If you missed the news on Instagram, We bought a desert fixer upper!
This blog has always been a process blog. We’ve been showing you our processes of what we do with your personal finances and how we are paying off $650,000 of student loan debt. So naturally, it makes sense to show you the process of getting and fixing up our dream home.
I thought a good starting place would be to answer some of our most FAQ. I’ve also included photos of the main level which is the first thing we’ll renovate. Enjoy!
HOW DID YOU FIND YOUR HOME?
For the past few years, one of my hobbies has been scouring Zillow every night when I’m unwinding and trying to go to bed. Since we moved to Phoenix and the cost of living is so much higher than Tulsa, we thought maybe we’d put off buying a home here until we paid off student loans. Until one day I got the idea that if we could house hack (meaning buy a house that also had rental income potential) then it could make sense to buy a home.
I had a few unique things on my checklist of things we want in a home. One night, a little over a month ago, this house popped up with a lot of things on our checklist, including a guest house that we could rent out. I crunched some numbers and figured out it was within our budget so I knew we had to see it! We did a walk through without a realtor and before being pre qualified for a loan (side note, not all listing agents will allow you to do this). When we finished the walk through, me and Danny looked at each other and were like, yeah this is our home. It just felt right. We called a friend who was a realtor, hopped on Credible and got preapproved for a mortgage, and put an offer on the home all within a couple of days.
DID YOU TAKE OUT A MORTGAGE?
Yes we did. Since Danny is a dentist, we were able to get a physician’s loan. Traditionally, you don’t have to put any money down for a physician’s loan but with Covid, they asked for 10% down. Physician’s loans are great because there’s no mortgage insurance and you don’t have to put so much down. We are beyond thankful we had enough in savings to do this on a whim. As I said, buying a home was not at all part of our plan! You can check to see what kind of mortgage you qualify for with our partner Credible without impact to your credit score.
HOW BIG IS YOUR HOUSE?
The main house is 6 beds, 3 baths, with a 2000 square foot unfinished basement.
HOW BIG IS THE GUEST HOUSE?
The guest house is 3 bedrooms, 2 baths, and 1900 square feet. Surprisingly, it’s bigger than where we currently live!
HOW MUCH WILL THE GUEST HOUSE RENT FOR?
We plan to list it for $1600 per month. Once all of Covid craziness dies down and people are traveling more regularly again we’d really like to host it as an AirBNB.
ARE YOU RENOVATING BEFORE YOU MOVE IN?
We are trying to renovate as much as possible before we move in. We are renovating in phases, so right now, we are only renovating the main level’s floors and paint.
HOW LONG DO YOU PLAN ON LIVING THERE?
Can’t ever say for sure but it’s the type of place I think we could stay for a long while.
HOW DID YOU DECIDE TO BUDGET THE HOME WITH THE MORTGAGE AND THE RENTAL INCOME?
We only bought the home because we knew we could technically afford it without the rental income. The rental income will be nice in off setting costs– in fact, with the rental income we’ll actually pay less for our house than we are currently paying in rent! We crunched our numbers in the Paidback app using the Loan Simulator calculator to make sure we could afford our payments.
WHERE WILL MONEY FOR YOUR RENOVATION COME FROM?
Savings and cash flowing the whole renovation.
WHAT IS YOUR FAVORITE PART OF THE HOUSE?
As the house currently stands, my favorite part is the pool! It’s literally the only thing we don’t have to renovate except for a rusty diving board. It has a rock grotto, diving board, jumping rocks, and a slide. I’m hoping big enough for swimming laps but we’ll see!
HOW LONG DID IT TAKE YOU TO BUY YOUR HOME? WERE YOU PREQUALIFIED FOR A LOAN?
We found our house when we weren’t even looking, so we weren’t prequalified. From start to finish, the whole thing was less than 40 days.
DO YOU HAVE TO BREAK YOUR RENTAL CONTRACT?
Fortunately, we are only month to month tenants. We found out after we put the offer on our house that our landlord wanted us to sign a 12 month contract and wanted to raise rent by $500 per month. It was perfect timing!
DID YOU PUT DOWN A 20% DOWN PAYMENT?
WHAT WAS MOST IMPORTANT TO YOU IN BUYING A HOME?
I really wanted a house with a guest house. I’m very interested in real estate and thought it would be nice if we could house hack– where we live in one and are able to rent out the other. I still can’t believe we actually found it! I have literally been looking for this for 3+ years.
HOW DO YOU KNOW HOW TO DO ALL OF THE DIY RENOVATIONS?
Other than painting, we are learning as we go with the DIY renovations. We won’t do everything completely on our own but we’re going to attempt to do as much as we can. Right now that’s demoing carpet and tile floors, installing luxury vinyl planks, and painting on the main level and we’ll see how things go from from there. We want to be able to DIY as much as we can.
WHAT RENOVATIONS ARE YOU GOING TO DO FIRST?
Floors and paint on the main level and we’ll get the guest house ready to be rented out. It needs a little bit of carpet patching up, fixing some shelving in closets, and getting rid of an old smell.
IS THERE ANYTHING YOU DON’T LIKE ABOUT THE HOUSE?
There are some weird legal issues with the house. For one thing, there are 3 easements on our property for our neighbors to access their home and to access our well.
The house is on a “county island” meaning it’s not really part of the city. That’s cool for saving money in taxes but it’s uncool in that we don’t get to access city benefits such as firefighters, city water, etc. Our home is on a well, as I mentioned. I think I like the idea of a well but we have a shared well agreement with our neighbor. Meaning they can access our well water. which might be OK, but it’s just kind of a weird thing.
Lastly, our house is on a septic tank so who knows what exciting adventures await with that.
CAN YOU SHARE SOME OF THE PLANS YOU HAVE FOR THE LAND YOUR HOUSE IS ON?
I can share a little! We hope to put in a mountain biking pump track, a sports court, and extend the patio to make an outdoor kitchen set up. It already has some fun things like a pool and fire pit area.
Did I miss any questions you have? If so, drop a comment below and I’ll add them to the list!