I just left the title company where our clients picked up a $61,000 check – the proceeds from selling their house. What makes this such a great story is how young and financially smart this couple has been. I first met this twenty- something couple, two and a half years ago when he was transferred here by the army; she was pregnant and they came to us looking for a rental home. They settled into a rental home in Eagle Point for $1250 month, and after renting for six months, they called us to see if we could help them buy a home. They soon found the perfect home for $167,900 and moved into it. Because he was in the army, he was able to get a VA loan with zero down giving them a mortgage under $800 a month – $450 a month less than they were paying in rent. In addition, they had a $9,000 a year tax deduction by writing off their mortgage payments, and in two years’ time they walked away with a $61,000 check. Accidental Investors or really smart young couple, you decide?
One of our brokers is 25, married, and bought his first home at 23, which in two years is worth $65,000 more that he paid for it. He’s a great example of either a financial wizard or Accidental Investor and he now gets to help his peers follow his path. One of his clients called him after a year of owning their home and they wanted to sell it to move to the country. He had to deliver both bad and good news to them. The bad news was that if they sold their home without owning it at least two years, they would have to pay state and federal capital gains tax on any equity they had in the home. The good news is that they had made $40,000 in equity in just one year and if they want to move at the end of this year they will most likely have about $80,000 in equity. What’s also interesting about this couple is their parents weren’t always supportive of them buying a home and they thought they should wait and save more money first. If they had waited to purchase a home, any savings would have been wiped out by the $40,000 cost increase of their home.
Our young broker had another couple that came to him to see if he could buy a home with the goal of paying less in a mortgage payment than what they were paying in rent. They were successful, and in addition to lowering their monthly payment they have made at least $25,000 in equity; and if that’s not enough, their lot is so large they are now working with a private planner to split it in half and sell off the vacant portion for $70,000.
Today we just completed a “value evaluation” for another young, newly married couple who bought a small two bedroom, one bath home in 2015, with a mortgage payment less than their rent and it looks like they have made about $2,275 in application for each and every month they have lived in their home. This month we close on a new home for the newly married daughter and son-in law of another broker on our team and they will soon be enjoying the world of tax deductions, sweat equity and appreciating values as well.
All of these cases are young couples just married and making smart financial choices. Don’t you wish you were as smart as they have been when you were their age? They all have mortgage payments that are lower than their previous rent payments! They all save on their taxes by deducting their mortgage payments, and lastly, they are all making about $30,000 a year in appreciation.
Accidental investors or financial wizards, these are all smart couples who have made sound financial decisions. We hope other young couples reading this article think twice about continuing to rent and they too can become Accidental Investors!
Written By Graham Farran