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Episode 10: Transcript
Starter Homes – First Time Homebuyer Hacks
[Announcer]: Hey look it’s the Double Wide Dudes. Watch out.
Mousetrap: Alright, alright. Welcome back to the Double Wide Dudes podcast, as always I really appreciate you guys tuning in and sharing the content with your family and friends. Me and AP and everyone at Braustin Mobile homes, really do appreciate it. It’s exciting times for the Chavez family AP. Looks like his house it about to deliver.
AP: Yeah, yeah we finally got the land all set ready to go. Adam and Wes over there at White Cloud Drones have been doing a fantastic job helping us document the whole thing. And we’re about a week away from bringing the home in and getting everything ready for them to move in.
Mousetrap: Nice. That footage is going to be excellent man it’s going to be; the bird’s eye view is just a beautiful angle to kind of see the whole project.
AP: Yeah, yeah I went out with Adam about a week ago to get some of the last minute pictures and there were two hawks up there. I guess we stumbled into their territory and they thought our drone was trying to steal their food or something. And it was cool to watch, they started dive bombing the drone and Adam actually had to land it so they would go away.
AP: It was crazy to see, I was glad I actually got to go with him on that trip.
Mousetrap: That’s expensive equipment, good thing Adam’s got the skills to kind of move away from them you know.
AP: I know, I know.
Mousetrap: But yeah that’s exciting man. He’ll be real happy with the final product. That’ll really give our customers a full angle from raw land to finished product.
AP: Yeah, it’s definitely an adventure and it’s a process, a step-by-step process and a lot of moving parts. And whether we’re doing part of it or all of it, folks that are looking to turn a piece of Texas into their homestead really need to know everything that goes into the project.
Mousetrap: Yeah most people are visual learners and just like we talked in the last episode, how important it is to get into a starter home for your first buy to really help yourself set up for long term success. And we promised the listeners three hacks on how to get that done, what are some of those things that these homeowners can do AP?
AP: Well the first thing that comes to mind is what they call the live in flip, or the fixer upper scenario. And basically what that is purchasing a home, distress property or a home that needs a little work and taken the time to finish it up and do that renovation while you’re living in the home. And what I’ve see over my career you know, I use to run what’s called the REO Program for one of these big companies here in town and what we would do is look for foreclosures and we put some money into fixing them up and making them look new again. And put them back on the market for resale. And you can make some pretty decent money doing that. The prices of foreclosures definitely have gone up a bit but if you’re an actual home owner looking for a blank canvas that you can kind of, you know paint the way you want it. That’s a fantastic opportunity to buy in it, live in it and fix it up all while keeping your mortgage super low. You know there’s foreclosures on the market right now here in San Antonio for sixty, seventy thousand dollars and you’d be amazed what ten, twenty thousand dollars’ worth of referb will do to a home.
Mousetrap: Yeah, yeah I mean you can use these live-in flips to accelerate your financial freedom right. Not get into something that’s really expensive, it’s going to help you save. Just like your buddy up in Pike Creek who did pay some good money for his property; the five acres in Pike Creek but his first home was the Single Wide. And he used that to have his mortgage loan for the home and then throw a little extra money into the land to pay it off quicker.
AP: Exactly, exactly and I’ve seen that quite a bit in the eight years I’ve been in the factory build housing industry, you know folks come in with that long term goal in mind. That long term vision of building this gorgeous house out there in the country of South Texas and they start with the land of their dreams. And look at one of these entry level starter single lines like we’ve got two bedroom, three bedroom homes that are in the low mid $20,000 range. And by doing that, like you said you keep your mortgage super, super low. If you’re disciplined enough and have that goal and that vision then you put a little extra money towards that land and pay it off much quicker.
Mousetrap: Yeah, if you can live with the dust and the construction for a few years it’s really going to pay high dividends in the future. It’s just kind of like that sacrifice we were talking about in the last episode. You know put up with it for the few years you’re going to be a lot happier in the end when you have money to live your life.
Mousetrap: And saying that I can imagine some people thinking to themselves saying, you know I don’t want to live in a flip. I don’t want to deal with the construction. I don’t want to take time to fix up the home.
Mousetrap: What’s another option for them?
AP: Well I for one can definitely appreciate that. You now when Elsa and I looked to buy our first home we already had a kid. You know my son was already with us and we just couldn’t go through the construction zone. I think he was two or three at the time and the last thing you want around a small child learning how to walk are sharp tools and nails and what not. So we purchased a starter home. A pre-existing starter home; two bedroom, one bath and you know nothing fancy. We were very intent on keeping our mortgage low, something that we could afford. She was a teacher at the time and I was really still trying to figure out my career path. And when you go into your first time purchase with buying a home to rent out later down the road in mind, it kind of changes things up a little bit. And I remember, you know Elsa and I looking at the kitchen or the back patio and thinking about how nice it would be to do updated appliances or updates counter tops or cabinets and whatnot, but because we knew that wasn’t going to be our forever home; because we knew we were going to rent this out eventually, we just didn’t want to invest that kind of money into something we weren’t going to be in for another year or two.
AP: And the other thing to keep in mind, if you’re looking at a property you’re going to rent out down the road, by keeping your mortgage as low as possible you also maximize your opportunity for return when you go to rent it out.
AP: You know the rental market is really going to dictate how much you can get out of your home when you go to rent it. And the lower the mortgage the more profits left over for you.
Mousetrap: Yeah, I mean if you’ve done that once then I can imagine you can do that again.
Mousetrap: It’s just, you know you get that home, a comfortable situation, a low mortgage, if you have to move for work or want to move to a different part of town well then you rent that house out.
AP: Right, right exactly and that’s what happened to Elsa and I throughout or lives together. You know we had one kid when we bought our first home, we very quickly realized we were going to outgrow that when we were pregnant with our second and so we bought another starter home. This time a three bedroom, one bath. We stayed there while we had our third but once we found out we were pregnant with our fourth then we had to upgrade again and get an even bigger spot. Because we went into that second one also as a starter home, as an affordable home we again were able to put that on to the rental market and get some help with that mortgage as well.
Mousetrap: So that’s two homes that you’ve had the opportunity to do?
AP: Yeah, yeah you know that’s why the statistics show that folks are moving every five to seven years because life happens. You know you have kids, you get a new job opportunity, you meet someone fall in love. I mean life is bound to happen and personally I think you need to go into every home with an exit strategy. Be it a flip sell or a rental situation.
Mousetrap: Yeah, so I mean buying a home to rent it out, buying homes to flip, those are two really god hacks to really get these first time home owners to set themselves up to not over pay for a home. What would be the other situation that these home owners can do?
AP: Well the last one is what we call the roommate hack. And this is really for guys or girls you know fresh out of college or just getting their lives started that already have roommates. You know you’re already splitting someone else mortgage, why not have your friends help to offset your mortgage. You know there’s a lot of good size three bedroom or four bedroom homes out there for sale and certainly three or four bedroom homes that we can build on land that’s for sale. And you know if it’s just you and a couple of friends or roommates, well then you might as well be splitting your mortgage and helping to set yourself up for a financial investment down the road.
Mousetrap: Yeah, I mean I had roommates when I first moves to San Antonio coming from McAllen. It wasn’t till last year I finally started living on my own; 12 plus years I was living with roommates and that reminds me of a situation with a buddy of mine. We were living in his dads house and me and another friend were paying the rent. I want to say it was fair rent for us but because we were both paying for it, the total of what the mortgage cost there was nothing out of pocket for him.
AP: Yeah, yeah you’d be surprised how many win-win scenarios are out there for you and your friends, if that’s the situation you find yourself in. And you know I had roommates too, I think a lot of folks out there start out of the nest if you will living that way. And if you do it right and got some friends that you like to be around and you can trust. Well then they help you basically buy a house.
Mousetrap: Yeah that’s awesome, I mean those hacks really set people up to not get in a financial bind the first go around right. Just to sum it up, we have the roommate hack, which is friends and family can help you pay for the mortgage by renting out a room. We have live-in flips, you know don’t be scared to buy a house that you’re able to renovate and if you don’t mind the construction that’s going to be some good pay-outs at the end for you. The third one was live-in rent, so you can buy the house it’s going to be well under your means and then move to another house and just rent that one out, and now you have residual income coming towards your pocket and that’s just another win-win scenario.
Mousetrap: Well that does it for this episode guys, thanks for tuning in. I also want to thank everybody that came out to our first time home buyer seminar, down there at the Geekdom Event Center, we really appreciate it. We’ll keep doing our part to give you and your family everything you’ll need to make the perfect home buying decision. Thanks again, we’ll catch you at the next one.