You may or may not be aware of this but Bozeman has a thriving entrepreneurial community! With its growth over the past 5 years, this community has become important to our local economy. This community has been able to come together due to a perfect storm of factors.
Factors affecting Bozeman’s Entrepreneurial Community:
- A high rate of entrepreneurs in the population.
- A high rate of new entrepreneurs who created a business by choice instead of necessity
- A mix of population that are native to the state and those that are moving here with capital and talent.
- A ready employment base, thank you MSU and University of Montana.
- Low cost of business.
- High rate of jobs created by each of these new entrepreneurial businesses.
All of this contributes to Montana being in the top ten states for business creation according to the Kauffmans Indicators of Entrepreneurship. I think that is pretty impressive!
Originally, Bozeman and Montana came to national attention with the establishment of RightNow Technologies in Bozeman and its sale to Oracle. There were many companies formed by former employees of RightNow and Oracle that stayed in Bozeman. These founders and their employees helped to knit together today’s entrepreneurial tech culture and community.
These days, there are all sorts of organizations that want to help start ups and people with great ideas. Most of advisors are really keen to continue to foster the entrepreneurial spirit and success in Montana. These groups will contribute their time, their expertise and even funding to help startups get off the ground.
2020 is forecasted to be a banner year for investment in our state with more capital coming from inside the state as well as from outside the state. The one cloud on the horizon to continued growth of Montana’s tech business is finding enough qualified workers. Hopefully, our education system will be able to step up fast enough to help meet the demand for these skilled workers.
To learn more about the thriving entrepreneurial community in Bozeman, check out a few resources that are listed below:
Also be sure to check my blog for more on life and real estate in Bozeman Montana. http://movemetomontana.com/
Over the weekend, I taught a first time home buyer seminar. I love helping first time homebuyers get into their first home because it means so much not only emotionally but also financially. It is the start of a secure financial future that can help you all the way through your retirement. Now is a particularly good time to purchase a home as interest rates are at multi year lows, inventory is better than it has been in a while, prices are still increasing but at a less rapid rate and there are plenty of low downpayment programs and down payment assistance options.
I want to focus today’s blog though on exactly how and why you are creating wealth as a first time home buyer and is an important building block of your portfolio and financial future.
The example that I used in the seminar is pictured on this white board photo and I will bullet point it out so it makes sense.
Case #1 – Rent
First assumption is that a person rents an apartment for $1000 a month.
The $1000 goes to the landlord.
The benefit received by the renter is a place to live. The renter is not paying off a larger debt to eventually own the home outright. ( Unless this a very rare lease to own situation)
There are no tax benefits associated with paying rent.
Case #2 – Purchase home with financing , usually from a financial institution.
This person has purchased a home with lender financing and pays $1000 a month to the lender.
What happens to that money is the interesting part
Part of it (I am using $500 a month in my example below) goes to the bank as interest to pay the bank for using their money. But the other part of the $1000 payment goes to pay principal on your loan. Principal is the part of the purchase price that you borrowed to purchase that house. Every principal payment increases your ownership in the house as you owe the bank less with each payment you make.
In my example, $500 a month goes to principal which turns into $6000 a year. In the space of one year, you have will have reduced your debt by $6000 and that continues for as long as you have that loan.
So that’s a bit of wealth creation right there as you own more and more of a valuable asset. The money that you pay off is considered your equity in your home.
But that’s not all…you will also be able to take advantage of an appreciating real estate market.
I know we all like to complain about rising home prices but did you think that the flip side is that if you actually own a home with the help of a lender, the rising home prices increase the value of your home too! And guess what, the bank doesn’t get any of that, its all yours!
You may not touch that equity and wealth for many years but you may want to consider what it can do for you.
Some examples :
- The equity that you earn simply by paying your mortgage and letting your home appreciate may provide a large down payment for your next home, say if you needed another for a growing family.
- It can help pay for a second home or an investment property
- The equity from the first home may help pay for kids schooling
- It can serve as nice retirement nest egg
To recap the benefits that one gains from paying a mortgage over rent:
- The interest portion of your payment is tax deductible
- The principal portion of your payment pays off debt (good for the credit score), increases your ownership in that house and creates wealth as your equity builds
- The value appreciation which increases your equity in that home belongs only to you, not the bank.
- You have a solid financial wealth tool that can be used later for when you need it.
That first home with very little down can be a springboard to financial security down the road. Purchasing a home is really one of the best leveraged investments you can make. Now is a great time to take advantage of this just because of the all of the positive market conditions and available money at low rates.
Please reach out and let’s talk more about more about creating wealth as a first time home buyer!
Check out my website and blog http://movemetomontana.com
For more on mortgage rates, check here http://www.mortgagenewsdaily.com/reports/newsletter