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  • Justin Purpero

You Can Buy A Home In A High Cost Area, Even If You Think You Can't Afford It.



Did you know that you can buy a home in a high cost area, even if you think you can't afford it? Today I'm gonna tell you some tips and tricks that I've learned over 20 years of experience that will explain to you how to do that and some ideas to take on for you to get into home ownership and start today. I'm here in Orange County, California, and the average price for a home is about $700,000. Young people and old just feel like they cannot afford to be a homeowner. They just feel like it's unattainable, they don't have the down payment, they don't have the credit scores, they don't have the income. What I wanted to talk today about is just some tips and ideas that I've learned over my 20 years experience that can help you shift your mindset, shift the reality of being a renter and into a homeowner. You know, I find that people are just out there with these notions that they haven't even explored. People haven't even had a chance to talk to a loan officer about what income is needed, how much down payment is needed, what kind of credit scores they need to have. Daily, I open people's minds about how they're closer than they think to being a homeowner. I talked to a young person the other day that was telling me that they can't afford to buy a home. I asked them where they lived and they lived in a nice part of Orange County. At the end of the day they had no idea what the lowest price of homes were in the area, so they had not done any market research of what the houses cost. They didn't know what kind of down payments that are necessary to buy a home and they didn't know if their income was enough to qualify. That right there just shows me that there's a lack of knowledge from this person of what it's gonna take to get into a home, and there's a lack of information for this person to feel like they can create wealth through home ownership and get started, and get a foot in the door. What I want you to explore is, have you done the research? Have you checked in and found out what it's gonna take and how much it's gonna look like every month for you to buy that home? One of the guys on my team, he's paying two grand a month in rent. It's not over the top but it might be a little bit higher than most. In Orange County, it's probably about the average rental income that you're paying. Now what he doesn't realize is that right next door to where he lives in this condo building, there are condominiums for sale for $500,000. They have HOAs and they have these different things that make it a little bit more expensive. What he doesn't realize is that if he put 3.5% down, which is about $17,500; good chunk of change, I get it, but attainable. If you're paying $2,000 a month in rent you're probably making five, six grand a month, let's call it like that. Maybe there's a spouse or someone else helping you out. You can save $17,500 in a year or two years. If you put that $17,500 down, his mortgage payment is only gonna be about $3200 a month. I get it, it's a stretch but so is saving money, putting money into a bank account. If he made that choice to save the money for down payment, took on that mortgage, he's getting started in the game of real estate. He's now paying every month on that mortgage and his principle balance is gonna go down. He also has the opportunity that the property is going to improve, especially in a high cost market where we see values increasing year over year. That $1200 difference per month can create wealth at extreme levels after three, four, five, six years. He could have paid his mortgage down by 30 to 40 grand. He could be in a position where the equity's built up another $100,000. He could be sitting on 100-$150,000 after three or four years of buying this property. That $1200, though it is a stretch, what he doesn't realize is that of that $1200, $400 per month is a tax write-off and a tax advantage that you can take that will allow that expense not to look the same. You can basically deduct the mortgage interest against your gross income every year. From that, that is money you're gonna be paying the IRS anyways. That's money that you can put into the investment game of real estate. It's one of these concepts that I like to talk about with people, that they don't understand that if they truly want to be a homeowner they have to do some due diligence. They're gonna have to speak to someone like myself, speak to a loan officer, get the facts straight. Then from there, get the mindset that, "Yes, I'm gonna be a homeowner but it's gonna take time." What are the steps that you're gonna need to take over 12 months, 24 months, 36 months? Let's be real guys, 36 months goes like this. You could literally have saved well enough for a down payment and get a better sense of the community that you want to buy in and know exactly what you're looking for and what you want to purchase. What I find is that people's mindset is half the battle. Get in the mindset of knowing that real estate is probably one of the greatest, if not the greatest, wealth creation vehicles in the nation. Get your mind right that that is where you're gonna start building wealth. Our incomes, what we're making every month, that's not where you become a millionaire. There's some millionaires out there from the income that they make but the reality is it's investments. It's investment strategies that come in place where they create that wealth in their life. A hundred grand's a lot of money but let's be real, it's pretty much what you have to be making if you live in Orange County. At a hundred grand a year, I've seen people create real estate portfolios that have made them millionaires. Literally, these people have been chipping away with their W-2 wage job, they have not many write-offs, but they've gone out of their way over time to start buying investment properties, buying condominiums and things that they can afford. As the time has progressed, these people have a dozen homes that they are getting rents on, and now they've got a great retirement plan where they're getting additional income to their household of 10-$15,000 per month. They literally will be buying in places like Oceanside where just a few years ago you were able to buy single family residences for 80 grand. Literally, you put 10 grand down and you were able to buy these homes. Because of that, they've created this portfolio, these houses are worth three, 400 grand now. Now, we might not see those type of opportunities as often but I can tell you that in real estate the name of the game is that there's always opportunities to make money. How do you create an opportunity for yourself? My feeling is it's always starting at ground zero and that's buying yourself your first owner occupied home and whatever it takes to get you into that. By doing that, you're gonna create the disciplines in your life by saving your tax advantages, being able to take on and afford a higher mortgage payment. Maybe not going out as much because you have that mortgage payment to take on, but those disciplines in life will lead to the success of having a portfolio, having wealth in your life. If you don't take that leap and don't put the steps in place now, you're gonna be looking down the road 40 years from now and wouldn't have built up anything. I find that people that are young, they don't think of home ownership like people used to. They look at home ownership as maybe just a liability and that it's unattainable. Well, if it feels unattainable, why does it feel unattainable? Because your mindset is not in a position that you even care to know. Do the research, find out what it's gonna take. Find out what your credit score needs to look like, what kind of income you need to have. Maybe you need to go get a new job. Maybe these things are gonna push you to drive yourself into a position to create wealth in your life. Maybe you're not one of these people, maybe you just don't want to create wealth, you just want to have a home for all the other reasons that many people own a house. You want to have a place that you can keep your dog and have a nice little yard for them. I would say the idea is, get the information, talk to someone like myself. Talk to someone that you know that's in the business and get the numbers. What are the houses down the street going for? Keep an idea of what the market is. Let's say, you live in Irvine. Irvine's a great city. It's got all the accoutrements. You get the nice restaurants, you get the great parks, everyone's friendly, that's a great place to live but it's expensive and so you're over there renting for, let's call it, three grand a month. That's a great place to rent but are you going to be able to afford buying something there? Now, if you were to just go two cities over or even 10 miles away from Irvine, you're able to buy a home, a great home in a great neighborhood that's up and coming. You're ahead of the game there. You're buying maybe a little lower because you see the value and you see the opportunity of growth in that property. That's where people win, that's where people create the wealth in their life.

When I was about 24-years-old I bought a home, I had no idea of what I was doing. I took a terrible loan and I bought high in the market. Bottom line is I ended up losing the home. I was married with my wife and she wanted a home so after renting for two or three years I had to get my mind right that I need to figure out what it's gonna take to get myself into a home. I ended up buying a house after about four years from the foreclosure but it took everything I got. I literally worked my ass off, made it a goal, looked at the savings that I needed to have, how do I improve my credit, what kind of income did I have to have to afford this. Finally, the time came where I found a great property. This property was literally under the John Wayne Airport. I was the second house over the runway. It was a stretch for me but I saw the value because it was in Newport Beach and it had the bedrooms, bathrooms, the square feet that I thought could have some potential growth. I took the risk but I knew that it was the right buy, just by knowing the market because I had done some research. Here I was ... After two to three years I put a little bit of money into the property but I sold it for hundreds of thousands of dollars more than I bought it for. What I did with that is then I could then take that money and reinvest it. Whether I wanted to upgrade into a new home or buy an investment property. The dream is to have a place for you and your family, that you can have your own space. Think of it always as "Am I buying this correctly? Is this somewhere that I can stay for five, 10 years? Is this somewhere that has the growth potential that I see because it's in the right marketplace?" Don't be caught up in I need to live where I'm renting now or I need to live where I work or I want to live over here. There might be opportunities if you look hard enough that you could afford but how about two, three cities over? How about five miles away or in a city that you never even thought of? How about getting a really nice house there where you can build wealth in your life? I find that it's all about research, it's all about talking with people, it's all about getting into the idea of home ownership. I think that if you are looking for wealth in your life and you want to create a lifestyle and a retirement for you and your family, then the first place to start is real estate. The first place to start with real estate is buying yourself a home that you live in. Let me know if you guys have any questions, I'm here for you. I hope this was something that you took advice from and can learn from. We're gonna keep doing more of these from time to time and so if you have any questions feel free to reach out to me at Justinpurpero.com.

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© 2019 by Justin Purpero | Articles