Real Life Planning Podcast Ep 43: Should You Buy a Home Now or Wait?

In Episode 43, Vekevia Tillman-Jones tackles how to decide if it’s the right time to buy a home, emphasizing the importance of financial readiness over trying to time the market. She shares practical tips for budgeting, exploring creative strategies like house hacking, and preparing for a sound long-term investment.

" It's a lot less about trying to time the market and it's a lot more about trying to make sure you get a good sound investment." - Vekevia Tillman-Jones

This week on Real Life Planning Podcast:

Takeaway Quotes:

"Ask yourself, can you afford the property now? That is so important. ” - Vekevia Tillman-Jones

" …you always want to just be checking for properties and keep your options open.” - Vekevia Tillman-Jones

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About the Real Life Planning Podcast

Hosts Cynthia Meyer and Vekevia Tillman-Jones explore practical steps for real estate investors to build financial freedom and make working for someone else optional.

TRANSCRIPT FOR EPISODE 43

[00:00:00] Should you buy a home now or should you wait for prices maybe to drop or wait to see what's going to happen with interest rates? When is the right time to actually buy?

[00:00:09] Unless you have a crystal ball, it's very difficult to really know exactly when the best time to buy a real estate property. We're trying to figure out what's going to happen with rates. Are they going to go up? Should I wait for them to come down a bit more? Prices are going up.

[00:00:25] Should I wait for prices to go down? Whenever we get into asking those types of questions, what we're really trying to do is time the market and that's just becomes very difficult. I remember back in 2008, I bought my first property and we still have it now; it's our rental property. That was great. The prices have fallen and it was very helpful for us in that season to get and purchase something at a lower price point. And then guess what happened the next year? Prices fell even more. And for quite some time, I was looking at the value of that property and wondering what is really going on here.

[00:00:57] It was below what I owed. But, over time, the value came back up and it's fine. It's doing fine. Now, we still have that property as a rental; but I had to wait it out.

[00:01:09] So, it really comes down to figuring out a couple of things.

[00:01:14] What I always encourage clients to do is instead of focusing on, the right timing, is this the right time to get in the market? Should we wait for this or wait for that? Prices and rates fluctuate. We all know that. Overall, what we really want to make sure of is that it is a good investment. That it's a sound investment. That we've run your numbers. We know exactly what you're trying to do and this investment makes sense for each specific person at that specific time. That would trump whether or not anything else specific is going on in the market.

[00:01:46] Ask yourself, can you afford the property now? That is so important. Are you actually ready to buy? Do you have the money saved for the down payments? If you're going to go down to go through some type of program, are you already planning for that to know what type of down payment assistance program or first time homebuyers program that you might use? Or maybe you're getting money from family member. All of those things need to be thought about. Maybe you've been saving and you have the money ready for your down payment, which is great. So you need to consider are you ready to buy financially? So, if the mortgage taxes, insurance, and the interest- if all of those things each month, are already something that you can afford, then you're on the right track.

[00:02:28] When you look at your budget, and even sitting down and thinking through some of the things that you may not even consider- you might have to be prepared for maintenance because you'll have to keep up that property. Any other expenses travel. Those kind of things associated- the new electric bill.

[00:02:43] If you're thinking about perhaps you're moving in a larger home, those things are gonna be very important. So you really wanna sit down and come up with a detailed or somewhat detailed budget to help you figure out whether or not you can actually afford this home before you get in there and, maybe you, things are a lot tighter than you would prefer.

[00:02:59] If you can afford the home, even at the given price point, even at the given interest rate, that might be a sign that there's an opportunity to potentially move forward or at least consider doing some more research.

[00:03:10] So now when we say can you afford the home? What does that even really mean? So a rule of thumb is that you don't want your monthly payment to be any more than 30 percent of your gross income; before taxes, before anything comes out- 30 percent of that. Now, I have heard and seen news out there that says that percentage could be somewhat antiquated or out of date, but the thing is, it's still a good pivotal point.

[00:03:36] I like good pivot points that we can use to still compare and contrast decision making from pivot points that we've used in the past, right? So the market may be changing. The prices may be higher, but it still has the same type of impact on us when it takes up more of our income. So I think that's still crucial to include and to consider.

[00:03:57] Now, I realize I've had clients who live in California or New York, for example, and sometimes trying to get it that 30 percent or even staying below it, which is a little bit- it would be even a better situation, it's just very difficult. Then in situations like that, we look and we pivot from that 30 percent and then we say, Okay ,are we keeping our other debt levels low so that we can be able to afford a home in an area that might be significantly higher than other areas?

[00:04:25] Something else that comes into play is how long you plan to stay in the home. Now, typically, we've heard that if you are not planning to stay in a home longer than three to five years, and perhaps purchasing a home is not the best option for you. And while I think that does hold quite a bit of weight, I do think that it may not be as black and white as many might consider it. And The reason that I say that is perhaps it is a good opportunity to still purchase that property and you will instead of be paying rent to someone else, you'll be paying into your own investment and building equity; be it slow if, depending on what season we're in in the real estate market, but you'll still be putting money back into your own type of property.

[00:05:09] And then If your goal is to later rent that home out or exchange it for another type of property, all things that we help clients with in Real Life Planning. If your goal is to do something to that nature or take one of those options, then perhaps it's not as big of a deal. You might move, but you have already looked at the numbers and you know that it's a good rental property.

[00:05:29] Or maybe you've looked at a multi unit and you know that you'll be able to rent that property out and be able to pay the monthly amount due as well as have some cushion. Now, you need to run through the numbers right to make sure that you could handle it as a rental because other expenses come along with that.

[00:05:45] But that's one of the reasons that someone might purchase, even though they don't plan to stay in the home for a longer period of time.

[00:05:52] Another thing that we could consider is if you are perhaps on the fence, and you're like, you feel that you can afford the home, but you wish that you could have help paying for the home. If you could consider things like, what if you have a single family home, you might rent out one or more rooms, right? It's a form of house hacking. Or Perhaps, you'll get a multi unit property, maybe a duplex triplex. Now, obviously, those will cost more to get into those, but perhaps that's something that fits your budget and what you're looking for and you could rent out some of the other units and potentially have no direct amount of income or rent that you'll have to pay directly into it or very minimal.

[00:06:34] So those are other options as well, where you could have an opportunity to purchase something and just know that for a season, if you're in a single family home, you might choose to have a roommate or maybe, I've heard stories of people who've had roommates long term, and they really enjoyed that; being able to meet someone new and just share life in that way.

[00:06:49] So everyone's situation is very different, but there are always options that you can consider that might actually make it work for you now.

[00:06:57] One thing that's very helpful is to always be looking. Keep looking for a property, so that you can know what's out there. What are the price points and run the numbers; know exactly how much the monthly payment might be. And I think that helps you make a very well- just a very informed decision when you're ready. When you see a deal come across and you've already been looking, you will know that this is a good deal and that'll give you some ease to go ahead and move forward. You're already planning.

[00:07:27] I know a lot of times when someone's looking for something that's maybe a little bit less expensive, don't forget other options like perhaps purchasing a property that needs a little bit of work, especially maybe your handyman, or, some people, or maybe it's just something you know you could hire and it wouldn't have to be very expensive. That may be an option for you. Another option, don't forget a short sales and foreclosures bank on properties. Banks are not in the business necessarily to want to hold on to all of those properties. There may be an opportunity to get something that's a little bit less expensive.

[00:07:57] Now, sometimes these type of purchases could take longer, but there are instances where that is not the case. We were able to purchase a short sale and it went very quickly. So I don't want you to be discouraged simply because something is a short sale or foreclosure property and think that it's going to take a very long time to be able to close in that type of property.

[00:08:19] It could, but it could not. Like I said, you always want to just be checking for properties and keep your options open.

[00:08:25] At the end of the day, the most important thing to remember is that it makes sense when you are financially ready to move forward with purchasing a property. Now, that process and being ready is going to look different for different people, but the point is that you want to think through the numbers. You want to make sure it's something you can afford. That you have a plan A and a plan B. That you've thought through what you want to have with this property, even after you lived in it for 3, 5, 10, 15 years, whatever your plan might be. So it's a lot less about trying to time the market and it's a lot more about trying to make sure you get a good sound investment that regardless of what's happening with the market that you've thought through scenarios and you're prepared to make sure that you are in a place that continues to allow you to be as stable as possible. Okay. And I think if you take those steps, you can still feel pretty good about your decision to move forward with the investment as well as be prepared and know that it's not going to, run you financially or anything like that.

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