What I learned from buying a house at 22

 
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I bought my first home at 22, making $30k a year. Sounds crazy, right? Well, I’m here to tell you that home-ownership may be a lot more possible for you than you think.

I won’t deny: I’ve been fortunate. With parents in the world of real estate, I am so thankful that I knew the value of getting into property ownership ASAP, as an amazing way to build long-term wealth. Purchasing a home sounds like a scary thing to do, but if I can do it, you can, too.

Obviously, the big question is: HOW!? Like I said, I was fortunate… but that doesn’t mean it was all sheer luck. These are the things that made home-ownership possible for me, at a young age:

#1 — I had a solid financial foundation.

There’s a lot that goes into this, but, for me, it came down to a couple factors:

  • Even though I had very little money, I also did not have any debt (other than a $200 car payment). I was very fortunate to come out of college without school loans, which was partly because I worked throughout the whole time I was in school.

  • I always live below my means (AKA, I do not spend more than I make). This is something very few people are willing to do. One simple way to keep yourself accountable: Pay for things with what you already have: Either cash or debit card, or only use a credit card if you pay off the balance each month. If you only make the minimum payment, you will watch your debt rack up like you’ve never seen before. To reduce spending, reassess your assumptions: I used to think “I need a new dress for every event I go to”… now I know that is simply not true. When I do need a new item, Ross and TJMaxx are great options when shopping on a budget.

Staying out of debt and living below your means are absolutely critical for any kind of financial success. Those are the foundational habits that everyone needs to build.

#2 — I got a 100% loan.

This meant that I had to put literally zero money down to purchase a home. To get this kind of loan, I needed to meet a few key criteria:

  • Getting a job in my degree field. For me, this was pretty straightforward: I went to school for Event Management, and I found a job as an Event Manager. If your degree doesn’t necessarily line up as clearly, talk to someone at the bank to see what would qualify. And if you’re still figuring out what jobs to pursue, you may want to consider this in the equation.

  • Having good credit (anything over 700 is considered good). This ties into #1 (solid financial foundation), above. A few tips: Pay the balance on your bill every month, making sure you do not have any lingering medical expenses on your credit, opting for a lower credit line, not opening multiple credit cards, and (most importantly) not purchasing a car on credit if you are thinking about buying a home in the near future.

However, getting access to that money doesn’t necessarily mean you should take it: Instead of spending the full amount the bank would give to me, I decided to look at how much I could afford to pay back, per month, and then used that to determine how much I should spend. So, I landed between 100k and 115k as my threshold.

#3 — I was willing to make sacrifices.

I bought a 3 bedroom 2 bathroom house with no money down for $100k. If you know much about houses… that’s not a lot. If you’re looking to buy a house, you’re probably not going to be getting something like the house your parents own. It’s important to re-set your expectations and not get frustrated, if your quality of life isn’t the same as it was, when someone else was paying your bills.

To buy this house, I lived in a pretty rough area. I moved into an “up-and-coming” neighborhood, 2 miles from Downtown Chattanooga. Part of this, for me, was that I saw this as a ministry opportunity — I imagined serving and helping my less-fortunate neighbors little did I know they would be ministering to me. (But I’ll save that for another post on the topic of humility!)

My home was also pretty small. And I bought furniture on Facebook, rather than going to a retail store. New furniture is pretty, but it also costs a pretty penny. Find someone moving and buy their stuff. I furnished my entire home for $2,000 and it was super cute, too!

#4 — I found ways to offset the cost of the mortgage.

This was the piece that made it all work. I actually chose a 3 bedroom house, specifically to open up these opportunities: that gave me two rooms to rent out. My mortgage was $663 (plus around $200 for utilities), and I had one long-term renter / housemate, who paid $500 per month. So I was paying 2/3 the cost of the person that was renting from me!

With the other room, I tried something different: when Airbnb was super new to Chattanooga, I jumped on the opportunity to open up my home. I hoped to make a few hundred dollars a month to help with the bills. That hope turned into reality and all of the sudden I was making close to $1,000 a month just by renting my spare bedroom.

My husband did something similar, before I even met him: He bought his first home at 21 (beat me by a year, ugh) and paid it off a few years after purchasing it! He had 6 guys living in a 3 bedroom house. Maybe not ideal, but they were all right out of college and were used to living dorm style and they all enjoyed their time together living it up in the bachelor pad at a low cost as they were all just getting into professional positions.

 
 
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This last tip is something I still use, to this day: Fast forward 3 years and I now own and operate 3 Airbnbs that are helping support my family. I still own my first home that is a traditional rental with long term tenants and profits about $400 a month, and my husband and I have a home we purchased in a similar up-and-coming neighborhood. Our primary residence already is worth $50,000 more than the original purchase price less than 2 years later.

I do not share all of this to boast in my earnings, but instead inspire you to take a leap and invest. You are paying someone else’s mortgage when you rent — why not pay yourself?

If you do decide to make the jump into buying a home, here are a few quick tips on how to make it work:

Single?

  • Get a roommate to offset the cost of your mortgage

  • Airbnb your spare room

  • Airbnb your entire house when out of town

Married without kids?

  • Live in a smaller starter house that is well below your means

  • Live in an up-and-coming area that is quickly appreciating

  • Live in your home for 2 years, then keep as a rental or sell (*your taxes may benefit from this! For more info, check out https://www.irs.gov/taxtopics/tc409)

Married with kids?

  • Live in a smaller starter home

  • Have your kids share a bedroom

  • Baby in the master? Baby room in a closet? There are ways to get creative!

Not a homeowner yet? Start the process, today! I encourage you to meet with a local realtor in your area. Sit down over a cup of coffee and learn as much as you can about the current market in your city. Ask them where the up-and-coming areas are, where the good schools are, and where they see the best bang for your buck. If you already own your current home, think about meeting with a realtor to discuss the opportunity to invest in a rental property. Another great resource is a podcast called Biggerpockets: it’s all about making passive income through rental income.

Thanks for taking the time to read this post — do you have any questions? Any details that aren’t clear? If so, leave a comment… or, reach out to me at lexibozarth.com. I absolutely love sharing my experience with people looking to get out of debt or make additional income through real estate. I’d love to Skype with you… or, if you’re in the Chattanooga area, let’s meet up!

 
Lexi is a realtor who loves helping people find their dream home, and is passionate about educating people on the importance of home ownership for the support of financial wellness. Lexi currently resides in Chattanooga, Tennessee with her best friend and husband Blake. Together they have a son named Bear and own several homes in the Chattanooga area. She serves on the board of a local non profit called Homes and Havens and works closely with a single moms ministry serving mommas in college called Momentum. Reach out to her for speaking or writing opportunities at    lexibozarth.com

Lexi is a realtor who loves helping people find their dream home, and is passionate about educating people on the importance of home ownership for the support of financial wellness. Lexi currently resides in Chattanooga, Tennessee with her best friend and husband Blake. Together they have a son named Bear and own several homes in the Chattanooga area. She serves on the board of a local non profit called Homes and Havens and works closely with a single moms ministry serving mommas in college called Momentum. Reach out to her for speaking or writing opportunities at lexibozarth.com