House Divided

“A comfortable house is a great source of happiness. It ranks immediately after health and a good conscience.” – Sydney Smith, British Writer

Looking back, most of us have made a few decisions we’d change given the chance to do over again. “Do overs” are allowed in golf and other gentle sports, but in life there aren't any do overs. If I could do one thing over it would be to buy a home in my twenties instead of waiting until I was thirty.

When I was 24 and still living with my parents, my father presented a brochure touting the affordability of a manufactured home. I remember thinking, why would I want to do that? This is one step up from living in a trailer park. Looking back, my father was just trying to empower me to make a good financial choice. Instead, I opted to move out and thus segued to my renter phase of life. This set in motion a period where I moved often for my job and I never was in a place long enough to consider the economics of purchasing let alone educate myself with how to make this first purchase.

In the LA Times on Sunday, Dian Hymer gave this advice to the weary first time buyer. “Tired of being priced out of the market? Perhaps the answer is to buy an income-producing property that you can live in, such as a duplex or triplex. The rental income could help pay your mortgage and enable you to qualify to buy a more expensive property.”

Even HUD concurs, “Duplex housing has long been a path toward affordable homeownership. Early in the twentieth century, the great cities of the east met affordable housing needs by building hundreds of thousands of two- and even three-family (‘triple decker’) homes that housed a generation of newly arriving immigrants.”

“Such housing has been seen as a way for people to purchase a first home, and build equity more quickly through rental income. Those wishing to purchase a duplex can use the income of the rental unit to help them qualify for a mortgage loan.”

I have known a few friends that got their start this way. They bought a duplex and lived in one half while renting out the other. Over time, they built equity and were able to buy a single family home while renting out the remaining half of the duplex. They owned a home and an investment property while still in their twenties and now that we’re all pushing forty, you can see the benefit of this head start.

Here’s my advice. Get into the market. Experts say that owning a home is the keystone of wealth. Make sure you take that step with caution especially in an over-inflated market. A duplex in my opinion is a good choice. Can't find a duplex... well if you’re single, taking in roommates can offset your mortgage and property taxes. I know, having roommates at 35 sounds a bit sophomoric, but forget about what other people think. I did it.

My mother came to visit soon after I bought my first home and when I told her I was going to get a roommate she said, “why on earth would you want to do that? Wouldn’t you rather live alone?” Well yes and no. Yes, I would like to be able to afford to live alone but at that time, my house payment was $2,300/month and I thought I could certainly find a like-minded person willing to pay me $795/month. I did and I lived there for two years, practically the entire time with 2 different tenants… and they weren’t just tenants. They became good friends. A friend supporting my financial plan… how smart is that?