First is fundamentally changing the real estate industry. We believe that operational excellence will be key to our success and will be driven by constant improvement as well as bold game changing innovations.
As one of our early engineers, you’ll help guide key design, architecture, and technology decisions. You will be a part of our platform team, helping us to build a platform to support our customer-facing and internal applications. You will help us to scale the system to meet the needs of our expanding userbase. This includes driving the product roadmap, bringing “design thinking” on product features, coordinating development efforts across the team, and working with the front-end team to ensure that our efforts are aligned.
What you bring to the table
* 5+ years of developing Rails applications in production :
* SQL and relational database experience (not just using a database through an ORM)
* Experience in building APIs (REST at least, GraphQL a plus)
* Passion for startups and building products that will be used to change the face of real estate
* Generalist mindset, excited to jump into many parts of the stack to ship working software
* You can develop features without hand-holding in Rails, diving down into the database level as needed
* Clear, effective communication skills, both written and verbal
* Experience with agile practices, including TDD/BDD, continuous delivery, object oriented design, etc
* Comfort with asynchronous development: pull requests, chat, email, etc
Extra bonus points for
* Sidekiq (or another background job system integrated with Rails)
* GraphQL experience
* DevOps skills (Ansible and/or AWS cloud a plus)
* Front-end experience (especially React)
* Mobile development experience
* Proficiency in GitHub flow
* Experience with pair programming (remote or in-person)
* Open source contributions, side projects and gems (edited)
Now is your chance to become part of a world-class, industry leading organization that touts the #1 real estate brand in the world! RE/MAX is a business that builds businesses. We, alongside booj, our award-winning technology company, specialize in providing the tools, training and tech to our real estate network, which includes RE/MAX and Motto Mortgage franchises, agents, brokers and consumers. Join us and build a career where your contribution is heard, your innovative ideas are valued, and hard work and collaboration truly makes a difference.
RE/MAX LLC, Motto Mortgage and booj are an equal opportunity employer committed to diversity and inclusion, as well as non-discrimination in employment. All qualified applicants receive consideration without regard to race, color, religion, gender, sexual orientation, national origin, age, veteran status, disability unrelated to performing the essential task of the job or other legally protected categories. All persons shall be afforded equal employment opportunity.
During the past two years, regulators and lawmakers have introduced and adopted new rules and guidelines aimed at curbing the impacts of racial bias on home valuations. But some appraisers and researchers insist these efforts have been based on faulty data.
Conflicting findings from a pair of non-profit research groups call into question whether or not recent actions will improve financial outcomes for minority homeowners without leading to banks and other mortgage lenders taking on undue risks.
The debate centers on a 2018 report from the Brookings Institution, which found that homes in majority-Black neighborhoods are routinely discounted relative to equivalent properties in areas with little or no Black population, a trend that has exacerbated the country’s racial wealth gap. The study, which adjusts for various home and neighborhood characteristics, found that homes in Black neighborhoods were valued 23% less than homes in other areas.
“We believe anti-Black bias is the reason this undervaluation happens,” the report concludes, “and we hope to better understand the precise beliefs and behaviors that drive this process in future research.”
The study, titled “Devaluation of assets in Black neighborhoods,” has been cited by subsequent reports published by Fannie Mae and Freddie Mac, academics and White House’s Property Appraisal and Valuation Equity, or PAVE, task force, which used the data to inform its March 2022 action plan to address racial bias in home appraisal.
Meanwhile, as the Brookings’ findings proliferated, another set of research — based on the same models and data — has largely gone untouched by policymakers. In 2021, the American Enterprise Institute replicated the Brookings study but applied additional proxies for the socioeconomic status of borrowers.
By simply adding a control for the Equifax credit risk score for borrowers, the AEI research asserts, the average property devaluation for properties in Black neighborhoods falls to 0.3%. The researchers also examined valuation differences between low socioeconomic borrowers and high socioeconomic borrowers in areas that were effectively all white and found that the level of devaluation was equal to and, in some cases, greater than that observed between Black-majority and Black-minority neighborhoods.
“That, to us, really suggests that it cannot be race but it has to be due to other factors — socioeconomic status, in particular — that is driving these differences in home valuation,” said Tobias Peter, one of the two researchers at the AEI Housing Center who critiqued the Brookings study.
Contrasting conclusions
Peter and his co-author, Edward Pinto, who leads the AEI Housing Center, acknowledge that there could be bad actors in the appraisal space who, either intentionally or through negligence, improperly undervalue homes in Black neighborhoods. But, they argue, the issue is not systemic and therefore does not call for the time of sweeping changes that the PAVE task force has requested.
Brookings researchers have refuted the AEI findings, arguing that, among other things, their controls sufficiently rule out socioeconomic differences between borrowers as the cause of valuation differences. They also attribute the different outcomes in the AEI tests to the omission of the very richest and very poorest neighborhoods.
Jonathan Rothwell, one of the three Brookings researchers along with Andre Perry and David Harshbarger, said the conclusion reached by AEI’s researchers ignored the well documented history of racial bias in housing.
“No matter how nuanced and compelling the research is, no one can publish anything about racial bias in housing markets, without our friends Peter and Pinto insisting there is no racial bias in housing markets,” Rothwell said. “Everyone agrees that there used to be racial bias in housing markets. I don’t know when it expired.”
Mark A. Willis, a senior policy fellow at New York University’s Furman Center for Real Estate and Urban Policy, said the source of the two sets of findings might have contributed to the response each has seen. While both organizations are non-partisan, AEI, which leans more conservative, is seen as having a defined agenda, while the centrist Brookings enjoys a more neutral reputation.
Still, Willis — who is familiar with both studies but has not tested their findings — said while the Brookings report notes legitimate disparities between communities, the AEI findings demonstrate that such differences cannot solely be attributed to racial discrimination.
“The real issue here is there are differences across neighborhoods in the value of buildings that visibly look alike, maybe even technically the neighborhood characteristics look alike, but aren’t valued the same way in the market,” Willis said. “Whatever that variable is, Brookings hasn’t necessarily found that there’s bias in addition to all of the other real differences between neighborhoods.”
Setting the course or getting off track?
The two sets of findings have become endemic to the competing views of home appraisers that have emerged in recent years. On one side, those in favor of reforming the home buying process — including fair housing and racial justice advocates, along with emerging disruptors from the tech world — point to the Brookings report as a seminal moment in the current push to root out discriminatory practices on a broad scale.
“It’s been really helpful in driving the conversation forward, to help us better define what is bias and be specific about how we communicate about it, because there’s a number of different types of bias potentially in the housing process,” Kenon Chen, executive vice president of strategy and growth for the tech-focused appraisal management company Clear Capital, said. “That report really … did a good job of highlighting systemic concerns and how, as an industry, we can start to take a look at some of the things that are historical.”
Appraisers, meanwhile, say the Brookings findings made them a scapegoat for issues that extend beyond their remit and set them on course for enhanced regulatory scrutiny.
“What’s causing the racial wealth gap is not 80,000 rogue appraisers who are a bunch of racists and are going out and undervaluing homes based on the race of the homeowner or the buyer, but rather it’s a deeply rooted socioeconomic issue and it has everything to do with buying power and and socioeconomic status,” Jeremy Bagott, a California-based appraiser, said. “It’s not a problem that appraisers are responsible for; we’re just providing the message about the reality in the market.”
Responses to the Brookings study and other related findings include supervisory guidelines around the handling of algorithmic appraisal tools, efforts to reduce barriers to entry into the appraisal profession and greater data transparency around home valuation across census tracts.
But appraisers say other initiatives — including what some see as a lowering of the threshold for challenging an appraisal — will make it harder for them to perform their key duty of ensuring banks do not overextend themselves based on inflated asset prices.
Even those who favor reform within the profession have taken issue with the Brookings’ findings. Jonathan Miller, a New York-based appraiser who has deep concerns about the lack of diversity with the field — which is more than 90% white, mostly male and aging rapidly — said using the study as a basis for policy change put the government on the wrong track.
“There’s something wrong in the appraisal profession, and it’s that minorities are not even close to being fairly represented, but the Brookings study doesn’t connect to the appraisal industry at all,” Miller said. “Yet, that is the linchpin that began this movement. … I’m in favor of more diversity, but the Brookings’ findings are extremely misleading.”
Willis, who previously led JPMorgan Chase’s community development program, said appraisers are justified in their concerns over new policies, noting this is not the first time the profession has shouldered a heavy blame for systemic failures. The government rolled out new reforms for appraisers following both the savings and loan crisis of the 1980s and the subprime lending crisis of 2007 and 2008.
But, ultimately, Willis added, appraisers have left themselves open to such attacks by allowing bad — either malicious or incompetent — actors to enter their field and failing to diversify their ranks.
“It seems clear that the burden is on the industry to ensure that everybody is up to the same quality level,” he said. “Unless the industry polices itself better and is more diverse, it is going to remain very vulnerable to criticism.”
[Editor’s note: This is part of the category product review series for the small landlord property management software sector. Originally published in the Geek Estate Mastermind.]
Syndication is a necessary component of succeeding for any property management software vendor, short of a massive built-in audience of renters. After all, a landlord’s goal is to find a tenant for their property as soon as possible—which generally requires advertising a rental listing far and wide.
The five companies covered in the mini-series: Zumper Pro, Airbnb, Avail, Cozy, Zillow Rental Manager. All except Airbnb do some level of syndication of long-term rentals. RentecDirect and TurboTenant are also included below as a result of membership in the Mastermind.
Below is a snapshot of property management software vendors’ syndication partners…
Note: I am keeping an updated spreadsheet available to members of the Geek Estate Mastermind. If you work for a property management software provider and wish to have your company included, please have your company’s founder apply/join.
It’s true that those who own the marketplace (demand) and own the tools have an unfair advantage when it comes to serving landlords. Thus, Zumper and Zillow do hold a strategic customer acquisition advantage compared to Cozy and Avail due to traffic and brand goodwill generated from their rental search products.
Zillow Group, Realtor.com, and CoStar all have significant resources to deploy. However, one significant challenge is getting those leadership teams on board with focusing on low-value (free, in most cases) landlords. They all have larger revenue streams elsewhere, so it’s unclear when, or if, rentals will move up the priority list. Redfin is the dark horse in this race. It seems inevitable that it will eventually broaden its rentals work beyond WalkScore.
Being a landlord isn’t all lounging around in designer sweatpants while the rent checks roll in.
If you’re managing your property yourself, you’ll find there’s more than a little legwork involved. Whatever your reasons, (and there are plenty, ranging from investing in property to getting stuck with a house you don’t want to live in), buckle up. We’ll be walking you through how to be a landlord.
How to price your rental
A lot of factors go into pricing a rental, but in the end, it’s all pretty simple. If you don’t hit the sweet spot, it’s either going to sit empty or cost you money.
Either way, you lose.
Here are the most important things to keep in mind:
1. What are your costs? Before anything else, do the math and find out how much you need to charge to not actively lose money. Take into account your mortgage payment, housing taxes, HOA fees, upkeep and repair costs, and anything else that will eat into your profit.
It’s okay to not pull in much extra cash right away, so long as you’re in the rental business for the long term. With time—and smart money management—you’ll pay off the mortgage and get your rental income (mostly) free and clear.
2. Timing is important. Just like the housing market, the rental market has slow and busy times of the year. Generally, they match up pretty closely. Demand is highest in the summer, when schools are out and the weather is good. You’ll be able to charge slightly higher prices in the warm months than the dead of winter.
3. High rent is not worth a bad tenant. Sure, the goal of a rental property is to make you money. But there’s more to it than setting your rent as high as you can and accepting anyone who’ll pay it. A good tenant—one who sticks around for multiple years, pays rent on time, and doesn’t damage your property or suck up your free time—is worth more than an extra few hundred dollars.
4. How much are other apartments going for? When in doubt, take a gander at comparable units on the sites you’ll be using to advertise your property. Just remember to take more than zipcode into account. Other factors include:
Nearness to amenities
Appliances (washer, dryer, dishwasher)
Renovations
Square footage
Layout
Carpet vs hardwood
5. Tenants will pay for something that looks like a good value—even if it really isn’t. Ever seen rental listings advertising things like “heat and water included?” This is a tactic used to attract renters without costing you money.
How?
It’s pretty simple.
If you’ve rented out this particular property in the past (or can get in touch with someone who knows what’s what), then you have a good estimate of what the monthly utilities cost—and that you can use in your favor. Say electricity usually costs about $70 a month. By rolling that into the monthly rent at $80 or $90 a month, you get a little extra cash and an attractive offer for renters.
How to advertise your rental
Once you’ve figured out your pricing strategy, it’s time to start attracting potential tenants. Back in the dark times, that meant putting an ad in the classified section of your local newspaper and hoping for the best.
These days, though, renters tend to start their search online, and that means you need to know where and how to put your best foot forward.
First, pictures. To really sell your property, you’re going to want to use recent pictures of your (clean!) rental. When writing the description, make sure to include all your good features. If there are one or two negative things about your rental, don’t try to hide them. Being honest can actually help you build trust with potential renters.
Which sites you use depends on your needs. Landlords generally agree, for instance, that Craigslist gets them a lot of attention, but that Zillow delivers the better quality tenants.
Here’s a quick list of some of the sites you should consider using:
Of course, some old school techniques like yard signs and referrals are definitely worth trying out. Test out your options. Soon you’ll find a combination that works best for your area and clientele.
How to screen potential tenants
Attracting the tenants is the easy part—it’s the picking that takes some time and energy.
1. Ask for a rental application. You can find templates online. Look for one that asks for current and previous employers, income level, contact info of previous landlords, number of occupants, number of pets, and personal references.
2. READ that application. Okay, so this is probably a no-brainer, but you should be able to weed out a lot of applicants at this stage. So they aren’t employed? Don’t have a (net!) monthly salary that’s at least 3 times the rent and can’t get a cosigner? Have previous evictions or references that don’t check out?
Those are all very good reasons to not rent to an applicant.
3. Run a credit and/or background check. Once you have your handful of maybes, it’s time to dig a little deeper. All three off the credit bureaus (Experian, TransUnion, Equifax) offer credit screening for landlords, and some even do background checks, too. They each had different offerings, so take a look at each before deciding.
Remember, though: a credit check doesn’t tell the whole story. While they’re usually a pretty good barometer when it comes to judging a person’s fiscal responsibility, there are situations where they don’t show you the whole picture. After all, filing for bankruptcy 5 years ago and staying current with your payments ever since is a little different than, say, skipping out on your last 4 credit card bills—both of which can tank your score.
4. Meet for the in-person walk through. Don’t be afraid to go all Sherlock on prospective tenants in-person. There are plenty of questions to ask yourself in order to get a sense for what sort of tenant a person will be.
Did they show up on time?
Is their car well-cared for?
Are their children well-behaved?
Do they know what kind of questions to ask about your property?
Have they tried to lie about their credit score or job?
Just make sure not to base your decision on age, gender, race, religion, or disability—that’s against the law and can get you sued (plus, it’s generally agreed upon to be pretty gross).
How to write a rental contract
First things first—are you a lawyer?
If the answer is no, don’t write your own lease.
As we’ll get into later, there are a lot of laws surrounding housing agreements, and when you’re not familiar with all of them, it’s alarmingly simple to get yourself into trouble.
To get started, you can find templates online for your state or city.
From there, though, it’s worth the money to have a lawyer look over it, especially if you’d like to customize it. If you do it right, it should be a one-time cost for a lease agreement you can use over and over.
How to figure out your rights as a landlord
Did you know that you can’t enter your rental without giving the tenant advance notice?
Or that you can’t evict a tenant by changing the locks—even if they haven’t paid rent in months?
A long list of laws govern the relationship between landlord and tenant, and it’s part of your new job to know them.
The tricky part is that many of these laws vary from state to state. While there’s no replacement for consulting a lawyer if you run into trouble, this resource on state landlord/tenant laws is a great place to educate yourself before you get started.
Useful tips for first time landlords
If you found your way here, I’m going to take a guess: you haven’t been at this landlord thing long. Heck, maybe you’re in the middle of buying your first rental property right now.
Here are a few things the pros already know:
1. Set your available hours. Unless you’re okay with tenants calling you to fix their toilet at 10pm, find a window of time that works for both of you and agree to it ahead of time.
2. You can collect rent payments online. Technology, amiright? These days, you collect rent from anywhere in the world—awesome if you don’t live near your property or choose to interact with your tenant as little possible. There are plenty of services available (Rentpayment.com, Cozy, and ClearNow are just a few). Do your research to find one that fits your needs.
3. Be wary of renting to family and friends. You’ve probably heard that sage advice to never do business with family or friends. Well, you probably don’t want to rent to them, either. If you value the relationship, it’s best to keep money out of the equation.
4. Your tenants don’t need to know you’re the owner. Think about it: instead of telling your tenant they can’t paint the kitchen chartreuse and facing their resentment, you play property manager and blame the owner for being a spoilsport. This is an especially helpful (and legal) tip if you’re not great at confrontation or have any reason to be extra conscious of your safety. Just remember: if your business contains your name, you’ll need to change the name of the LLC so paperwork won’t tip off your tenants.
5. Document the state of your property before and after each tenant. It’s possible to wind up with a wild animal of a tenant no matter how well you screen. By knowing exactly what sort of damage has been wrought upon your property—and having the pictures to back it up in court—you’re in a much better position to hold onto your money.
6. Document any agreement you make. You’re probably noticing a pattern here: when in doubt, document. That holds especially true for any changes you agree to make to your standard lease after it has been signed. In this case, what you need is called an “addendum to a lease.” You can find templates online, but it can pay to use a lawyer.
7. Consider insurance. Landlord insurance may not be required by law, but it can definitely be worth it in the event of property damage or accidents.
WASHINGTON, D.C. – The Federal Financial Institutions Examination Council (FFIEC) today announced the availability of data on 2022 mortgage lending transactions reported under the Home Mortgage Disclosure Act (HMDA) by 4,460 U.S. financial institutions, including banks, savings associations, credit unions, and mortgage companies.
The HMDA data are the most comprehensive publicly available information on mortgage market activity. The data are used by industry, consumer groups, regulators, and others to assess potential fair lending risks and for other regulatory and informational purposes. The data help the public assess how financial institutions are serving the housing needs of their local communities and facilitate federal financial regulators’ fair lending, consumer compliance, and Community Reinvestment Act examinations.
The Snapshot National Loan-Level Dataset released today contains the national HMDA datasets as of May 1, 2023. Key observations from the Snapshot include the following:
For 2022, the number of reporting institutions increased by about 2.63 percent from 4,338 in the previous year to 4,460.
The 2022 data include information on 14.3 million home loan applications. Among them, 11.5 million were closed-end and 2.5 million were open-end. Another 287,000 records are from financial institutions making use of Economic Growth, Regulatory Relief, and Consumer Protection Act’s partial exemptions and did not indicate whether the records were closed-end or open-end.
The share of mortgages originated by non-depository, independent mortgage companies has decreased and, in 2022, accounted for 60.2 percent of first lien, one- to four-family, site-built, owner-occupied home-purchase loans, down from 63.9 percent in 2021.
In terms of borrower race and ethnicity, the share of closed-end home purchase loans for first lien, one- to four-family, site-built, owner-occupied properties made to Black or African American borrowers rose from 7.9 percent in 2021 to 8.1 percent in 2022, the share made to Hispanic-White borrowers decreased slightly from 9.2 percent to 9.1 percent, and those made to Asian borrowers increased from 7.1 percent to 7.6 percent.
In 2022, Black or African American and Hispanic-White applicants experienced denial rates for first lien, one- to four-family, site-built, owner-occupied conventional, closed-end home purchase loans of 16.4 percent and 11.1 percent respectively, while the denial rates for Asian and non-Hispanic-White applicants were 9.2 percent and 5.8 percent respectively.
The FFIEC also released today several other data products to serve a variety of data users. The HMDA Dynamic National Loan-Level Dataset is updated on a weekly basis to reflect late submissions and resubmissions. Aggregate and Disclosure Reports provide summary information on individual financial institutions and geographies. The HMDA Data Browser allows users to create custom tables and download datasets that can be further analyzed. In addition, since mid-March 2023, the FFIEC has made available Loan/Application Registers for each HMDA filer of 2022 data, as well as a combined file for all filers, modified to protect borrower privacy. Additional summary information regarding the 2022 data may be found here.
More information about HMDA data reporting requirements is also available here.
MEDIA CONTACTS
CFPB, Michael Robinson, (202) 597-4022 FDIC, LaJuan Williams-Young, (202) 898-3876 FRB, Laura Benedict, (202) 452-2955 NCUA, Joseph Adamoli, (703) 518-6330 OCC, Brian Walch, (202) 649-6870
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The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.
Malcolm in the Middle star Frankie Muniz just put his Phoenix mansion on the market for $3.5 million. This isn’t the first time the former child star, who originally moved to the Phoenix area when he was pursuing a career as a race car driver, has bought and sold property in the region.
His 5,300 square foot mansion with four bedrooms and five baths has a lush garden paradise vibe going on, which is quite the contrast to the surrounding desert climate.
The property is known as Il Segreto (The Secret)–a fitting name for an Arizona oasis. If you’re into homey, bungalow styled mansions, then this place just might be your dream home. Don’t take my word for it, though, check out the pictures below.
[huge_it_slider id=”16″]
Photos via Realtor.com
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Living in Oklahoma is more than just OK. This warm, welcoming South Central state has everything from booming industries like agriculture and aviation to vibrant cities full of country music, sports and delicious barbecue. Outside the cities, prairies, forests and lakes offer spots for outdoor recreation and learning about the state’s deep and rich history. So, yes, Oklahoma is more than just an OK place to call home.
On top of all that, the cost of living in Oklahoma remains low and affordable. Nearly all cost of living categories, from housing to groceries, falls below the national average. But some cities and towns are more affordable than others. This cost of living guide breaks down what it costs to live in different places around Oklahoma so you can find the best place for your lifestyle and budget.
Oklahoma housing prices
Housing is one of Oklahoma’s most affordable cost of living areas. Housing prices in all major cities and towns are well below the national average. In some areas like Muskogee, it’s as low as 47 percent below the national average. But rental rates and the cost of buying a house can vary widely throughout the state. Luckily, Oklahoma has plenty of cheap places to live. Let’s look at the average rents and housing costs in cities and towns around Oklahoma.
Broken Arrow
Located in the northeastern part of the state, Broken Arrow is a popular suburb of Tulsa. The area is full of family-friendly things to do like exploring the Ray Harral Nature Park and spending time shopping and dining in the historic Rose District.
Another reason Broken Arrow is such a popular place to live in the Tulsa area is because of its affordable housing. The cost of housing here is 21.1 percent below the national average. Its attractively low housing costs appeal to everyone from families to young professionals working in Tulsa.
The average rent for a one-bedroom apartment is $1,096 per month, up 10 percent from last year. The cost for a two-bedroom apartment is up 13 percent to $1,284. However, three-bedroom units are down 57 percent to $900. At those prices, it’s better to rent the larger space and use the spare bedrooms as a home office or get roommates.
Compared to the national median home price of $430,982, buying a house in Broken Arrow is also very affordable. The housing market here is up 20.4 percent from the previous year. If you’re looking to become a homeowner in Broken Arrow, the median sale price here is $277,000.
Edmond
Edmond forms part of the larger Oklahoma City metro area. Located along the northern part of the metro area, an abundance of parks, low crime and safe neighborhoods endear this city to families. While all the big-city attractions of O.K.C. are close at hand, Edmond has its own active social scene, with dining, art and nightlife.
Overall, Edmond’s housing costs are 20.1 percent below the national average. If you’re looking for affordable housing within the O.K.C. metro area, Edmond is a great option. One-bedroom apartments are available for $852 a month and two-bedroom units for $1,037. There hasn’t been a lot of growth in the local rental market. These rates have only climbed 7 percent and 1 percent, respectively, since last year.
The housing market in Edmond has seen a bit more growth, climbing 16.1 percent from the previous year. With the median sales price of $358,750, Edmond is the most expensive city to buy a house in our highlighted Oklahoma cities.
Enid
With just over 50,000 residents, Enid is Oklahoma’s ninth-largest city. Located in the north-central part of the state, the city is well-known for its long-running symphony. Full of parks and family-oriented activities like children’s museums, it’s heralded as a great place to raise kids in a safe, friendly community.
Housing prices here are also 25.1 percent below the national average. Your friends in major coastal cities won’t believe what you pay for an apartment. One-bedroom apartments go for an average of $525 per month. Two-bedroom apartments are around $625. Both these numbers have held steady since last year, with no growth or decrease.
Enid is also an extremely affordable place to purchase a house. The housing market here has dropped significantly over the past year, decreasing an astonishing 82.7 percent. The median sale price for a house in Enid is only $39,900. If you have dreams of owning a home in Oklahoma, Enid is the place to set down roots.
Oklahoma City
Oklahoma’s capital city is a hub for eclectic art ranging from galleries to street art murals, culture, dining, history and entertainment. It’s also the largest city in the state. Locals living here have access to everything from world-class museums to cheering on their hometown sports teams. The city is affectionately referred to as O.K.C. and its overall cost of living is one of the most affordable in the state.
Housing costs here are 30.4 percent below the national average. You can find a one-bedroom apartment for $997 and a two-bedroom unit for $1,327. These numbers are up 7 and 24 percent, respectively, from the previous year.
O.K.C.’s housing market is also experiencing growth, rising 15.2 percent from last year. If you want to buy a house in the state capital, $265,000 is the median sale price.
Tulsa
Known for its dazzling Art Deco architecture, sports and arts and culture scene, Tulsa is Oklahoma’s second-biggest city. When not learning about the city’s history at venerated institutions like Greenwood Rising, which documents the 1921 Tulsa Race Massacre, or partaking in the multicultural food scene, locals spend time hiking, fishing and boating outside the city in the lush “Green Country” region.
The cost of housing here is 36.5 percent below the national average. But rates here have been climbing over the past year for both rent and home ownership. The cost of a one-bedroom apartment has risen 34 percent to $929. A two-bedroom apartment comes with a price tag of $1,109 per month, which is 24 percent higher than last year.
Compared to other major OK cities like Oklahoma City, buying a house in Tulsa is the most affordable in a big Oklahoma metro area. Rates have risen 18.4 percent from last year, making the median sales price $225,000.
Oklahoma food prices
From fried okra to barbecue to Indian tacos, Oklahoma is famous for its homegrown cuisine and dishes. Oklahoma also has a booming agriculture and farming industry. Overall, food costs in Oklahoma fall 5.4 percent below the national average. With Okies spending between $200 and $233 per month per person on food, that puts Oklahoma among the lowest states for food costs.
This is how food costs in these different Oklahoma cities compare to the national average:
Edmond is 11.5 percent below the national average
Oklahoma City is 7.8 percent below the national average
Enid is 7.3 percent below the national average
Tulsa is 5.6 percent below the national average
Broken Arrow is 4.5 percent below the national average
Food costs here are closer to the national average than in other areas like housing. Edmond is the least expensive city for groceries in the state. Broken Arrow is the most expensive. Buying a dozen eggs in Edmond costs $1.38 compared to $1.85 in Broken Arrow. But lower or higher averages may not always be reflected in prices for specific items. A half-gallon of milk actually costs less in Broken Arrow at $2.18. In Edmond, it costs $2.28. A half-gallon of milk is most expensive in Enid, costing $2.48.
With so many different and delicious kinds of food available around the state, Oklahomans have plenty of opportunities to dine out. Going out for a three-course meal for two will cost more in a big city compared to a small one. You’ll pay the most for a nice date night meal out in Tulsa at $46.50, followed by Oklahoma City at $45. But in Edmond, it will only set you back $25.
Oklahoma utility prices
When paying for the cost of living in Oklahoma for utilities like water and electricity, Okies pay less than the national average throughout the state. Oklahoma gets the majority of its electricity and energy from natural gas and coal. But renewable energy like wind power and hydroelectricity are starting to account for more of its energy production. As the song goes, “when the wind goes sweeping down the plain” also makes for a significant renewable energy resource.
Here’s what you can expect to pay for utilities compared to the national average in these Oklahoma cities:
Broken Arrow is 6.9 percent below the national average
Tulsa is 6.9 percent below the national average
Oklahoma City is 6.5 percent below the national average
Edmond is 3.8 percent below the national average
Enid is 2.6 percent below the national average
Residents of metro areas like Tulsa and Oklahoma City pay less for utilities than more remote, isolated cities like Enid. In Broken Arrow, the monthly total energy bill comes out to around $150.78. As one of the priciest cities for utilities, total energy bills in Enid are around $163.59. The average water bill around Oklahoma is $33.
Internet is also another important modern utility. Internet is less expensive in big cities like Tulsa, where a 60 megabits-per-second package costs $66.22. But in Edmond, the same level of spend and access costs $77.
Oklahoma transportation prices
Using public transportation is a great way to reduce commuting time and save money on gas and other vehicle costs. It’s also more environmentally friendly. Most Oklahoma cities and towns offer some form of mass transit to their citizens. For the most part, the cost of using public transit in Oklahoma cities is below the national average. Here’s how these different cities stack up to the national average:
Enid is 12.8 percent below the national average
Broken Arrow is 12.2 percent below the national average
Oklahoma City is 10.1 percent below the national average
Tulsa is 7.4 percent below the national average
Edmond is 6 percent below the national average
Public transportation costs are lowest in Enid, where the city operates an on-demand rideshare service costing $2 per ride. Edmond’s Citylink bus service is free to the public, with five different bus routes through the city and connecting to Oklahoma City. Let’s dive further into the more extensive mass transit systems in Tulsa, Oklahoma City and Broken Arrow.
Tulsa Transit in Tulsa and Broken Arrow
Tulsa Transit offers bus-based public transit to Tulsa and nearby Broken Arrow. It has 21 different routes throughout the area. Service is limited within Broken Arrow, but residents have access to a Park & Ride express that connects Broken Arrow to downtown Tulsa. Starting fares are $1.75 for a two-hour pass. A full-day pass costs $3.75 and a monthly pass is $45.
If you prefer to use your car to get around Tulsa and Broken Arrow, you may have to pay tolls on the Creek Turnpike. This 33-mile toll road forms a beltway around the eastern and southern parts of the city. Traveling the full length of the turnpike in a standard 2-axle passenger vehicle costs $3.00 with a PikePass and $3.75 without.
However, having a car may still be a necessity in Tulsa and Broken Arrow. Tulsa’s transit score is only 25. This means that most locals don’t live close to public transit or say that it’s necessary to have a car here. Broken Arrow scores even lower at 17. Tulsa fares slightly better for walk and bike scores. Although not the most walk- and bike-friendly cities overall with scores of 44 and 49, respectively, there are still pockets of town you can navigate by foot or bike. Broken Arrow’s walk and bike scores are even lower at 20 and 33. So, while you can definitely get around the Tulsa metro area by bike, you should have a car, as well.
EMBARK in Oklahoma City
Consisting of buses and streetcars, EMBARK provides public transit throughout Oklahoma City and its metro area. Riders have a choice of 22 different fixed bus routes and two different streetcar routes around the city center. A single trip costs $1.75 for a bus ride and $1 for the street car. You can use both buses and street cars with an unlimited pass, which cost $4 for a day, $14 for a week and $50 for a month.
Ferries and water taxis also travel along the Oklahoma River in the heart of town. The public transit ferry travels between five different landings along the river. Using this service costs $12 a day. The Bricktown Water Taxis travel along the river through the popular Bricktown District, costing $13. However, both these services are primarily aimed at tourists and are not the most economical or efficient means of commuting or getting around town.
While there are no toll roads within Oklahoma City, there is one outside of town. The Turner Turnpike connects Oklahoma City to Tulsa. Using the full toll road costs $4.50 with PikePass and $5 without.
Most likely, it’s necessary to have a car in Oklahoma City, as well. The transit score is a low 22. Some districts and neighborhoods, especially in the city center, are good for walking and cycling. But Oklahoma City’s walk and bike scores are still low, with the walk score is 43 and its bike score is 48.
Oklahoma healthcare prices
Healthcare is one of the few cost of living areas where some Oklahoma cities exceed the national average. Overall, Oklahoma ranks among the bottom states for quality of healthcare, access and public health in general. It’s important to note that determining an accurate healthcare average is difficult due to how variable healthcare costs are per person. Due to factors like pre-existing conditions or insurance plans, some people within a certain city may pay far more for healthcare than other locals.
Although personal circumstances vary, it’s recommended to see your doctor, dentist and optometrist on an annual basis. This allows you to stay on top of your health. Here’s what it costs to go to the doctor’s office in these different Oklahoma cities:
Enid: $150
Tulsa: $128.67
Oklahoma City: $104.67
Broken Arrow: $98.83
Edmond: $96.41
Enid soars above the other cities with the priciest doctor visits while Edmond takes the lowest spot. You’ll also be paying a lot to visit the doctor in different metro areas. Considering Enid’s high healthcare prices, it’s no surprise that its healthcare average tops the national average. Here’s how the other cities fare compared to the national average:
Broken Arrow is 11.4 percent below the national average
Edmond is 7.4 percent below the national average
Tulsa is 1.4 percent below the national average
Oklahoma City is 1.1 percent above the national average
Enid is 2.5 percent above the national average
Healthcare costs in Broken Arrow are the lowest below the national average. Right in its own metro area, though, Oklahoma City’s healthcare costs peek over the national average. But the cost of specific types of care does vary by city, as well. For example, Enid has the lowest price for a dental check-up. Going for a cleaning and check-up in Enid costs $85. But in Oklahoma City, it’s $118.
Oklahoma goods and services prices
The final cost of living category to consider is miscellaneous goods and services. This category covers important but non-essential activities and goods. Some relate to leisure and lifestyle, like going out to the movies. Others are for buying goods like toothpaste.
Since Oklahoma is overall an inexpensive state, for the most part, these goods and services fall below the national average in terms of cost:
Oklahoma City is 13.5 percent below the national average
Enid is 11.6 percent below the national average
Edmond is 7.9 percent below the national average
Broken Arrow is 6.4 percent below the national average
Tulsa is 3.3 percent below the national average
But it’s not completely black and white. Individual costs do vary by city, though. The most expensive place to get a haircut is Broken Arrow at $21.75. Edmond offers the cheapest price at $16.17. Going to the movies costs $6.09 in Enid compared to $9.84 in Tulsa.
With its wide-open landscapes, friendly cities and low cost of living, Oklahoma is a popular place to raise kids and have a family. If that’s the case for you, you also need to consider childcare costs as part of a monthly budget. You’ll find the most affordable childcare in bigger cities. A month of private preschool or kindergarten for one child costs $795.86 in Tulsa and $500 in Oklahoma City. But in a smaller city like Edmond, you’re looking at a big price jump to $1,000.
Taxes in Oklahoma
Oklahoma’s state sales tax is 4.5 percent. To put that into real-life figures, for every $1,000 you spend on delicious Oklahoma barbecue, you’re paying an extra $45 in tax.
Some cities and counties add their own local taxes to the statewide rate. In some areas, the number jumps significantly.
Enid has a combined tax of 9.1 percent
Broken Arrow has a combined tax of 8.42 percent
Oklahoma City has a combined tax of 8.63 percent
Tulsa has a combined tax of 8.517 percent
Edmond has a combined tax of 8.5 percent
As you can see, you’ll be paying the most sales tax living in Enid. Instead of $45 in tax for every $1,000 spent, you’d be spending $91. That’s a big jump.
How much do I need to earn to live in Oklahoma?
Oklahoma’s cost of living is low and likely within the budget of a lot of people. But there’s one way to determine if living in Oklahoma fits your budget. Experts recommend that you only spend 30 percent of your gross monthly income on housing. This is because housing is usually your biggest monthly expenditure. By only paying 30 percent, you leave plenty left over for other necessities like groceries, taxes and fun activities.
Since the average rent in Oklahoma is $797, you’d need to make $2,656 monthly or $31,872 annually to fit the 30 percent rule. Oklahoma’s median household income is $53,840, so most residents should comfortably afford housing and all other cost-of-living essentials here.
To figure out what city in Oklahoma best fits your budget, use our rent calculator.
Living in Oklahoma
With low prices for everything from housing to groceries, the cost of living in Oklahoma is just one of the benefits of living here. In addition to saving more on essentials, you also get to live in a state that offers equal-parts exciting cities full of history and culture and vast landscapes. As the song goes, the land we belong to in Oklahoma is grand and affordable to boot. You’re doing fine, Oklahoma!
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The Cost of Living Index comes from coli.org.
The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of June 2022. Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.
A landslide struck Laguna Beach’s Bluebird Canyon in 1978 — smashing cars, buckling streets and destroying 24 homes. An adjacent swath of earth broke loose in 2005, wiping out 12 more homes.
That wasn’t enough to keep Scott Tenney away. In 2010, Tenney and his wife, Mariella Simon, bought a 15-acre hillside ranch near the disaster area despite the listing warning that the property was on the site of an ancient landslide.
“We knew we’d have to do a bit of terracing and retaining, but California is what it is,” Tenney said. “It’s a dynamic place not just culturally, but geologically.”
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From an outside perspective, his might seem a confounding decision. But in Southern California it’s an extremely common one, because that geological diversity, as Tenney calls it, is not just the danger. It’s the allure.
Elevation has long been aspirational here — an escape from the urban flats.
Since settlers first started pouring in from the relative flatness of the East Coast and Midwest, they were captivated by California’s vertiginous landscape. Plein air painters flocked to capture the light of the arroyos. Health seekers sought the clean air of the San Gabriel foothills. Folk rockers found inspiration in Laurel and Topanga canyons. And the moneyed elite started building their houses higher and higher above the basin, forever seeking the trophy perch with the show-off view.
But that perch has always come at the risk of catastrophe. Homes slide into a gulch in Palos Verdes. Fires roar over the Malibu hills. A debris flow kills 23 people and destroys 130 homes in Montecito. Heavy snow traps thousands in the San Bernardino Mountains. And winter storms pull fragile bluffs into a rising sea.
These natural disasters so often occur where the tectonic plates collided and folded into beautiful vistas.
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While other regions may face only one main disaster threat — tornadoes in the Midwest, hurricanes on the Gulf and East coasts — California’s extreme topography brings siege from all sides: the ocean, the trees and brush, the sky above and the ground below. And oftentimes, the most attractive areas are some of the most dangerous.
A land of disasters
More and more people are crowding into the Wildland Urban Interface — the zone of transition between unoccupied land and human development. It’s where properties mingle with undeveloped (and often steep) land, and it’s uniquely susceptible to natural disasters.
According to the U.S. Fire Administration, this area grows by 2 million acres a year as people fan out to the edges of wilderness in search of affordable houses, more space or simply a break from life in the city. And California holds more homes in this dangerous zone than any other state in the country.
And prices keep soaring. It doesn’t matter if a house sits on stilts on the side of a cliff, if it’s a landslide complex slowly sliding toward the sea, or if it’s predicted to be knee-deep in water in a couple of generations — there will always be a buyer.
As Californians flock to risky areas, disasters take a greater toll. Over the last decade, the state has experienced 20 disasters that each cost at least $1 billion in damage from flooding, wildfire and extreme heat. Those 20 alone combined for 783 deaths, according to National Centers for Environmental Information.
According to the real estate listing database Redfin, the trend is nationwide. Last year, the country’s most flood-prone, heat-prone and fire-prone counties all saw more people move in than out. Redfin researcher Sheharyar Bokhari blames one primary factor: the housing affordability crisis.
“L.A. and most other coastal cities are expensive. With remote work becoming more of an option, people are finding they can have more space and finally afford a home if they move to riskier areas,” he said.
Bokhari said another L.A.-specific factor is development — mainly that there’s not as much being built in the city compared to the more rural areas surrounding it.
He points to the Inland Empire, which is typically more affordable than L.A. County. In Riverside County, roughly 600,000 homes face a high risk of wildfire, the most of any of the 306 high-fire-risk counties in the country. Despite that, the county’s population grew by 40,000 over the last two years.
Even if experts — and common sense — say to stay away from certain areas, Bokhari said that won’t likely happen because local governments aren’t incentivized to push people out.
“These disaster-prone cities need revenue and people paying taxes,” he said. “They just claim that they’ll be more resilient and take more safety measures going forward,” he said.
Where else would I go?
Since moving onto the ancient landslide zone, Tenney and his wife founded Bluebird Canyon Farms, which offers workshops and grows food for local markets. His time is split between that and taming the erosion-prone land beneath the farm.
To combat sliding land, Tenney installed a gravity wall, 200 feet long and 9 feet tall, to retain the hillside. In addition to grading the terrain to make the slopes gentler, he added powerful drainage systems and timber-and-concrete cribbing to keep structures in place.
The work never stops, and Tenney keeps a monthly schedule to keep up with tasks. Clear brush in spring. Clean storm drains in September. Inspect terracing every few months.
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“You can run but you can’t hide,” he said, adding that urban centers such as L.A. have their own laundry lists of things to worry about: crime, homelessness, etc. “You won’t experience a wildfire in downtown L.A., but there are plenty of other things to be concerned with.”
Cribbing systems used by Tenney have become commonplace in Portuguese Bend, a small coastal community on the Palos Verdes Peninsula situated on a slow-moving landslide complex. Land moves up to 8 feet a year, and at that rate residents would rather ride the sliding earth toward the sea than sell and move somewhere else.
“I’ll be here until I can’t be here anymore. I’ll slide away with the land,” Claudia Gutierrez told The Times in July after a nearby landslide in Rolling Hills Estates sent a handful of homes careening down a canyon.
You’d think the real estate market in disaster-prone areas would eventually slow down, but there are no deals to be found for house hunters. Longtime residents often stay put post-disaster, and incoming residents consistently pay a premium to live in a scenic, though potentially dangerous, area.
In cities tucked among the foothills of the Verdugo and San Gabriel mountains such as Altadena and La Cañada Flintridge, buying in a high-fire-risk zone might be ever-so-slightly cheaper than buying in a safer place. And buyers pounce.
“My clients try to choose low-fire-risk zones, but if the house in the fire zone is the right price, that is more important,” said Brent Chang of Compass.
When Lisa and Michael McKean got home to Malibu Park from their honeymoon on Nov. 8, 2018, they were so exhausted that they went straight to sleep. The newlyweds didn’t even bother unpacking their suitcases of swimsuits still wet with Caribbean saltwater.
When they woke up, Lisa looked out her back window and saw a 10,000-foot cloud of billowing black smoke.
The Woolsey fire was ravaging the Malibu hills.
The pair grabbed their still-packed suitcases and fled to the Zuma Beach parking lot, where they spent the day surrounded by horses, dogs, cats and neighbors all wondering if their homes would survive.
Theirs, built a year earlier, did not.
“The entire neighborhood burned,” Lisa said. “Everything was black, scorched earth.”
Devastated, the pair spent six months crunching numbers on the cost of rebuilding versus moving. The home that was destroyed had taken four years to approve and three years to build. Their next one could take even longer.
Despite the damage, and despite the ceaseless, inescapable risk of a future fire, they ultimately decided to stay and rebuild.
Cheryl Calvert has lived in Malibu since 1985 and has adapted to a life of fire. To her, the flames are nearly routine.
“Once you make it through your first one, you realize it’s manageable. But you have to plan ahead,” Calvert said.
She keeps two bags packed at all times: one full of goggles and N95 masks and one with dog supplies.
Calvert has experienced plenty of fires during her time in the coastal community, but the worst was the Corral fire in 2007. She was in the driveway as the flames arrived, and she sprayed the corner of her wooden home with a hose as it ignited. Her guesthouse and garage burned down, but the house was saved.
She never considered leaving. Instead, she became more prepared, installing an extra water tank and leaving a pair of shoes by the front door at all times for quick escapes.
“We have to do crazy things, but it’s only crazy for an hour or two every five or 10 years,” she said.
She ran down the usual list of reasons why people move to Malibu: the beautiful landscape, the ocean breeze, the sweeping views. But she said the main reason her and so many of her neighbors stay is because of the community.
“We’re all living near like-minded people who are willing to risk themselves for each other,” she said. “It’s a bunch of hippies. Rich hippies.”
The psychology of staying
A life among the trees, coasts and cliffs is often what lures Californians to disaster-prone communities, but according to experts, the factors that make them stay after a disaster strikes are much more complicated.
Age, race and class can all indicate whether someone is more or less likely to move after experiencing a disaster. For example, Zhen Cong, professor of environmental health sciences at the University of Alabama at Birmingham, found that in the wake of tornados, the middle class might be the most inclined to move since the upper class has the resources to stay and rebuild, while the lower class is often trapped and has no other choice but to stay.
Other relocation factors include the level of damage to the home and whether the person owns the place or rents. But often the most important factor is one that can’t be easily quantified: “People who have a strong sense of place and a strong sense of community are less likely to move,” Cong said.
Ironically, some disasters can even encourage people who otherwise would have left to stay.
In studying post-tornado relocation decisions across the country, Cong found that after a disaster, people increase their disaster preparedness. Part of that includes gathering supplies, but it also includes social engagement: talking to neighbors, sharing information on social media and attending meetings. That engagement, which might not happen if a tornado doesn’t strike, brings a greater sense of community, leading people to stay in that community.
Anamaria Bukvic, an assistant professor at Virginia Tech who studies coastal hazards and population displacement, found that after Hurricane Sandy struck the East Coast in 2012, non-geophysical factors mattered the most in deciding whether to stay or leave. For example, confidence in adapting to future disasters was a more relevant indicator if someone would stay than how close they lived to the ocean.
“The experience of flooding can be emotionally disturbing and traumatic,” Bukvic said. “When facing problems, some people try to avoid them. Others try to resolve them.”
She added that confidence in government plays a major role as well. If a person believes the government responded well to the disaster and will keep them safe during the next disaster, they’re more likely to stay.
That’s something that Malibu Mayor Bruce Silverstein thinks about when overseeing the city’s disaster response plan. Although L.A. County is responsible for physically fighting the fires that plague the area, Malibu has instituted a free service in which residents can request a fire-hardening expert to inspect their property to better prepare them for the next blaze.
The city also outlaws certain types of vegetation susceptible to fire and tries to prevent excessive population growth in order to make evacuation from hills and canyons easier during emergencies. It’s the main reason accessory dwelling units (ADUs) are harder to build in Malibu than L.A.
“Unlike L.A., we don’t have standards that encourage growth,” Silverstein said. “We maintain the status quo and try to keep space between properties so if one catches on fire, it doesn’t extend to the neighbors.”
Michael Dyer, a former Santa Barbara County fire chief who now serves as public safety director for Calabasas, said safety became a top priority for the city after Woolsey, energizing the community into forming multiple volunteer commissions that plan for disaster preparedness.
“We have to provide that service as a government,” Dyer said while monitoring a brush fire in Topanga from his front porch. “No one has forgotten Woolsey yet. And as long as I’m here, we won’t.”
No simple fix
As the climate crisis worsens and the Wildland Urban Interface grows in size, experts are eyeing ways to mitigate the effects of natural disasters to save both the environment and human lives.
L.A. is currently considering an ordinance that would limit development in the Santa Monica Mountains. Using recent wildfires and the Rolling Hills Estates landslide as examples, supporters said the measure would make it harder to build mansions and large hillside homes as a way to limit damage caused by disasters, as well as protect open space and wildlife.
In addition, national insurers such as State Farm and Allstate are no longer selling insurance policies in wildfire-prone areas after a series of catastrophic fires raised premiums. Without insurance, people might be disincentivized from buying and building homes in risky areas.
Redfin is also tinkering with a way to warn people of a home’s potential dangers. The company conducted an experiment in which it showed a listing’s flood risk score to certain users but not others and found that those who were shown the scores were less likely to bid on the home.
The scores have since expanded to show risk for fire, heat, drought and storms.
In the meantime, Californians continue to build, and rebuild, in disaster-prone areas. Lisa and Michael McKean, whose home burned down in 2018, moved back into Malibu Park in 2021.
As neighbors slowly filter back into the neighborhood, they walk around to measure progress and congratulate those who have returned.
“We used to hate cement trucks and jackhammers, but now we celebrate them,” Michael said. “The cheery sound of construction.”
More Than a Third of Americans Say Uncertainty About Their Finances Keeps Them Up at Night at Least Monthly Northwestern Mutual’s 2023 Planning & Progress Study finds Americans feel stronger about their friendships, mental health, physical health and job stability than they do about their finances An arc of financial anxiety emerges – peaking for … [Read more…]
Traditionally, a debt product can be used to cover expenses when you’re cash-strapped. If handled responsibly, personal loans can also serve as a tool to build wealth.
Some of the ways personal loans can help you increase your net worth include improving your cash flow through debt consolidation and giving you the necessary capital to invest in a variety of things.
Using personal loans as a tool to build your net worth can be especially useful during these tough economic times. Most Americans feel like they need at least $233,000 a year to live comfortably, compared to $75,203, which is the average annual salary in the U.S.
Personal loans are often thought of as debt products used to finance an expense when money is tight. Although personal loans can be a great solution if you’re in a financial bind and need to pay for things like an unexpected medical bill or an expensive car repair, they can also be used to improve your financial situation.
Personal loans can help you build wealth in three ways. First, personal loans, particularly debt consolidation loans, can be used to get rid of high-interest debt to improve your cash flow. You can also use the funds to take advantage of a good investment opportunity, or finance some much-needed home renovations or repairs that could potentially increase the value of a property.
How to use personal loans to build wealth
Just like credit cards, personal loans are a highly versatile credit product, as lenders place very few restrictions on how you can use the funds. But unlike credit cards, personal loans are disbursed in a lump sum and come with a set repayment schedule and a fixed interest rate.
This alone makes them a better option when it comes to building wealth, as these factors can help you avoid the temptation that often comes attached with revolving credit, such as overspending or only paying the minimum due, both of which can worsen your financial situation.
“A personal loan can give the borrower clarity on what is there to spend and a plan to pay the debt off,” David Mullins, CFP and wealth advisor at David Mullins Wealth, says. “Of course, debt is not typically the answer, and spending behaviors must first be changed before such strategies can become beneficial.
In other words, for you to be able to use a personal loan successfully to build wealth, you must first have a plan and be on solid footing when it comes to your finances and spending behaviors. Otherwise, you’re at risk of falling into an endless cycle of debt.
Debt consolidation
If you’re struggling with high-interest debt, such as credit card debt, then taking out a personal loan to consolidate debt could be a great option to help you increase your net worth. Personal loans tend to have much lower interest rates compared to those of credit cards, plus their interest is fixed, meaning you’re protected against market fluctuations — something credit cards can’t offer.
According to CreditCards.com, credit cards currently have an average interest rate of just under 21 percent, while personal loans have an average interest rate of 11.29 percent — that’s a 46 percent difference.
By consolidating multiple credit cards into a single loan with a fixed interest rate and a set payoff date, you could get rid of debt faster and save money on interest along the way to improve your monthly cash flow.
For instance, let’s say you have $5,910 in credit card debt, which is the national average, with a 21 percent interest rate. If you take out a 36-month personal loan with a 11.29 percent interest, your monthly payment will go from $223 to $194, and you’ll save over $1,000 on interest over the life of the loan.
That said, to be able to maximize your savings with a debt consolidation loan, you’ll need to have good to excellent credit, plus a stable source of income. Additionally, when looking at debt consolidation loans, savings can fluctuate not only based on your interest rate but also on the fees charged by lenders. Make sure you factor these charges in as part of the equation to determine whether a debt consolidation loan will actually save you money or if a debt avalanche or snowball payoff strategy may be a better option.
Investing
Contrary to what many believe, you can use a personal loan to invest. This investment can be using the funds to pursue a certification to advance your career and increase your income, but it can also be investing in the stock market. Likewise, you can also use a personal loan to purchase an asset that you can rent or use to generate income. Personal loans can come with interest rates as low as 4.6 percent, depending on the lender.
That said, for this to work, you will need to have excellent credit and stable finances, otherwise, you won’t be able to qualify for the lowest personal loan rates. And, the higher the interest, the less earnings you’ll be able to generate through your investment, thus defeating the initial purpose of the loan.
“When using personal loans to build wealth you must be purchasing assets that will appreciate or cash flow more than the interest rate, including maintenance costs — if any,” Mullins says. “One mistake entrepreneurs can make is to assume everything will go right and be overly optimistic on financial projections. Make sure you calculate worst case scenarios.”
Financing home improvements
Another way personal loans can be used to build wealth is to make renovations or improvements to a property, including your primary home or rental, such as an Airbnb. Home improvement loans, which are a type of personal loan, are an ideal choice for these types of projects.
Just like other personal loans, home improvement loans come with fixed interest rates and a set repayment schedule. What’s more, some lenders may offer repayment terms of up to 144 months on home improvement loans, which can give you a ton of flexibility, especially if you’re planning on doing extensive renovations. They can also be a good alternative to secured loans, such as a home equity loan or a home equity line of credit (HELOC), as you’re not at risk of losing your home if you default on payments.
However, just like using a personal loan for investing, it’s best if you have good or excellent credit for home improvement loans for them to be worth your while — interest-wise.
“When it comes to home improvements with a personal loan, understand you will probably not get 100 percent of your investment back when you resell,” Mullins says.
“What you value and what the market values will likely differ. Nevertheless, if you are dead set on that kitchen remodel, a personal loan can be a better funding option than maxing out credit cards or even taking equity of your home. Just be sure the costs associated with these improvements can be enjoyed even if they are never recouped,” he adds.
What is considered rich?
Americans’ budgets have been stretched thin over the last several months, thanks in part to stubborn inflation and a rising rate environment. According to Bankrate’s latest survey, most Americans feel they need about $233,000 a year to live comfortably — more than triple the amount of the average salary in the nation, which sits slightly over $75,000.
That said, the vast majority of respondents say that $233,000 is just the number to live a normal everyday life. To feel rich, which basically means that they have enough wealth built to not have to worry about feeling financially insecure, Americans say they’d need an annual income close to $500,000. However, this fluctuates by generation, gender, race and ethnicity, as well as parental status, as shown below.
Although it may not be an ideal solution for everyone, personal loans can give many the opportunity to build wealth by providing the seed capital needed to take advantage of economic opportunities they’d otherwise miss out on due to lack of liquidity.
To determine whether a personal loan may be the best solution for you to increase your net worth, make sure to assess your financial situation thoroughly and calculate how payments will fit into your budget, especially if things were to get tough economically. Additionally, have a financial professional evaluate your plan for investment — including potential risks — to better understand whether the reward will be worth the risk.