Let me begin by apologizing for not updating my blog since last week! Life has been a little bit hectic (which in real estate is always a good thing), but I am back to updating daily! Lately I’ve noticed that many of my friends are now beginning their annual search for the next great lease. For whatever reason, their current leasing situation did not work out or they are serial movers. Either way, it made me think how a few of them are probably just better off buying a place. With that in mind, today’s topic focuses on the ultimate rich kid conundrum - should I buy or should I lease? Here are some questions to consider:
- Are you planning on staying in one place for the next few years or are you out of here the moment you land your first starring role in the CW’s 20-something version of “Sex and the City” shooting ASAP in NYC?
- Do you have the money to comfortably put down roughly 10% of the purchase price or are you parents willing to invest in purchasing your first home?
- Are you currently and consistently paying more than $2500/month in rent?
- Do you have a reliable career or other sources of income that you can depend on for the long haul?
- Do you have an emergency cushion (parents with money count too) that will see you through should you find yourself laid off, fired, or otherwise without a job for the next 8 months (thank you Suze Orman for this bit of wisdom)?
If you’ve answered yes to all of these questions, then I would advise purchasing overrenting. Every rich kid knows that the way to secure a rich future is to invest your money properly. Your $3000 a month rent at the hottest luxury apartment complex featured in “The Hills” could be paying down a roughly $500,000 condo. A wise agent whom I greatly admire once told me to buy everything you can get your hands on and never sell unless you have to. These are words to live by!
You’ve heard it before, a real estate agent telling you that you should buy a place instead of throwing your money away on rent - how original! I get it! Let’s look at some numbers to put things in perspective:
| Sale Price | $500,000 | $500,000 |
| Down Payment | $100,000 | $50,000 |
| Loan Amount | $400,000 | $450,000 |
| Rate (fixed) | 5.25% | 5.25% |
| Payment | $2,208.81 | $2,484.92 |
| Taxes & Insurance | $520.83 | $520.83 |
| Home Owners Dues | $280 | $280 |
| Mortgage Insurance | $215 | |
| Total Monthly Due | $3009.65 | $3285.75 |
| *This is a general estimate to be used as a guide. | ||
Make sense? Please reference the Rich Kids Guide to Buying a Home (http://www.richkidsrealestate.com/buyers.php) for a step by step break down on the home buying process.
Not ready to purchase yet? Search all active leases in the MLS using my Quick Search Feature (select Residential Lease under the Property Type drop box): http://www.richkidsrealestate.com/search.php