Lately, I have been seeing many articles about single women outpacing single men in home ownership. The data is interesting, but what has always inspired me the most is hearing others’ personal stories.
As a single woman who owns 2 investment properties, I'll tell you how I got started and plan to keep acquiring more.
When I look back on how I managed to purchase my first property, I can see how I started prepping for this purchase many years earlier, yet I didn't realize my personal finance actions then would support my later home buying goals. If you are just starting now, don't get discouraged. Future you will be so thankful you started today. Remember: consistent effort, over time, produces results.
Learned my numbers.
I began tracking my spending some time back in 2017, when a coworker shared her budget tracker with me (I have since tweaked and modified my budget tracker to its current state). Understanding exactly how much I had coming in, going out, and what I was spending on is the most powerful action I have ever taken for my finance.
Through understanding my numbers, I was able to adjust my spending to support my goals and set aggressive but realistic financial goals. During this time, I worked to save an emergency fund (standard financial advice is to save 3-6 months salary) and adjust my spending so I could support maxing out my HSA (health savings account) and 401 K.
Lived below my means.
Understanding my numbers was shocking, particularly it was hard for me to accept that the lifestyle I thought I should be able to afford, was not affordable for the average person or me. (Great visual of this here from one of my favorite personal finance accounts) I realized that my peers were likely in debt to afford that new car or European trip. Either that or someone else was gifting those things to them. Tracking my spending allowed me to understand what lifestyle I could truly afford, and then adjust accordingly.
I started ruthlessly cutting unnecessary expenses, found joy in minimalism, and started feeling a lot less stressed about money all the time. I heard someone say recently that we went from keeping up with the Joneses to keeping up with the Kardashians, the way we compare our lives to others has become extreme in the era of social media. I have found the most wealth in wanting what I already have.
Increased my income.
While you can only cut so much out of your budget (you have to eat something and live somewhere), your potential to earn more is unlimited. In my late 20s I realized my career as a designer was going nowhere, despite consistent promotions in responsibility, I was only making $5k more than when I started in the field.
I switched to a career in Design Project Management, where my salary increased by 40% immediately and 70% by the end of a year. It has come with consistent promotions in pay and responsibility ever since. No amount of penny pinching on my designer salary would have ever enabled the wealth-building power of that one decision to switch careers.
So often we focus on all the small variables, but one challenging, impactful decision can outweigh hundreds of small choices.
Continued to save.
Nothing sexy about this one, I had gotten my spending under control and increased my income so there wasn't much more to do than stick to the plan. This part can be boring, the excitement of making life changes is over! Don't get distracted by shiny objects, the consistent effort is where the magic happens.
Explored my loan options.
Now this is where my personal path to home ownership got interesting, when I first looked at buying an investment property I was married and not looking to move into my investment so I needed 15-20% down. But then during the process of looking at investment properties I also got divorced, which enabled me to move into my investment and qualify for a primary residence loan at 5% down.
It is essential to understand the factors affecting your personal situation and what loan options you have available. 20% vs. 5% down on a $350,000 house is the difference between $70,000 or $17,500 very different savings goals. Down payment is just one variable you have to leverage, there are many others as well as rules that apply to certain loan products that can either work for or against you. Understand your options to clearly define your target and know when you personally are ready to buy.
Did it scared.
When single women (or really anyone) ask me about homeownership, I consistently hear a lot of fear mainly about the house breaking. While not everyone is going to love DIY as much as me, there is nothing you cant handle when it comes to homeownership. Plumbers, electricians and handy people are in such high demand because the average person does not know how to fix their house, or care to learn. There is nothing wrong with that!
As a handy person myself, I was still terrified of the risk of buying another home. Now that I'm 3+ years out there hasnt been any problem I haven't been able to handle. Owning a home comes with many joys like controlling your monthly housing cost, being able to personalize your space and in general be more in control of your lifestyle those pros may be worth the con of having to manage and maintain a home.
Bought below my means.
Never buy a house that is at the max of your personal budget, or the max you were approved for by a mortgage lender (one caveat is if youre buying an income producing rental, if the numbers work and it will cash flow this could be a reason to purchase at the top of your limit). I bought a house I could afford easily and added in some buffer for all the renovations I wanted to do. And I STILL ended up living without a dryer for months because I couldn’t really afford to replace it when it broke – a small sacrifice!
If this is your first home, you (like me) are likely underestimating the additional costs of home ownership beyond your mortgage, insurance and taxes. If you underspend, you can always upgrade your home later, but if you overspend you may find yourself in a very stressful financial situation.
So how am I continuing to buy investment properties? The same 7 steps listed above with one additional step: investing in myself. Through education, networking, and financially re-investing my gains back into growing my rental portfolio. The financing is geting more and more creative as well, as I learn more about what levers I have to pull.
As always, the best time to start was yesterday the next best time is now. If you’re looking to buy a personal residence or an investment property in the near future, it’s never to early to understand your options and put together a plan.
xx,
Claire
