AN The Economist shares her top tips on how to make a home wealthy – but it will come at a cost.
Lawrence Kotlikoff says that being “home rich” means that you end up with the property you really want at an affordable price.
Interest rates on home mortgages rising faster than in decades, with US home buying more expensive every minute, report CNBC,
The economics professor suggests that future shoppers can save an extra dollar a year by moving to a lower-tax or no-tax state.
While 42 states impose an income tax, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming do not tax salary and wage income.
Hypothetically, crossing the border from Massachusetts to New Hampshire could save you 5% of your salary that would otherwise be going toward income tax.
The downside is that you may walk away from an organized life of friends and family.
Another easy way to save for your dream property is to start a fire while moving out and living with your parents or grandparents, Lawrence says.
In 1960, only 29% of people camped with their parents, but by mid-2020, during the COVID pandemic, 52% were living with their parents.
Living long enough with your parents may not be everyone’s dream, but it can be a necessary sacrifice if you want to be a homeowner.
If you manage to save money buying a property outright, Lawrence recommends that you take the opportunity to earn even more money by renting out your home.
You can do this on a part-time basis using Airbnb and other similar online companies.
However, economics savvy warns that it is illegal in some states, so be sure to check local regulations.
Transforming a garage or attic area and renting it out as a studio apartment can pull you in enough money to upgrade your existing home or buy a better home.
The downside is that you will have to be with a stranger for a while.
Last but not least, Lawrence urges people to “consider narrowing down to less expensive housing to suit their needs.”
While homeowners may feel that this is the opposite of progress, sometimes it is necessary to take a step back in order to move forward.
Most American homes are large and having multiple bedrooms certainly makes sense when you are raising kids.
But you just might end up spending more on housing when they’ve grown up and gone.