To own or to rent: an eternal question that boggles us who have been in the workforce long enough to have saved a bit of money and want a place to live in. After the huge housing crisis circa 2008, we fast forward to 2015, when the prices of homes began to go higher, making it harder for most folks to own a house of their own. After a few years of renting, Peter and I buckled down and decided to buy a home. Here’s part one of our journey through home ownership — the hows, what & the why.
Why We Bought A House: A Background
Peter and I used to be renters: he used to live in a studio apartment in Downtown Jacksonville, while I settled for a two-bedroom I shared with a roommate in Jacksonville’s Southside. My main reason for renting was simple: I can’t afford to own a home in Jacksonville given my visa situation. If I were to buy a home, I’d have to pay for it in cash and have to deal with the tax repercussions since I am not a US citizen or permanent resident. Peter’s story — well, he doesn’t think he has the down payment nor can he afford to buy a home.
When my roommate moved away to New York, I got another roommate to save on cash, but our lease was nearly ending and I had a wacky idea: how about if we just buy a home of our own instead of renting something out? Instead of paying a rent every month, how about we build equity instead to an eventual asset in the long term. Note: a house and it’s contents are not exactly assets, but the land value is the one driving the costs up.
So, why did we buy a house? A few reasons:
- We wanted a vehicle that will potentially earn us income – let’s face it, nobody wants to work forever. By buying a home now, we can work our way to paying off our mortgage quickly and buy another home within the next 5 years, rent out the first home, and continue the cycle. In the meantime, to help pay our mortgage, we rent out our spare bedroom on AirBnB. It’s actually quite nice to meet other people, and at the same time get a bit of a push to earn a bit more of our home equity every single month. We don’t earn much, but it’s a great side hustle nonetheless and is a step up to get rid of our escrow and interest payments.
- We want a place to be home, not just a place to live in – Buying a home is highly emotional. You buy a home because you want a place to come home at the end of the day, and pay very little in rent in the future (ie after your house is fully paid off and you’re just paying HOAs, insurance, or taxes). We want control of our decorations: we can put up photos on the walls as we see fit, and decorate as we want without fear that we’re going to be kicked out.
- We want a small sense of stability – If we are renting, there is a chance that the price of our apartment or home will go up every year because of inflation. When we bought our home, we know exactly how much we’ll pay for every single month until our mortgage term is up (provided we don’t pay extra principal, which we do).
How we bought our home
We bought our home the usual way: through a real estate agent. She set us up with a website called MLS, which has a listing of available homes (single family, multi-family, condos, townhouses, you name it) for sale. She asked us the following information:
- Price Point – We started looking for single family homes with very little HOA at around the $200,000 mark. But then we lowered that price to $150,000 – mainly because we asked our credit union to pre-approve us for roughly that amount at first. We wanted a place that we can afford if we were to have a 15 year mortgage instead of the traditional 30 year mortgage. Our reason? If we can’t afford the principal + interest on a 15 year mortgage, we probably can’t afford the home at all. This also keeps us in check to what we really can afford and not live beyond our means.
- Location – We wanted our potential home to be near where we work & near the mall (St John’s Town Center). That is limited to a few zip codes that we were looking homes for. We loved our old apartment and think it’s really convenient to everything so we wanted it to be there. Also, location is one of the most important things to consider when buying a home. You would want something accessible and an area that would hopefully appreciate in the future, thus giving you more gains in the long run.
- Type of Home – Single family homes, condominiums, townhouses – there’s a lot that you can choose from. We decided to go for either a single family home or a townhouse. We immediately said no to condominiums because the homeowner association (HOA) fees are a bit high (around $250-$300 per month). Townhouses have HOAs too, but it’s a bit lower than a condo and has less restrictions than a typical condominium.
We must have toured a few single family houses that are a bit more than our original budget, until we found the townhouse we eventually made an offer for. Built in 2006, it has an HOA of $150 a month, but we like the low-maintenance living it entails. 1,248 square feet (around 116 square meters) of total living space, across two floows, and has an open floor plan. The first floor is the kitchen and the entertainment area, while the second floor has the living quarters (ie bedrooms) and a washer/dryer area. We wanted a place that’s not so big (after all, there’s only two of us), and at least two bedrooms, which the second bedroom can be used as a guest room or to be rented out if our friends or family are not using it. That means not much wasted space between the two of us. After all, a house is a place to just sleep in and lay our head in. A necessity, but does not mean its an investment.
But don’t you travel a lot? Why did you buy a house if you’re out exploring the world?
Yes we did buy a house even if we travel a lot. However, as we mentioned in our previous posts, we are still working full time. We need a place to rest our heads. Yes that means we are not at home all the time (on weekends and certain days during the year), but owning a house does not mean you should stay in your house all the time. Of course if we’re not in our house and nobody’s renting it, it can be a waste of a space or an opportunity to earn cash, same way if you have a vacancy in your rental home. Same if you’re renting – aren’t you wasting valuable rent money if you’re not at home? (And trust me, you’re not at home for most of the day as you go to work, or as you go traveling).
We may think differently if we are full-time nomads: but we don’t think we will be, as that can be too tiring and stressful. We may stay for one place for a few months and then move on to another city/country/continent – but we’ll probably always come back to our home. It’s just great to have options. If we’re not at home, we can easily rent the whole place out, and if we were at home, there’s always the spare bedroom to rent out.
A few other nomadic travelers have buckled down and ended up staying in one place as they try to decompress from traveling. So, might as well make the investment now (while we can), and while the interest rates are down. Nothing better than striking when the market is at your side.
Also, things happen – we may have children in the near future, or we may continue to travel the world as we please. It all depends on circumstances, and we’re glad we covered ourselves by buying a house when we can instead of when we need it.
So, would you buy a home or continue renting even if you like to travel? Let us know your thoughts in the comments below!