Today I thought I’d share a story about a client I’m very impressed by. He’s a young professional – 27 years old – and had a dream of moving out of his 250 square foot studio to be a homeowner where he could have the freedom to adopt a large dog and have a yard for he and the dog to play. He wanted to stay conveniently located near his work in Monterey at the Naval Post-Graduate School. Ideally, he would continue to walk or bike to work, and he wanted to make sure his schedule didn’t change much when he became a homeowner. After looking at a few properties in Monterey, he found the Casanova neighborhood to be very desirable due to the location, and promptly made a strong purchase offer after getting pre-qualified. He’s a single guy with a good income, and had saved up a great down payment. Still, these small Monterey homes are not inexpensive, and his loan was close to $500,000. In order to feel comfortable with the +$3,000 mortgage payment, he found a tenant to live in one of the bedrooms. Coming from a tiny studio apartment, he felt his new 1000+ square foot two bedroom home would easily accommodate two people.
Getting a tenant involved significantly offsets his mortgage, and helps pay down his loan every month building more and more equity. He bought at a time when interest rates are, historically, still very low. He’s now a homeowner of a $600,000 home in Monterey living below his means, getting the tax benefits of homeownership, and he adopted a beautiful German Shepherd who loves his new backyard. He bought a pool table for his two car garage, and I feel very proud to have helped him in this process.
Home ownership for millennials can be a daunting process, but our client did a fantastic job creating a scenario that worked for him even in an up-market. Kudos, Brandon!