Sometimes you have to adjust what you think you want and those plans by taking a different path to create the wealth and life you want…
This story is actually from a couple of years ago but a worth retelling. I find that whenever prices are high, people get depressed that they cannot buy a home or don’t know how to invest in property correctly. They feel “priced out of the market”. A couple of years ago, I had a young man come in to qualify for a house or condo. After crunching his number he was short $200,000 in buying power. The houses were $600,000 and he could afford $400,000. Single, no kids and had just started working in Engineering 2 years ago, he also didn’t have a lot of savings.
After talking to him, and listening to his goals. Here at Athena Paquette Mortgage Consulting, we suggested he buy a duplex (like I do to every person starting out in real estate). He didn’t like the idea of a duplex which at the time he could have gotten for $600,000 which he did qualify because of the rental income we could to use to qualify him.
So as an alternative, I asked him if there was anywhere he liked to vacation and he said Palm Springs for the golf, film festival, etc. So I suggested that he buy a property down there. At first, he said no I planned to buy my first home close to work. I want to be a homeowner. But after I showed him online listings and the prices in the desert, he relaxed a bit and was open to changing his plan and putting on hold owning a home.
He could buy on his own or even split it with a friend to start building equity and rent it out when he is not using it. So he bought a small house in the Palm Springs area for $250,000 put $25,000 down and got a great rate since he was a first-time buyer. His total mortgage taxes and insurance payment were $1394.
He was able to rent it out for $150+ per day when he wasn’t using it in high season which helped pay for the times he was there. He ended up making approx. $6000 his first year in short term rental fees. And, yes, he got a friend to in on it with him. So he paid $697 per month. That’s not much more than a car payment for a lot of people.
If you know anyone who has been “priced out of the market” have them call me and I can help them create another plan. Sometimes sitting on the sidelines is the best plan.