Have You Thought About Buying Real Estate? Here Are Some Things You Should Know.
“Super Nintendo, Sega Genesis
When I was dead broke, man, I couldn’t picture this
50-inch screen, money-green leather sofa
Got two rides, a limousine with a chauffeur
Phone bill about two G’s flat
No need to worry, my accountant handles that” — The Notorious B.I.G (Juicy)

A Sweet Piece of Real Estate
Beach access. A king-sized pool and spa. On-site tennis and golf. Not too shabby. That’s what Rihanna bought when she whipped out her checkbook to purchase a Barbados home valued at $22 million. Most people don’t even have $1,000 in their savings! Her down-payment using a conventional mortgage would be $4.4 million! I guess that’s not too expensive when you have a net worth of $230 million. Well played, Rihanna. It was probably a steal.
But what about the rest of 20 somethings? Home financing ain’t easy. Real estate developers are building more luxury homes than affordable starter homes for first-time homebuyers. Tight market conditions are forcing folks into the rental market with upped prices. Here are some charts that break it down.
The truth is, buying a home isn’t a walk in the part. Surveys show that millennials want to buy real estate. No doubt about it. The problem is that according to reports, 68 percent of millennials haven’t saved more than $1,000 for a down payment. 44 percent claim to have saved absolutely nothing.

You need a few things if you want to purchase a home
Down payment — this can range from 3.5 to 20 percent of the home’s value based on your credit score, current financial health, and mortgage interest rates.
Closing costs — It doesn’t stop with the down payment. You also have to pay for property taxes, an inspection, and any pre-paid interest. This can add up to 2 to 5 percent of the cost of your home
Moving expenses — unless your house comes furnished, you’ve got some more costs on the way. Think furniture purchases, Uhaul expenses, and any immediate upgrades you may want to be done to the space to make yourself feel more at home.
You’ll also have to worry about mortgage payments, maintaining an emergency fund, and repairs and maintenance. More about these costs here. Buying a home isn’t for the cheap or weak-hearted.
The fact of the matter is that lender standards are higher. The median credit score backed by Fannie Mae is 750. Yikes. Homes are becoming a bit pricier. Our generation has more student debt than ever. All truths. But these truths shouldn’t deter you. The average age for first-time home buying is 31. You may have a bit of time. Here’s a good guide on home buying for millennials from NerdWallet.
There are a few things to consider
- The Federal Housing Administration (FHA) offers the option for paying lower down payments with lower credit scores
- If you purchase a multi-family home — you can always rent out the other floors to get help paying down the mortgage
- Airbnb is also an option to help with the costs
Remember, as the wise man Robert Kiyosaki said, most homes are actually liabilities. They produce no income, yet produce a load of expenses. Consider the renting out extra space to produce more income. And as you move along your financial journey, consider snagging some real estate that will produce passive income. Nobody said it was easy, but it can be done. Use Rihanna as inspiration.
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