The Number One Financial Threat In America (Part:2)
Renting a home is now one of the biggest financial threats to individuals in America. So how did this situation get so out of control? How can renters become home buyers faster? What can real estate professionals do to help? Rental Nation 2015 Homeownership in America has fallen to its lowest point in around two decades. New rounds of foreclosures, and forecasts from industry analysts suggest homeownership could fall even further. In part 1 of this report we looked at: Now let’s look at: The Rental Threat Renting isn’t just costly and unsustainable for renters, it is also a threat to the rest of the country. Renting means paying more money to live every month. It means paying to make someone else rich, while you get poorer. The longer you rent, the worse these dynamics get. You keep making the top 1% richer, and you keep giving up more of your paycheck. The longer you wait to buy a home, the harder and more expensive it is. This doesn’t mean we should hate all landlords and rental property owners. If you are renting, you are probably glad to have a roof over your head. And that wouldn’t be possible without a real estate investor offering the property as a rental. There are many great landlords. They are concerned about providing safe, healthy, and affordable housing. They should get something for investing their lives and hard earned savings in providing this service. On the other hand, there are other landlords that aren’t as good. They take, take, take. They make it hard for those that need to rent the most to get in, and charge them to death. Often while providing inferior housing. It shouldn’t, and doesn’t take one party taking advantage of another to make a living. However, there is no question that there is great inequality in America. Look at Miami, FL. It is one of the world’s favorite luxury real estate markets. A single building boasts 2% of the world’s billionaires as unit owners. Yet, Miami is also considered one of the most poverty stricken cities in the United States. It’s really hard to get ahead when you are down, and renting. Everything is more expensive. Even more so when you have bruised credit. Conversely, once you own a home and have money; it’s easier and easier to make more money. However, there is a point when this disparity will bite the wealthiest back. You can only get so much blood out of a stone. Why More Renters Aren’t Buying Homes According to Zillow, it is far cheaper to buy a home than rent – renters just aren’t buying. Why not? Surveys show that some have been discouraged by rising home prices. As many as 30% say they don’t think they have enough down payment, or their credit isn’t good enough to qualify for a home loan. In reality, many could and should be buying homes right now. Home prices will only keep going up. The sooner you buy, the better. There are also many 100% financing, low down payment, and other financing solutions. These are even open to those with low incomes, and less than great credit. There are down payment assistance and low down payment loans for those with credit scores in the low 600s, and for those that are just 3 years out of foreclosure, or who may still be in bankruptcy. Your local branch might not offer them, but they are out there. With so much on the line; isn’t it worth a few phone calls, emails, and a couple minutes searching Google? RealEstateWA.org offers programs like this for home buyers in Washington State. And Alternative Mortgage Group in Florida offers expanded options; especially for self-employed borrowers. There are thousands of others too. 3 Tips for Buying a Home Faster Even if you have challenged credit, income issues, and little money to put down, there are options: Too many prospective home buyers have sabotaged themselves in the past by holding out for their dream home. The best and fastest way to your dream home is to buy the home you can afford now. Cut your housing payment, or start building up your dream home down payment through equity in a starter home. While you might not plan to move for a long time, statistics have shown Americans on average move at least every five years. Sometimes even more frequently. So buy an affordable home, and then move up later. If you don’t want to live in the home you can afford – rent it out. Copy the strategies of the top 1% of wealthy individuals. Invest in real estate and rent it out. Have someone else paying for your investment. Use that to buy the home you really want. Summary Renters can’t afford to keep renting long term. The sooner they buy homes, the better. If there are financial and credit challenges – explore your options before you give up, or invest in real estate. Current real estate investors and landlords can do a lot to help the situation. Each distressed home purchased and rehabbed helps build up communities. Providing good rentals at fair prices is an invaluable service, and will always be needed. Just because you make money from renting real estate doesn’t mean you can’t help others to buy homes. Educate them. Advise renters on how to move up. Offer rent to own, or selling financing help. The more people you help, the more that it will come back to you.