I wanted to share with you how I was able to purchase my 1st house at 23 for $0 out of pocket. #1 Finish School Early
The 1st thing was I graduated from college @ 20 years old and the idea behind this was so that I could start working immediately and start earning an income. If you’re wondering, I graduated high school early.
#2 Live At Home - Resist Temptation
Now I mentioned this in my other video but living at home is probably one of the smartest things you can do early on. While living at home, I had every temptation to buy a car, move out into my own place, go out every weekend. Fortunately, I resisted these temptations and saved up what I could and even invested some of my money to help with the down payment. We’ll talk about those investments later.
#3 Side Hustle Money
I have Side hustle selling Nintendo Wiis and price mistakes to pay off student loan and credit card debt. I remember waking up early mornings to go to ToysRUs, Target, or Bestbuy and also setting up amazon alerts so i could buy Wii’s the moment they became available. I made about $8000 total doing this and sold about 90 Wiis @ $90/wii profit.
I also picked up side jobs and did IT work for a small business setting up PC upgrades and file system backups. My wife was interning here and her boss wanted some work done but didn’t want to pay IT prices so he hired me to do the work for cheap. I made about $800-$1000 doing this for him.
#4 Invest / Save Money
Invested money into private savings - HUI
$300 / month for 18 months, earning 20-40 dollars a month in interest! - That was about 6-13% return each month. It also acted like a private savings account because once the 18 months was up, I would get my entire $5400 back.
#5 Have Great Credit
You need to have near perfect credit to get the best possible rates and to even be eligible to buy a home. I got a credit card when I turned 18 so I had built up a decent credit history. I never missed a payment and that helped with getting my loan. Make sure this tool is ready for you when you need it otherwise you might miss out on some sweet real estate deals.
#6 Buy Used / Foreclosed Homes
I bought a USED HOME and not a NEW model home. Now all my co-workers were buying homes at this time and they were all convinced new was the way to go since the state offered tax credits. One thing I noticed with the new homes was that they were smaller and priced more than the slightly older homes. They would be 20k-30k more expensive and have 300-500 less sq footage. A lot of their gains were lost because of this. I know 2 people that bought NEW Homes at the same time as me and while they got an additional $3k-$5k in state credits, their home appreciation wasn't as much as mine and their home was smaller. There’s nothing wrong with a slightly used home!
#7 2008 Housing Recession
I guess I just got lucky and was born at the right time for a recession to happen when I was ready to buy. A lot of millionaires were born during this time if they had money to pick up real estate. The market was on a down turn and I remember homes were being foreclosed everywhere! You can't find properties of this size today for $194k so I guess I got lucky.
#8 Ask Seller/Bank To Pay Closing Cost
Now during this time, most of the negotiation happened with the banks. The banks were offloading all their debt and cheap prices because they knew they were going to get a bailout. The realtor suggested we ask for 6% closing since FHA loans allowed up to 6%. We ended up negotiating a 5% closing credit which ended up covering most of the closing cost. I only needed to come up with 3.5% down.
#9 First Time Home Buyer Tax Credit
Well, during this time, there was a bill in the senate that got enhanced and gave 1st time home buyers the ability to claim a $8000 tax credit. My home qualified for the full $8000 credit and I was able to claim that on the 2008 tax return (even though I bought the home in 2009).
This meant that the entire down payment that I put down was refunded back to me in April when I filed my 2018 taxes.
So that’s how I was able to purchase my home for $0 out of pocket. I know you can’t replicate this but you can use some of my tips to get the lowest loan cost possible when buying your 1st home so you pay little to no closing cost. Be sure to check out my video if you’re buying your 1st home because as a 23 year old 1st time home buyer, I made every mistake in the book buying this 1st home and I talk about some of them in that video.
#1sttimehomebuyer #americandream #homeowner
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DISCLAIMER: I am not a CFP, CPA, attorney, insurance agent, real estate agent, mortgage broker, or financial advisor. These videos are for educational purposes only and I am merely sharing my opinion and experiences. Please do your own research or consult a professional!
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