There comes a time in everyone's life when moving from their parents' house becomes necessary.
Even though the thought of an independent lifestyle could be exciting for some, it is also quite terrifying for others, especially for those who are scared to deal with responsibilities on their own.
The latest statistics show that 52% of young adults in the US with ages between 18 and 24 still live with their parents.
These people choose to share their home for various reasons - they want to save money, have exhausting jobs, have kids on their own to take care of, or are simply frightened of the stressful and challenging process of moving out.
But what exactly does this process entail, and where should you start?
If you're wondering how to move out of your parents' house, you've come to the right place.
Multi-generational living is not uncommon nowadays. Nonetheless, there are mixed opinions about it - some move out immediately after becoming students, others live their entire 20's in their parents' house, and others never think about moving out.
Of course, the situation is different for each person, which is why you should focus strictly on the reasons why YOU want to move out of your parent's house.
Therefore, the first thing you should do before deciding to move is to analyze the pros and cons of living with them.
Save money- There is no better reason to start with. Depending on the family, living with parents can save you from paying partial or total rent and many costs such as bills, groceries, and other household expenses.
For this reason, if you plan to save for a new car or even a place to live on your own, sharing the home with your parents for a while can be a great start.
Fewer housework responsibilities- Many people living together means fewer responsibilities in the household for you. If you have a demanding job or are still a student and struggling with dozens of exams, living with your parents will save you from many daily chores, so you will have the time to enjoy other activities after work/class.
Unlimited homemade meals- Another perk of living with parents is that you won't have to cook for yourself all the time or order food - which can be quite expensive if you take into account the three regular daily meals. That will save you both time and money.
Free babysitting- If you have children, your parents will be the ones who will enjoy the most spending time with them. Of course, this could also happen if you do not live with your parents, but sharing the same house will be easier for them to always be close to their grandchildren.
Emotional support- Having your family close in challenging situations can be very helpful. You can always rely on your parents whenever you encounter difficulties in life, either financial or emotional.
Limited space-Not your house, not your rules - that means you can't just break the wall in your room to expand, or to bring things that take up a lot of space, at least not without approval.
Lack of privacy- If sharing all aspects of your life with your parents is not bothering you, then living together will never be an issue. But if you're not much of a talker, consider that it will be hard to live with your parents without them wanting to know what you're doing with your life constantly.
Limited control- Living with your parents as a young adult is like sharing open space with all your neighbors. It will be hard for you to bring friends home, play your music loudly, or cook at three in the morning because you are in the mood to eat french fries.
Fighting the generation gap- Different opinions between generations are common among families. There is a good chance that you do not have the same beliefs and values as your parents, no matter how solid your relationship is. That will make a living with them difficult and stressful in the long run.
Slowing down your progress- It may be surprising, but all the advantages of living with your parents can make a huge disadvantage together - you will slow down or even stagnate the progress of becoming an independent adult.
Sure, free meals and no bills to pay is the dream, but what will happen when you have to do all this yourself? And it will definitely happen at some point in your life.
If you were convinced by the cons and not the pros, that means you officially decided it's time to move out of your parents' house.
In this case, we recommend arming yourself with a lot of patience, because there are some initial costs you will have to consider and some that will require planning a monthly budget.
Take a look at our checklist and see if you are ready to cover all the costs involved in moving to a new home.
How to move out of your parent's house:
Start saving a couple months in advance of your move out. There are cases where you will have to pay the rent for the first month, the last month, and a security deposit - this means a total of 3 months' rent in advance. More than that, you may also need to pay the renters insurance if your landlord or the building requires it.
If you decide to move to another city and have many personal belongings to transport, you will need help. Unless you have some friends willing to support you on this step, you will need some money to turn to a professional movers company.
You can either rent a moving van or truck and let your friends help facilitate the move!
Go to your favorite furniture store and pick out what you need. By paying an extra handling fee you can have the store deliver straight to your new house. When you move for the first time, you will feel that your parents' house had them all. On the other hand, your next home may not have all the things you are used to. Therefore, you will have to make a first-time investment in furniture and some appliances.
Supply:
Tools:
Materials: Lots of patience and planning
The average monthly apartment rent in the U.S. 2017-2021 is $1,124, so you will have to think about whether you can afford to rent before you leave your parents' house. One rule of thumb states that you should spend around 30% of your gross income on rent.
Bills. You will need to have a budget for monthly bills such as electricity, gas, and water, in addition to internet and TV service. However, there are some cases in which, if you rent a place, these bills will be included in the monthly rent.
Health insurance. This is an expense you don't want to ignore. Without insurance, the average cost for an emergency room visit is $150- $3,000 or even more, depending on your condition and the performed diagnostic tests and treatment.
Transportation Costs. If you are a driver and own a car that you use regularly, consider paying for the fuel, auto insurance, and vehicle registration. Moreover, you may have to pay for a parking space.
If you are not a driver, there will still be transportation costs arising from the use of taxis, flights, and all those related to daily commute costs.
Emergency savings. Without your parents around, you will need to build an emergency fund by yourself, which you will use only in emergencies, as you probably already noticed by its name. Depending on your monthly income, and usual expenses, you should put away 3-6 months for the emergency savings before moving out.
Services & memberships. Now it's your turn to pay for services such as the internet or TV, as well as other streaming subscriptions that you used in your parents' house. By putting all this on a list you will probably feel the need to give up a few.
Key Insight: If you have a pet, you will have to pay an additional deposit to cover the possible damages caused by it during the rental period. This fee varies depending on the landlord and can be around $35 or less.
Now that you know what costs to expect once you move out of your parent's home, let's talk about the things you should avoid.
Do NOT move out of your parent's house if:
You have not set a budget. If you make a hasty decision and leave your parents' house without an already established budget, the chances of going back in just a few days are very high. Therefore, you should consider absolutely all the start-up costs involved in moving to your own place and the ongoing ones that you will have to take care of monthly.
You don't have a secure income. Even if you have a budget ready to move into a new house, you will need a stable income to cope with all the expenses. Unless your parents are willing to help you with a monthly amount of money for bills and other costs, having a job it's a must.
You don't have an emergency fund. As we said before, the emergency fund should be mandatory when leaving your parents' house. If you question the need to save at least three months for this, think about the expenses resulting from unexpected events such as a car breakdown or a pipe network issue.
You are planning to move to an expensive place. Nothing wrong with moving to a costly place, but how expensive can it be? If you choose to move to downtown New York or San Francisco, and living there will cost you more than 25-33% of your income, you should consider your decision.
You want to save money. Except for the case when your job is ten times your rent, moving out of your parents' house won't help you save money, at least not in the first few months. If you plan to save money to fulfill some pricey goals, you should wait to do this first before moving out.
Key Insight: Usually, apartment and house leases have a term of 1 year. So, if you are not ready to rent for at least a year, you should reconsider that decision.
All things considered, moving out of your parents' house is an important step that should not be treated superficially.
If you make a hasty decision without having the necessary budget or informing what it means to live on your own and all the involved costs, it is possible to regret moving out too soon.
To learn even more about how to move out of your parents' house, watch the following video.
There is no right age to move out of your parents' house. This decision should be entirely up to you, and you should only move out when you are ready. However, according to the National Longitudinal Survey of Youth 1997 exploring the experiences of young millennials, their median age at the time of moving out of their parents' home was about 19 years.
This amount can cover the rent for several months and some initial expenses. Nevertheless, if you do not have a steady income, a budget of only $5000 will not be enough to live on your own after moving.
If you are afraid of huge expenses when moving out, you should consider a roommate. Sharing rent and other expenses with another person will help you save more money over time.
Finding a cheap rental is rare but not impossible. Cities like Omaha, Tucson, and Springfield have an average studio rent of $615- $841 per month. Despite the advantages of cheap rent, keep in mind that apartments with small rents could be positioned in areas far away from your zones of interest or even your workplace.
So, you've been wondering “ is it better to rent or buy your new home? Well, this is just the article for you.
To make it simpler, we have divided it into two parts financial benefits and non-financial benefits.
The financial benefits include, as you might have realized, all things finance from not having to pay maintenance costs or repair bills, accessing otherwise expensive amenities, not having to pay property taxes or down payments, all the way up to allow for better and more secure budgeting options.
The non-financial list is a little more fun and includes the freedom you gain to travel and move around, the additional quality you can gain, and the much better and more popular locations you can live in, places you might have not been able to reside in otherwise.
Key Insight: Look at both the financial and non-financial benefits together
Additionally, we explore the financial commitment you have to make, and whether sometimes it may be better not to make the big investment as it has additional risks attached. Both renting and owning a place is a commitment, but in different ways and in different degrees.
So, how exactly does renting beat out homeownership? And what factors come into it? Read on to find out 10 financial and non-financial benefits of renting a home that you should consider before making your move.
One of the biggest benefits of renting a home is that there are no additional maintenance costs or repair bills. When you rent a property, it is the landlord who is responsible for all maintenance, improvement, and repairs.
This means that if an appliance stops working, or even if your roof starts to leak, you can just call the landlord and he is required to take care of it. Not only is this less hassle for you, but can possibly save you a lot, and we mean a lot, of money.
Key Insight: The Landlord is responsible for maintenance and repairs
Another financial benefit of renting is having access to amenities that would otherwise be an enormous expense.
If you enjoy luxuries such as a fitness center or an in-ground pool, but do not have the money to afford them yourself - considering not just the installation costs, but also the maintenance costs, then renting may be the answer for you.
Many middle-scale to upscale apartment complexes include such luxuries without any additional charge to tenants. Such luxury is likely to be unavailable even to condo owners, who would need to pay monthly fees for access to them.
Another significant financial benefit is that you, in comparison with homeowners, do not have to pay property taxes. The rate of tax varies from county to county, and is based on the estimated property value of the house and the amount of land, but can sometimes reach up to thousands of dollars annually, which can be a costly expense to some homeowners.
Lenders generally require renters to pay a security deposit, usually worth as much as a month's rent, when it comes to upfront costs. If the renter has not damaged any rental property, the deposit will likely be returned to them after they move out.
On the other hand, when it comes to purchasing a home with a mortgage, as most do, the initial down payment is likely to be around 20% of the property's value.
Of course, this also results in having equity in the home, meaning that the value of your house is likely to slowly increase as a result of all your investment.
This increase in the value of your house can renters never experience, however, if you do not have money for a down payment, you are likely to be, at least for now, better off renting.
One of the best things about renting is its financial security through consistent spending each month you simply know what your rent is going to be. What is more, the majority of landlords offer long-term tenancies.
This means that renters can also benefit from long-term consistency, with costs being pre-planned and maintained at the same level for the whole duration of the tenancy.
This is likely to have a very positive impact on your budgeting each month you will have a fixed cost of rent, and the rest of your disposable income can be planned to suit the rest of your lifestyle. Homeowners on the other hand do not benefit from this security.
Whilst the mortgage rate stays the same each month, and so does the service charge if you live in a block of flats, unexpected charges are simply just part and parcel of owning your own home.
The maintenance costs will vary, depending on what is broken, and are almost an endless list of possible additional costs, such as:
All these would be covered under your rental contract, but when you have your own place, it is all on you. So, in this case, really take into account the disposable income you have and whether it would not be more beneficial to have all such unexpected costs covered.
Key Insight: The top financial benefits of renting are access to amenities, no down payments on a house, and a clearer insight on your monthly costs-which relates to a simpler way to budget.
Now that we've covered all the financial benefits, let us explore the ones that cannot be paid for. And amongst these is first in line flexibility, which is simply unmatchable by owning a home.
Most rental contracts are around 12 months long, which means that if you want, you could change a home every year.
This provides unmeasurable freedom you can explore new parts of the city, the country, or move abroad! Additionally, you can experiment with different apartment layouts, decorations, and price points to find the best choice for you.
Not to mention, you will not be weighed down by mortgage payments and can hand out your notice almost any time, depending on the contract type.
This a point that adds to the access to amenities. Essentially, renting has the possibility of giving you a home of a better quality than you could afford to buy.
Let us illustrate by an example. If a person with an annual household income of $80,000, which is double the average salary in America, wanted to find an apartment in Brooklyn, New York, he would generally struggle to find any place he could buy which was liveable.
If he was renting, however, he could afford a large apartment of a high standard, possibly even with luxuries in the building, such as an in-ground pool or a fitness center.
Therefore, if the quality is what you are searching for, renting may just be the right option for you.
Additionally, renting allows you to live in more sought-after places than buying would likely do. Let us stick to the London example. Take for example Benthal Green, an area of London within walking distance of East London's iconic Brick Lane or the vibrant Shoreditch, and only minutes away from Oxford Street by subway long story short an incredibly popular near-center area.
If you wanted to buy a home there, the average price fluctuates at about £536,000, which is at least to most far too expensive (unless you have £110k sat in your bank for a deposit of course). Renters do not have the same price barriers. Average rents in Bethnal Green are at about £1,900/month, a significantly lower price in comparison.
This price difference opens doors for a whole new range of residents, who can now afford to live in a popular London area they might have not otherwise.
Buying a home is an investment, and as with all other investments, it carries risk attached.
When your home is rented, you do not need to worry about the market crashing and putting you underwater on your home.
Or that you will have to pay a costly home repair which will wipe out your whole savings account, not to mention not having to worry about whether your home is gaining or losing in value, in case you will be selling it later.
The biggest risk of renting is usually just how happy you will end up being with the home you chose, and that is a risk most of us are willing to make.
Key Insight: The non-financial benefits can be as simple as peace of mind, being that there is less risk attached than owning the property. Also. depending on your income--renting enables you to be in a more desirable location.
Small things such as chipping paint or yellowing grass are obviously far from being the end of the world. However, admittedly, they can still ruin your day, and as they pile up with time can actually make house owning a big responsibility.
When you are just renting your place, you do not have to think twice about any of these.
So, if your chosen Sunday plans involve hanging out with your friends or reading with a glass of wine, rather than climbing up a ladder and clearing leaves out the gutter, then renting may just be the better option for you.
This question is, unfortunately, a little more complicated than you might think. The short answer is: depends on who is estimating it.
There are 3 main ways to get the value of the home you want to buy estimated: by a listing agent, by a neutral agent, or by an appraiser. Learn how long a home inspection takes in this post.
And the tricky thing is, all 3 are likely to have different estimations. In this article, we'll get into which way is the cheapest, which tends to be the most expensive in comparison with the market price, and what your own role is in determining the price.
Just keep on reading before you decide to buy the home of your dreams!
Key Insight: Generally there are three main parties that may determine the market value of a home-- the listing agent, a neutral agent (or your agent), or an appraiser.
Firstly, we need to discuss even is the market value of the home, as we will be using it as a comparison. Wikipedia defines market value as:
"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus."
Wiki
You might be thinking this definition is a bit too specialized, so let us help explain it to you. A competitive and open market is one where anyone can buy and sell and additionally, as mentioned in the definition, fair conditions must be applied no corruption or theft.
A prudent buyer implies someone who leaves no money on the table and does not lose out to other buyers in a competitive market and is under no time or monetary pressure.
Undue stimulus implies, at least when it comes to a property market, inappropriate use of influence or incentive from parties different than the buyer such as pressure from family.
In short, the market value is the ideal value of the house if the monetary value of all things included from walls to the roof would also account for their age and other influences.
At the same time, the buyer would be deciding on his purchase alone using only his mind and the buyer and seller would be in equal power positions. In other words, ideal conditions can, unfortunately, never be met.
However, the reason this all had to be explained and the reason it is the perfect comparison tool is that this is the ideal price of the house.
The bigger the deviation from this amount, the more beware you should be the buyer may be setting the price far too high because they think you will still pay it.
It also means you're not getting the best deal and therefore should instead look for other properties of course, only if you aren't willing to pay the price regardless.
The listing agent is the agent directly hired by the home seller to get the home sold for top dollar essentially trying to make the most of the value of the house.
This, therefore, means that the price will most likely be the highest one and comparatively higher than the price determined by the market according to its actual value.
The second option is hiring an independent agent, or possibly a friend to look over the house price listed and how it compares to the actual house value.
Here you may actually get a far more accurate estimate, as the price is likely to be closer to the market value. However, it still begs a few questions.
The issue is that you have to keep in mind that around 95% of real estate agents do the job either part-time or sell two or fewer homes a year.
The point we are trying to make is they simply rarely are real home estate experts, and therefore are unlikely to be significantly more helpful in determining the real prince of a property than someone who has no experience whatsoever.
Key Insight: Whether the real estate agent is hired by you or the other party, the main technique that is applied to determine the market value of the house is a comparative analysis.
Another option is to hire an appraiser before making an offer. Just in case you did not know, an appraiser's job is to independently assess the monetary value of the given object in this case property.
Therefore, you would be hiring an independent agent who is likely, due to his or her expertise and independence, likely to give you the most accurate estimate that is one closest to the market value of the home.
However, due to the sheer amount of expertise required, is also likely to be a quite time-consuming process. And in the property market, time is everything. If you choose to do this process, therefore, you are likely to lose offers.
You could of course reserve the house with the buyer, but it is unlikely that they would agree to that after all, they are probably trying to sell it for as much as possible in the shortest time possible.
While your appraiser is determining the market value of the home you want to buy, another buyer will come and put the home under contract before you will even be able to make an offer.
Key Insight: Appraisers have a neutral stance and take a more objective approach when determining the price of the home--they look at things that cannot be changed like the age of the house. While realtors take a more subjective approach--like what are potential buyers willing to pay.
The one option we have not talked about yet is to be working with a home buying specialist who sells scores of houses (or more) each year. This is because you want someone who can advise you precisely on what your offer should be.
An alternative is asking yourself, or your expert, what price would the home be sold at if it is not sold to you but to another buyer instead. This is because the motivation for your purchase is likely to affect how high the price the seller can go.
The home appraiser would give the most unbiased opinion but the real estate agent would give the most accurate market price of the house.
That is, if you need to buy a home in a hurry, the seller may exploit your need and increase the price of the offer.
As such, it is always important to consider what price would be given to a seller who is not pressured by time and therefore has the upper hand in the sale.
Key Insight: You need to match the right option for your particular situation. For example: If your home is in disrepair then consider having a cash home buyer evaluate your property. If your home is in tip-top shape then using a real estate agent is a good option as well
