How I purchased my first home at 21 and later turned it into a rental property

We purchased our first home in 2011. It is still my single favorite purchase of all time. It was a townhome in a suburb of St. Paul (shoutout Woodbury!). It is 1,500 square feet, 2.5 bathrooms, 2 bedrooms and a 2 car garage. At 21 years old, I felt like an MTV Cribs style baller purchasing this home at the time. It was built in 2006 and was in an awesome neighborhood with 2 pools and many parks and trails. We still own the property today and live less than a mile away.

Yes, let me take you back. The year was 2011, two husbands ago for Kim Kardashian. The price tag was $135,000 for a what I considered the penthouse of Woodbury, MN at the time, a fraction of what it is worth today. I purchased it using a first time homeowner loan through the FHA along with a $10,000 down payment that I had saved from WORKING DURING COLLEGE AND OPERATING MY OWN BUSINESS.

I know you’re thinking this doesn’t all add up for the $135,000 price tag. As with most things, there is some luck involved here. The real estate market was still recovering from the housing market crash of 2008. I took a calculated risk at the time and decided to make an offer on a short sale. The previous owner had purchased the home for nearly $100,000 more than I did. Short sales were fairly common at the time and were used in scenarios where the homeowner wanted to sell the property, but due to the fallen values had to get the bank to agree to forgive the difference between what they owed on the home and what they could sell it for.

Submitting the offer and awaiting the bank’s approval took a couple of months, but was well worth it. While short sales are not as common in today’s current market conditions with most homes being worth more than people purchased them for. The risk of trying for a great deal through a short sale at the time was that I could have waited several months and never heard back from the bank or they would deny my offer. It seems like the realtor selling the property and the owners did a great job with checking all of the boxes to ensure the deal would go through. It is so crazy to think of how different the real estate market was as a buyer then. In the middle of an economic melt down there was houses that literally sat on the market and sellers that couldn't get out of them met with buyers who had the luxury of hymning and humming over which option they should choose.

At the time, even as an impatient 20 year old, decided to take a calculated risk. I would trade the immediate gratification of purchasing a house that was not quite as nice or try for a better one at a little bit lower price!

It turned out to be well worth the risk and potential inconvenience to get a great house for a good price. If the market ever presents opportunities for more short sale properties in the future, it is definitely something that I plan to capitalize on! I realize I got pretty lucky in my situation with not only the market appreciating in the years to follow, but also the bank being willing to accept my offer in a somewhat timely manor (it took about two months) and the home being in good condition.

We lived in the home for about 2 years when we decided to purchase a single family home to remodel. Rather than selling the town home and cashing out on the roughly $25,000 of equity that we already had, we decided to keep the home and turn it into our first rental property. This is still one of the greatest decisions I had ever made; I will share some of the numbers with you on a future post!

Did you buy your house younger than the average age (which is 34 years old according to Experian)?

How did you purchase your first property?