Why I Bought a House In A Pandemic

Some of you may know that recently my fiancee and I purchased our first home...in the middle of a pandemic.

I wanted to make a video talking about what I did, why I did it, what our long term plans are, and most importantly if I’m completely crazy to have purchased a house all while COVID-19 is happening.

Wow, where to begin. Maybe a good place to start is by saying this: it is my full time job to help people buy and sell homes. I’ve been through this process with my clients over and over and over again. So you would think that it would be pretty straightforward and not the least bit stressful right?

WRONG. Purchasing a home is an emotional rollercoaster from start to finish. I still had to rush signatures on documents, worry about documents being overnighted getting to escrow on time, shopping for insurance, negotiating credits for repairs, and being completely stressed out signing loan documents early in the morning to, fingers crossed, try to close before the weekend.

Also, I too went through the same ups and downs of loving the house when I first saw it, negotiating against multiple offers, then noticing all the little flaws during the inspection period and coming to think this is a terrible house, don’t buy it, its not worth the money, everything is too expensive and the house is falling down, all the way to realizing things aren’t as bad as they seem, a little work can go a long way, your first home is never your dream home, and this is the start of a long term journey, to finally closing on the property and being elated at making it over the hump.

Oh and it helps that there’s a patio and pool. I have learned that cocktails do indeed taste better on a hot day when you are partially submerged in water.

All jokes aside, that’s a long winded way of saying the same thing that I advise all my clients: this process is tough but worth it. Get yourself a good agent.

For those curious about what we actually bought, Lindsey and I purchased a 1956 Palmer & Krisel mid century home in the North Hills West neighborhood, tucked right in between Northridge and Granada Hills.

Palmer & Krisel were mid century architects that built a lot of homes in the valley in the post war period, and they are known for their triangular windows and of course, open floor plans with tons of light and indoor/outdoor living.

William Krisel actually went on to make most of his career building in Palm Springs, and most people know him from his work out there, as well as for his butterfly style rooflines.

I really love mid century architecture, I think it is the perfect way to experience southern California, so of course, we wanted to find an architecturally sound gem that we could restore to its former glory.

It’s worth nothing that this is house part of a longer term strategy that Lindsey and I will be working together on. We plan to purchase a new home somewhere between every 2 to 5 years and live in it while we renovate it.

The minimum 2 years is the time period required to have a property be your primary residence so you can qualify for the capital gains tax exemption, up to two hundred and fifty thousand dollars for a single person and five hundred thousand dollars for a married couple.

That means we can take the profits from the first house tax free and roll it into the second, do that again, roll it into the third, and so on, until you’ve reached true dream house territory.

I’ve watched a very wide variety of people invest in real estate in my career, and though there are many ways to do it, this is one of the ways that I think people can really maximize the investment payoff of their primary residence.

Now, I think the major differentiation here is to note that we are renovating these homes, specifically with architectural preservation in mind, NOT flipping them.

See, flippers are looking for the quick profit in a short period of time. Not all flippers do this, but most of them invest in very cheap materials, and focus only on trendy aesthetics, not taking the time to really think about how these updates will affect someone living in the house.

In my experience, what we call “seller renovated homes” always sell for more money because these are people who are making the upgrades for them, not for quick profit. This always means higher quality and more well thought out upgrades, and thus commands a higher price.

Plus, buyers tend to feel better when someone actually cares, like we do, about a home.

Of course, this house has a lot of work that needs to be done to it, and we have budgeted about 60 thousand dollars over the course of the time we own the house to do this work. A great aspect of living in a house while we renovate it is that we don’t need all that money upfront, we can slowly invest as we earn more and save for the work.

Plus, we are going to be doing a lot of the work ourselves...I’ve already painted two rooms while Lindsey has done plumbing work, electrical outlet replacements, and lots of cleanup.

But that still begs the question: why now? And why in the middle of a pandemic?

Well there are two major driving forces that I see right now, and these are not unique to me, rather I think they are driving the larger market as a whole, and we are certainly not immune to them, we are part of that larger market.

The first is monetary, the second is changing how we live.

Let’s start with the financials first.

I don’t know how to say this other than interest rates are at historic lows and money is dirt cheap.

Interest rates on conforming loans are easily dropping below 3 percent and well qualified buyers are getting mid 2 percent loans.

Even people in the jumbo loan category or that are putting less than 20% down are getting mortgage rates of low 3%.

Not only that, the Fed has stated that they plan to keep interest rates low well into 2021, so money is easily accessible.

I remember last looking at a home loan that was mid 4% a few years ago. Even people that looked as early as late last year and the beginning of this year saw mid 3% rates. This translates to potentially hundreds of dollars less on a mortgage payment.

We now have a mortgage payment slightly higher than the place we were renting, and getting an extra bedroom, and extra bathroom, double the space...and a pool.

Plus, we are no longer throwing money away each month on rent, we are building up equity in an asset that we own which is a huge step towards a solid financial future.

Ok, money aside, there are just as important if not more important personal changes that are driving this move for us and many many other people in the market.

Our old place that we thought was a cool artist space suddenly felt like a prison with no outdoors space when the pandemic happened.

Being able to walk to things was suddenly irrelevant. Being home all the time meant space was a concern, and Lindsey and I certainly had a rough adjustment period to both working at home full time in the same space.

We craved something quieter, a place with tree lined streets to walk our dog. We wanted space, and we were willing to live a little farther outside the city to get that.

Most companies will not be returning to the office until well into 2021, and even then we will see an increase in “work from home” either permanently or flexibly.

Commute times will be significantly reduced, potentially for a very long time, which is a good thing for mental well being, as well as the ability to live a little farther from the city.

All of my fears about moving to what some people might consider a suburb of Los Angeles were unfounded.

The food is excellent, on par with most other areas of LA, and friends still come visit without hesitation (though I’m sure the pool helps).

It’s just as vibrant and interesting as the heart of the city, except I can see stars at night and there aren’t meth addicts outside my front door…

I also think that there is an inevitable trend of growth in the suburbs. If people are no longer required to live so close to the city, it would make sense that they move further away if they can have more space for the same price.

And couple that with the fact that many people will want larger houses with one if not multiple offices, if your price point hasn’t changed, you have no choice but to seek that living situation a little farther from the city.

All of these forces and stories are similar to the reasons every single person I’ve helped purchase a home during the pandemic have stated: I have to be home more, I don’t need to be as close to the city, I’d like some more peace, quiet and space.

On a little personal note, want to know how many houses we looked at before choosing one? Five.

Now you could make the argument that I see hundreds and hundreds of homes for my work, and you would be right, but I still firmly believe in the advice I always give my clients: If a home makes your heart sing, don’t overthink it, go for it.

We did and though it has been a crazy amount of work, maybe even a liiiiiitle more than we signed up for, it is definitely worth it.

This year is quickly coming to an end. I don’t have to tell you that I believe this is an excellent time to buy a home, I just did it myself.

So, are you looking to purchase your first home in Los Angeles? Maybe you know someone who is?

I’d love to help guide them through this process and make sure they land the perfect home for them.

Please don’t hesitate to reach out or refer me, and thank you for reading.