When do you know you are ready?

Question

Hi everyone, i hope you are doing very well and happy. So i am a 23 year old who has worked his butt off since 2020, i currently have 20k saved for a down payment and by the end of the year i hope to have a maxed out emergency fund maxed out and potentially 30k for my house fund. Now heres my question, how do i know when I'm ready? In a lot of ways i still feel 18 and i still have so much maturing to do, however i do feel mature in many aspects, i have a stable career, i pay all my bills, i have a car bill but it will be paid off ASAP (less then 300 a month) and no bad habits/addictions. I feel like i am ready but i feel theres times im being too cautious and times im being too fast, any advice? Thank you.

Daniel McDonald · Answer

If I waited until I truly felt ready I don't think I would have ever gotten started. At some point you will just need to jump in becasue some things you will just never truly learn until you're in it for real.

Chris Berry · Answer

I think it is impossible to "time" the market and wait for the perfect time.  The interest rates might not drop considerably for a long time.  The prices could continue increasing while you are waiting for the interest rates to drop.  They might also drop and then everyone comes rushing back in and making it harder to find a good deal.  If you talk to the bank and see what you can afford and the numbers make sense with the current conditions than go for it. You will never feel 100% ready.

Roger Lemley · Answer

Hi Koen, For me it was when I was listening to podcasts and understanding what they were saying. The first episode I had to google half of what they were talking about. Once I got to the point I could follow along I felt good enough to start talking with agents and lenders.

Randall Alan · Answer

@Koen Ballantine

I'm not quite sure if you are talking about a house for yourself, or an investment property.  On the presumption it is a personal house, I would say to do it as soon as you can afford it, presuming you are looking to stay in the same area you are at for at least several years.  Home ownership is the number one way to build personal wealth.  It is easy to underestimate what a 3% increase in a large asset does over say a decade!  But between you paying down your mortgage, plus the tax write offs, plus market appreciation it sets you up for having tens of thousands of dollars in tax free gains when you eventually sell it.  All this with only having to put down 3% of the purchase price of the asset!  (Wall Street doesn't even come close to offering that deal!)

If you have the money, and are asking the question, I would say you are ready.

The only other question might be - are you timing the market right?  At 7%+ interest - and rates expected to drop in the next year, I could see an argument to maybe wait for the rates to come down a bit before pulling the trigger.  But on the "Are you ready?" side, it sounds like you are to me

All the best!

Randy

Wale Lawal · Answer

@Koen Ballantine

To buy your first property, consider financial, personal, and market conditions. Consider stable income, emergency fund, and DTI. Personal readiness includes long-term plans, maturity, and market conditions. Research local market, real estate, and mortgage interest rates. Follow a structured plan to get pre-approved, work with a real estate agent, and evaluate properties.

Good luck!

Koen Ballantine · Answer

@Theresa Harris thank you so much for your response i agree with you

Koen Ballantine · Answer

@Randall AlanHi sir yes im looking to house hack and hold thank you for the advice i definitely will hold until interests rates cool a little!

Theresa Harris · Answer

Talk to a bank and see how much money you can borrow. If the numbers work, buy a place.  There will always be a better property out there somewhere, but all that matters is you are happy with the one you have.

As for feeling 18...I'm much older than you and still feel like I'm a kid and learning things all the time.  I bought my first place when I was your age and in grad school because it was cheaper to pay a mortgage than rent.

When do you know you are ready?

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