ARTICLE BY: Maggie Clemens
“Yes, it is . . .”
The year was 1985, I was 25 years old and all sorts of cocky! It was the year I bought my first property.
A 2 bedroom, 2 bath condo in North Park. It was brand new and beautiful. It cost just under $100K and the mortgage rate was about 17.5%.
Yes, you did read that right 17.5%.
My goal in life at that time was to become wealthy, and every wealthy person I had studied up to that point had used real estate as a foundation. So, I decided to buy real estate.
I had been renting since shortly after I arrived in San Diego. It didn’t take me long to realize that living in the barracks on base was not for me. I don’t know how many times I moved, but I don’t remember staying longer than a year at any place. It seemed like whenever it was time to sign a new lease the landlord wanted to raise the rent.
It was exciting. I had no idea if It would work out when I applied for a VA loan, but I was approved and proceeded with the purchase. I thought I must be able to afford it, after all they wouldn’t approve me if I couldn’t, right?
I nearly went bankrupt soon afterward. No one had mentioned things like property taxes, home insurance and HOA payments.
What I did instead was get a 2nd job and also decided to rent out the Master bedroom. I figured I could get more rent for that and I moved into the small bedroom and used the guest bathroom. It was quite a struggle at times but at least it’s mine, I rationalized.
As time went on, mortgage rates started to come down. Then they came down again. And again. And again. After finishing my degree and getting a higher paying job, I refinanced it and was now able to make the payments on my own.
In hindsight, would I do it again? Would I really sign for a mortgage at 17.5%?
You see, what I was ultimately able to do was stabilize my housing expenses.
Even if the rates had not come down, my income increased and my mortgage payments remained the same. The rate was fixed so they couldn’t go higher. It may have been a struggle but I didn’t have to worry about a landlord raising my rent every year.
I ended up keeping that condo for 15 years. I moved out, kept it as a rental, then moved back in once or twice when I needed to. It was home. If everything else went to hell, I still had my home.
Funny thing happened when I went to sell it, I had equity. I had never paid a penny more than I had to and yet I ended up with enough equity to buy another, bigger condo.
Which is the 2nd reason to buy – a forced savings account.
Real estate is a cyclical asset. The value may go down for a while but over time you will build equity. It is not like the stock market and it shouldn’t be thought of like a stock.
If you are a real estate investor, timing is important. But If you are renting why pay your landlords mortgage? If you have the ability to get pre-approved for a mortgage and can make the payments, you should be building your own equity.
If all you do is stabilize your housing costs you are way ahead of the person whose rent goes up every year. Trust me, your landlord appreciates your willingness to pay more of their mortgage payment every year, but how does that help you?
So, when someone saw the One World Realty logo on my shirt the other day, they asked me if it was a good time to buy real estate and I answered “Yes, it is!” If you are wondering if it’s a good time to buy and have questions than let’s talk. Call me at 619-800-1145 or send me an email at Maggie@OneWorld-Realty.com and I’d be happy to help.
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