Effie Avsker

When you buy a house, you are committing to a long-term relationship.
The purchase price of the house is fixed once you pay it and won't change for the entire period of the ownership. The mortgage, on the other hand, can be refinanced when the rates go down. Therefore, when contemplating to buy a house, the purchasing price is much more important to consider than the temporary mortgage rates.

In my last post I got an important question and I thought that the answer would be interesting to a wider audience, so I decided to repost this answer as its own post:

We always tailor our solution to our personal circumstances and needs. Obviously, if my budget for housing is ~1,000$/ months, I will not try to buy a Million $ mansion, nor will I try to rent one for 5,000$/ month. So, let’s try a small exercise. Let's assume that I love an urban lifestyle, with cafes right on my street and groceries at a walkable distance. I can't afford to buy a house in the downtown, but I might be able to rent a condo, not a large one, but suitable for a couple with no kids (let's assume we are not talking about one of the top super expensive cities). At the same time, I might be able to find a house, maybe a bit further in the suburb or countryside, or even in a different state that sells for ~200,000$. If I manage ~40,000$ down payment, my mortgage payment would be ~1,100$. With rent of ~1,300$, the renter covers my mortgage and expenses, I gain ownership equity in my own house, all the while living the lifestyle that I enjoy and paying the ~1,000$ rent that I can afford.
Obviously, not always this rosy scenario can play out easily. Sometimes we will need to save for quite a while for the down payment itself, sometimes we live in high-cost areas and no matter what, it is difficult to come up with a scheme that we can afford. However, through the years of my life experience, I learned that there are much more options out there than we can see at the first glance. While not always we will find the one that works for us, it is always worth to try and explore, more often than not we can be surprised for the better!
This is not a substitute for a financial advice. I recommend to always consult with a professional advisor that is familiar with your personal situation.

𝟰 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗕𝗲𝗻𝗲𝗳𝗶𝘁𝘀 𝘄𝗵𝗲𝗻 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝗶𝗻 𝗿𝗲𝗮𝗹 𝗲𝘀𝘁𝗮𝘁𝗲:

- 𝑪𝒂𝒔𝒉 𝒇𝒍𝒐𝒘 - After collecting the rent and pay operating expenses and loan payments, there ought to be some cash flow left over.

- 𝑷𝒓𝒊𝒏𝒄𝒊𝒑𝒂𝒍 𝒓𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏- Through tenants paying monthly rent, you are able to pay down any loans that might be on the property. Resulting in the tenants paying down the mortgage amount for the owner.

- 𝑰𝒏𝒄𝒐𝒎𝒆 𝒕𝒂𝒙 𝒔𝒂𝒗𝒊𝒏𝒈𝒔 - cash flow and principal reduction are both taxable. The good news is that both can be sheltered from income tax by depreciation.

- 𝑨𝒑𝒑𝒓𝒆𝒄𝒊𝒂𝒕𝒊𝒐𝒏 - Real estate historically increases in value year over year. Investing in real estate properties helps you to build generational wealth.