Recent industry surveys indicate overwhelmingly that Millennials do not view a home as a status symbol . When they are home , they much prefer open spaces . Because of their active lifestyles , they prefer as little maintenance as possible . They know their tastes and lifestyle will change ; they want a home that will adapt .
Millennials tend toward smaller lots . Outdoor space is still important ; however , on a smaller scale . A small terrace or nicely landscaped patio is sufficient for most . Despite less of a demand for large outdoor spaces , Millennials crave proximity to nature . They are attracted to big windows and skylights . Open living / dining areas are important because they provide space for entertaining and social gathering . “ Green ” home technology is important to this generation . Energyefficient HVAC and appliances are a must . Solar panels , programmable thermostats , renewable materials and salvaged décor fundamentals such as bamboo , wood , concrete and glass rank high . Of course , Millennials need room for their many gadgets , and require the technology to power them .
How can Millenials afford to invest in real estate , and to be so particular about what they are looking for ? Millenials rely on financing more than any other tool to purchase real estate . Inability to save ( whether due to job income , costs of living or less time accumulating savings ) makes relying on mortgage loans the only way some Millenials can afford to buy .
Bill Regan , Vice President of C & F Mortgage in Annapolis , Maryland notes that the banking and mortgage industry is constantly evolving in order to service new clients , including Millenials . “ Each program has it strengths . Options that are appropriate for one customer may not be ideal for another . It is important to meet with a mortgage professional to sort out what will work best for you ”, he said . For example , there are new financing and loan programs available through Fannie May HomeReady that allow for as little as 3 % interest . The Federal Housing Administration ( FHA ) has a 3.5 % down payment program that offers flexibilities that Fannie Mae and Freddie Mac do not . The Department of Veterans Affairs offers veterans several tools to buy a home with governmentbacked guarantees .
THINK SMART Use financial common sense . Invest prudently in an emergency savings fund . Use your company ’ s 401k or Thrift Savings Plan ( TSP ) match program . Set aside a percentage of your income for Employee Stock Purchases ( TSP ). You should be able to cover these budgetary debits before you add the cost of a mortgage . BEWARE OF OUTLYING COSTS Owning a home can be expensive . Taxes can go up and unforeseen breakdowns of HVAC , sewage or electrical systems can be surprisingly expensive . Include a solid , realistic plan to budget for covering these costs outside of your mortgage payment . MANAGE YOUR RISKS Millenials should consider the great financial burden that family or investment partners could incur if the worst should happen . Term and Universal life insurance eliminates any scenario where someone else could inherit your debt . THE REAL ESTATE PRE-NUP : GET IT IN WRITING If you are buying a home with your unmarried partner or an other investor , be sure that you have a written agreement covering all aspects of the investment . Include specific instructions for flipping , assigning costs , setting a budget and dividing profits . RESPECT YOUR ELDERS Parents , grandparents and older mentors purchased homes when interest rates hit 15 % or more and when the internet did not exist . They ’ ve had invaluable experience about the many obstacles you might face as a real estate investor . Listen to people who have already been through a real estate transaction . SLOW DOWN Buying a home or investing in a property is a serious matter . It takes time , patience , research , consultations with expert real estate professionals and plenty of due diligence . The process of buying can evolve as markets change or even as municipal laws impact real estate . DON ’ T WORRY SO MUCH ABOUT THE DATA It has been said many times that the right home will find you . This happens regardless of the data . If you find that a property that speaks to you personally , and you can afford it responsibly ; if you plan to commit to the project for a period of time , and to set down roots for at least several years , then why not go for it ?
GREENBOOK | SUMMER 2016 49