I’m getting a little long in the tooth. My hair has more silver in it now than blonde, and more of my forehead shows each time I visit the barber. I’ve gotten a lot of mileage out of my body, and along the way I’ve learned a few important lessons. I’m just going to mention a few basics, and you don’t need to earn an MBA like me to make the right choices regarding your financial future.
#1 – My wife and I purchased our first condo back in 2000. How did we do it?
- We had a side hustle. We really enjoyed the business, and it was key to building up enough savings for our down payment. If you can find a side hustle you enjoy, you should also be able to get ahead financially. The key is being willing and able to put in the extra work, and then socking away that extra money.
- Invest in the stock market. We got lucky and scored 100 shares of Priceline at the pre-market IPO price of 16. After 30 days, the required holding period, we sold it at a phenomenal 160 price. We did some more trading too, but that was our greatest financial success at the time. If you have money, but not enough for a down payment, you might want to consider investing (although the market is really high right now), letting it grow, and cashing in when you have enough money for a down payment. Three important words, “Don’t day trade.” Those 100 shares of Priceline now trade under Booking Holdings (BKNG), currently at $2,670/share. Do the math. In general, like real estate, the longer you can hold your stocks, the better.
- Ask family for help if you can. There’s no shame in asking for assistance from family for a down payment. I see it all the time in real estate transactions, when families gift funds to buyers. The people who love you want you to succeed, and if they can, often they will be willing to help.
#2 – Think long term.
- When it came to the stock market, over the years we could have done a lot better just by holding onto stocks and letting them appreciate rather than selling for a profit (or loss). See the Priceline example above. However, our goal was always to buy a house rather than rent, so when it came time, we decided to cash in our stocks and put that money towards a down payment. We don’t regret our real estate transactions.
- Don’t freak out! October 9, 2002 Priceline dropped to $6.60 per share. We should have bought 100 shares (or more) then, but by that time we had sold our first condo and we were waiting to buy another. We didn’t want to risk money by investing in anything for a short time period. We always had our eyes on the long term, and purchased another condo the following year as the real estate market continued to appreciate.
- Once you own a home, it’s important to invest in the upkeep at a minimum. If there are problems with the home, you need to address them as soon as you have the available funds, otherwise small problems will become bigger and more expensive to fix over time.
- Don’t buy a home you can’t afford. This is super important, and it’s what can sink home buyers if they aren’t careful. Don’t just look at the down payment and monthly payments. Figure out what the house needs, and what you can afford to do over time. If it needs more maintenance than you can handle, it’s okay to look for another opportunity.