You know, it's the dream of all young adults to have their own space. A place to hang your hat and call home. Sometimes it's the dream of older folks too. Shelter is a basic human need. Just as important as food, or clothing. Whether that be in an apartment or otherwise, a home is a necessity. However, there is a distinction between living in a rental home and apartment living. Some of those include prestige, cost, noise, common walls, and so much more. Let’s dive in!
I want to say first and foremost; if you can afford to buy a home, buy! The tax benefits, peace of mind, accruing value, having a permanent base, all of which is good. It is an investment in your future. Save your nickels, clean your credit up, shop wisely, and you'll be better off than many folks. However, owning isn't always the best option. Depending on your circumstances, you may find rental homes or apartments your best use of resources. At least in the short term. On the other hand...
You May Not Be Ready Yet
I remember as a teenager thinking that having an apartment would be the greatest thing ever. Heck, I did not even care if there was a pool. As I got older, I continued with apartment living, thinking that rental homes were simply out of the question. I was wrong. Soon my family and I were living in a single-family home, paying decent rent in a great city. However, over time, and rental rate hikes, we finally took the plunge and bought a house. And you know what? I'm looking to buy another to serve as a rental home. Don't tell my wife!
Rent to own?
I have a buddy who is perpetually broke. His wife and kids are hunting for a home in San Diego. He asks me now and then “if Rent to Own is a good deal?” He always seems to forget my answer. Maybe he doesn't like my answer? Back in the day, like in the late '80s, there were all sorts of people out there scamming the hopeful. Those folks looking to get into a house with not a lot of money. Rent to Own seemed like the way to go. If you find a legit person or company doing this sort of thing, you are going to spend a lot more for that house than if you bought outright. Bear in mind the scammers! They are very much alive and well, and taking money from hard working folks.
The best thing about apartment living, in my skewed view of things, is that everything outside the walls is taken care of for you. Landscaping, pools (a must have, by the way), parking, and common areas. You do nothing outside your walls. Furthermore, if your dishwasher stops working, you call someone who comes and fixes it, or they call maintenance to take care of it.
The downside though is nearly daunting. Thin walls are pretty common. Those neighbors who argue on the other side of the wall that happens to be where your head is on the bed? Yeah, there's that. The "elephant step" folk upstairs? Yep, there's that too. Carport parking is fun, too.
Rental homes, simply put, and aside from owning your own home, is the zenith. Loudmouth Larry does not share walls with you unless your rental is a condo. Even then condos usually have better sound deadening than apartments anyway.
Stomping Sally? Not a problem.
Garage for your car or hobby? Yep, that can be had.
There is a level of privacy, not to mention a feeling of security that you will not get with most apartments. You simply do not have the "people density" that an apartment complex has. Also, when you lease a house, you're not just leasing the area within the walls of the living space, but also the parking, the front yard, the rear yard. It is yours.
A quick note on this, too:
We very much encourage our residents to think of the home they are renting as that, a home, their home. Many of our residents have been in their homes for 20+ years. Which is out of the ordinary for an industry that sees turn over, on average, of about 24 months. At Management One, we have found throughout over 30 years of being in business, that the resident who thinks of the house they live in as home, rather than a rental, tend to take better overall care of the house. I can attest to this as I see it all the time in the field. What I mean by that is the folks who share Holidays over the years. Kids grow up in a stable home base. New children are born into the family and through it all, this is home. This is their base. These folks, those who view the premises as their home, they usually have a higher level of care about the property they live in than the person who views it as "just a rental."
Creating a stable environment such as this, our property owner can enjoy the peace of mind that their property is not only occupied but is occupied for the long haul, by good people.
The advantage of a rental homes includes all the bonuses you would enjoy as a homeowner, but without the financial liability of owning a home.
Owning a Home
Owning a home gives you all the advantages of rental homes and more. You get the tax benefits, the property goes up in value each year, provided the market is heading in the right direction, and you have a permanent home base.
Regarding the market though, those of you with a good memory will recall the 2008 to 2011 period, I'm sure. I can guarantee you the banks clearly remember this period. I know because I was checking and inspecting bank owned homes during this span. There were literally thousands of homes in Southern California locked up, empty. It got to the point where I could easily identify vacant homes while driving down any given street based on commonalities I spotted. These conditions existed despite efforts by reallots and banks to make homes "not look so vacant."
In our 35 years, our CEO at Management One has been in the real estate industry 2008 was the only time Real Estate went down. Most recessions stats show real estate values stay the same. No increase or decrease in value. Therefore, real estate does not have the volatility that stocks do.
Owning Multiple Homes
My wife often accuses me of "bringing out the backhoe" when I have a thought or idea. What she means by that is, for example, bringing out heavy equipment for a simple task, like a post hole. She's not wrong. I do tend to think big, sometimes at the expense of the small.
However, there are some things that one needs to think about on a larger scale sometimes. The moon landings would never have happened if NASA thought small.
Owning a home is great. Owning a home and a rental property is great. But why stop there?
We have several property owners with multiple properties. When looking at these properties we manage and then looking at the numbers; I can tell you that economy of scale is no joke.
My house ought to gain about $30,000 in value in the next year. But if I had ten such houses? That's a third of one million dollars! In FREE Money! Okay, almost free. There's still property taxes and maintenance costs, but I have not taken into account rental monies. At, say, $1500 rental rate, which is fairly low by the way, that's $18,000 in yearly rental income! Before taxes, and mortgage, of course.
My point is, real estate is a good, solid investment. If you get the chance to buy into the market as an investor, provided market conditions are healthy, I highly encourage it.
And when that time comes, we're here at Management One, ready to help. We find, lease, repair and manage homes in the Inland Empire and Orange County. We are a full-service property management company that will help you with all your property management needs. If you are looking to rent a property, we can help with that too!