My experience buying a property with zero down

“This place is like a bomb shelter” said my friend who was looking at the tiny condo with me that I was interested in buying. He wasn’t wrong, it had some…issues. It was the winter of 2006 and I had decided to buy my first home. I don’t remember what spurred this decision on. I just remember being tired of renting, feeling like I worked too hard not to own my own place, and deciding to buy a place. However, there were a couple of big issues that should have kept me from buying: I had debt, I didn’t have enough money saved for a down payment, but I foolish girl, ignored those issues and still decided that I should buy my place.

The home that I decided to buy was a one bedroom, non-conforming garden level unit (no bedroom door). It didn’t have a lot of windows, it was only 495 square feet, was dark except for after 12:00 p.m. when the sun was shining in, and once I moved in I realized that I could hear the upstairs neighbor’s three legged dog (who wears a brace) walking back and forth during strange times of the day. Did I mention that I love, love, love my place?

I bought  in a fantastic area that has great restaurants, bars, grocery stores, and a huge park. I actually lived in this area years ago when I was in high school and it’s even better now! Coffee shops are nearby, the walkability score is 71, it has a transit score of 66, and a biking score of 93. I would argue that the transit score is much lower than it should be because I am a couple of blocks from three light rail stops and from the bus.

It has been 7 years since I bought my place and even though I would never recommend purchasing a home without a down payment. I lucked out. Most units the same size in my neighborhood were going for $150,000-$200,000 at the time that I made the purchase. My place: $72,500. Yep, you read correctly. It was really cheap (for Denver). My mortgage payment is hundreds of dollars cheaper than what I was paying in rent. The property has gone up in value the entire time I’ve lived in it and I would make a substantial profit if I decided to sell.

Things I wish I’d done before making this purchase:

• Paid off my debt
• Put down a 20% downpayment
• Double checked the neighbors. There is one shady family on the block 🙁 Everyone else is fabulous
• I will never buy in a duplex/triplex again unless I own the entire building. It has been difficult at times to agree on what to do with the lawn, etc. I bought the least expensive unit but work on the lawn the most because I am very sensitive about how the lawn looks. My neighbors-not so much.
• Try to figure out how many dogs there are in the neighborhood. People in Colorado LOVE their dogs. I just love puppies.
• I don’t have a bathtub. I really miss having one 🙁

Things that worked out-despite myself! 

• I got a 30 year fixed rate mortgage with no penalty for prepayment.
• The mortgage is super affordable and I love my place. I feel very secure here and have decided to rent it out once I find someone and get married.
• I love my neighbors-except for the shady one. People look out for me and we all know each  well enough to notice when people go on vacation or are gone for awhile.
• I love the park!
• My net worth is higher than it would be because my property has appreciated every year that I’ve lived here. Most homes in this area are selling in a week or two once they hit the Market.
• I love the access to transit.
• My mortgage has been steadily going down and I have plans to really accelerate the payments after my debt is paid off.
• I wouldn’t have been able to rent a place that is as cheap as what I pay in on my mortgage. Denver has gotten really expensive in the past 6 years.
• I will make a profit when I begin to rent it out..

I really lucked out with this purchase and am really fortunate that I decided to buy super conservatively even though I could have gotten a mortgage for 3 times the amount. I’ve learned a couple of lessons from this first real estate purchase. These are things to think about before buying:

• First, it’s all about location, location, location. I feel very safe in my area (except the shady neighbors). I know my neighbors, and people are always amazed when I say what area I live in. I always mention that the place is small. They don’t seem to care.
• Think outside the box. My place is exactly what I need for me as a single person. I’m not paying for space that I don’t need. I’ve hosted two people at the same time here-it was very cozy but they were European and didn’t care or notice the size of my place. Nonconforming units, places without doors, smaller than you originally considered are the places that offer possibilities. In February (hopefully) I will be putting in a wooden floor in my bedroom, getting my bathroom fixtures changed, and getting new tiles on the bottom of my shower. I am slowly doing renovations that will help increase the value of my home and make my home a lot more comfortable for me (and future renters).
• Public transportation should be close! I am so happy that I can easily take the bus or light rail downtown. I don’t need a car because of this. I have decided to buy car this spring but it’s not urgent.
• Grocery stores-Are there any nearby? I wasn’t thinking about this when I bought, but was aware that there were 3 grocery stores within walking/bus/bike riding proximity of my place.  The next time I buy proximity to grocery stores is something that is non-negotiable. I will not be far from a grocery store. My goal is to always be close to at least two stores. (Emphatic enough?)
• Coffee shops-How many?  I love going to my local coffee shop. I know the owner and his entire wonderful family. His dad even reads my blog from time to time and asks about how things are going.
• Restaurants/Bars/Retail/Fun Stuff-There are a ton of bars, restaurants, retail, and fun stuff in my area and close to my area (walking distance). It’s great!
• Park or outdoor area nearby? There is a huge park nearby that is wonderful year around. People, run, walk, hang out, play volleyball and have a great time in this park all year around. There is even a lake and you can rent a paddle boat on warm days.

Overall, it has been an amazing experience. Though not perfect, and it’s not my dream house, it has been a dream to own a place that I feel happy and comfortable in (especially now that the clutter is gone.)

Have you purchased a home with zero down? What has your experience been like? Are you paying down your mortgage quickly? Would you considered an unusual property?

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Michelle

I am an obsessive foodie, but not self-righteous with it, love travel, meeting new people, helping you look good, and am freaked out by people who don't enjoying reading...something! Grab a Perrier, read my blog, feel free to drop me a line! Hope to hear from you soon.

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