5 Ways to Build Wealth Without Buying a Home

Getting Rich As A Renter: 5 Ways To Build Wealth Without Buying A Home

For many, homeownership is an essential part of the American dream. That doesn’t mean it has to be your dream, too.

Maybe you don’t need a space or a backyard for a dog. Maybe you don’t think real estate is the best investment out there.

Or maybe you just can’t figure it out how to pay a mortgage.

Either way, people will tell you that renting is like burning your money – but in reality being a tenant can be to your financial advantage. Here are five ways to thrive.

1. Keep a rental agreement in case of a pandemic

Real estate agent and client in face mask looking at new project

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At the start of the pandemic, tenants had an advantage as monthly payments for apartments and other rented properties in expensive cities like New York and Seattle plummeted.

But prices in most areas have recovered and rents have risen this year faster than before the pandemic, according to real estate data site Apartment List.

This growth has slowed in recent months, with rents starting to drop in many cities. So you may want to consider staying put for a while if you are happy with your accommodation and your rent is reasonable, perhaps because it was set before the pandemic or because you made a deal. during the pandemic.

If you are planning to relocate, check to see if the rents soften the area you are considering. For example, Notes on the list of apartments a decline over several consecutive months in Minneapolis; Boston; Seattle; and Arlington, Virginia.

2. Find better investments than home ownership

Many people think that owning a home is a good investment, but that is not necessarily true.

A 2010 Federal Reserve report titled “American Dream or American Obsession?” showed that the real rate of return on US real estate between 1975 and 2009 was less than 0%.

Meanwhile, the average annual return on the stock market between 1975 and 2009 was 3.375%, after taxes and inflation, according to the Fed study.

Today it has never been easier to put money on the market – all you need is a smartphone app.

3. Use the money saved to pay off your debts

Female hand putting money in piggy bank and counting on calculator close-up

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Owning a home involves a number of sunk costs such as mortgage insurance, home insurance, interest, and property taxes. And when something breaks, you have to fix it yourself instead of just calling the owner.

When you save all the money as a tenant, you can take it and spend it on consolidating your debt.

If you’ve used your credit cards more than you would have preferred throughout the pandemic, you’re probably already earning expensive interest. By grouping all your balances into one low interest debt consolidation loan, you can make it easier to manage your debt and even pay it off sooner.

4. Invest in yourself

It might be a good idea to improve your marketable skills by going back to school.

If you don’t have all the cash up front for a college program, taking out a competitive student loan rate can help make your dream come true without costing you all your savings.

But that assumes that you aren’t already drowning yourself in student loan debt from your previous education. If this is your situation, you may want to explore refinance your student loans take advantage of today’s rates which remain close to their all-time low.

5. Shop around for offers

A young couple uses a credit card to shop online on a laptop

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The premise that it’s better to own than to rent also assumes that homeownership is your # 1 priority, regardless of any other goals you might have for spending your money or what you would like to do with your life. .

As a tenant who doesn’t have to worry about the costs of owning a home, you might have more money for the things you really care about. It could increase your standard of living overall.

If, for example, you like to shop online, you can download a free browser extension who will instantly search for better deals and coupons.

“But owning a house is my dream”

Couple with keys standing outside new house

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If you are passionate about owning a home, you are not necessarily destined to become poor.

Just be sure to follow these tips to get yourself in the best financial position:

  • Get the lowest possible rate on your loan. The best way to save on your mortgage is to comparison store for the lowest mortgage rate. Numerous studies have shown that borrowers who review five or more rate offers save thousands of dollars over time, compared to those who get the first loan they see.

  • Find the best price on home insurance. Home insurance is essential, but not too expensive. Through shop for your blanket, you can pay hundreds of dollars less in home insurance every year.

  • Save a respectable down payment. Having a larger down payment can help you get a lower mortgage. You can try to increase your income with a popular app that allows you to invest your “spare currency” on the record stock market.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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