It was after my freshman year in college. I had lived with my dad that year and I decided it was time for me to become fully independent and move out. So I pitched a crazy idea to my dad, and he actually agreed: I wanted to buy a house. At age 19. Without a penny in savings.
Because why waste my money paying rent? Every month that money is GONE forever. I shouldn’t throw my money away, instead I should ‘invest’ it in real estate and that money will be available for me in the future as home equity! Brilliant!
So I set out to buy a house. I knew the first house I looked at would be too much fixer-upper work for me, so the agent took me to this house. What a cute little yellow house!
When I walked in everything was clean and fresh. Newish kitchen and bathroom, new carpets, fresh paint! And it was in my approved loan budget. And it was close to college and the grocery store and the bar. I was overcome with excitement and emotion. It was perfect for me.
I put in an offer on July 4th. It was so symbolic! I was declaring my freedom. The home inspection went off without a hitch – a few minor issues that we discussed with the sellers. We bargained a bit over repairs, and everything was going smoothly. We settled on the house 1 month from the date I put in my offer. The summer of 2007 I became a home owner!
How I did it
Well, back in 2007 the banks were much more lenient about approving mortgages. I also qualified as a first time home buyer for an FHA loan which had no downpayment requirements. In addition, my dad cosigned the loan for me and with his good credit I was approved for enough to buy a decent home in my city.
Throughout the remainder of my college years I rented out the spare rooms to fellow students to help with the mortgage. Life was good and I was so high on my horse about how fiscally responsible I was. The cash flow from my roommate tenants was helping enough that I could pay my mortgage as a full time student with a part-time job. During college I got married (oops) and then months after graduation (fall 2010) his mom offered us her home in a nice neighborhood. We agreed and moved and rented from her while trying to secure another mortgage for that home.
Tenants from Hell
I decided to play the part of a ‘real’ landlord and rented out my whole house. Boy that’s a lot of work and I didn’t even jump all the hoops I was supposed to. I drew up contracts and collected a security deposit. Every month I visited to collect rent.
In the summer of 2011, my husband and I separated; I moved out and for a while I was kind of homeless (staying with friends) until I could get the tenants out of my house so I could move back to my house. In July when I moved back I was in for a real treat. Not only had my tenants been failing to pay rent but they also trashed the place a bit – especially the 2nd bedroom. And I didn’t even collect enough security deposit to cover the lost rent let alone all of the mess left behind. Good thing I’m a natural DIYer.
Desperate Times call for Desperate Measures
Newly single and now living on less than half the income I was used to, I knew I wouldn’t be able to keep up with my mortgage payment. I quickly fixed up the spare bedrooms and rented them out as quickly as possible. Yes, really. Despite my horrific experience, I knew I had to collect some supplemental income ASAP to make ends meet. I was desperate. I even
asked begged my boss for a raise (and got a little one). And I decided I needed to refinance because the 7.25% interest was just too high. I took the FHA Streamline Refi in Sept 2011 at 4.5%.
I rented the spare rooms to some close friends of mine. It sort of worked out. One roommate was fine. He was neat, minded his own business, nice, payed mostly on time and gave me heads up if it’d be a little late. The other roommate, not so much. She always struggled to pay. Always late or partial payments until they were so few and far between I had to ask her to leave. She promised she would get it together and if not, she’d leave. I gave her one last chance but not surprisingly, she didn’t come through. She left so much stuff behind and was dragging her feet to pick it up. Finally, I had to evict her and put her stuff out on the lawn. I even had to go to court to try to collect payment. To this day she still owes me. A friendship and over $1k lost. Good grief.
3rd Time’s a Charm? No.
After she moved out I decided I didn’t want to fill the room. I had a new job, so I didn’t need that rent money. By this time my BF had moved in with me too. Well then my good roommate asked if I would let his 2 friends stay in that room last summer just temporarily until school started up again. Reluctantly I came up with a price I thought for sure they would decline. Well of course they didn’t. So Then I had 2 more roommates. That was a roller coaster. Between late payments, wasted water and electricity, and leaving windows open while the A/C was on REPEATEDLY I was half crazy by the time they moved out. Good riddance. I was so fed up with roommates. Shortly after, my good roommate also moved out.
And then there was just us. Well, almost. Just us and my 2 cats and his dog. Whew. Much better.