Besides the fact that you have to live somewhere- historically, home price appreciation has outperformed inflation. What that means is putting your cash into an asset like a home vs leaving it sitting in a bank account ensures your money will grow at an accelerated rate. You’ll also have access to the equity gained over time to fund future investments. Here’s how to get started:
- Take care of your credit. Nothing will cripple your ambitions like having a ton of consumer debt. I specified consumer debt because not all debt is bad, but consumer debt is treacherous. I encourage you to reflect on your relationship with consumer debt, reevaluate what you’re financing and why. Keeping your debt-to-income ratio low will mean your purchasing power will be greater.
- Avoid turnkey ready properties. Turnkey ready properties factor into the pricing that the labor on the property (painting, landscaping, minor repairs and updates) has conveniently been done for you. You end up essentially paying a premium price for the convenience of having someone else do the labor. You can save a ton of money by buying a home that needs upgrades and doing them yourself over time.
- Be flexible. We migrated from the Bay Area to the San Joaquin Valley in 2020, during the peak of the pandemic. My husband was working a weekly rotation to the Bay Area at the time- we knew he wouldn’t have to commute consistently for a while. In the meantime, our property appreciated at a rate of 59% from when we purchased in 2020- and were saving over 40% of our income paying down the properties mortgage vs renting in the Bay Area. Now that my husband has returned to work; we’re reevaluating if the commute is something we truly want to stick to or if there’s greater real estate opportunity in other states. I’d say you want to be open to the possibility of commuting unless you work remotely.
Love, Daley.