American dream or ball and chain? We’ve heard so many times that homes are the ultimate investment, but your job advancement and long-term salary potential could be hindered if you’re tied down.
Most of the time, the buy-vs.-rent debate revolves around which is the best financial decision. That’s for good reason: As you’ve undoubtedly heard more than once, buying a home is the biggest purchase you’ll probably ever make. Most people need to borrow hundreds of thousands of dollars to make it happen.
It’s not a decision to make lightly, and the numbers involved are something you need to take seriously — especially when the adage that buying is always better than renting is a myth, not fact.
In some cases, you shouldn’t buy a home because it’s not the financially sound choice. Taking on a large amount of debt for the long term after shelling out that much cash up front could put you in a precarious financial position.
But let’s just say the numbers do check out for you, and you want to buy a home. In that case, you still need to consider one other factor that might make buying a bad choice: your career.
The Finances Check Out, But That Still Doesn’t Mean You Should Buy
At worst, buying a home could sabotage your career opportunities. Even in a less-dramatic situation, your house could seriously limit how much you could advance in your career — and affect how much money you can make.
Owning a home reduces your flexibility to pursue jobs and opportunities that may make it easier for you to build serious wealth over your lifetime.
For many people, committing to living in a single location for years could seriously interfere with their ability to grow their career, expand their business, and earn more money.
It’s Difficult to Move to Follow Career Opportunities
It’s hard enough to move from one place to another when you rent. But moving as a renter is considerably easier than moving as an owner, because you can’t just up and leave any time you want when you own your home. As a renter, you always have the ability to break your lease if you need to.
But as a homeowner, you can’t just call up the bank or anyone else and ask them to take the house off your hands.
If you’re trying to move to chase down a career opportunity, you need the ability to be fast and flexible. Depending on what the real estate market looks like at the time you want to move, that may not be possible.
You Might Not Be Able to Afford to Move
If you bought within the last three years, you sunk a lot of cash into your home. In an average market, it’s unlikely that home prices will have risen to a point where you could break even, let alone make a profit. Unless you’re willing to lose money on the house you might have bought as an “investment,” you might be in a position where you can’t afford to move.
A Lack of Career Flexibility Could Lead to a Lack of Wealth
The inability to move to explore a new position, role or career opportunity could limit your ability to earn a higher income. Taking new jobs or calculated career risks are both great ways to potentially earn more money than to sit at your existing job and cross your fingers hoping for a raise.
When you earn more money, you get to choose how much to save for the future, which puts the power in your hands rather than at the whim of the real estate (or stock) market.
Buying a Home Limits Your Flexibility
Of course, all of this is just something else to think about when you’re making a decision on whether or not to buy. You may not need much career flexibility at all, and that’s fine. But failing to account for this could turn into a big financial mistake.
You do need to understand how buying a home can limit your career flexibility. It can limit your ability to chase down an opportunity if it arose unexpectedly. It also limits your financial flexibility and liquidity over the short term, because it requires you to put a good chunk of your liquid cash into an illiquid asset.
“Less flexibility” is a trade-off you make when you buy a home. Whether that’s acceptable or not is up to you — but the bottom line is that you must think about this factor if you want to make a fully informed, responsible decision around buying real estate.
For more information on apartments in Lexington Park, MD, contact Abberly Crest.