young professionals: the ultimate real estate guide · 2018-02-18 · from career opportunities to...

Rodolfo ManzonPresident, Spectrum Realty [email protected]

4141 NE 2nd Ave Suite 106-B, Miami Design District, FL 33137

Young Professionals:

The Ultimate RealEstate GuideRenting vs. Buying & Other Common Questions

To Rent or to Buy?

To rent, or to buy… That is the eternal question for an increasing number of young professionals.

With just a quick internet search, you’ll see countless articles about millennials waiting longer to get married and have kids, increasing levels of student debt, rising living costs, tightening credit standards, etc.

All of these factors are valid. Student debt, for example, has reached an all-time high and can become prohibitive for first-time homebuyers.

However, as you’ll see in pages #3-5, there are some tactics and tools cash-strapped millennials can use to make the buying process easier if that is the direction they choose to go.

But first, let’s tackle the question of renting vs. buying. This decision often comes down to a few key factors:

4141 NE 2nd Ave Suite 106-B, Miami Design District, FL 33137 305.921.0972 [email protected]

MobilityFrom career opportunities to romance and the allure of new cities, many people in their 20s and 30s relocate at least once. Renting naturally provides a much higher degree of flexibility. As a general rule of thumb... If you’re going to be somewhere for <5 years, rent.

To learn more, check out the NYT interactive rent vs. buy calculator.

FinancesWhile there are ways to navigate homeownership with varying degrees of debt (see next section), buying a home is still a significant financial commitment. You need to make sure your credit is in line, you have funds for a reasonable downpayment, and you’ve developed a plan to manage home improvement costs, etc.

MentalityIf you are hyper-focused on your career, travel, or life goals that run contrary to staying in one place, homeownership might not be the best decision. It takes some serious soul-searching to determine what you want to achieve in the next five years and how your living arrangements fit into that plan.

A Look at the Data


To give you a better idea of the renting vs. buying landscape, we’re going back to the data. Check out these graphs from a recent Trulia report, especially as they pertain to buying in Miami and Ft. Lauderdale.


The Top Reasons YoungProfessionals Purchase Homes

1) Control Over Living Space — Whether you’re interested in remodeling the kitchen, owning a pet, or just want to paint the walls a different color, renting doesn’t afford nearly the same degree of control over your space as owning. Often times, landlords have strict rules against changing the property and/or having furry friends.

2) Sense of Privacy & Security — When you own a home, it’s entirely your property. You aren’t “borrowing” it from someone else, and you can secure it however you want.

3) Nicer Home — Perhaps you want to live in a newer home? Or maybe you’re looking to renovate an older house to make it your own? What about a yard for BBQs and kids down the road?

As a homeowner, you have the flexibility to choose nicer options and make improvements.

4) Community Engagement — Everything changes once you purchase a home. You are now invested in the neighborhood and the community as a whole. You have a desire to improve your surroundings so the value of your home remains high.

5) Flexibility in Future Decisions — When uncertain times arise, homeowners are able to borrow against the equity in their home. Having this option available can help young buyers feel more secure in their purchase.


How to Work TowardsHomeownership

Given the factors mentioned at the beginning (higher cost of living, credit standards, student debt, etc.), how can millennials best navigate the buying process?

1) Student Debt — According to the National Association of Realtors, 44% of millennial homebuyers were still paying off student loans at the time of purchasing their first home. This is almost half!

Often times, young professionals have a misunderstanding about a) the downpayment percentage and b) the debt-to-income ratio required to qualify for a mortgage. In many cases, these figures are far more attainable than people expect. Count on a team of experienced real estate professionals like Spectrum to help you chart a savings plan and take advantage of more favorable financing options.

For more information, check out this Mortgage Reports article: https://themortgagereports.com/19172/first-time-home-buyers-guide-buying-with-student-loans-debt-gina-pogol

2) Downpayment — It used to be potential homeowners needed to put down a minimum of 20% to get a loan. Thanks to a variety of new programs, buyers can put down as little as 3% in some cases. In fact, 61% of millennial homebuyers in 2016 put down less than 10% up-front for their purchase.

Graphs and a more detailed explanation can be found here: https://www.mykcm.com/scripts/apg/gapg.php?g=millennial&contactId=99166

3) Credit Score — Again, there tends to be a misunderstanding with regard to the credit score required for a mortgage (a credit score is the number between 300-850 depicting a person’s creditworthiness).

Many people think this number has to be in excess of 780 to qualify for a loan, however, that is just not true in many cases. Come to find out, the average FICO score for millennial homebuyers is just 721!

Click here to run your credit score for free: https://www.creditkarma.com/

young professionals: the ultimate real estate guide · 2018-02-18 · from career opportunities to...

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