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Avocado toast advice explained: home buying the millennial way

Avocado toast advice explained–home buying the millennial way

We get it, home prices are ludicrous and will continue to be for millennials. It’s not our lifestyle choices alone that are making us feel uneasy about the evident delay in our lives of finding a home that we can call our own.

For some it’s a little stress in the background of their lives, for others it’s a major issue, if that’s familiar, you’re not alone. Surprisingly for some it’s not even a thought due to the economics of home ownership in today’s major cities.

Remember a few months back – the Avocado Toast advice? Tim Gurner (Real estate millionaire) claimed the young generation is spending too  much on expensive avocado toast and that’s part of the reason to blame for affordability. Though there might be some insight here (or completely not) it’s relatable in a funny way, but the real reason behind delayed buying is highlighted in his 60 Minutes interview–it’s the steep cost of property in today’s world.

He recommends buying with a friend if you can’t afford a home yourself in today’s property market.


When you’re too busy thinking about avocado toast

To those where renting vs. ownership is not even on their radar, I’d personally like to ask how much money will you lose on rent before you buy? You think you’re going to own a home one day, but does your plan actually resonate with the current reality of acquiring your first home?

Many of us have a vague concept of how we will buy our first home and bridge the financial gap between renting an apartment and being able to afford our first home.

Some of us learn the hard way when going to purchase a home that this plan doesn’t work in reality because of unrealized down payment requirements. To make it harder if you choose to go with a low down payment (below 20%) you are left to face additional fees that you will pay every month that you wouldn’t have to if you put down 20%.

Misunderstood costs can confuse even the smartest of us because the options are not all thoroughly understood by buyers, often because there is no one there to provide the A to Z explanation. It’s not often in your mortgage brokers or banks interest nor is it for example a real estate agents domain to stay on top of these things or to recommend them due to conflicts/commissions.

Like many, if you do opt to purchase a home with a 20% down payment does it realistically look like you’ll save enough for a down payment within the next 2-3 years? And if not what to do in the interim? Because rental costs during that period can quickly add up. Past performance is a strong predictor of future, realistically looking at your past monthly savings for a period, are you on route to afford a home in the next couple of years?

If not, don’t fret too much because you’re truly not alone in today’s avocado filled world.

In a study conducted on renting, researchers surveyed over 24,000 renters across the US and found that they cannot yet afford to buy a home due to many only having a few thousand in savings, i.e over 85% of those surveyed had less than $10,000 saved up.

It is not like millennials plan to rent forever and skip home buying altogether, according to Fannie Mae’s National Housing Survey, 93% of people aged 25 to 34 who are currently renting say they are likely to buy a home someday.

However this desire of home ownership is definitely not met without concern. In a poll conducted in California’s Bay Area, the poll revealed that over 80% of millennials say they are concerned about finding an affordable place to live.


So how does Home Savvy fit into all of this?

Although there aren’t any ways to get around expensive property costs, logically the smartest way financially to get around these barriers are:

– Not having to spend so many years waiting to earn the down payment, which in certain circumstances can be 12+ years

– Shortening the amount of years renting because rent is money thrown out the door while you are trying to save up

Home Savvy is a platform marketplace that enables you to do both, drastically shorten the number of years or dollars it takes to come up with a down payment and drastically reduce the years you spend renting before you can come up with enough to own your own home.

By co-buying with a friend using Home Savvy, you instantly slash the cost of a home by half, saving you hundreds of thousands in the cost of your home and also the rent you would otherwise pay waiting the number of years it would take to buy a home. You also reduce the monthly rent costs as mortgages are frequently a lot less than rent, further you are splitting that cost in half making it far cheaper than rent.

You save an incredible amount of money in three ways, a) the home price b) the significant number of years you shave off renting and c) the monthly amount coming out of your wallet for living costs

Co-buying with Home Savvy also enables you to sell your share anytime independently of your co-buyer. Further if there are any financial issues that arise, i.e your co-buyer misses a payment or defaults, Home Savvy steps in to mitigate and remedy the issue, acting like a bank ensuring the cost is covered so you are not negatively affected. We also carry out a special process that is pre-agreed at co-purchase to protect you in the rare occurrence your co-owner defaults and to ensure we’re able to enforce these remedying steps to protect you and your home financially.

Looking at this logically it’s a way for millennials to bridge or hack the system and to get to the American dream far faster.

You don’t have to wait years to earn or save up, you spend less over a smaller number of years, and you can take advantage of property appreciation and earn a profit on top of saving tens if not easily hundreds of thousands in rent.

You also have as Home Savvy as the central third party to mitigate any issues and to help sell your share when you’re ready to move on, at no cost to you.


Benefits of co-buying with Home Savvy

The conventional way for someone to own in the San Francisco Bay Area is to save up while renting for over 10 years, just to afford the down payment. Painting a simple example, at $1750 a month for one room in a shared three bedroom apartment that is $210,000 ($1750 x 12 months x 10 years) in rent, which is a very significant amount of hard earned money to burn on rent while trying to save up for a down payment.

Alternatively, co-buying with Home Savvy you can circumvent that 10 year period and begin putting money into the equity of your home far far sooner, which evidently you will actually get back and see when you sell. Shortening the cycle of spending while saving up and selling at anytime independent of your co-owner.

Unlike renting where the money you spend goes to waste, so to speak. You will also have the advantage of your property appreciating over time so that you can earn a profit. In a 10 year high level picture you can spend $210,000 on rent or invest it into your equity while getting around the high barrier requirements of traditional home buying.

You could be Mike…

Let’s talk about Mike, a relatively recent grad who’s been out of school and working in his industry for 3 years knows homeownership is an inevitable for him. He knows naturally he’ll have to rent for what he believes to be at least 8 years to save up and purchase a home in the future. Naturally he would rent for many years up until he can afford his own home, but instead he decides that co-buying is right for him in place during the time his peers would naturally rent. He believes that it’s the perfect investment and living situation before he finds a partner, has children and settles in the suburbs.

Mike can afford a better location near work with a short commute because he’s co-buying with Fred and buying a home for half the cost.

7 Years go by, Mike has saved thousands in rent and also has benefitted heavily from the appreciation in home values near his work and decides to sell while Fred decides to stay.

Mike sells his share of his home as he looks to move to the suburbs and a friend of Fred’s decides to buy, transferring over his mortgage to the new buyer with the help of Home Savvy.

Home Savvy’s special structure enables Mike to sell his share of the co-owned home conveniently without any hiccups to Fred’s friend and Mike takes his otherwise lost savings and now profit and buys his next home.

Had Mike decided to continue to rent to save up for a conventional home down the line, he would have spent hundreds of thousands in money he wouldn’t see again and would have not gained a profit on the sale of the home.  


So how should you think about renting?

If you can avoid renting, do so as soon as possible for obvious financial reasons. As a millennial we have a belief that we will one day have the finances that our previous generation or parents have, just in a longer amount of time.

It’s critical though to keep in mind that these hopes and dreams have to really be acted upon, savings must occur and investments must be made to get us there. Or else it may just become an aspiration, or severely delayed by a number of years–which is wasted money when time is money!

If you can you should reduce your expenses to get there quicker

If you’re paying a high cost of rent living in a one bedroom or studio in the city, consider the question: does a 2 BR really reduce my level of privacy? Sharing an apartment is one of the easiest steps you can take in lowering your ongoing living costs. If you’re already doing so–pat yourself on the back, being financially savvy always feels good.

Considering a cheaper neighborhood might also really help to shave a few hundred dollars a month off your rent, I know the trade off is your commute time to work but sometimes adding an additional 10 minutes on a bus, or bike ride really can pay dividends–Google maps and some planning can easily help you figure this out.

Ultimately with renting, it’s important that you have an idea of how much you will end up spending on rent before you are fully able to own a home. Sticking with the mindset “it’ll happen in the future” without planning a timeline and understanding the financial implications is one of the scariest things you do to your personal finances. Having a clear idea now will save you from unknowingly spending a fortune (easily $100,000 – $200,000+ if you do the math) that could otherwise go to better causes.

Not having a clear answer or best guesstimate as to when you may own, is what really undermines our generation financially as the ‘rent tab’ just gets larger and larger without any transparency or foresight into how much you may end up wasting on rent. Which left unchecked (that’s most of us!) could put you at a major financial disadvantage, it’s the ‘silent killer’ of financial growth if you will–and that’s the inherent problem with renting.  

If you’d like to talk through your purchasing options in the city, visit to talk through your options with an expert!

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