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How to build wealth when you don't own your home

Gita Sitaramiah, Star Tribune on

Published in Home and Consumer News

Darla Kashian recalls closing on her first home, then getting laid off the next day.

She was working at a startup company as the dot-com crisis began. Panicked, she took the first job offer she got. Kashian, who is now an RBC Wealth Management adviser, looks back and thinks she shouldn't have used all of her savings toward a down payment.

"I think you're in a more powerful position when you have cash in the bank," said Kashian, who also recalled a $30,000 emergency repair immediately after another home purchase.

If you're in your 20s or 30s and frustrated at the recent home price boom and rising interest rates or aren't ready for raking leaves or shoveling snow, take heart. There are other paths to saving and investing toward financial stability and freedom.

To be sure, homeowners who borrow and stay in their houses for decades can build considerable equity in their homes. They have the forced savings account of a mortgage plus appreciation and prices have trended upward historically. A notable recent exception came in the years around the 2008 financial crisis.

Home ownership has been a substantial contributor of wealth for low-income households, since they hold the majority of their wealth in their homes, according to Habitat for Humanity.


But home ownership comes with opportunity costs, such as reduced flexibility to relocate for career opportunities. There's also the expenses, sometimes for sudden unexpected repairs.

"Anybody that's owned a home understands that homes aren't necessarily an easy way to build wealth," said Grant Meyer, a financial adviser and founder of GTS Financial in Bloomington, Minnesota. "My home just needed a new hot water heater and a set of some appliances and most certainly did not make me any money in the short term."

We asked financial advisers for tips on how people in their 20s and 30s can build wealth as a renter. Here's a few steps to get started:

Live on less than you make


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