My Journey: Buying in SoCal with low money down. How I'm doing it
It all started with the question "Can I buy an actual HOUSE (no condo or townhouse) in Southern California, let alone the San Fernando Valley, with as little money down as possible?
So far, the answer turns out to be........absolutely!!
But, it takes some work and positioning in spots where you can use leverage. Some of you will call me lucky, and sure, it might seem like I was lucky, but I don't believe in fortune just falling my way. I'm not lucky, my poker and roulette bankrolls will back me up on that. I believe we MAKE our own luck. I was in the correct position and had ability and mindset to capitalize on the opportunities that came my way.
The house is my family home. At first, my dad did not want to sell it to me. He was against the idea of me buying the house because he didn't believe I could handle the responsibility of being a home owner (first timer) of such a large property in an expensive market like the San Fernando Valley (SFV). Instead of saying he was right and being defeated and settling for the smaller condos down the street I took it as a challenge to show him I could handle the job. I had lengthy talks with him and my mother about the different strategies I could use and the connections I've made in this industry to leverage my purchase of the house. I explained to him the concept of 'house hacking and ADUs'. I showed him the numbers I could rent out rooms for, as well as the lease agreement I would use to protect myself and my house. I even did rehab work around the house to show him my dedication to maintaining the quality of the home. Eventually, he agreed to selling me the house.
The next move was to acquire the capital to buy the house. If you're familiar with the SFV area, it's not cheap. Not even close to being considered fair, but it's my home town and I love it here. I knew I wanted to live here. I made it a point to learn about 'gifts of cash' and 'gifts of equity' (GOE). From posts I made here on BP and connections I made I learned about the pros and cons of everything and after expressing to my dad that I wanted to use a GOE to buy the house, he agreed to do it, but only at an amount that won't cause him tax issues in the future.
So, with the GOE and the capital that I had saved of my own from hustles I've done to controlling my budget and being frugal, I still did not have enough for a down payment I felt was adequate to give me a mortgage I was comfortable with monthly. I didn't give up though. I started actively using @Brandon Turner's "Don't say 'I can't. Say HOW can I...?' " methodology and started looking for other sources to help supplement the extra I needed to bring me a down payment I liked. I began calling multiple lenders daily. I asked questions about anything I could to learn what I needed to make this purchase a reality.
After many calls, I've now settled on a lender who I have found to be very helpful and was willing to talk with me the longest on the phone and answer my questions, as well as give me some ideas moving forward.
Currently, as I write this I am about to secure the last of the funding I need to purchase the house. Tomorrow I have a call with a friend who will co sign as well as offer me the final amount I need to get the down payment for the house (with a sizable interest rate for his trouble cause I'm a good friend like that). We just need to iron out the details.
When all is said and done I will be only putting up 2.5% of my own money for the total of a 10% down payment on the house. We're projecting the value of the house to be $610,000.
I will come back to this post and update it as my journey continues. Thank you for reading the whole thing if you stuck around this far. i appreciate it.
This is only part of my story. I am also investing in out of state properties using the BRRRR strategy as well and co-hosting a podcast all about into to real estate investing. I also recently joined an incredible mastermind called M1 that has changed my life. I plan on writing about my journeys in those avenues as well. So stay tuned!
If you have any questions, please reach out to me or reply to this post. I will get back to you within 24 hours.