Does Buying Make Sense in Your 20’s?

Isabel and I have been conflicted by the idea of buying a home for a couple of years now. At the time of writing this, we’re both 26, and engaged to get married in the Fall of 2020. We had originally planned to get married in Fall 2019, but we wanted the extra time to prepare and be thoughtful about our venue selection rather than rushing into something we weren’t completely sure about. For many couples in their 20’s, the decision of buying a house vs getting married can be tricky. Both are costly, and require saving and proper planning. We ended up buying a fixer upper, and we’ll take you through our decision-making process in the paragraphs below.

In summary, the factors that led us to buying vs continuing to rent are 1) we wanted to have freedom over what we can/can’t do to our home 2) tax benefits 3) we fell in love with the house and the ocean view 4) we knew the house was priced well and would be a great rental for years to come once we decide to upgrade 5) the house has 2 bedrooms, so we could rent a room if we ever needed to offset the mortgage 6) since we sell homes, we figured we should own one 7) we found something we could comfortably afford and did not over-extend ourselves.

1 – Freedom to Hang a Picture and Garden

We’ve moved 9 times since moving to the Monterey Peninsula in 2010 to attend CSUMB. Why would we put ourselves through that? Since graduating, we’ve only moved 5 times. We started in a small studio about 250 sqft, then upgraded to a one bedroom in Carmel Valley. The one bedroom apartment didn’t have laundry, so we moved to New Monterey into a 2 bedroom 1 bath. Neither of those apartments allowed our dog, who was living with Isabel’s Dad for a few years, so we moved to Fort Ord where they allow pets. Four months after moving there completely fed up with the lack of cell phone service, we found our house and we had just had our best month of our careers, so we pounced.

One thing that bothered us about renting was that we always felt guilty hanging pictures or changing minor things because we would have to replace or fix everything when we left, and we knew the situation was always temporary. We also wanted a yard for our dog, and space to garden and spend time outside. We love watching HGTV so we were open to the idea of fixing up a house, and quickly realized that was probably the smartest move considering the prices of entry level homes on the Monterey Peninsula. It’s just us two (for now), so we figured we don’t need too much space, but would like the ability to add a second bathroom.

I think there are some amazing benefits to renting, but we really wanted something to call our own, something we could improve upon and do whatever we wanted without feeling any guilt or landlord over our shoulders.

2 – Tax Benefits

We aren’t CPA’s, and everyone’s situation is different, but for us being self employed the tax benefits of owning were very attractive. We try to find as many deductions as possible for our taxes, and being able to write off the mortgage interest and depreciation allows our net payment to be about $200 less than what we paid in rent even with a low 5% down payment. For us, this made the purchase a no-brainer from a financial perspective.

3 – Smitten Kittens

We found the house on MLS, and visited it the first day it came on the market. We liked the neighborhood, and we were immediately greeted with a huge ocean view – a view we would soon enjoy with coffee in the mornings and a glass of wine at night as the sun goes down. The house was a cute 900 square foot 2 bedroom 1 bath built in the 50’s with seemingly good bones and unbelievable potential. We submitted a full price offer that night with our pre-approval letter.

Our Evening View!

4 – Value

We really know the Seaside market and when we walked in, we felt the house was priced aggressively and would be a great investment. We considered what the house would rent for once we decide to move up in a few years, and felt that with a light rehab, the rent could cover our mortgage even with such a low down payment. We feel the Seaside market is only going to grow considering all the new development in the area.

5 – Rent a Room in a Pinch

We both had a lot of roommates in college, so we’re no stranger to cramped houses and if we had to, we would have no problem renting a room out if the mortgage payment became too much for us. We like this strategy and actually considered doing it to help us save money for renovating, but we’ll start with just us and see how things go.

6 – Talk the Talk

We consult home buyers and sellers every day, and we really wanted to be able to empathize with what they are going through on a personal level. We felt that owning a home would only help our business as Realtors and give us more perspective on the service we provide. In addition, the renovations we have done and will continue to do have taught us so much about subjects we knew very little about before having our house. This will be a value to our clientele.

7 – Thoughtful Planning and Affordability

We looked around on and off for about two years before buying our house. We even moved a couple of times to other rentals while considering purchasing. We considered buying a more expensive turn key property so that we could focus all of our efforts on the business rather than spending any time renovating, but ultimately felt it would stretch our finances and cause us more stress than if we had rented. We are in a commission based business, so we had to think about our sales history with busy times and slow spells to make sure we account for those slow times and prepare with reserves. If we had more predictable incomes, we might have been able to dial in our price range with certainty, but that was not the case. We were very cautious about what we could afford and I think for millennials in commission based careers, that kind of planning is essential to avoiding buyer’s remorse. Ultimately, buying a light fixer that is in livable condition was the best strategy for us because it allows us to do the work ourselves and create equity in a market that has been consistently growing for years. We took market corrections into consideration, and felt we bought such a good deal that we would be able to weather the storm in the event of a correction.

We realize that not all houses are going to check all of these boxes, and every market is different, but these are the factors that convinced us to pursue our first purchase in our 20’s with a low down payment. What are your thoughts on buying in your 20’s? Would love to hear in the comments below!