Buying Home Need Not Be Impossible Dream
Many would-be buyers in Los Angeles assume it is impossible to buy a home, even though California is experiencing the best real estate buyers market in years. Although prices are down, interest rates are low and sellers are willing to negotiate, still they hesitate.
In fact, almost everybody with a steady income and a willingness to compromise and use their imagination can become a homeowner.
Several years ago I was a 26-year-old single secretary of modest means, angry that the rent on my one-bedroom apartment was being raised to $225 a month. My next-door neighbor, a registered nurse, was angry as well.
At Christine’s suggestion, her mother introduced us to a real estate agent. I had visions of him asking, “What do you two girls want with a house?” But he didn’t, and that day we made an offer to purchase a three-bedroom fixer-upper in San Bernardino. We signed escrow papers, applied for an FHA loan and a couple of months later moved into our new house. I didn’t realize it back then, but I was “equity sharing.”
Today I’m in my 30s, still single and still a secretary of modest means. And I just became a homeowner for the third time. I got a great bargain on a condo in the nicest part of Glendale.
Although the condo is really just an apartment with an attitude, it does have a fireplace, a pool and even a view. Not to mention a hefty tax break.
Compromise and imagination have been the keys to my success. My first house was a sickly shade of pale green. The carpets, walls and draperies were green. The appliances were green. Even the cement of the back-yard patio was green. We spent several months and quite a few dollars covering, replacing and tearing out the green.
When it was time to move on, I did not profit (or lose) financially from the sale of that house. However, I gained a wealth of experience. I learned how to paint, strip cabinets, hang wallpaper and shop for swamp coolers.
A few years later, I was engaged to marry. We both wanted to own a house and decided to accomplish that goal. This meant driving an old clunker and watching every dime we spent. After searching the San Fernando Valley from end to end, we started looking farther away. We could have bought a small fixer-upper in the Valley, but wanted to get as much house for the money as possible.
Our search brought us to Canyon Country, where we found affordable new homes at the top of a hill. It was a compromise that would require a long commute to our jobs. We decided to make an offer anyway and spent the next few months watching our home being built. The developer offered us a buydown on our interest rate and required only a 5% down payment. This assistance allowed us to qualify (barely) for the mortgage.
I was now a homeowner once again. I never did get married. Unfortunately, a couple of years after the escrow closed we were splitting up and it was time to use compromise and imagination once again.
He wanted to move and I did not. We eventually agreed that I could live in the house and the extra bedrooms would be rented out to cover most of his portion of the mortgage payment. Although I disliked the thought of having renters in my home, I did not want to lose the house or the investment it represented. I gritted my teeth and ran a “room for rent” advertisement in the local paper.
As it turned out, one of the renters became my best friend. And in 1990 I sold my interest in the house to, of all people, my “ex” and his new wife.
After five years of commuting from Canyon Country, I wanted to live closer to my job in downtown Los Angeles. Glendale seemed to be the perfect location. I rented an apartment there and immediately fell in love with the city. My one-way commute to work went from 75 to 25 minutes. I knew I wanted to buy my next home there.
Although the sale of my interest in the Canyon Country house left me with plenty of cash for a good down payment, I feared Glendale was too expensive. Equity sharing had worked for me before, but this time I wanted to purchase by myself, if possible.
Despite my doubts, I started looking at open houses on the weekends. Most of the agents I met discouraged me, but then I met Candy. I told her I wanted a condo in a great location that would take my small dog. I was flexible on most other points. She showed me a few places that were not right for me, and listened when I told her why.
Then one evening she called me, excited. A new listing had just come up on her computer, and it looked perfect. I made arrangements to see it, and although it was a compromise in some ways, it was still a bargain. I made an offer that night.
The escrow was an emotional roller coaster, but that’s another story. It had a happy ending when I finally moved in. When a neighbor asked if I was the new tenant, I proudly replied, “No, I’m the new owner!”
In 1991, the methods that worked for me over the years can work for almost anyone. FHA and VA offer competitive interest rates combined with low down payments. This option will not buy a California dream house, but it will certainly buy a condo or fixer-upper.
Equity sharing, in conjunction with either FHA or conventional financing, is a great way to enter the market. (Just be sure to have an attorney write an equity sharing agreement, as I did.) For those who do not qualify for conventional financing, the choice of loans includes adjustable, buydowns and seller-assisted financing.
Commuting can save thousands of housing dollars, and commuters come to Los Angeles from as far as Palmdale. Creative financing has also made a comeback, and some of it can be quite useful.
I believe anyone who says “absolutely no” to all of these possibilities may not seriously want to own a home.
For me, I didn’t worry about the fact that my parents bought in Woodland Hills for $19,000 in the 1950s and today the property is worth in the $300,000 range. Instead, I made compromises, used my imagination and never gave up hope. As a result, I made the transition once again from renter to owner.
