We're told by pretty much everyone that it's always better to own than to rent, but, that's not entirely true. There is no question that investing in real estate is an incredible opportunity, but it can get a little tricky if you become a homeowner before you're ready. With the upfront costs and long-term commitment, you'll want to make sure that you don't end up house poor (here's what first time home buyers wish they knew).When you're starting to think about homeownership, it's important to evaluate the different opportunities as they each have their own advantages.
There are more options out there today than simply renting and traditional homeownership using a mortgage. When you're starting to consider buying real estate you should also be diving into the emerging models out there like co-equity models (AKA Key), iBuyers and rent-to-own (here's how Key differs from rent-to-own models).
You'll need to know a lot more than we can tell you in this one article (that's why we've got our ownership archives!), but here are the top two things you need to be ready for with traditional homeownership:
No matter which option you choose, there will be unrecoverable costs. These are costs that don't help you build wealth. With renting, it's simple, it's the rent you're paying. With homeownership, it's a little more complicated and you have to think about things like taxes, maintenance and the cost of capital (debt and equity).Debt refers to the amount of interest you're paying on a mortgage, and equity refers to the opportunity cost of how you could have potentially had a better investment had you invested elsewhere (say, the stock market).
And by that we don't mean to try to "time the market". Instead, consider your life stage as this has a massive impact on investing in real estate. Generally speaking, the longer you hold your real estate investment the better off you'll be. If you buy a place and sell it three years later, you're probably not getting further ahead, but if you hold that same investment for 10+ years, you may have a great return on investment.
Until now, we've only known buying and renting, what if there was a third option? That's where Key comes in. We are a new co-equity model that gives you all of the benefits of owning, with the freedoms of renting. The benefits being an equity position that can grow in value over time as well as security of tenancy with also the freedoms of renting being capital flexibility and personal mobility. Plus, our unique model is the only one where you don't need to qualify for a mortgage.
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Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.
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