A (sort-of-serious) theory: The ease with which you can get around your city without a car is inversely proportional to how easy it will be to get your hands on real estate. When you live in a massive metropolis with a few million other people, trains can be easy to come by, but affordable starter homes are not.
But if you know that homeownership is something you want for yourself—and you’re not willing to move out of the city to do it—all hope isn’t lost. There are a few things you should know about buying in a big city…
Don’t Borrow More Than You Can Afford
This advice rings true for any buyer anywhere, but shoppers in a high-priced market should be extra wary of overextending their budget. Jon Sterling of ClimbSF, a San Francisco real estate company, warns young homeowners against depleting their savings to buy a home and on borrowing the full amount your lender has approved. Sterling reminds buyers, “Just because you can spend that much, doesn’t mean it’s wise to do so.” It’s important to know your budget and how much you can spend rather than relying on your lender to determine that for you.
Look for Up-and-Coming Neighborhoods
If you’re already living in a big city, chances are you know the financial implications of living in hot, fancy neighborhoods—it’s hard to afford both the rent on a hip block and have enough left over to actually enjoy the restaurants and nightlife there. You should take that life-budget-balance knowledge and apply it to your home search: Take the opportunity to consider other neighborhoods around you that are more affordable. Drew Millard of 33 Reality in Chicago says, “You don’t have to live in the hottest, most expensive area of your city. Find an area that is safe but is still a quick Uber ride to nightlife.”
Take Advantage of the Rental Market
Just because you’re done renting doesn’t mean everybody else is. Consider becoming a landlord and buying a place like a duplex or a home with an apartment or suite you can rent out. The landlord life is not easy and multi-family buildings don’t come cheap, but you have the benefit of knowing that, in your big city, there will always be a steady stream of renters looking for a place to stay. “I saved for a few years and bought a three-unit property, in which I lived in one unit and rented the other two units,” Millard of 33 Realty said. “The two rental units offset my living expenses so I could keep saving and buying more investment properties. Buying rental properties can produce a large amount of passive income and is a key to financial freedom.”
You Should Consider Fixer-Uppers
Don’t be afraid of a home that needs some work—if you’re willing to put in the elbow grease, you can score a great deal on a house with some history. You need to weigh the long-term benefits of fixing up an older home, of course, and be sure to have the proper inspections done and get estimates for repairs in advance in order to gauge if the property fits your budget, but you might find that a fixer-upper is just the dream home you’ve been searching for.