First time home buyers’ options to get into real estate

I have been discussing with my kids who are in their 20’s the best way to get into homeownership in this buyer’s market. Of course, their mother and I have been encouraging them to establish living on a budget, ideally to live on 70% of net pay, which is about 50% of gross pay. Where does this come from? Well, roughly, federal and state taxes and social security take a chunk of 30% of gross pay. Then set aside 10% of net pay for liquid savings, 10% for investment, 10% for charity. So if Net=.7 x Gross, and Living= .7 x Net, then Living = 49% x Gross.  Living also includes paying student loans and credit card balances. So the message is to continue living like a student and not to radically escalate their expenses until they have a nest egg to leverage themselves into home ownership and other wealth building ventures like an entrepreneurial  side business.

Now,  this is easier said than done. And we have already passed the mark of our kids commenting with amazement and bewilderment on the amount of money withheld from their paychecks. So they are getting to be goal oriented about advancing in their careers and building net worth. It would seem to be a wise move to get into home ownership on the right terms and at the right price in this buyer’s market.

I am going to talk about some options for my kids as first time home buyers. Tomorrow I will highlight some first time home buyer programs offered by various cities. Next week I will discuss creative financing options working with sellers and also lease option possibilities in which the buyer and seller arrive at a win-win solution.