College Student Home Buying Guide
AKA – How to buy a house as a college student.
Before you start
If you are in college and have bought a house or bought one while you were in college, I would LOVE to hear your story since I have never talked to anyone else that has done this. Please either comment at the end of this post or contact me. Thanks!
Introduction
If you’re in college and want to buy a house, chances are you are in the minority. It’s rare that you will find a college student that has bought real estate. Buying a house is so off of the radar for the majority of college students that you’d be hard pressed to even find one other person to compare notes with. I bought my first rental house in October 2009 while I was a college student at the University of Michigan in Ann Arbor Michigan on a land contract. No banks were involved, nor were any real estate agents. Here’s how I did it.
Summary
1. Searched Craigslist for home sellers willing to sell their house on a land contract and eventually found one that made financial sense (see below for details on land contracts).
2. Borrowed $5,000 from my parents and used $10,000 that I had saved up as a down payment. The sale price was $54,000 so the remaining $39,000 was on the land contract.
3. Since the interest rate on the land contract was 7%, I paid it off as soon as possible using student loans (see below for issues relating to using student loans as a down payment or for paying off real estate purchases).
4. Found a renter (also using Craigslist) who rented the house for $950 / month. The $950 covered the land contract payment, property tax, insurance, and the payments on the loan from my parents.
So it’s possible. I’m not saying that “anyone can do” like those gurus out there would have you believe, or that it’s easy, just that it’s possible. After that house I repeated the same process (with a few minor changes) two more times and was able to get better interest rates on the subsequent houses. After all, if it works, why do anything else? All that said, here are details on how you can buy a house, even if you’re a college student. (A quick note … If you have questions on more specifics of these deals, or if you have questions about a potential deal that you’re working on, I would be happy to talk to you about this. Just drop me a note and I’ll get back with you as soon as possible.)
I’m in college! Why would I want to buy a house?
What I want to focus on in this post is creating a passive income stream for you. There are tons of different types of passive income and call me biased, but I would rate rental properties as the best investment option that is available to you and me. It’s not as easy to set up as say an affiliate or niche market website, but the payouts are far greater, longer lasting, and more consistent. As a college student you have certain disadvantages when it comes to buying a house but you also have some distinct advantages. Traditional loans will be tough to come by and you may not have a lot of disposable income for a down payment. Do not despair! Later in this post, I will discuss ways to overcome these disadvantages. Your advantage as a college student is this … you have a bunch of friends who would be more than happy to rent a room from you! Finding renters with non-student housing can be tough and costly but for you it should be fairly straightforward. I mean, what student wouldn’t want to live in their friend’s house?
Also, because of the nature of the student rental market, rents of dorms and rooms close to campus end up being quite inflated. The reason for this is that the person living in the room is rarely the person that actually pays for the room. In other words, in most cases the parents pay for their students living expenses while they’re in college. Parents often want the best for their kids and landlords know this and that is why rents around colleges are usually inflated. It’s the classic “somebody else is paying so why does it matter what it costs” situation that you see in health care and wedding registries. As a student-landlord, you can benefit by being on the other end of this transaction by being able to charge higher rents.
Is buying real estate really the best investment I can make?
If you’re reading this post, my guess is that you’ve already done quite a bit of homework and are convinced that buying houses is far and away the best investment you can make, not just in college but at any time in your life. If you haven’t come to that conclusion yet, please check out my post on why there is no better investment than real estate. The post covers real estate in general so here I will only cover some of the specifics relating to your situation as a college student.
Market Stability in College Towns
College towns rarely see very large shifts in real estate prices and it’s even rarer to see large drops in prices. Higher education has simply not been hit as hard by the recent downturns as manufacturing or retail and home prices reflect that. Professors and administrators still have jobs and thousands of students flock to colleges each year with their pockets full of student loan and grant money. It is this constant influx of money that prevents the real estate market around colleges from seeing the large dips that you see in other areas. Here in Ann Arbor Michigan, home to the University of Michigan, the city is considered an “economic island” surrounded by areas like Detroit that have been hit very hard by the manufacturing downturn. Although house prices did drop here, they didn’t drop nearly as much as other places in Michigan, they bottomed out more quickly, and are rising again well before the surrounding cities.
Financing
You may think that since you’re a college student, that you have no chance of getting a loan to buy a house. This may be true if you intend on going the traditional route of applying for a traditional loan from a traditional bank. The problem with traditional loans through traditional banks is that almost all banks have the same lending standards thanks to the government’s takeover of home finance through the “Government Sponsored Enterprises” Fannie Mae and Freddie Mac. As a student, chances are that you don’t have income that can be included on your loan application. For income to be counted, you have to have been in the job for two years of more and the bank has to be relatively certain that you will stay in the job. Most college jobs do not fall into these categories, even if the pay is really good.
Luckily, there are still ways to get financing, some through relatively traditional means, and some less traditional. The less traditional sources use what I call your “Social Credit Score“, rather than your FICO score.
1. Get cosigned by your parents
When you get a loan cosigned by someone else, that person is on the hook if you default on you loan. It also means that your loan will show up on their credit report. If you can convince your parents that you are a good credit risk, then asking them to cosign a loan for you is a great option. With a cosigner, any loan that they can get you can get too. Plus, you can get the rates that they would get based on their excellent credit. These days, you could get a loan for less than 4%, depending on their credit worthiness. The “exit strategy” in this case is to agree to refinance once you get into a stable job after college. That way the loan will be removed from their credit within a relatively short time-frame.
The downside of asking someone to cosign is something I alluded to above. The loan will be included on their credit and will be used in calculating their debt-to-income ratio. This comes into play if they want to buy a house themselves during the time when they are cosigned on your loan. My advice is to simply be sensitive and open about this when you have the conversation with them. Remind them that their credit-worthiness will be affected even if you make your payments on time. If they are thinking of moving soon, asking them to cosign could be asking too much since it could prevent them from getting another loan.
2. Find a seller willing to sell on a land contract
This is the method I used when buying a house as a college student. Getting a cosigner is much easier and cheaper but cosigners are not always easy to find. In short, a land contract is an agreement between a buyer and a seller where the seller effectively acts as the bank. The buyer puts down a down payment and then makes monthly payments TO THE SELLER, not to the bank. Again, no banks are involved. If you as the buyer default on a payment to the seller, the seller has the right to foreclose on you and take the house back, just like a bank. Land contracts (or contracts for deed) have been used for a long time but have traditionally been used for purchases of farmland rather than rental homes.
Craigslist is the best place to find sellers willing to offer land contract terms on their house. When I was searching for houses, I scrolled through the /reo (real estate for sale by owner) Craigslist every day. For me the URL was http://annarbor.craigslist/org/reo. You can also do a search of for all land contracts on Craigslist by using the following Google search term:
“land contract site:annarbor.craigslist.org”
If you have a local real estate company, you can search their listings in the same way. In Ann Arbor Michigan, Reihnart Realtors is the main real estate company in town. The search term for their site is:
“land contract site:reinhartrealtors.com”
Why pursue a land contract? Because instead of convincing a bank that you are credit worthy, which as I mentioned earlier is next to impossible in this era of federal government control, you only need to convince the seller that you are credit worthy. This can still be a hurdle but not an insurmountable one. Sellers will usually ask for the same stuff as banks do (ie. bank statements, pay stubs, etc) but generally it’s much easier to prove your creditworthiness to an individual than to a bank.
Please note: One downside of using a land contract to purchase a house is that most houses end up being ineligible for sale by land contract. If the owner of the house has a mortgage on the house (ie. the house is not fully paid off), then it’s best to pass on that one. Why? Because bank loans usually have a clause that allows them to “call in” a loan if ownership of the property that backs the loan changes ownership. They don’t always exercise this option but it’s a possibility and could be devastating if it happened.
Is it a good deal?
There is tons of literature out there on whether a particular investment is or is not a good deal. People talk about ROI, cash-on-cash returns, cash flow, net income, gross rent to sale price ratio, and about a dozen other metrics that they use to evaluate a property. For me, that’s too confusing and ends up causing people to give up the process all together. Instead of confusing yourself and mystifying the process, use the following sentence when evaluating whether a property is a good investment:
“If you can pay the mortgage with the money you save living in the dorms, then buy the house”.
Additionally, if you buy a house as a college student and rent rooms to your friends, then if you can pay the mortgage with the money you save, plus their rent, then go ahead and buy the house. Of course, take into consideration taxes, maintenance, and insurance, but in general, if you can pay the bills then buy the house. I’ll leave it for another post to talk about what an amazing investment a rental house is, even if it is only cash flow neutral.
Next steps …. by now I’m assuming that you have found a house that you want to buy and are convinced that it will be a good investment for you. The rest of this guide will go through the nuts and bolts steps of writing up a sales contract and closing on the house.
Getting the down payment
Most people will tell you that getting out of debt (or not taking on any debt) is of the utmost importance. My personal thought is that debt is fine as long as it pays for itself. Don’t use debt for consumption, use it for investment. Wise use of debt is a key to leveraging the funds you have and leads to higher returns. You will rarely find a successful business that has not used debt to grow.
That said, here are my three favorite ways to get a down payment for your house.
1. Earn it
Get a job, save up, sell some stuff, figure it out.
2. Use your student loans as a down payment
If you’re willing to take on a little bit more risk, this could be a great option. I realize that this is controversial somewhat. Most would say that you’re not supposed to use student loans to buy a house, and even if it’s technically allowable, you still shouldn’t do it since it’s “not normal”. Most college students use their student loans for spring break trips to Cancun, so using it as a down payment is simply strange for most people. Is case you were wondering about the legality of this, here it is straight from the Department of Education website:
“You may use the money you receive only to pay for education expenses at the school that awarded your loan. Education expenses include such school charges as tuition, room and board …”
And there it is in black and white. You can use your student loans to pay for room and board. I would like to see someone try to convince me that buying a house for yourself and a few friends doesn’t count as room expenses. Just because most people go the easy route and rent their room, doesn’t mean that you should.
Beware though … if you choose to use your student loans as a down payment, treat them as part of the home loan. You will be using a land contract to buy this house and will have to make payments to the owner. When evaluating the property based on my very simple evaluation criteria as stated above, you should count your future student loan payment in that calculation. In other words, the money you save plus rent from your friends should be more than the sum of all expenses, including your student loan payment. Don’t neglect that portion just because it’s deferred until after you graduate.
3. Crowd-source your down payment
The great thing about land contracts is that unlike traditional bank loans, you can also borrow the down payment! Crowd-sourcing is a very exciting and relatively new way to match up lenders and borrowers and to circumvent the banks in the process. In short, when you apply for a crowd-sourced loan, individual borrowers around the country can lend you small amounts of money so that if things work out, your loan gets financed by dozens of people, each lending you as little as $25. Two major players in this field are Lending Club and Prosper.com. You can borrow up to $35,000 from either Lending Club or Prosper.com. Depending your credit worthiness, your interest rate could be as low as 6.78%. As with using student loans as a down payment, you should always use your crowd-sourced loan payment in your profitability calculations.
Title companies
Don’t let anyone fool you into thinking that you need a realtor to buy a house … you don’t. What you do need though is a title company. A title company will give you a blank sales contract to fill out with the seller, will take this contract once it’s filled out and draw up the closing documents (including the land contract), and they will do a title search for the property to make sure that there are no liens on it.
Do a Google search for “Title Company (enter your city)” and do a little bit of calling around. The title company I used charged $250 for writing up the land contract and another $250 for doing the title search. They will usually try to sell you “title insurance” as well. If you want to be 99.99% sure that there are no liens on the property instead of 99.98% sure, then by all means get the title insurance. I have never gotten it and don’t recommend it and here’s why. A title search (which I recommend getting and is probably required by law) will uncover any outstanding liens on your property. Title insurance covers you if for some crazy reason, there is a lienholder out there that the title search does not uncover. The thing is, almost nobody ever makes claims on title insurance since the process of doing a title search is so straightforward.
Now here’s the best thing about title companies …. once the title company has your sales contract paperwork, they will tell you what to do from there. In effect, your work is done and all you have to do from here on out is follow their instructions. It’s a very freeing feeling. They will tell you how much money to bring to closing, where and when to show up, and how to file your documents after the sale. They will draw up the contracts, do the title search, and have everything ready in nice neat folders sitting on the table for you when you show up at closing. Once they are on the job, they steer the ship.
Sales contact
The title company will be able to provide you with a blank sales contact to fill out. This is just a document that has blanks for sale price, land contract terms, closing date, and so on. Sit down with the seller and fill it out. A land contract will always include a down payment and will often have what is called a “balloon payment” as well. The down payment is typically around 10% to 20% of the sales price. A balloon payment means that the loan balance is due in full before the amortization period is done. So for a house that costs $100,000, typical land contract terms might look like this:
Sale Price – $100,000
Down Payment – $12,000 (remaining $88,000 on land contract)
Land Contract Terms – $88,000, 6.0% interest rate, 15-year amortization, 5-year balloon payment
This means that you would have to make payments of $742.59 each month to the seller. Theoretically, after 15 years that loan would be completely paid off. However, since this seller in particular wants to get all of his money sooner, there is a 5-year balloon payment required. That means that you will have to pay off the entire balance of the loan in 5 years. In 5 years you will almost certainly have a stable job and will be able to refinance with a traditional bank loan. You will want to refinance as soon as possible because interest rates on land contracts are typically higher than bank loans by a few points.
Once you have worked out the details of the sale with the seller and documented them on the sales contract, bring the completed and signed contract to the title company and set a closing date.
Some words of encouragement
Don’t get bogged down in the details
Of course, at some point you will want to visit and inspect the house. You can even get a home inspection done if you really want. Home inspections are required for bank loans but are optional if you’re buying via land contract. Personally, I don’t get them but I definitely don’t discourage them either. If you do get a professional home inspection done, I would only focus on the big ticket items as you negotiate with the seller. Focusing on the small stuff can derail an otherwise good deal. If you’ve never done much in the realm of home repairs, it’s probably a good idea to go with the inspection.
And don’t let naysayers talk you out of this!
As with anything where you venture outside of what is considered “normal” or “safe”, you will have people all around you telling you not to go through with this. I mean, college students don’t buy houses … do they? What will you do with the hosue when you graduate? What if your renters don’t pay? Ok, there will always be naysayers and there will always be another reason not to buy a house … always! As a college student buying real estate you are moving into almost completely uncharted waters. Most college students use their student loan money on beer and iPhones, you’re investing in your future and starting your real estate business. Keep your eyes forward. This is worth it.
And finally …. closing on your house
Closing is the event when you, the seller, and the title company representative get together, you sign the documents, and walk away owning a house. There are a few things you will need to remember as closing approaches:
1. You will need to bring a cashiers check to closing.
The amount of the check will be given to you by the title company and will include the down payment, closing costs, and prorated property taxes owed to the seller. Remember, the amount will be several hundred or even a few thousand dollars more than just the down payment depending on when property taxes are due in relation to the closing date.
2. You will need to register the deed after closing.
The title company will give you instructions on where to register the deed and which documents need to be submitted. Again, just as is the case for the amount of cash needed at closing, the title company will tell you exactly how to go about this very important step.
Summary
Spend your freshman year in college working and saving money, finding an awesome house to buy, and lining up renters. If you want to use your student loans to buy a house, then take as much as they will give you and save it in a savings account and do not touch it. Once summer rolls around, you will be well-positioned to actually buy the house. Don’t let the circumstances overwhelm you and don’t let friends and family talk you out of this. When you buy this house, you are starting a business. People who start businesses rarely choose the easy or well-trodden route and you are no exception. Good luck to you and feel free to contact me if you have any questions on specific specifications of your soon-to-be house.
Awesome! I love how ‘uncharted’ this is, and I found a house that I really want to buy. I’m in college, and get a pretty decent amount of student loans- but I use that money to pay for my room and board. So, I’m wondering what your thoughts are on lease-to-owning a home, and also buying a house to actually live in, and then renting out the other rooms. (Actually, this particular house has a fully finished garage apartment for me to rent!) I know I could afford mortgage rates, it’s just getting all the paperwork in order. It seems overwhelming, but I really want the house! I’d love to hear your thoughts and encouragement.
Howdy!
Thanks for the comment and for actually reading the entire post. It’s pretty long but there was a lot to say. As far a least-to-own options, I think they’re a great idea and one of the more ideal methods to buying a house. In terms of the mechanics of a lease-to-own deal as opposed to a land contract, they are fairly similar. You can expect to pay a chunk of money up front either way (down payment for a land contract or “valuable consideration” for a least-to-own). That upfront payment is usually more with a land contract (10 – 20% as opposed to 3 – 5% with a lease-option). If the least-to-own contract is written up correctly, your lease payments will partially pay down the sale price just like a land contract payment pays down the note. Least-to-own might be a little bit easier to get into because there is less trust involved between the two parties since the actual transfer of title has not happened yet. I would wholeheartedly recommend persuing a least-to-own and would love to walk you through the potential deal. That said, I’ve never actually done one although I have put in a few offers to sellers for least-to-own situations.
Buying a house to live in and renting out a room or two is and unbeatable option. I did this while I was in the military … bought a house and rented two of the rooms (and a sofa at one point) to some military buddies. The obvious benefit is that you live there and can manage the house with ease. Also, theoretically you would be renting to friends who you trust. One thing I would recommend even if you rent to good friends is to write up a rental contract between you. It’s sort of awkward to have your friend sign a rental contract because it sort of feels like mixing business and friendship but you need to protect yourself and a savvy renter will want a contract also so they know what is expected of both parties. Who pays for cable, utilities, food … those issues can come up if you don’t deal with them right off the bat before they move in.
In closing, please don’t let the paperwork intimidate you. Dealing with the contracts is a hurdle but not insurmountable. It’s like anything that you have to learn … it looks really tough at the start but one you study it a little bit the mystery goes away. Drop me a note in the contact me page and we can talk about some of the specifics of the contracts and paperwork that worry you. I want you to get into a house, that’s the whole reason I started writing about this stuff. I can be done and it will set you on a great path of either going into real estate full time or else having a few houses as a valuable asset that you manage on the side. Anyways, drop me a note and we can discuss further. Good luck!
Matt
I am currently in college and I bought a home my freshman year for 20k and now as a junior I will be paying it off in one month. And to top it off I have not as of yet incurred any student debt. It is a very long story of how I accomplished this task, but I have had absolutely no help from my parents (whom have no money) or anyone else. It is completely possible to graduate college with no student debt and own a home that is paid for at the end of the four years!
Victor
Victor,
That’s awesome! Could you fill me in on how you did this? I would love to write about this on the site. If you’re willing, fill out the contact form and we’ll chat.
Matt
I am a full time student and I managed to save almost 250 k and I want to buy a house in LA. But I am nervous to lose my college benefits which is financial aid and EOPS. I feel I will end up paying for college out of my pocket and no more financial aid fro me. Another thing, someone said that its a very bad idea to buy a condo with 100% cash and fully pay it off for tax reasons. So I feel I am trapped here. I dont know how other students see this situation differently. Please explain this, guys. thank you all.
I haven’t filled out a FAFSA for a while so I’m just not sure how they look at assets for their calculations and would have a hard time speaking to losing financial aid by buying a house vs having 250k in other assets. It seems to me that they would be similarly weighted. In regards to the tax implications of buying a house in cash, there are definitely different schools of thought on whether to keep a mortgage or not. Yes, you can deduct the interest but then again, it’s still an expense. What tax bracket are you in now? How long do you intend on living in the house? How much do you intend to spend on the house? Personally, I side more on buying in cash or at least putting down a large down payment considering your available cash. Then again, I’m not a financial adviser and I know that lots of people would disagree with me.
Hello! I am a single Mother of two and at the age of 41 am going back to school. I live in Indiana and I have found a house I absolutely love despite it being a fixer upper. Am I crazy to think there’s a snowballs chance of being able to get this house? The price on the house just dropped and the mortgage payments would be very low. Actually much less than renting something. It is also listed as a possible short sale. Beautiful old house built in the early 1900’s. It has a few issues but nothing I’m unwilling to deal with. I am definitely looking at this house with eyes wide open.
I am not working at the moment because I am going to start school in mid May or early June for summer session then full time starting in the fall.
You are the only person I’ve seen that’s said it is absolutely possible to buy a house as a college student. Any advise would be SO appreciated!!
Getting a bank mortgage is always the easiest and cheapest way to get a house but that will be tough without a job. Banks are not exactly creative these day and have a hard time lending if they cannot turn around and sell the loan to Fannie and Freddie. How much is the house listed for? Do you have any cash on hand for a down payment? Do you know if the owner would entertain the thought of selling the house via land contract or lease to own? One of those two options often work in a situation like this. Seeing as how it might go in a short sale, it might be too late. Definitely contact the owner directly as soon as possible. Message me if you want some advice on what to say.
This is interesting. Do you think it would be possible for a college student to buy a home, working a minimum wage job?
DC, thanks for writing in. I’ve just written a post about this and you can find it here.
In short, there’s nothing stopping you from buying a house with a minimum wage job. You would just have to make sure all the numbers work and that you are able to make payments on the land contract with either your wages, rent from renting out rooms, or both. Feel free to respond to this comment, that post, or contact me privately with your specific information and we will see what we can do.
hi my name is Robert, im a full time student i will be moving to Houston next semester. im studying architecture and would like to get into real state, i also want to own a home. i currently have saved up $3,000.00 and expect to have around $5-6 by the time i move. i was wondering if you can guide me on what i can do with the money i have. i don’t have family, i work 3 jobs right now, i have a fair credit score, and im a full time student, i have also held jobs for 2 or more years. i need someone to guide me on the process and would appreciate it very much if you could help me.
I am so glad I found this article! I am 22 and still in college because I got a late start. Most people my age and even way older do not own homes and rent. I am at that point in my life where buying is the only option I want to consider. People try to talk me out of it bu I refuse to rent an apartment for more money than my mortgage would end up being and it’s not really my own. I am working with a first time homebuyer’s grant agency which I recommend to anyone. They help you with down payment,closing and repair costs as long as you live in the home for 10 years. All I had to do was save 3% for down payment and another 10% for my own reserve account just in case I lose my job or anything like that. Anything is possible when you are “young” as long as you are smart and educated about what you are trying to accomplish. Doing lots of research on home buying and finances will help as well. So happy I am not alone!!! 🙂
I know this article is about purchasing a home, but what about purchasing land? I live in a state where there is an abundance of land for cheap prices, $5000/acre. I can’t get a loan, but was thinking of purchasing parcels of raw land until I finished school. I’ve never purchased a home or land, so I have no insight on whether it’s a good idea or not. What would be the pros and cons?
The only downside of buying raw land is that it’s tough to make it produce income and therefore falls into a different category. It’s more like speculating. It very well could be that it will pay off well but it’s just a totally different process to figure out your costs and potential gain for this type of thing.
Hi Matt!
I have some questions about buying a house as a student. I am married but my husband and I are still in school. We are both currently working full time and our only debt is about $15,000 on our car. We are looking at moving out of state in a year to further our education and that’s when we will need to start taking out student loans. We will most likely both stop working to focus on school, but it would be cheaper to buy a house and repay those loans, then to rent an apartment for twice as much(currently in Utah, moving to Oklahoma and it’s very cheap). What is our best option for buying a home? Is it best if we buy it before we move out there while we still have good jobs and credit and just try to rent it out until we move there? We are searching for our best options because there are not many married college students, let alone ones that are interested in buying a house and settling down.
If you’re not going to have jobs when you get to school, your best bet is probably to try to do it before you head out there. Of course, that will be tough to do because the banks will wonder why you’re buying a house out of state and when they realize that you’re doing it with the intention of both being in school, there’s a good chance that they will not offer you credit. Do you have any money saved up for a down payment? You’re best bet is probably to find someone willing to sell you their house on a land contact and negotiate directly with the seller. That is tougher to find but certainly possible in most areas.
My daughter is 18 and asking to buy a house. It is listed at $60K, hoping to get it down to about $50K. I have to say, at first my answer was a resounding “no”. I want her to focus on studies, not paying bills and having to manage a house. She has saved enough for a down payment. Talking to banks has been quite hilarious- “You can’t do that. An 18 year old is not responsible enough to handle it.” My husband and I will probably co-sign her loan, and her roommates will help with covering her costs. It is close to the university. I am a believer that she can be responsible and do this successfully. We have weighed the pros and cons extensively. I wouldn’t recommend that everyone do this, but for her, it is looking to be a wise decision. She is in the pre-med program, with a follow on at the same university for med school, so the time frame just makes sense. We live close enough to the possible purchase to help with repairs, problems, etc. So I am a converted mama, believing my daughter can purchase her first home at age 18. 🙂
I’m 18 and a freshman in college. To complete my degree, I’ll have to move to Alabama after the four years of undergrad here in Kentucky, so my question is, should I buy a house here in Kentucky and try to rent it out or sell it when I move to Alabama, or, and I’ve been considering this option, just moving down to Alabama and buying a house there. If I were to do the second option, I would be living in the Alabama house for eight years or more. Buying seems like the only option for me at this time, considering it’s almost impossible to find a rental that accepts my dogs, a German Shepherd and a Rottweiler. What would you recommend?
Hi Brittany,
My one piece of advice would be to not think of a house as “tying you down”. A lot of folks forgo buying a house because they’re going to be moving soon and don’t want to be tied down to an area or leave loose ends in the places they lived. There are certainly personality types that have a hard time with this but for me, I’ve always thought that spending time and money to buy a house and then doing the research on good property managers in the area is time and money well spent. If you are able financially to buy a house in Kentucky and then another in Alabama, I would do it. The model where you buy a primary residence in each place you live is awesome because you can continually have access to mortgage financing as the one that is going to inhabit the property. In other words, interest rates on rental properties are much higher, and loans are harder to get, than primary residence loans. So personally, I would buy a house in both places but if you’re one of those types that just can’t stand to have business interestes in other states that distract you from what you’re doing, then obviously take that into consideration. Just don’t feel tied down to a property simply because it’s not close by. Good property managers make it completely unnecessary to ever even see the property after you leave a place. Thanks for writing in and let me know what you decide.
Matt