Beware of the rental trap.
The Rental Trap
By now, you should be wondering – what is the rental trap? In you’re caught in the rental trap, it’s because the cost of rent is too high. As a result, you don’t have enough money left to save up the down payment necessary to purchase a home. Yes I know, it’s difficult to save money when you need to pay other bills After all, you also have to pay utilities, health insurance, and more. And. like me, you probably want to eat also.
However, if you’re still living in a rental, do whatever in you can in order to purchase a home. And the sooner you do it, the better. Because rental rates are rising, due to a lack of available rental units. And the reason rental rates are rising is because there aren’t enough starter level homes available.
Why is there a shortage?
The root cause is that more and more new households are being created. It’s not a new story, children grow up and move out on their own. This creates demand for more starter level housing. However, building starter level homes is not as profitable for the builders as building higher priced homes. And that’s what is being built these days. And the builders need to build higher priced homes because the land to build on is expensive. It seems the lower priced vacant land is where people don’t want to live. And if the newly created households can’t find a starter level home, they have no choice but to rent.
Also adding to the problem is a very limited market in rental community new construction.
Owning your own home is a great way to protect yourself from rising rents. It allows you to lock in your housing costs for however long you have your mortgage. Additionally, you can build equity for yourself. You really have a choice. You can build this equity for yourself, or pay the landlord rent and build the landlord’s equity. Your choice, choose wisely.
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