In today’s economy, where real estate prices continue to rise and monthly expenses are increasingly difficult to manage, saving enough money for property investment has become a significant challenge. Millennials, in particular, face an even more intense version of this struggle — burdened with student loans and the high cost of living, they often find it difficult to allocate funds toward investment goals.
However, updated data from real estate services reveals that millennials are still eager to own property. The desire is there, but financial readiness remains a major hurdle. In fact, over 25% of millennials planning to purchase a home have less than $1,000 in savings — a figure far below what’s typically needed for a down payment.
This is where guidance from a knowledgeable Real Estate Financial Advisor becomes crucial. With the right advice and planning, millennials can take realistic steps toward homeownership and long-term investment success.
As a young buyer with limited savings, you should take it as a signal that you are not yet fully prepared for homeownership. Property investment requires patience and discipline, jumping too quickly will leave you with risks of failing to keep up with your housing expenses and ends your journey before even it starts.
Savings Are Essential
Savings are a key in buying your very first home. If you don’t have a sufficient down payment, you will be denied the option to buy one. 20% down payment is usually required by conventional mortgage lenders, it’s possible to get a home loan with a lower down payment. For example, if the down payment is as low as 3% and you are looking to buy a $100,000 home, you’d still need to have $3000, which means if you have less than that, you don’t have enough.
If somehow you are able to arrange enough for a down payment by borrowing it from parent or grandparent, you still need to have a backup plan for an emergency fund. When you own a property, the risks of costly repairs usually exist. Or if unfortunately, you lose your job, you will need a way of paying for your home and other expense while you are without an income.
It is smart decision to have enough in your bank account to cover four to six months of necessary living expenses, but you are not much ready to own if you are a homeowner and don’t have $1,000 in savings.
Better Wait then Jumping Unprepared
Buying a home before being fully prepared will leave in a pool of financial stress and many unfortunate consequences. So, it’s better to wait for a year or two to meet the following objectives;
- A sufficient amount of money for a 20% down payment on a home if you’re getting a loan.
- A sufficient amount of money for loan’s closing costs i.e. 2% to 5% of the loan’s value.
- A sufficient amount of money to cover at least four months of living expenses.
Following these objectives will give you a safe cushion in case of any unforeseen circumstances and helps you to stabilize financially.
Like any other business, property investment is a journey filled with challenges but with the right knowledge and proper planning, you can get healthy returns. To make your way in the property market, reach out to the expert property investment strategists at 10 Properties in 10 Years. Get step-by-step guidance and tailored plans to build an amazing property portfolio. Find out more at 1300 617 677 or send us an E-Mail: [email protected].