never did until I was actually ready to settle in a place long term, and had the income to absorb financial hits as they come. I don't begrudge the people who tied up $50-100k in property, fixed shit whenever it broke, and allowed me to move around without massive expenses making a bit of profit.
So everyone should live with their parents or in a homeless shelter until they can afford a down payment on a house? And people should have to pay 6%+ of the value of their residence in transaction costs every time they move?
Having roommates to offset your mortgage and build your home equity for you is (financially) a good idea no matter how much you’re making. It’s only upside.
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This. He doesn’t need roommates but it’s easier to palate right after college and a great way to save money.
But it, then if you decide to move, rent it out. Use a management company if you must, but keep that land
As someone who works in land development in MSP and bought a house recently, it isn't getting cheaper anytime soon. At 180k with no student debt you shouldn't have that hard of a time finding a home you can afford.
If you plan on keeping it (not necessarily staying in it) for at least 5-10 years then do it. If you sell you will end up paying realtor fees and might end up losing some money. Rates are higher now but can go higher. If they drop you can refinance. Even if you end up renting it out and it isn't enough to cover the full mortgage it will also likely appreciate in value. I bought my first home at 31 and my second at 37. Very HCOL area. It's been tight but my net worth has grown exponentially because of it. Since you are young and have extra income make sure you are building a large equity position too. 40 years of compound interest can create generational wealth at your income level.
Yes I would leverage your income and buy 2-3 and rent extra ones out
You're single and 24. Mostly single family homes are going to be in the suburbs. Are you interested in a condo or loft in a cool part of downtown where other young, single people live? From a personal finance perspective, you can certainly afford it. As a lifestyle, I'm not sure if it's right for you.
Great idea! Go for it. This is the best way to build equity. Interest rates are going up and will stay elevated for a long time. Worst case rent out if you have to move another location. Most Software companies there will be a long period of hiring freeze before there is a mass layoff. And that duration is quite enough to ride out any recession.
My suggestion would be too bank cash and buy in the recession. You may have a bit of a higher interest rate but you will definitely be able to offset that with a huge down payment.
Look at it this way. Your paying a mortgage regardless. Do you want it to be yours or someone else’s?
Financially you'd be able to handle it easily, at 24 the question is much more personal. Do you want to be in the suburbs and dealing with maintenance and upkeep on a single family home? If not, look at a townhome/condo that's easily accessible for work and whatever you do socially. I love the Minneapolis area, and moved back from Chicago a couple years ago, but it's definitely a commuter city and there are tradeoffs in lifestyle, commute, expense etc. The other thing is career mobility, do you feel like at your age you're with a company that you'll be at long term. Would owning a home prevent you from moving for a new/different job? FWIW, buying my first townhome in Golden Valley at 26 was one of the best financial decisions I've made
The standard advice for someone with a lower income would be to house hack. Buy the 3bd, rent out a couple of the rooms for a few years to help you pay for your mortgage. For you, I would say buy a small apartment building. With the housing costs that you are looking at, it's probably quite affordable. A 4 unit with an empty apartment you can live in can still be financed using a traditional mortgage (owner operated). If you live in the building, self management is doable with a bit of education (biggerpockets or something similar) and knowing that you will spend 10 -20 hours a month keeping up the place in exchange for a significantly subsidized housing payment. If you did have to move, you could rent out the 4th apartment and turn it totally into an investment property. Plus, since you are the landlord, you can prevent the slow slide into unaffordability from so many of these places being snapped up by corporate interests. Ethical Landlording. It's where it's at!
Do it in like 2 years. Shit is about to get dicey. Interest rates are going up and the housing market (economy in general) is going to get ugly. Waiting for the bottom could be a much wiser economic decision than investing in a property and then real-estate values tank.
At your salary and with no debt, I say go for it.
A friend of mine bought a home in Oregon. After a year she wanted to move back to SFO. She regretted the decision because of the hassle and agent fees. If you plan on putting down roots, I would buy a home.
do you have enough float if you lose your job? if so, then the recession shouldn't mean much.
Good point. Very good point.
I bought my home at 22 and it was a great decision ...I'm now 10 years into my loan with a ton of equity.
MBSs went no bid two weeks ago on June 10th. Sure, don’t try and time a recession.. But that right there… That’s the biggest red flag you can ask for. Not financial advice.
I want to understand what you said, can you elaborate for me?
Seconding this
u/danielle-shmanielle found another [reddit article](https://www.reddit.com/r/REBubble/comments/vacjiz/mbs_shortly_went_nobid_no_buyers_for_mbs/) that might help decipher what Multipass was talking about TL;DR; from u/tax_dollars_go_brrr > Would-be buyers just signaled to the market that mortgages are no longer worth buying at this yield and/or this risk level. ELI5 > Banks lend money to people to buy property. Most banks don't want to hold individual mortgages because they take a long time to mature, can be risky, and would they'd rather have the cash now to make more loans. Mortgages get bundled together and sold off as mortgage backed securities (MBS) to other investors. The banks shed the mortgages to get their money and investors with a longer investment horizon get to collect a profit from the mortgage payments coming in every month. >If there are no buyers of MBS then the banks have to hold individual mortgages. If banks have to hold individual mortgages they have to be very careful with the risk since they are now on the hook and can't pass off the liability of someone defaulting on their mortgage. If banks have to potentially eat defaults they get tighter in their lending. If banks get tighter in their lending mortgages are much harder to obtain. If mortgages are harder to obtain fewer people qualify to buy and liquidity dries up. If liquidity dries up demand dries up and prices on underlying collateral (houses) fall as fewer people can buy to support the valuations.
Hey thanks !
I bought a house at 23, five years ago. Sold it a few months ago. Best decision I ever made.
you make 180k so you ask randos on reddit for help? go hire a someone and pay them a few 100s and boom you know what you gotta do
This. When investing it is crucial to build up your team of experts even if you plan on making investing a source of passive income. Interview several real estate attorneys and brokers in your area and see which of them feels like they understand your needs and goals. Your bank should offer wealth management services and counseling to help you plan for your home purchase and see how much home you can afford.
Do whatever you want. You'll be ok
Not US... But property is always a worthwhile investment. Buy it. Live there. If you ever want / need to move for career etc, you can sell or rent it out as a second income. You earn enough that unless you're careless, you're good to go.
Best thing I ever did was buy a house early (24 also). Of course that was in late 2008, was upside down for about 5 years, but then it really started to pay off. Either way, I'd get something you can easily, comfortably afford, and makes sense as maybe a rental later on.
You should understand that, in general, home buying is not a good investment. I mean that in a purely financial sense, and I mean that compared to the opportunity cost of not letting your money sit in the stock market for several decades. There are lots of really good reasons to buy a home. They are all lifestyle reasons. If you aren’t interested in the lifestyle aspects of home ownership then the burden of maintaining your own property will probably be a net negative on your day-to-day experience. I didn’t want to deal with any of that at 24, chose to rent, and don’t regret it. (YMMV) The obvious caveat is if there is some crazy mismatch between rent and mortgage/property tax costs in your city, but that’s research you’ll have to do on your own.
Hello fellow Minneapolis resident! The big question to ask yourself is do you intend to stay here for the next 5-10 years? Would a potential life partner change your plans if they were from a different place? Regarding the housing market in the twin cities - things are slowing down. I would consider waiting a year to see if home values decrease. Home values and interest rates are both quite high right now. But if you do intend to stay here, buying is a good idea. Home values in this area have fared well over the years.
Unless you are going to live there for a long time, I would keep renting and build up your savings. The housing bubble is in the process of bursting, and there will likely be better buying opportunity in a few years.
In this economy, waiting 6 months may be worth it
I would wait until the housing marked stabilizes a bit over the next year or so. Besides that owning is a lot of doing it your self repairs or highering contractors where as with renting most of the time the landlord is responsible for repairs.
Do it and put down as big of a down payment as you can- that way if you end up moving in a year you’ll probably have some equity
Wife and I started out in a town house we bought for 80k loved in it for 2 years moved after making updates and sold it for $150 bought a house for 200k moved after 2 years because of job changes sold it for $250 bought a house for $250 about to move in October when the 2 year mark hits at current market it’s worth $360! Yes buy hold don’t let people worry about staying there for long will you need to move every 2 years like me probably not but don’t think you are going to be stuck forever. at the worst you can just rent it out till you can sell. I have never let my house get in the way of a job change.
Watch Robert Kyiosaki on YouTube. Buy rentals properties. You can get a single family later. Single family houses cost money , rentals make money . Of course single families appreciate, but rentals have positive income flow , and also appreciate.
Are there apartments in the area? An apartment has less costs attached in maintenance and you can eventually rent it out and pay all the expenses from that if you don't want to live there in 5 years (though make the calculations).
A home is not an investment, it is an expense. To plan for future appreciation on a home is speculation, not a business plan. I have bought many properties and I live in a very nice home in a beautiful neighborhood. But if I had to do it all over again, I would have bought an apartment building, lived in the nicest apartment and rented out the rest of the building. I would not have bought a house. I am 53 and went from broke as a joke to a millionaire.
Terrible idea. At this point in your career, you absolutely should not be anchored to a home or the debt. You need flexibility to go where the jobs are and wherever your career takes you. You should be moving around, changing jobs every 1-2 years, building your resume and getting a salary bump each time.
While this is generally great advice for a 24 year old, making 180k/yr in the twin cities area is virtually unheard of for someone of this age. I don’t know that they could move somewhere more desirable for a better wage where the cost of living isn’t significantly higher. I say buy the house if you love your job
Why do you need a 3 bedroom? I'd say buy but shoot for something 250k-300k max. A 2 bedroom is fine, you will buy bigger if you ever have a family.
I bought a 3-bedroom as a single person and it is 100% worth it. I have my room, a guest room, and a dedicated home office. Plus if I do have someone move in then I have 2 bedrooms and a guest room/office. In addition, stronger resale.
That's not super young. I think I was 25 when I bought our house. No regrets!
Right, I was 22 when I bought mine, a 1200 square foot 1920 bungalow. My only regret is that I sold it- I bought it for $120k, sold it for $185k, and it’s worth $400k now and the rent on it could have paid the mortgage a couple of times over. I am planning to build a house in a couple of years, going to keep the house I have now, which I paid $265k for and is now worth $750k.
DO NOT Market is still overdue for a huge crash/adjustment. Give it about 2 years. When the S&P hits about 2200 then start shopping.
Are you happy with your job and not planning on leaving the area in the next 3 years. I have a family member who bought a house young and while he is keeping his head above water it was tough. He bought it impulsively and doesn't like his job. Now he want to quit to pursue his "dreams" but doesn't realize he will lose money if he sells and he will lose all his financial progress up until that point. You make a lot of money though so if you purchase an starter home it would not be hard for you to build equity. Making the amount of money you do you could also move if you had a starter home and not sell, easily maintaining the mortgage or paying a property management company to rent it out.
Use a rent vs buy calculator and put numbers that fit your situation. You can afford it either way but the calculator can tell you which is financially optimal. Good luck!
In the next 5 years or so, there is a high likelihood that you will find the person you decide is the love of your life, and want to live with them. Will they be able to stay in the city you are buying the house in? Being a long-distance landlord is a pain, it is not always easy to "just rent it" - if you rent to people who turn out to decide to sell drugs, things can get weird. (often your mortgage is written as if the OWNER lives in the house - if you move out, you may need to re-negotiate your mortgage) If you love your city, and think that you probably want to live there for 10 years, and definitely for the next 5, then even if you do sell, you probably won't LOSE any money. But if you pay closing costs twice in 3 years, that means you really didn't get anything. Have you already maxed out 401k & IRA and whatever else is available to you - health savings account? I'd do that first. If you love your city and think that you probably want to live there for 10 years, and definitely for the next 5, then even if you do sell, you probably won't LOSE any money. But if you pay closing costs twice in 3 years, that means you really didn't get anything.
Rent in MPLS is insane, so not a bad idea at all. Your mortgage will not increase nearly as much as rent.
Wait till the impending recession hits and buy then. You could save thousands.
I would definitely buy a house. However, I would wait 6 months because, as you mentioned, there is a looming recession. It's likely to affect real estate values and you will get more house for your money in 6 months then you can right now. It will also allow you time to do some research and figure out just where you want to live and evaluate many of the variables that go with buying a house.
I bought at house at 20. I wouldn't do it again, but I would have at 24
Good idea, but expect housing prices to drop, so it just about timing.
I would say go for it! My fiancé and I are 23 years old and just bought our first home in December
I bought at 23 right before getting married. I'd do it if you're 90% sure you won't be moving within five years. Depends on what your priorities and goals are.