If you’ve ever been in a Monopoly game after most of the properties have been purchased and developed, it can be a relief to land on Free Parking, knowing the dice must rotate to the next player giving you a respite from paying rent. Like the game, in real life, it would be nice to avoid paying rent and even better to have people paying you rent for property you own.
Winning in the game of Monopoly is all about investing. If you travel around the board, trying to buy the ultimate property and pass Go to get another $200, you’re missing the opportunity to purchase good properties along the way that could lead to upgrading into your dream home.
Starting early to buy your first home gives a buyer a chance to acquire a property with a minimum down payment, and inevitably, have a lower payment than paying rent for a similar home. As the home appreciates and the loan amortizes, the equity grows. Within a few years of average appreciation, the down payment can double or triple based on the leverage of using other people’s money.
They could use the equity to stair-step their way into a larger home and finally, their dream home. Or, if that homeowner’s goal is to acquire rental properties, they could convert that home to a rental and buy another home on a low-down payment, owner-occupied mortgage to allow that property’s equity to grow in the same way.
Multi-unit properties could be another option. Finance it with the same type of owner-occupied, low down payment mortgage to achieve leverage that isn’t available to non-owner-occupied investors; live in one unit and rent the others. FHA, VA, and conventional mortgages allow for owner occupants to purchase up to a four-unit building with minimum down payments.
It is very impressive to see the portfolios of properties that some young people have built by focusing on their goals, living within their means, and not getting distracted along the way. You can learn a lot from them but be careful about getting into a game of Monopoly with them; they know how to play the game.
Let’s connect and talk about some of the specifics. If you love Santa Fe and real estate, let’s have a consult about your real estate dreams and needs. I can help you turn them into reality and solutions.
Emily Medvec Broker|Realtor eXp Realty LLC in Santa Fe NM 505-660-4541
