So let’s talk about buying a house and what the purpose of buying a house is.
I like to tell people that a house is nothing more than really a stepping stone to get to your next phase in life.
So, for some of you that are first time home buyers, that’s your very first home that you’re purchasing and maybe you have an idea that, boy I would love to have a nice, big, beautiful home at some time in the future but my experience is that it’s very difficult to get straight from being first time home buyer to getting to where you’re in the nice, big house with the pool and the huge backyard and all that good stuff if you haven’t had some purchases along the way.
The reason is because we leverage real estate in a way of building equity and we take that equity and we move it to the next part and to the next home and the next home.
Same thing if maybe you’re in a house already and you’re moving down. Ideally you have your house, you have equity, maybe you paid it off and it’s time to move down. There’s things that you need to be aware of as well and how to play the market in a way that gives you the best advantage.
Maybe you’re just a lateral movement, right? We just want to move into a different house, that’s all.
Again, all these tips and tricks that we’re gonna share with you are all part of the stepping stones to get to the next place.
I run into a lot of people, a lot of home buyers, who want what they want and they want it now!
But if they don’t get it then they just don’t ever make a purchase and as a perfect example, there’s one person that I kind of stayed in touch with that I remember when I met with him, and this has to be 15 years ago, he said to me, “Anthony, I know prices are gonna go down and I know that the market’s going to crash and I know…”
And while yes, that has happened since then, even when it was at it’s bottom and I would follow up with him he still insisted, “No, no, no, prices are gonna go lower, interest rates are gonna go lower and I’ll be able to buy just a killer house for cheap” and what ended up happening is he missed that and many other opportunities and in the end he still doesn’t own a house.
He’s never owned a house in his entire life because he’s always waiting for that perfect opportunity, right?
I’ll give you a little bit of my story. Me and my wife, we were married at the age of 18. Bought our first condo at the age of 20 and we bought it for $75,000, it’s over here in North Santa Ana. Nice little place, bought it for $75,000, thought that was fair. Almost two years later in the early nineties, when they closed all the military bases and the market crashed, the value of our condo went down to almost $13,000.
I mean that’ll make you rip your hair out, right? I’m losing that much equity and lots and lots of people bailed out but we stuck it out and we said okay it is what it is, it’s the real estate market, right?
We ended up selling it about seven years later for $245,000. Bought another house, paid $160,000 for it which at the time I thought was ridiculous, that was crazy to think that you would spend $160,000 on a house. I would love to spend only $160,000 on a house, but we ended up selling it less than five years later for almost $500,000, it was right during the peak of the market and so if you don’t have a property to leverage, you’re never going to get to that next stepping stone.