Buying A Home Immediately After College
Where the Dream Began: A Little Background
Every kid at a young age gets asked the cliché question, "What do you want to be when you grow up?". Often times the classic responses are athlete, actor, president, etc. Fast forward to high school when the question becomes quite a bit more meaningful because college is just around the corner. For me, I always knew my niche was in business, personal finance and the capital markets. Learning these areas became an obsession of mine, and I took every single chance to learn that I could. It was exhausting at times with the amount of information I would try to keep up with on a daily basis, but it was what I enjoyed and I knew it would help me in the long run.
I was always known by my friends as the 'hustler', never being satisfied with one source of income in high school. I didn't even have my first job until graduating high school, but rarely relied on my parents for a source of income. I started my own eBay business at the age of 14 by selling items for others and taking a hefty commission since most people were just trying to get rid of their old stuff. Another way I made money was bartering at garage/yard sales around my hometown and selling the undervalued items on eBay for significant profits. These are just two examples. My 'hustler' attitude is not what I consider to have set me apart from others my age. What set me apart was what I did with the money I earned. Most kids saw money they earned as "what can I buy with this?". I saw it as a chance to improve my future. By this point I had saved a significant amount of money and I finally turned 18. That day I opened my first brokerage account and invested in the stocks I had been recently watching. Trading in and out of stocks became a hobby of mine, but it wasn't all roses. There were times where I made a lot of money, but there were times where I lost a lot of money. Fortunately, I often ended up on the winning side more than the losing side of the trade. I enjoyed the research I was doing in order to make these trades. It was my new hobby and making money off a hobby sounded more like a dream than a reality.
I continued the 'hustle' during college of making money in any way you could imagine. I only ever had an actual job during college in my first two years during the summer months when I wasn't taking classes. I continued to bank and invest as much money as I could. Fast forward to my junior year of college where I landed my first "big boy job". It was a very well-paying internship that lasted a full year (part-time during for a half of the year) and was a more steady source of income. This allowed me to bank money on a steady basis where I was able to project my balances each month. It was also around that time that figuring out what I wanted to do after college and the exact location was becoming a top priority. As an accounting major and high performer in school, I was destined to be on the path to public accounting. With regard to where I wanted to work, Florida was always a dream (I could never stand the frigid Ohio weather). Eventually I did in fact land another prestigious internship, this time in Florida at a public accounting firm during its busy season. During this internship I worked like an absolute crazy person (70-80 hours/week) but lucky for me, the company paid overtime (and it was GOOD overtime). I was able to bank substantially more money into savings, and was extended a full time offer with that same company in Tampa, FL which I happily accepted. After my internship I returned home and had a lot of free time before classes started in May. Although it was early, I was weighing housing options for when I moved to Florida after my senior year and buying a house was becoming more and more like the smart, obvious choice. Rates were lower than they had been in quite a long time, and I was close to having enough capital to put down 20% on a home.
If you can't already tell, most of my thinking is long-term. The benefits of owning a home long-term at such a young age were incredible. These benefits included but were not limited to:
- Tax benefits
- Earning equity instead of rent going into someone else's pocket
- Price appreciation
- State Homestead Exemption
- Ability to add my own touch
At this point I was set on buying a new home. I was slightly short on a 20% down payment and wanted to avoid paying private mortgage insurance (typically paid when you don't have 20% to put down), so I reached out to my parents. They were gracious to gift me the additional amount to get me to the 20% mark. To this day they state that the reason they made the gift is so they had a place for a free vacation when they got sick of the cold, and I was all for it. After a long, exhausting search and with much assistance from my father, we settled on the area of Riverview, FL which is about 20 minutes south of downtown Tampa. The neighborhood we found seemed to be the perfect fit because it was right next to the highway, which is a must with the way traffic is around the city of Tampa. I signed the contract and I was on my way to taking all my hard work in saving and putting it toward something where my money would continue to work for me. The design appointment for the new home came quickly and I admittedly spent far more than I was hoping on finishes that made the home look the way I wanted it to. The house was built, and I was on the move to my new city to attend closing and move in. The final check was cut for the down payment and I was all settled in. Everything to this point, all the work and hustling, was the easy part. Paying for and maintaining the house became a whole other animal.
Expect the Unexpected
I had done my research on how much home I could afford, and if you were to know anything about my personality, you'd know I spent more than enough time. I felt that I knew everything, but I don't think anything could prepare a 23 year old for what there is to know about owning a home. Simply put, it is hard and a LOT of work. Luckily my new home came with a one year manufacturers warranty where anything that became faulty would be fixed by the builder at no cost. However, having this warranty only made me realize what is to come once it expires. You think you've budgeted enough? Well, you should probably budget more. Growing up in my parents house and apartments on my college campus, maintenance was always an afterthought to me because I never had to take care of anything. When you own a home, you're all alone and cost is not the only factor that comes into play. Having the knowledge and ability to fix something is a whole different ballgame in itself. Luckily, I grew up seeing my dad fix random things throughout the house during my childhood so I am not your typical accountant who gets a blister after five minutes of work on the house. However, I'm not going to sit here and pretend like I am the next Bob Villa.
Yardwork is another item that I did not realize was such a big deal in owning a home. Paying someone isn't cheap, and when you're 23 with a beginning staff accountant's salary, it is definitely not in the budget. As a result, I have learned on the fly how to maintain the landscaping that came with the home with a lot of trial and error. Fortunately for me, Florida's climate is fairly steady (just assume it's hot) so I don't have to worry about the constant changing seasons, but it's still a task I spend a good amount of time on per week.
An Accomplishment Can Also Be a Headache
In the end, I still have absolutely zero regrets in buying a house at 23, but I have learned a lot along the way that I am hoping to pass on to those with a similar opportunity. Over the long-term, buying a house is almost always going to be more beneficial than renting, but not everyone is cut out for the daunting task. Unless you want to spend thousands a year for third parties to maintain your home (which I personally can't afford), you are going to have to treat the home like its your child. Don't be too quick to toot your own horn just because you have accomplished something not many will be able to do. It is not for everyone. A lot of young professionals want to have as few obligations so that they can go out and have fun, but some are different. Personally, I take pride in my home as it is a symbol of my success and hard work that I put in long before I even had my first job. However, if I chose to neglect my home, my "Ultimate Dream" would turn into an "Ultimate Nightmare".
My story is just one of what I'm sure is many out there regarding owning a home right out of college. It can be done and is only as impossible as you make it out to be. This doesn't just apply to houses however. You can take the attitude I had and apply it to whatever your goal is.