The Expectations Vs. Reality Of Buying My First Home In My 20s

It took six months to find my new home, 45 days to close, and now that I’m moved in, it’s time to take a look back at the process as a whole. I’ve shared the juicy details and frustrations of starting the searchsetting my budgetfinding my lenderappraisal drama, and even the letter I sent to the seller. But now that everything’s said and done, I’m just so damn happy to call this place home.

So, with the joy of being a first-time homeowner and first-time landlord aside, it’s time to reflect on how my search evolved over time.

The basics:

I went into this process looking for a 2BR (bedroom) 2BA (bath) that kept me within a half hour from my office. It had to have a washer/dryer, and had to be rentable.

I ended up buying a 3BR 2.5BA (what what) just a bit further from my office — my new commute takes 40 minutes in rush hour, instead of the 30 I was anticipating. The tradeoff, however, yields an extra bedroom and a sweet renter setup.

It has all the bells and whistles I knew I wanted. Washer and dryer, two parking spaces, and it’s in a safer location than I was originally expecting.

The finances:

Here’s a big difference. I’ll be honest, I went above my anticipated budget of $365K for a 2BR, and instead opted for $427K for the 3BR. While this raises my monthly housing costs, it also drastically increases the rent I can take in for the additional two bedrooms. I was planning on paying about $2,000-2,400 for my monthly mortgage, insurance, property taxes, HOA dues, and PMI, but I’m looking at monthly payments of about $2,800 all in.

That said, 3BRs in the area rent for over $3,300, so each rental bedroom can easily go for over $1,000 of monthly rent in the area. Because I’ll be living with a close friend, I’m charging her about $1,400, as she’ll be taking one extra bedroom and converting the other into an office, which she and I will split. This brings my actual monthly costs to $1,400 for a much better place than I’ve ever lived in before.

If I find another roommate, with whom we both want to live, we’d remove the office, rent the third bedroom, and my monthly costs would drop to less than $900 for housing. Insane, for someone who’s rented in Los Angeles and could never find a 1BR close enough to work for less than $1,500 a month.

Long-term, when I convert it to a full rental, I’m hoping I’ll have the same luck as the last owner. He’d had the place rented out to engineers in the area, consistently, for upwards of eight years before selling. Fingers crossed that my future renters are so consistent!

The location:

I’ve been all over the place throughout Los Angeles these past few months. Originally I was looking in the Culver City and Inglewood areas. Culver City is way out of my price range, but Fox Hills (the southwest corner of Culver City) had a few 2BRs that I looked at — all in the $450-500K range. I told myself I’d consider these if they were amazing, but the rent I could pull in just didn’t justify the costs.

I looked in the Northwest corner of Inglewood, and loved some of the places I found. They were in my price range, in a relatively good neighborhood, but none of them were right — what I mean is, maybe they had a great location, but only 1.5 bathrooms. Not the best situation for living with a renter…and if I wanted to weigh the pros and cons overnight, poof. The place was already off the market.

After having the rug pulled out from under me on a few places, I expanded my search out of pure frustration. I’m so glad I did! I started to look in Gardena and neighboring areas, which eventually led me to my new home!

*****

So, I didn’t get what I was picturing. I got something much better, with pros and cons that come from that. Yay: extra rentable bedroom! Boo: higher mortgage payments. All in all, I think it was the best choice for a long-term play. Here’s to hoping that I’m right!

This post was originally published on a fledgling blog meant to help the author eliminate anxiety from her life, and to help organize her thoughts.

Image via Pexels

  • Allyson of Lovely Explorer

    Speaking as someone who just moved to LA, it’s impressive that you own even a tiny slice of this town! Rental potential is definitely there. I work in Fox Hills/Culver City and commute from Hermosa Beach. My trade-off was also the drive (I was hoping for 20-25 mins and it’s consistently 30-35).

  • Summer

    Congrats on the new place! It definitely sounds like you made a smart choice going with the pricier 3-bedroom; having the option for an additional tenant or even just as office space is really great.

  • Gem

    I would love a follow up with a few more details about how you saved for a down payment and afforded to buy in your 20s.

    • Sara

      Seconded!

    • That’s a great idea! I’ll post again soon 🙂

  • Caitlin K

    All the props on this! I’m in the Agoura area and housing in Los Angeles is RIDICULOUS. Would love to hear much more about being an LA homeowner and your process. Great read.

  • Christine L.

    Curious what you did in your 20s to allow you to purchase such a valuable property. My husband and I are both 28 with full-time careers and stellar credit, and we are struggling to find an affordable house.

    • Gem’s comment inspired another post that I’ll be working on, detailing how I saved for the downpayment. That said, there really aren’t a lot of affordable options here in LA that are still safe… I even looked in “West Compton” out of sheer frustration, and found a decent place in my budget (but with terrible neighbors). It took a long time and a lot of internal debates before I found my new home.

      As for how I got it? My credit is “great,” but not stellar – low to mid 700’s. Because I didn’t have the full 20% down, that put me at a 4.125% rate. With 10% down and a competitive offer price, the seller was willing to work with me over some of the offers with the full 20%. Their agent insists that it’s because of my overly-eager letters, but who knows?

      So all it really took was 10% down of the $420K+ – by no means a drop in the bucket for me. It took a few years of moderate to aggressive saving, which I’ll be writing about again soon!

      • Christine L.

        Thanks for replying. I’m very interested in how you managed to save the downpayment. I checked out your blog (and subscribed!) and realized that we live in two remarkably different areas of the western US – your monthly rent is more than my monthly pay BEFORE taxes, and the houses I’m looking at are all $115k or less. That might be why your 40k downpayment seemed so miraculous to me.

        • Totally makes sense! Even worse, housing markets are so different everywhere you go – my experience in the balloon that is Los Angeles right now might not reflect anyone else’s, let alone someone outside of these high COL areas.

          Still, I think the best thing I learned is that I didn’t need the full 20% down. I’m able to save more, faster as a home owner now than if I waited around renting until I got the full 20% so I could get a slightly lower interest rate… Seems obvious, but this was a mental hurdle for me.

          Good luck with house hunting!

  • Lina Abascal

    going thru this in LA right now as well and appreciated this!!!