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Avocado toast advice explained: home buying the millennial way

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!

Understanding the hidden cost of rent

Understanding the hidden cost of rent

Understanding the hidden cost of renting

There is a deeply hidden cost in renting. This cost will affect you for years to come and understanding this misunderstood concept can tremendously help your life’s financial story.

Whether you are a millennial and renting, or whoever and renting, you could save hundreds of thousands unknowingly by understanding your view of rent vs. what it really is and what renting now is doing to your future.

Up until this day a period of your time after school spent renting has almost always been an expectation in our society but a prolonged period such as those experienced when living in or near big cities, comes with it an unexpected setback.

Some who are living in areas that have more affordable homes in the form of cheaper property costs are able to move to ownership sooner than others, thus can get away with only renting for a short period of their lives.

Whereas others, who live in more urban areas around bigger cities put up with higher property costs, thus far longer rent periods.    

Albeit both have their advantages and disadvantages, many living in the city enjoy higher wages, better job opportunities, city culture and being close to the action. Whereas rural suburban areas do have more affordable housing, but job opportunities and job availability are nowhere near comparable and long commutes into the city are clear disadvantages.

For the rest of us this expectation of rent takes a giant toll on our finances and could very much offset the increased salary rates found in major cities.    

More importantly however the act of renting in or near the city could leave a financial impact on us that could easily last for 10+ years.  

Calculating the cost of renting

Take for instance:

Rural Setting

You rent for 4 years, before being able to afford your own home and at that point on enter a period of investing. In those 4 years, you spend a total of $72,000  ($1500/monthly x 12 months x 4 years)

City Setting

You rent for 10 years, before being able to afford your own home and at that point on enter a period of investing. In those 4 years, you spend a total of $216,000  ($1800/monthly x 12 months x 10 years)

A difference of $144,000 (216,000 – 72,000). These numbers can be arbitrary but you will end up with a large difference in the end regardless.

That $144,000 is indeed life changing money, it may not seem like it but with $144,000 you can invest that, make a savvy career move, buy a second property and let it appreciate over the years to yield a 6 figure profit, plus get your $144,000 back. It’s not uncommon to obtain a $150,000-$200,000 return on a secondary income property holding long. Follow? If you don’t go back a sec–you’re here after all!

The cost of lost investments

Whatever amount it is, it could get you ahead or really, hold you behind. Think of the cost of rent and where you are financially now, what you may not understand is investments are actually a multiplier of your financial wealth. A multiplier of the cash you have throughout your life really. Investing that $144,000 say in a second home or an investment is really money that is working for you on the side.

These are life impacting things to consider, opportunity costs really, renting now will directly or indirectly affect you negatively later. We all get that renting is bad but the impact isn’t realized until you logically look at the greater longer term picture of your life.

In other words the immediate perspective is obvious but the long term is a bit of surprise to many when they begin to see the financial choices that are in your control today, really do heavily influence your quality of life and lifestyle later.

To help you understand the hidden costs of renting now, let’s take you through a quick and simple exercise:

Understand your likely future

To get the full benefit of this exercise let’s look at what you have spent on rent in the past. Note down exactly how many years (and months) you’ve been renting (and if you haven’t been renting for a while this is still relevant).

Working along using a real friend Matt’s numbers, Take the number of years you have been renting and multiply it by the average rent you have been paying, so in his case that’s 5.2 years at $1600  = $99,840 (5 Years * $1650/mo * 12) You follow?

So, so far living near San Francisco but not in the city, Matt has already spent about $100,000 in rent, money that he will never see again.

Now look at your average price per home in your city,

New York (Manhattan) $1.34m

San Francisco $1.2m

San Jose $881,000

Los Angeles (General) $631,000

Vancovuer $1.17m

Conventional mortgages require 20% down as a down payment when purchasing a home, which is the norm. In Matt’s case living near San Francisco a home’s down payment is $240,000.

Now, looking at your savings over the recent past how much have you actually saved in the last 3 years per year? Looking at the most recent years gives us a strong reality check as to how much you actually save per year.

Surprised it’s nowhere near what you make? That’s reality! But don’t fret it’s normal, the average American in 2016 only saved 5.2% of their earnings according to the Bureau of Economic Analysis.

Let’s arbitrarily say (because we can’t account for every type of earner or saving type) that you’re able to save $1500 a month (yes we’re mighty savers and somehow are able to pull that off) that equates to saving $18,000 clean per year, that’s well above average by the way.

Time. Time. Time!

Next, you have to ask yourself how much time will it take to earn your down payment? Calculate it. Go on, do it. Seriously. In our case $240,000 / $18,000 is roughly 13.3 years. The important thing here is note how many years it takes to earn that down payment in other words own your first home.

Why is the number of years important? Because the period in which you are trying to save up for that home, you are also simultaneously spending on rent, every month.

During that time you might want to factor in rent increase, upgrading to a better apartment or choosing to live alone instead of having multiple roommates.

In our case spending 13.3 years just to come up with our $240,000 down payment–we actually spend $263,000 on rent!  ($1650 our rent * 12 months * 13.3 years)

Does that make sense? While trying to save up you spend a ridiculous amount of money on rent, simply because of the number of years it takes to own. Welcome to a giant hidden expense in your life and unlike owning you never see that money again.

The surprise here is realizing the time it takes to own. The second important consideration or surprise is the amount you will spend in your coming future years on rent! This might surprise you and it may be a good question to ask your coworkers and friends. Are they aware?

To consider: Because we don’t necessarily save up to buy a home the very first year we make a salary, we in reality on average only begin saving seriously for a home when we start to think of buying a home in the future.  

Question or two for ya

1) Can you afford this?

2) Would you spend $___,___ (whatever number you calculated) in our San Francisco case
     $263,000 if you knew ahead of time?

So why do it?

How to work around this!

Obviously you can reduce your monthly rent cost, but that’s not the significant element. The significant element is the number of years you are renting for. Rent is money thrown out with the garbage as long as there is an opportunity cost to put it somewhere else i.e owning.

One way to drastically reduce the number of years spent renting, thus the amount of money you will eventually commit to spending on rent, is to maybe follow the advice of property mogul Tim Gurner (famously known for the widely covered advice for millennials to stop spending so much on Avocado Toast) in his 60 minutes interview–purchase a home with a friend.

Tackle the problem head on: What does co-buying a home do?

It obviously beats spending $200,000+ in rent over 10+ years in your future to eventually own a home.

But think for a second, if you co-buy a house your down payment requirement is split in half by at least 50%.      

So now you can half the dollar number required to own i.e half the down payment and immediately halve the rent cycle.  

If you use Home Savvy, Home Savvy has multiple down payment options i.e a 5% down payment option, in our case instead of needing $240,000 you’ll need just $60,000, which many can afford now or soon or with the help of mom and dad/family.

This immediately enables you to save $___,___ (whatever number you are expecting to pay in rent and __ years in renting, in Matt’s real life case that’s 13.3 years and $236,000 in thrown away rent. He could easily save $236,000 a quarter of a million dollars in his lifetime, by co-buying with a friend riding the property appreciation curve, and earning a profit when he goes to sell and buy his next home.

Hacking home buying

Hacking home buying

Hacking Home Ownership

Going about home ownership from renting using the conventional method is for the outdated (un fun).

Even with today’s crazy home property prices there is still a cheap and affordable way to own a home, especially in markets like the San Francisco Bay Area, Los Angeles, and New York (Yes Manhattan too)


Read more:

Face it, we all have to own a home some day. And unfortunately it becomes one of the biggest expenses and investments that drag on throughout our lifetime. Owning your first home is even more difficult given the major barriers that are put up by the market–particularly the down payment of your home and the subsequent monthly mortgage payments.

But you can’t avoid it unless you plan on throwing away money on rent for the rest of your life.


There’s a cheaper and financially savvier way!

Why be a sucker?

If you’re going to require a roof over your head and pay for it with your hard earned money, one way or the other, you might as well do it in a way that truly maximizes your sacrificed dollars. Renting isn’t the best thing to do for your current wallet and future wallet, I’ll get into a solution in a minute.

You get it, I get it, owning a home is the way to go but there are barriers! Down payments now a days are not cheap, depending on what city you are in they can easily be in the six figure range and take years to earn.

For example a 20% down payment on an $800,000 home in greater Los Angeles or a $1,000,000 home in the Bay Area outside of San Francisco is $160,000 and $200,000 respectively.


Coming up with a down payment is daunting – Hack the process!

If you co-buy a home, you can halve that down payment. What’s more is if you co-buy a home using Home Savvy’s flexible down payment requirements, say putting 5% down–you can own that home for only $40,000 and $50,000–a difference of $120,000 – $150,000. Yes you read that right. Read it again.

You can further hack the homeownership process by getting a third person to co-buy with and split that down payment to one third of the requirement!

Doing the math for a $800,000 home bought by three co-buyers and splitting 10% down via Home Savvy:


$800,000 x 10% = $80,000 down payment divided by three co-owners is just $26,6667 per homeowner!


Owning a home in San Francisco’s Bay Area for $33,333 or Los Angeles for $26,667 is the ultimate hack

Also remember you are splitting the monthly mortgage payments three ways. So your monthly out of pocket payment can be cheaper than rent. Perfect for millennials or people living in expensive areas or just those who want to save money on buying a home.

Remember with Home Savvy you can sell your share at any time, independently of each of your co-homeowners. Home Savvy will also step in if one of your co-owners missis a payment or should any other financial issues arise.

It’s clearly the ultimate way to hack home buying, one of the biggest requirements in life.

An accidental investor: why I bought a house with a friend

An accidental investor: why I bought a house with a friend

An accidental investor: why I bought a property with a friend

I bought a house with a friend when I was 22, but I can’t really brag about it because it wasn’t a decision based on investments, retirement, and all of the other financial things we’re meant to consider after graduating. In fact, it was more a decision based on not being able to do what I wanted when I wanted. It was an also a successful accidental investment.

Let’s me make my confession a little more clear: I didn’t co-buy because it was a smart financial decision. In fact I didn’t even co-buy because rental prices were high. I co-bought a house for three main reasons:

  1. I wanted a dog
  2. I hated giving my money to my annoying landlord every month
  3. I wanted an easy life and didn’t want to have to move every time the rent went up, a roommate wanted to leave, or the landlord decided to sell the property

Yes, I pretty much bought a house because I wanted a dog and I’d had terrible landlords.

I co-bought a house because I couldn’t afford the mortgage or the down payment on my own.

So in the mid 2000s—yes I am a member of the avocado toast loving millennial generation—I bought a house with one of my best friends who was also my roommate at the time. It’s still one of the best financial moves I’ve made in the last 10 years, but it definitely wasn’t the most thought out decision…

An accidental investor

I’d like to be able to say that the 22-year-old version of me was a smart investor, but honestly everything that happened was pure luck. It could all have gone horribly wrong. We had no agreements in place about how long we were keeping the property for, how we’d handle maintenance, what happened if we had a dispute, or what we’d do if one of us wanted to leave. We also had a joint mortgage. This meant that if either one of us got into financial difficulty the other person could see their credit score plummet too. Thankfully my taste in friends was better than my financial planning skills at the time.

10 years on and I’d never co-buy again…

…without a contractual agreement in place.

I know I’m making this sound as though buying my first home with a friend was a stupid idea. It wasn’t. I just realize how lucky I am that it turned out so well. In fact, despite some occasional disagreements, it was pretty damn awesome. So why wouldn’t I do it without a contract again now? I guess the fact that a home in San Francisco could cost $1.2 million makes the process feel a whole lot more significant than it did with my small mortgage back in the 2000s. Plus fresh-out-of-college me really didn’t know a whole lot about protecting my finances and future, whereas current me would really like to retire before I’m 80!

The smart way to co-buy

When I first heard about Home Savvy I was honestly kind of shocked that more people weren’t already talking about how to make co-buying in San Francisco an easy process and a smart financial decision. Especially as the house prices are so high that the chances of owning a property by yourself, even on a high income, are pretty small. What I love about Home Savvy and one of the key reasons that I joined the HS team is that we have a process that not only makes co-buying easy, but also protects the interests of every co-buyer. Home Savvy has already done the hard work of creating the agreements that help co-buyers make decisions, plan for the future, and protect their finances. Basically Home Savvy makes co-buying a smart financial choice by mitigating the risks to your credit and your friendships.

Does co-buying make financial sense for you?

The team at Home Savvy wants your co-buying experience to be successful. That’s why we want to be honest and say that co-buying in San Francisco isn’t going to be the best choice for everyone. However, if you’re planning on staying in the Bay Area for the next couple of years and are currently paying over $1000 in rent per month, it is definitely something you should consider. If you’d like to learn more about co-buying, Home-Savvy, or using our free co-buying concierge service visit today.

A space of my own

I’m going to leave you with my current motivation as a 30-something-year-old for why I’d co-buy a home in San Francisco today:

  1.     I have dogs that weigh over 5 lbs (no more CL hunting for pet-friendly)
  2.     I hate wasting my money on rent, no matter how nice the landlords are
  3.     I don’t want to have to move every time the lease is up

Oddly, my reasons aren’t that much different than they were in my 20s. Except one key bonus reason:

It’s a savvy financial decision and an investment in my future

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