Since the real estate market crash in 2008, many parents have been advising their adult children to rent instead of buy, out of fear of another market crash. Sometimes real estate is an investment and sometimes it is simply where you live, so you need to analyze the costs and benefits of renting vs owning. With the continuous rise in rental rates, many buyers want a fixed monthly expense and the creativity to make their home their own.

 In 2015, I had several single buyers in their 20’s purchase their first home. Most of these buyers were living with roommates before they purchased and they kept their roommates after they purchased. One buyer was renting a home with two roommates paying $1200 per month for a 3 bedroom 2 bath home. He purchased the home with no down payment, using a veteran’s financing program, and the seller paid his closing costs. The purchase price was $170,000 and his monthly payment is less than $1200 per month, including taxes and insurance. His roommates pay him $800 per month, and he is receiving tax benefits as well as appreciation in the property value.

 Another buyer was paying $800 per month for a 1 bedroom 1 bath apartment and she purchased a 2 bedroom 2 bath townhome for $85,000. Her down payment was $3,000 and the seller paid her closing costs. Her monthly payment including taxes, insurance, and association dues is less than $800 per month and she now has a roommate paying half of the mortgage.

 If you know you are going to be moving in less than 5 years, your job is unstable, or your family situation could be changing, renting may be a better option. Owning a home has maintenance costs that need to be included in your budget. There are closing costs when you sell, so you want to work with an experienced real estate agent to avoid a bad investment.

 To buy a home you need good credit, and a down payment of at least 3% of the purchase price, unless you are a vet. A professional real estate agent and a loan officer can analyze your situation to help you decide what works best for you.

Ask the Real Estate Agent is a weekly column by Cheryl Kempenich of Coldwell Banker Burnet, who lives and offices in the Chisago Lakes Area. Submit your questions to ckempenich@cbburnet.com. All information is deemed reliable but not guaranteed. For legal assistance consult an attorney.