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When the idea of buying a home comes up, many people imagine a sweet house with a white picket fence: the classic American dream. But in truth, purchasing a home can mean buying an apartment, especially if you are a city dweller, or it might even include buying an apartment complex, where you can both live and earn some rental income.

Apartment living can be perfect for those who love urban life, singles, small families, and empty-nesters. However, it’s not only in cities that you will find apartments: There are beach condos, suburban and rural buildings that house more than one family, and other options available. Wherever it may be located, owning a complex can be a way to enjoy the apartment lifestyle and make money. Typically, an apartment complex is defined as a residential property with five or more units.

Here, you’ll learn the full story on real estate options that may be available when you’re considering the purchase of an apartment complex.

Condo vs Co-Op

If you are considering becoming an owner and resident of an apartment complex, you will likely encounter the terms “condo” and “co-op.” Both a condominium and a housing cooperative involve multi-unit buildings, but there are key differences between a condo and a co-op. It can be important to understand these points upfront.

Ownership

When you buy what is known as a condo, you own the unit. The exterior of the units and land are usually considered common areas, owned collectively.

If you buy into a co-op, you don’t own your apartment. You purchase shares or an interest in the entire building. So, you don’t “buy” a co-op apartment; you become a shareholder in the corporation that owns the co-op.

You’ll usually sign a contract or a lease agreement that allows you to live in one of the co-op units.

Oversight

Both condos and co-ops answer to an oversight body. For condos, it’s a homeowners association. For co-ops, it’s the residents who own shares in a nonprofit corporation that owns the building.

When it comes to buying and selling, the co-op association can influence the deal. Most require a prospective buyer to be approved by the co-op board.

💡 Quick Tip: Mortgage loans are available with flexible term options and down payments as low as 3%.*

Costs

Here are some of the key differences for residents of co-ops and condos:

•   Co-ops tend to cost less per square foot and often have lower closing costs. But some lenders aren’t keen on co-ops or require higher down payments. And some co-op documents outright prohibit financing.

•   Co-op monthly fees tend to be higher than condo fees. A co-op shareholder’s fee could include payments for the building’s mortgage and property taxes, security, amenities, and utilities.

•   Condo owners pay property taxes on their unit, which may provide them with a tax deduction.

•   With a co-op, the monthly dues for maintenance include the property taxes associated with the units, technically owned by the corporation, which receives one property tax bill. Each resident’s portion of that bill is tax-deductible.

House vs Apartment

If you are pondering whether to buy an apartment complex or a house, consider some of these key lifestyle differences.

•   Unlike a co-op apartment or a condo, houses stand alone, and some folks prefer that breathing room. Hey, communal living isn’t everyone’s cup of tea.

•   Along with the home, the owner owns the land that the home sits on, as well as any detached structures on their property like a garage or pool house.

•   Similar to a condo, homes may require HOA fees that cover costs relating to security, maintenance, and access to any amenities in the neighborhood.

•   A house typically will cost more than a condo or co-op apartment, but it usually appreciates faster than a condo. However, in hot housing markets, an apartment or an apartment complex could prove to be an excellent investment.

•   With a house, there’s that yard to mow. Then again, you can have your own garden. With an apartment complex, you may or may not have common outdoor space, whether a courtyard or a roof garden. If it is part of the property, as the owner, you will be responsible for its maintenance.

💡 Quick Tip: One answer to rising house prices is a jumbo loan. Apply for a jumbo loan online with SoFi, and you could finance up to $2.5 million with as little as 10% down. Get preapproved and you’ll be prepared to compete in a hot market.

Finding the Right Real Estate Agent

While buyers can search for an apartment complex on their own, professional help is often a smart move.

Whether you’re a first-time homebuyer or a seasoned one, listing your top priorities can help an agent narrow down the options. Examples of things that could be important to you:

•   Proximity to work or school

•   Local crime rates

•   Parking, traffic, and transportation

•   Cost of living

•   Nearby amenities (gym, grocery store, shops, etc.)

When choosing a real estate agent to work with, it can be smart to speak to a few and ask them key questions to determine if they’ll be a good fit.

Think of it as a job interview and review their qualifications, learn more about their area of expertise, and find out how much it’s going to cost to work with them. Some questions worth asking are:

•   How many clients do you currently work with?

•   How many apartment units/complexes have you helped clients buy?

•   Do you have references?

•   What is your availability to show apartment buildings?

•   How quickly do you typically respond to emails and phone calls?

•   What are your fees? Do you have a network of professionals who can help with other aspects of buying and owning an apartment complex?

Recommended: Buying a Multifamily Property With No Money Down

Renting vs Buying an Apartment

Renting is not always cheaper than buying, but at the same time, any type of homeownership comes with added costs that renters don’t have to incur.

Before deciding whether to buy or rent, it’s best to ask yourself some important questions. And then you might want to check out a rent vs. buy calculator.

There are many calculators available, but they can only provide a loose idea of what may be a better deal long term, so that’s worth keeping in mind. Each calculator will have a different methodology.

Obviously, buying an apartment complex brings a different set of financial obligations and expenses to the table. Consider those vs. potential rental income carefully.

Next, take a closer look at the responsibilities that come with buying an apartment complex vs. just a single apartment.

Why Buy an Apartment Complex?

While the practicality and value of buying an apartment complex will depend on each person’s needs, goals, and financial situation, there are a few ways to tell if buying a multifamily building is a good opportunity.

•   Income. You can earn rental income as an owner of an apartment complex. If you live in one unit and rent out the others, you will have a form of passive income coming your way.

•   Wealth building. When you buy an apartment complex, you may well be building your wealth long-term as your equity in the property grows and its value potentially increases over time.

•   Tax incentives. You may benefit from mortgage interest, depreciation, and other deductions come tax time.

•   Supplemental income. You may be able to earn additional funds via providing laundry machines, parking spots, and the like.

However, you must also consider these obligations:

•   Time and energy. You will likely have to invest a significant amount of time in shopping for and purchasing an apartment complex. Not only are you considering whether there’s a unit you yourself would like to live in, but you must also think about the real estate investment you will be making.

For instance, is the building structurally in good shape? What kind of capital improvements may be required in the future? And if you do become an owner, you will either need to find and hire a management company or be on-call for tenant issues and repairs 24/7 yourself.

•   Funding. Buying one apartment can be pricey enough. Buying a multifamily building? More so. You will need to spend time getting your financing in order, and also recognize that you lose the liquidity of, say, cash in the bank or investments when you purchase real estate.

•   Ongoing expenses. You must have an operating budget and be ready to finance the maintenance issues that are bound to occur. Also, as residents move out, you will need to expend time, energy, and resources to re-rent units. And what if an apartment sits empty for a while? Can you handle that in terms of cash flow?

•   Liability. If an accident or crime were to occur at the property, you could be liable. It’s important to understand, prepare for, and protect yourself in the event of such incidents.

Steps to Buy an Apartment Complex

Soon-to-be apartment buyers will want to understand that getting their finances in order and securing a mortgage loan are some of the final steps toward the goal.

1. Do Your Research

Before you go shopping or apply for a loan, it’s important to understand the responsibilities of owning an apartment complex and to know the four different types of buildings, from Class A (best condition and amenities) to Class D (likely older and in need of repair).

You will probably want to learn more about the housing market and cost of living in areas you are considering. You want to feel comfortable that the area you are investing and living in is stable or on the upswing to protect your business interests and enhance your daily life.

2. Develop Your Budget

Purchasing an apartment complex can involve a six-figure down payment and a positive financial standing. You will also need to have worked through the cash flow implications of owning a multifamily building, including a budget for maintenance and reserves for unexpected expenses.

3. Get Preapproved for Your Loan

Finding the right financing may require a different path than getting preapproved for the purchase of a single-family home. You will need to find a lender who serves borrowers for multifamily properties. It’s likely you will need to have detailed financials prepared for this investment as well.

Don’t be surprised if you need up to 30% as a down payment, and recognize that your financial projections may count more toward your mortgage approval than your credit history.

Recommended: How to Afford a Down Payment, Step by Step

Pros and Cons of Buying an Apartment Complex

If you are thinking of buying an apartment complex and living in one of the units, consider the upsides and downsides.

First, the pros of buying an apartment complex:

•   Income. As an owner/tenant, you should be bringing in a stream of passive income which can build your personal wealth. This can be enhanced by offering additional amenities to tenants, such as laundry facilities or onsite parking.

•   Wealth growth. You will likely build equity in your property, and the value of your building may increase over time.

•   Tax deductions. As the owner of an apartment complex, you may be able to claim deductions and depreciation on your taxes.

•   Convenience. In terms of your own residence, apartment life appeals to many who want an urban lifestyle or the ease of maintaining a smaller footprint.

On the other hand, consider these potential negatives:

•   Expense. Buying a multifamily property will likely require a hefty down payment and an ongoing investment of funds to operate and maintain the building. You may have to cover loss on income also if, say, a tenant moves out and it takes several months to re-rent the unit.

•   Time and energy. Maintaining your property, its financials, and tenant needs 24/7 is a major commitment. It’s not a simple side hustle in most cases!

•   Liability. If someone were to be injured on your property or a crime were to occur, you might be liable.

•   Lack of flexibility. As a resident of an apartment, you may lack the opportunity to customize your home as you could with a single-family house. You probably can’t add another bathroom or expand the kitchen much, for instance.

Tips on How to Buy an Apartment Complex

If you think buying an apartment complex is right for you, follow these tips to help make your ownership dreams come true:

•   Do your due diligence. Scrutinize not just the structure and its mechanicals but also its financial records. You may want to review copies of leases and tax returns and have an appraisal done.

•   Consider your financing carefully. You might get financing from the seller, a commercial bank, or a private lender. You may want to look into what are known as non-recourse loans which, if you were to default, would not allow the borrower to seize your personal property. These loans are typically costlier than recourse loans but can be a smart move for some borrowers.

•   Get the right support. You’ll likely want to be advised by a real estate attorney with experience in this realm, and you may want to interview and hire a property management company to help you handle the sometimes constant demands of owning an apartment complex.

The Takeaway

Are you ready to buy an apartment complex and possibly live in it? If so, it’s wise to be aware of the differences between a condo and co-op building, the financing and expenses involved, and how it may impact your cash flow, tax returns, and net worth. When securing financing, not all lenders will offer funding for multifamily properties, so it’s wise to shop around. If, however, you are simply shopping for an apartment in a building that someone else owns, you’ll likely have a more streamlined path (and many lenders to consider) as you pursue homeownership.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Is it profitable to buy an apartment complex?

Many factors determine whether it is profitable to buy an apartment complex. You will have to consider the cost of the property and its financing, maintenance expenses, the local housing market, occupancy rates, and many other variables. As with any business venture, it may or may not be profitable.

What questions should you ask when buying an apartment building?

When buying an apartment building, it is important to understand the condition of the building and improvements that will need to be made in the future, current and past occupancy rates and rents (ask to see leases), and the tax returns of the current owner (to know what the cash flow is likely to be like). It’s also wise to personally inspect each unit and request an appraisal.

How can you make money when investing in apartments?

It is definitely possible to make money when investing in apartments, but it’s not a given. You will need to have the means to afford the purchase, manage cash flow successfully, understand the rental market in your area, and keep up with maintenance and other liabilities while turning a profit. Working with an experienced, highly recommended real estate attorney and management company may contribute to your success.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOHL-Q225-026

You’ve decided to buy a home. Luckily, you’ve found a real estate agent who can help you find homes to look at and assist with negotiations and inspections. But what if that agent also works for the seller? That is called dual agency, and there’s a lot to consider before agreeing to the arrangement.

Here’s what future homebuyers need to know about dual agency to help decide if it’s the right choice for them.

What Is Dual Agency?

A dual agent represents both the buyer and seller in the same real estate deal. Dual agents are also sometimes referred to as transaction brokers.

Dual agency can be controversial and is banned or severely limited in eight states: Alaska, Colorado, Florida, Kansas, Maryland, Oklahoma, Texas, Vermont, and Wyoming.

Other states do not explicitly make it illegal, but some do warn against using a dual agent.

For example, the New York Department of State issued a memo advising consumers to be extremely cautious when signing on with a dual agent because in doing so they forfeited their right to an agent’s loyalty.

However, in every state where dual agency is legal, the law requires agents to disclose their work with both the buyer and the seller. Both buyer and seller must agree to use a dual agent and sign a consent form indicating they understand what they are agreeing to.

Dual agency may also refer to deal-making of seller’s agents and buyer’s agents at the same real estate company.

For example, Keller Williams, one of the largest real estate firms in the nation, has both seller’s and buyer’s agents. If one of its seller’s agents puts a home on the market, there’s a decent chance that one of its buyer’s agents may have a client for the property.

This is less controversial and poses fewer issues as it is still two separate people overseeing the seller’s and the buyer’s interests.

Recommended: How to Buy a House Without a Realtor

What Are Agents’ Fiduciary Responsibilities?

Real estate agents are legally bound to represent the best interests of their clients. This means agents must disclose any information they have that may or may not help their clients in the negotiating phase.

The obligation to disclose could pertain to information on home inspection reports, defects with the house, or anything else that affects the property’s value.

While representing a buyer, an agent must also disclose any existing relationship with the seller.

Be sure to ask real estate agents important questions about how they work and what they’ll do for you so you’ll know whether they’re the right agent for your needs.

A seller’s agent must disclose any relationship with potential buyers and all offers made on the property—unless, in general, the seller has instructed his agent in writing to withhold certain kinds of offers.

Real estate agents are also expected to put their clients’ financial best interests above their own. This could mean putting in an offer below asking price, which would reduce their own commission.

With all of that in mind, it becomes clear that issues of loyalty and confidentiality become challenging in a dual agency situation.

💡Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Pros of Dual Agency

Smoother communication: Having one agent representing both the buyer and seller could help create a smoother communication path. Because the person represents both parties, they may be able to speed up any negotiations. In this case, the dual agent may also understand both the seller’s and the buyer’s timelines, their schedules, and any internal deadlines better than two separate parties could. Buyers wouldn’t have to wait for the seller’s agent to call back and sellers wouldn’t have to wait for a buyer’s agent to call back, because with dual agency they are the same person.

Potentially more information on the home: A dual agent may be able to obtain more information on the home than an agent just representing the potential buyer. In turn, they can relay any pertinent information, such as structural issues, inspection reports, and any updates made to the home, to the potential buyer.

Potentially more access to a larger pool of homes: Remember, dual agency also means a buyer’s agent and seller’s agent working for the same agency. That means, if one home doesn’t work out, the two agents could look internally to find more potential homes their agency represents for the would-be buyers. They may even be able to find a few homes that haven’t hit the market yet.

Possibility for a discount on commission: In a typical real estate transaction, the seller’s agent and buyer’s agent split the commission. A dual agent may be willing to negotiate down their commission since they are double-ending the deal.

Dual agents still have to do their job: In the end, even dual agents must present all offers, prepare all paperwork, present all disclosure agreements, and help to complete the deal.

Recommended: 10 First-Time Homebuyer Mistakes to Avoid

Cons of Dual Agency

Buyers (and sellers) won’t get special treatment: Agents only working for one side will likely be willing to go all out for their client to ensure that the client gets the best deal. An agent working for both sides may be more tempted to get the best deal for themselves to maximize the commission (hey, it’s just human nature to look out for No. 1). A buyer (and a seller) usually wants loyalty above all else when looking for a home. Homebuyers may want to seek out someone who knows what’s needed to buy a house and has their back.

Buyers (and sellers) may not get the price they want: Again, a dual agent’s allegiances are split down the middle during the deal-making process. A seller’s agent is meant to promote the home and get the seller the best price for the home with the fewest contingencies.

A buyer’s agent is on a mission to find every tiny thing that needs to be fixed with the home to get the buyer the best deal they can. If a person is representing both sides, how can they do both? It’s important to discern an agent’s allegiances before signing on the dotted line.

No pushback from the other agent: In a two-sided real estate deal, the two agents will typically go back and forth on the home’s price, any reductions the buyer may want in exchange for repairs, the home’s inspection report, and much more. This creates a system of checks and balances for both sides, which can be important when negotiating a fair deal. However, if one person is playing both sides, things may get muddled, hurting both the seller and the buyer.

The Takeaway

Dual agency is rare in the real estate world because most buyers and sellers want to find an agent who is loyal to them and has their best interests at heart. Still, if you find yourself in a dual agent situation, there is much to know.

There’s another important decision most homebuyers must make: getting the right home loan. Different lenders may offer different terms, rates, or perks that may fit a buyer best.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Is having a dual agent a good idea?

Dual agency isn’t necessarily a good idea and is banned or strictly limited in eight states. A dual agent’s allegiance may be split between the buyer and seller, and most buyers will prefer a dedicated agent. Real estate agents are fiduciaries and obligated to put their client’s interests before their own, but that may be difficult when they have clients on both sides of a transaction.

What is a common challenge with dual agency?

A common challenge with dual agency is that the agent’s allegiance is split since they represent both the buyer and the seller. While this can facilitate some communications, it may raise problems in terms of whose interests the dual agent is representing.

Do dual agents get double commission?

Typically, in a real estate deal, the agent representing the buyer and the agent representing the seller divide the commission between them. If there is a dual agent — someone who represents both parties s

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q225-163

Having a roommate can be great; you have companionship and someone to split the bills with. But that sharing of expenses can sometimes get challenging and even tense. Roomies can wind up arguing over who is using up all the paper towels or sending the electricity bill through the roof.

Here are some smart tactics that can help keep the peace and also control costs.

Creating Clear Guidelines on Which Bills to Split

One of the easiest ways to ensure everyone feels satisfied with how the household bills are handled is to be direct and upfront with financial expectations. And this means being straightforward about what those expectations are before anyone moves in.

If you’re moving into someone’s home or an existing roommate situation, it’s a good idea to ask how bills are handled now and how it will change when you move in. Some specifics you may want to address:

•   Whose name is currently on the utilities?

•   Will I be expected to put my name on any utilities?

•   When is money collected to split the bills?

•   Are the bills divided equally, or by room size?

These can be helpful, because everyone can understand what’s expected. It also sets ground rules moving forward.

Deciding How Everyone Wants to Split Bills

As for the best way to split bills, that may depend on the household situation. For example, if the home has two evenly-sized rooms and a shared bathroom, kitchen, and living area, it may be easiest to simply split the bills down the middle as everyone has an equal space. But if one room is exponentially larger than the other and has its own en suite bath, the bills could be split proportionally to reflect the extra space for one roommate versus the other.

It is a good idea to tackle the grocery issue head on. For instance, address such questions as:

•   Is the house going to split groceries?

•   Is everyone going to enjoy one shared meal together at night?

•   Are the roommates going to split common goods like cleaner and toilet paper?

•   Or is each person going to fend for themselves?

Any way you choose to go about it is fine, as long as it’s all out in the open — before someone accidentally finishes someone else’s ice cream without asking.

Recommended: Ways to Save Money on Food

Picking Who Is Responsible for Which Bill

Once it’s decided how a bill will be divided, you may want to assign each roommate ownership of bills for things like the electricity, heating, gas, water, trash, cable and internet, and more, depending on the rental agreement. Perhaps you’re able to get a better deal based on a roommate’s existing account with a certain biller. That may be one way to decide and to cut back on expenses.

Or, you might have the roommates divide up the bills evenly in order to distribute the responsibility. Doing things this way may also ensure everyone pays bills on time. Being late with bills can lead to fellow roommates being surprised with a service being interrupted and their credit being dinged if they are listed on the account that’s unpaid.

You might also look into changing the due date on bills; this can sometimes be accomplished and can ease cash flow.

Creating a Roommate Bills Contract

Once the lease has been negotiated, the bills have all been cleared up, and everyone is in agreement, consider creating some sort of “roommate contract” that spells out exactly what was decided upon, which everyone reads and signs.

That way, no one can ever claim they were confused about the household budget and how bills are split, when money is owed, and who is responsible for what.

Sharing a Spreadsheet of Expenses

Once you and your roommate(s) are settled in, you might want to create and share a monthly Excel spreadsheet of expenses.

You could share this spreadsheet online, allowing each roommate to keep track of the expenses they are responsible for and easily let everyone know what has been paid and what is outstanding.

This spreadsheet may also come in handy for adding in shared groceries and necessities like milk, eggs, toilet paper, and paper towels. That way, everyone can keep track of who bought the last batch to avoid an argument later. You’ll also see how much your household is spending on groceries per month and other expenses.

Recommended: Different Types of Budgeting Techniques

Sitting Down Together at the End of Each Month

One sure way to ruin a roommate relationship is for one person to get passive-aggressive about the bills. As a result, you generally want to avoid leaving little notes around the house about who owes what (or who hasn’t done the dishes in far too long) and instead face those issues head on.

At a good time for everyone, perhaps toward the end of each month, schedule a 10-minute roommate check-in. In this meeting, everyone can share household happenings, announcements, and any updates on household bills.

By sitting down in person, no one can avoid possible uncomfortable questions about money. You all can figure out potential sticky situations together.

As a bonus, roommates can also use this time to go over any other to-dos around the house. You might also discuss ways to economize, such as saving money on water bills.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Keeping Some Personal Purchases Separate

Though some may be tempted to fully invest in a roommate relationship by sharing the financial burden on just about everything, there are some items that are better left in the personal spending category.

That includes the purchase of any big-ticket items you’d like to take with you if you ever move out. These might include such items as a TV, couch, tables, glasses, or an expensive air fryer purchased on a whim.

It may also be helpful to distinguish an area in cabinets and the fridge for each individual roommate to place specialty or expensive food items they do not want to share.

If one roommate has a pet they adopted on their own, it is a good idea to keep those petcare expenses completely separate.

Another common recommendation is for everyone to invest in their own renters insurance. This will protect all their items in case of a fire, flood, burglary, or more. This type of insurance could save everyone a lot of money and heartache if disaster strikes.

Using Modern Technology to Split Bills with Roommates

Fortunately, splitting bills with roommates is easier than ever, thanks to the advent of P2P transfers. If one roommate covers a household bill, the rest of you can reimburse them using a app like Venmo or Apple Pay. Your bank may also have tools you can use to quickly send funds to others.

It can be fast and free to transfer money this way and can make sharing expenses with roommates quick and simple.

The Takeaway

The key to splitting bills with roommates smoothly is to establish clear financial guidelines from the start. Consider using P2P transfer apps to simplify reimbursements and maintaining a shared spreadsheet for transparency.

Other moves that can help keep the peace include: having regular monthly check-ins to address issues openly, keeping some personal expenses (like big-ticket items, specialty groceries, and pet care) separate to avoid conflicts, and setting up a roommate contract to formalize agreements and prevent misunderstandings.

If you need flexible banking (whether or not you have roommates), consider what SoFi has to offer.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How should bills be split with roommates?

To split bills fairly with roommates, start by listing all shared expenses — rent, utilities, internet, and subscriptions. Agree upfront on how to divide them, usually equally unless someone has a significantly larger room or different usage habits. You might designate one person to pay the bills and collect each roommate’s share in advance using a payment app. Open communication and written agreements can help avoid misunderstandings and ensure everyone pays their fair share on time.

How do you divide utilities with roommates?

Divide utilities by first listing all monthly expenses, such as electricity, water, and internet. Agree on a fair division method, such as splitting equally or based on usage. Then choose whether one person pays all bills and collects money, or if you will divide responsibilities (e.g., one pays electric, another pays internet, etc). Consider using a budgeting app or shared spreadsheet to keep tabs on payments and ensure everyone pays their share on time. Regularly review and adjust the division if necessary to maintain fairness and avoid conflicts.

How do you split bills between two people?

When splitting bills between two people, first decide what will be shared — rent, utilities, groceries, etc. A common approach is a 50/50 split, but you can adjust this based on income or usage. For example, if one person earns significantly more, a proportional split might be more fair. Next, establish who’s responsible for paying which bills so nothing slips through the cracks. Also consider using tools like a shared budgeting app or spreadsheet to track expenses. Clear communication and consistent practices help prevent conflicts and promote financial harmony.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q225-066

Paying rent every month can feel akin to throwing money away. You don’t grow equity in a home, nor do you have a place to call your own or customize as you see fit (farmhouse kitchen sink, anyone?).

Perhaps you’re wondering if the time is right to buy a home or at least start saving for one. Maybe you’ve caught DIY fever and have ideas about what your dream home would look like and have been watching videos of how to redo a backsplash and plant some annuals. Or maybe you are planning on enlarging your family and think it’s time to become a homeowner, since a yard and playroom sure would be nice.

But there are other considerations, especially financial ones, to contemplate as well. The housing market has been hot, and pulling together a down payment plus affording a home loan may stretch your budget. Maybe renting is your best bet after all.

“Am I financially ready to buy?” is certainly one question you will likely want to answer. But it’s not the only issue. Here, learn the four signs that you may be ready to join the ranks of first-time homebuyers.

Renting a Home vs Owning a Home: Pros and Cons

One important way to know if you are ready to be a first-time homebuyer is to consider the pros and cons of owning vs. renting.

First, take a closer look at the benefits of owning:

•  You know what your housing payments will be in terms of your mortgage amount, especially if you opt for a fixed-rate mortgage.

•  Month by month, you will build equity in your home.

•  As your equity grows, you may be able to borrow against it for other financial goals.

•  Owning a home can be a step toward building your net worth.

•  You may qualify for tax deductions.

•  On-time payments can help build your credit history.

•  You can customize your home to reflect your particular needs and tastes.

Now, here are the cons of owning a home:

•  You often need to come up with a down payment, which can be hard to save for. There are also closing costs to be paid.

•  You need to qualify for a mortgage.

•  You also need to budget for property taxes and related expenses such as insurance.

•  It will be your responsibility to pay for home repairs and upgrades, which may make having a healthy emergency fund more important. If, say, the furnace conks out, there’s no landlord to call for help.

•  Your mortgage, as well as taxes and other expenses, could add up to more than rent.

•  You are making a long-term commitment to owning a home. While, of course, you can always sell a property, it’s in your best interest to stay put and recoup closing costs and other expenses vs. picking up and moving frequently.

Next, think over the pros of renting:

•  It could be cheaper than owning. Your rent could be less than the mortgage, and you won’t have property taxes to pay.

•  Repairs and maintenance will likely be your landlord’s responsibility.

•  You’ll have the flexibility to move more easily when you want to.

•  You don’t need to come up with a down payment or qualify for a mortgage loan.

Last of all, take a look at the cons of renting:

•  You won’t be building equity in a property as you make your monthly rental payment.

•  Your net worth will not grow with rising property values.

•  You won’t have the security of ownership and its relatively predictable costs. Your landlord could raise your rent or decide not to rent the property any longer.

•  Your payments typically don’t build your credit history.

•  While you can likely decorate as you please, you won’t be able to upgrade or renovate as you might with a home you own. For instance, even if your landlord did allow you to get a new smart fridge, you probably couldn’t take it with you when you move.

💡 Quick Tip: Buying a home shouldn’t be aggravating. Online mortgage loan forms can make applying quick and simple.

Renting a Home vs Owning a Home Differences

Deciding whether to buy or rent is a major decision that can involve your financial and personal needs and aspirations. Here are some specifics:

•  Renting a home offers you more flexibility in terms of when and where you move; you will likely feel less anchored in a property.

•  Renting may well be less expensive: You don’t need to come up with a down payment, and rent may cost less than a mortgage or a mortgage plus property taxes.

•  However, when you have a mortgage, you are likely building equity and wealth, which you may choose to borrow against in the future (say, with a cash-out refinance). You may not have that feeling of “throwing money away” every month on rent.

•  When you buy a home, you are on the hook for that monthly payment, but, if you have a fixed-rate loan, it is more predictable than rent, which may fluctuate with the housing market.

•  As a homeowner, you would be liable for paying taxes and insurance, as well as bankrolling any renovations and upgrades to your home.

•  When you own your own place, you can personalize it to suit you, whether that means putting in a spa bathroom, knocking down walls, or building a patio.

Buying a Home vs Renting an Apartment

When it comes to deciding whether to buy a property or rent a home (say, an apartment), there is no right or wrong answer.

•  Renting is often more affordable, allowing you to save money and perhaps meet other money goals like paying down debt.

•  Renting is more flexible in most cases. If you rent an apartment, you are able to move at the end of your lease (or possibly before) without a lot of hassle.

•  When you rent an apartment, your landlord is probably covering property taxes and will be responsible for repairs, such as HVAC upgrades or fixing a clogged sink.

That said, when you buy a home, you may find the following:

•  A bigger financial commitment may be required (down payment, closing costs, property taxes, home maintenance), but you are building equity and possibly growing your wealth.

•  You can make your place yours and renovate it to suit your taste.

•  Buying a home vs. renting an apartment can give you a sense of security: You won’t have a landlord who can raise your rent, and you can put down roots in a community.

4 Signs You May Be Ready to Buy

If you think owning a home vs. renting is right for you, here are four signals that you may be ready to move ahead.

1. Your Budget Is Big Enough to Cover the Expenses

Home ownership isn’t all gain, no pain. Expenses may include:

•  Down payment and closing costs

•  Mortgage payments, including property taxes, homeowners insurance, and, if applicable, private mortgage insurance

•  Repair and maintenance costs, including HOA dues, if applicable.

How can you budget for these upfront and ongoing expenses? One way is to take a look at the average amount each of these costs in the housing market where you plan to buy a home to get a sense of how home-related expenses may affect your finances in the larger picture.

Doing some number crunching with a home affordability calculator may be enlightening.

You may get excited about buying a fixer-upper when watching home improvement shows. A common mortgage for such homes is an FHA 203(k), backed by the federal government, which includes money for the purchase price and some repairs and renovations.

Buyers will need to get bids for all the repairs they hope to fund with the loan. For less extensive repairs/improvements, there’s a Limited 203(k).

If the desired renovation is on the smaller side and you acquire a traditional mortgage, cash or a personal loan are options.

You can get an idea of how much your chosen home repair or improvement costs will be with this home improvement cost calculator.

💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

2. You Plan on Staying Put for a While

Buying a home signals more of a commitment to location than renting. If you’re likely to relocate in the coming couple of years, renting may be the right move.

Here’s why: If you buy a home and sell it soon after, there’s a chance you’ll barely break even. That’s because real-estate commissions and other factors will come into play. And the financial and emotional stress of selling again soon after buying can be significant. On the other hand, if you can see yourself staying put in your new home for a while, it might be a sign to start shopping.

3. You Have Good Credit

Your good or better credit profile may have been advantageous when applying for a place to rent.

The credit you’ve spent years building will likely pay off in a bigger way once you make the move to own, with improved lending terms such as a lower mortgage rate offer.

What credit score is needed to buy a house? The average American’s credit score remains in the range considered “good.” But applicants with “fair” and even “poor” credit scores can and do secure mortgages.

Here’s how credit scores are usually classified:

•  Excellent: 800–850

•  Very good: 740–799

•  Good: 670–739

•  Fair: 580–669

•  Poor: 300–579

If you’ve spent years building your credit and your number reflects that, then you might be financially ready to buy a home.

Credit score requirements for loan program eligibility and pricing can vary from lender to lender, so you may want to shop around.

4. Rents in Your Area Are High

In many markets, the rising price of rent could make buying more enticing than ever. It may be a smarter move to invest your money toward homeownership vs rent.

Two big factors to consider are:

•  How long you plan to stay in your home

•  The price-to-rent ratio, which compares the median home price and median annual rent in a given area.

Several websites (such as Zillow, Trulia, and Realtor.com®) have tools that allow you to assess the dollars and cents of renting vs. buying. Estimating your break-even point of renting vs. owning a home could be another useful way to answer the question of whether it’s a good time to buy a home.

It’s best to take the calculations with a grain of salt, though. These are general estimates, and no one can predict the future of housing prices, rents, and taxes.

The Takeaway

When considering whether to buy vs. rent, there’s not one right decision. It’s a matter of which scenario suits your life and your financial situation at a given time.

Signs that you may be ready to buy a home can include having an adequate budget for the costs involved and a good credit profile, a desire to put down roots, and an understanding of the price-to-rent ratio in your target area.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What are the advantages of owning vs. renting a home?

There are several pros to owning vs. renting a home. You can build equity in your home and potentially grow your net worth. What’s more, you can personalize your home however you like. You’ll also have stability in terms of both knowing your housing costs every month (as opposed to a surprise rent hike) and putting down roots in a community.

What are 3 disadvantages to owning a home?

There are several cons to owning vs. renting a home. You may face higher costs (down payment, closing costs, mortgage, plus property taxes). In addition, you will be responsible for home maintenance, which can be pricey and require your time and energy. You’ll likely have less flexibility in terms of moving, too.

What is the main reason to avoid renting to own?

Renting to own can be problematic if you change your mind. You can wind up losing your down payment and other charges.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q225-169

Monetary policy is how a central bank or similar government organization manages the supply of money, interest rates, and overall economic growth. In the United States, the central bank is known as the Federal Reserve. The Fed has a dual mandate: first, to maintain stable prices, and second, to promote maximum employment. Monetary policy is one tool that the Fed has to try and accomplish those goals.

Overview of Fed Monetary Policy

The Federal Reserve sets the key interest rate in the U.S., called the federal funds rate, that influences the short-term rates other financial institutions use, impacting the availability and cost of credit.

The Fed also has an indirect effect on longer-term interest rates, currency exchange rates, and prices of bonds and stocks, as well as other assets. Through these channels, monetary policy can influence household spending, business investment, production, employment, and inflation.

A country’s economy sometimes experiences inflation, which is when the prices of goods and services overall are rising. The central bank can use monetary policy to tame inflation, mainly by raising interest rates, as it did in 2022 and 2023, and during the 1980s.

In some instances, the economy may have been in a period of deflation when overall prices have fallen. Then the central bank typically responds by loosening monetary policy, either by lowering interest rates or using the more extreme measure of buying assets directly. A sharp period of deflation occurred after World War I, as well as during the first several years of the Great Depression.

What Is the Fed Funds Rate?

The Federal Reserve System has a committee, the Federal Open Market Committee (FOMC), which meets several times a year to review key economic factors. The FOMC watches for signs of recession or inflation. It then sets what’s called the federal funds rate, which informs the interest rate banks charge one another for overnight loans.

It may seem counterintuitive that banks would loan money to each other, but here’s why they do. Banks are required to meet the reserve requirement set by the Fed. This is the least amount of cash a bank must have on hand, either in its own vault or in one of the regional Fed banks. Even when the Fed sets the reserve requirement ratio to 0% for depository institutions, which it did in response to the Covid-19 pandemic, banks are still incentivized to maintain adequate reserves.

When the overnight rates banks use to borrow money are lowered or raised, this in turn can lower or raise the rates businesses and consumers use to borrow. For example, during the housing bubble of 2008, the Fed lowered the federal funds rate to a range of 0% to 0.25% to encourage borrowing. This was part of the Fed’s strategy to mitigate the financial crisis. In contrast to that rate, in 1980, the federal funds rate was 20%, the highest in our nation’s history.

Rates set by the Fed have an impact on the overall financial market. When rates are low, it’s less expensive and easier to borrow, which can boost the market’s liquidity. Overall, when rates are low, the economy grows. When high, it typically retracts.

Recommended: Federal Reserve Interest Rates, Explained

How Monetary Policy Can Affect You

If a bank doesn’t have enough to meet its reserves, it borrows the funds from a bank with excess cash. The lending bank can benefit financially because it would earn interest in the amount of whatever the federal funds rate is that day.

This system helps ensure that each bank has enough cash on hand for its business needs that day, and it also caps that bank’s lending ability because the bank needs to keep a certain amount of cash on hand, rather than lending it out.

Moves made by the Fed can have a significant impact on ordinary people’s personal finances, as well. As the federal funds rate changes, it’s likely that banks’ prime interest rates — or the rates they charge their best, low-risk customers — will change in response, as well. So, if the federal funds rate goes up, your bank may decide to charge a higher interest rate on loans — or if it goes down, a lower rate.

This may affect what consumers are likely to be charged on mortgage loans, car loans, personal loans, and so forth. A credit card rate, as well, is typically tied to the prime rate plus a certain percentage.

At the same time, a rise in the federal funds rate could mean that banks may increase the APY you receive on a bank account, while a cut in the Fed’s rate could lead to a lower APY. An increase in the federal funds rate is typically an incentive to save, rather than spend.

In short, as the federal funds rate and the prime interest rates at banks go up or down, so, too, can both monthly loan payments and the interest received on deposits at financial institutions.


💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers high-interest savings accounts with no account fees. Open your savings account today!

Famous Fed Decisions

If you want information in significant detail, you can see meeting minutes from the Federal Reserve going back to 1936. You can also see the entire history of rate changes since 1954.

An entire book could be written about Federal Reserve policies and the Great Depression — a decade-long, deep economic downturn when production numbers plunged and unemployment figures skyrocketed. It’s been acknowledged that mistakes the Fed made contributed to this economic disaster.

During this time period, the Fed was largely decentralized, and leaders disagreed on how to address the growing economic challenges. Some policies were implemented that unintentionally hurt the economy. The Fed raised interest rates in 1928 and 1929 to limit securities speculation, and economic activity slowed. The Fed made the same error in judgment in 1931, at the start of the Great Depression.

In 1973, President Richard Nixon stopped using the gold standard to support the U.S. dollar. When inflation rates tripled, the Fed doubled its interest rates and kept increasing them until the rate reached 13% in July 1974. Then, in January 1975, it was significantly dropped to 7.5%.

This monetary policy didn’t effectively address the inflation, and in 1979, then Fed Chairman Paul Volcker raised rates and kept them higher to end inflation. This might have contributed to the country’s recession, but the inflation problem was solved.

Recommended: History of the Federal Reserve

Monetary Policy vs Fiscal Policy

Both monetary policy and fiscal policy are tools government organizations use to manage a nation’s economy. Monetary policy typically refers to the action of central banks, such as changes to interest rates that then affect money supply.

Meanwhile, fiscal policy typically refers to tax and spending by the federal government. In the U.S., fiscal policy is decided by Congress and the presidential administration.

For instance, when the Covid-19 pandemic wrought havoc on the U.S. economy in 2020, causing many businesses to shut down, U.S. fiscal policy generated stimulus packages that included supplemental unemployment benefits, stimulus checks, and small-business loans. These measures were intended to prop up the economy during a difficult time.

The Takeaway

Monetary policies are a key way that central banks try to influence a country’s economy. The main tools that central banks, like the U.S. Federal Reserve, use are interest-rate levels and money supply. On a macroeconomic level, monetary policy can be a powerful, important way to fend off recessions or tame inflationary pressure. On a microeconomic level, the monetary policy interest rates that a central bank sets also affect both loans that everyday consumers take from their banks and the interest rates they receive on their deposits and savings.

Understanding how monetary policy works can inform individuals’ strategies when it comes to spending, saving, and making bigger financial decisions.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What is the Federal Reserve’s dual mandate?

The Federal Reserve’s dual mandate is to both maintain stable prices — or, keep inflation in check — and to promote full or maximum employment in the economy.

How does monetary policy differ from fiscal policy?

Both monetary policy and fiscal policy are tools used by regulators to manage the economy, but monetary policy refers to tools used by the Fed or a central bank, such as interest rates, whereas fiscal policy refers to tools used by Congress or the executive branch, such as taxation and spending.

Who or what sets interest rates in the U.S.?

The Federal Reserve sets the federal funds rate in the U.S., which then has a broader impact on the availability and cost of credit for consumers. The rates set by the central bank directly impact the rates banks use to borrow from each other, which in turn affects the interest rates consumers may see, ultimately influencing economic activity in the country.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

SOBNK-Q225-113