Six Tips on How to Become a Millennial Homeowner
I owned my own home by the age of 20 when I was still a student at the University of Alberta. However, this is something that most 20-year-olds nowadays can’t even imagine. So, I started wondering, what’s the difference between our generations? While there are a variety of factors that have changed since I was 20, the majority of the steps I took to own my own home weren’t a generational advantage. They were evergreen tips and tricks that are still accessible to most people, and it’s my hope that by sharing a few of them I can, at the very least, help point millennials in the direction of home ownership if that their goal. So, to all my millennials out there, or just anyone struggling to own their own home, here is my short list of tips to help you get there.
1. Take the well-paying job over the glamourous job.When I was a university student, I ended up taking a job that paid really well but was less on the glamourous side, and it required you to live out of town for eight months away from family and friends. Was it tough to relocate to a new town and be isolated from the comforts of home? Absolutely. But I knew that if I worked hard and saved as much as possible I’d be able to have enough money to put a down payment on a house when I returned, and that’s exactly what I did. I also gained new friends and new and amazing life experiences along the way. If you have the opportunity to make more money in a less glamourous job, even in a remote area of the country, take it. Remember, there’s going to be a light at the end of that tunnel, and the light could be you opening the door to your own home.
2.Develop a clear budget and set aside monthly funds. This may seem like a pretty obvious tip, but it’s a crucial component towards financial stability. Calculate your monthly income and expenses, then decide how much you need to cover your necessities and how much money you have leftover. Set a clear goal and timeline for yourself to meet your target, and stick to it. Anything that isn’t required for necessities should be put directly into a savings account and left alone. Make sure to be diligent with yourself, spending an extra $20.00 here and there adds up quicker than you think.
3. Look for little ways you can cut back on costs. When I was working at that job I mentioned, the company I was working for gave me an allowance for food and accommodations that I could use towards my living expenses. Instead of staying in a hotel and ordering meals from the kitchen, I shipped food ahead of time and opted to stay in a little trailer beside my project site instead of the local hotel. It may not have been the most desirable route, but I was able to clean up the trailer and make it suitable for those months, and in turn I was able to save more money towards that down payment. You’d be amazed at how much you can save just by opting out of small conveniences. I also became an expert at thrift store clothing purchases — it is amazing what little gems you can find with some patience and determination.
4. Reach out to a family member to co-sign. If you’re a student like I was when I purchased my first home, the bank likely won’t give you a mortgage without a co-signer. I was fortunate enough to have my parents co-sign for me on my first home as I had proven to them through concrete action that I was financially responsible. I had also saved all the money for my down payment so they didn’t need to contribute a dime. My advice would be gather your down payment first and prove your financially responsible before approaching someone about being your co-signer, because it’s a lot easier to convince someone to be your co-signer once you have a proven track record.
5. Timing and Location are essential. If you don’t know where you’re going to be in a year or two from now, renting is likely your better option. However, if you’re planning on staying in town for at least two years or more, and you are not buying during a hot peak in the market (think 2007 in Edmonton, or 2017 in Toronto), it is worth investigating the financial investment to own your own home. If you have decided to purchase, make sure it’s in an area that’s easy to rent out or sublet if you need to. I’ve found that areas around post secondary or transit hubs tend to be the easiest locations to rent out and require less dependence on a car. Subletting out one of the rooms in your home to a roommate while you live there can also help you subsidize your mortgage. I had roommates in my first home up until I moved a few years later and sold the property — it meant I paid no more in monthly housing expenses than when I rented an apartment.
6. Change the way you look at property. Home ownership in this generation is going to come from taking a piece of property and doing more with it than we have in the past. This means using a piece of land that has been traditionally used for a single housing unit and adding two, three, or four more units. For example — laneway suites. This is essentially a mini house near the rear laneway on the same property as the main house, but with individual ownership. Personally, if I was a millennial I would be very interested in seeing more housing choices such as laneway/garage suites, tiny homes and townhouses, and I would be actively advocating for more unique housing options like this in my city. (See the Infill Development in Edmonton Association website for ways to get involved here in Edmonton: https://www.infilledmonton.com)
I hope you can find some use out of these tips, and as always you’re more than welcome to share your experiences with us at RedBrick. If you have a home-owning tip or story let us know, I look forward to hearing all about it.
That’s all for now, chat again soon.
All the best,
Originally published at redbrickinc.ca.