In this series, NerdWallet interviews new homeowners across the country about their unique homebuying journeys and the financial decisions that helped them get there.
It seems like everyone wants to move to Austin, Texas. It’s no surprise: The state capital is one of NerdWallet’s best cities for job seekers, and it’s also home to a fantastic art and music scene.
But what does it take to settle down in Austin? How much do you need to save?
To find out, we spoke with Nicholas Coates, a 28-year-old finance manager, who recently bought a home there. Coates told us about Austin’s booming real estate market, how being a “personal finance freak” helped him find a home and why it’s OK that he didn’t find his dream house.
What brought you to Austin?
I’m originally from Fort Worth, Texas, and I attended The University of Texas at Austin. I stayed in Austin after getting a job at a Big Four accounting firm and eventually moved into a financial analyst role.
I really like my job, and I love everything Austin has to offer — the people, nature, its restaurant and bar scene, the warm weather — and how it lets me be close to my friends and family. I thought it would be awesome to settle down here.
Why did you decide to buy a home in Austin?
I had been renting for nearly 10 years in Austin. My roommate and I were sharing a $2,100, two-bedroom apartment in a popular neighborhood, South Lamar, but I wasn’t taking advantage of the area.
Prices were expanding, rental prices were going up for one-bedroom apartments and I thought I could find an affordable place that could go up in value in the next five to 10 years.
I wanted to put equity into real estate while the market was hot and get a return on my investment.
What were you looking for in a home?
I wanted a house rather than a condo. Condos in Austin are charging outrageous HOA fees, and I wanted a yard. I was looking for a small- to medium-sized house — no more than 2,000 square feet — because it was originally just going to be me, although I ended up getting a roommate. I was looking for three bedrooms to give the house a better resale value, and I converted the extra bedroom into a study.
Location-wise, I hoped to be as close to downtown Austin as possible without spending a fortune. I landed on an area in South Austin because prices were still relatively affordable. The interior would ideally be updated but didn’t have to be perfect. I didn’t care about the exterior or landscaping because I could fix that over time.
What was your homebuying journey like?
I started looking at a few houses last summer, but ultimately decided that I wasn’t ready to purchase. I did market research for a year, and when my lease was about to expire this summer, I was ready. I started working with my Realtor, who is also my boss — which was very convenient, by the way — and he set up a search so that I would get an email every time a new house within my criteria was listed.
I looked at roughly 12 houses, put in an offer once I found one that I liked and closed on July 21. The house was only on the market for two days, but homes were going really fast in Austin this summer and you had to be ready to pull the trigger.
How did you know it was the one for you?
I’m pretty analytical and like to run the numbers over and over again, but it came down to a feeling that this was the right house. I liked the layout and the interior, and it was the right size and location for what I could afford. It needed additional work, but nothing was a dealbreaker. The best way I can describe it is that it was the best compromise I could find.
My house is a flip. It was built in 1971, but it had brand new fixtures, wall accents and paint. Someone had passed away, so an investor came in, bought the house for cheap and put a bunch of work into it. You can see that happening a lot in my neighborhood, Garrison Park. It’s not the best area, but hopefully it will get better over time.
What’s your approach to finance, and how did you save for the home?
My budget was between $300,000 and $350,000, which is somewhat challenging in Austin. I knew I’d have to settle on the location or a home that needed a little work. I’m kind of a personal finance freak — I have a 15-year plan modeled out in Excel — and I’m diligent about keeping a budget. I do a lot of research before making a big purchase.
It helped with buying the house because I knew how much the mortgage was going to be. I started saving for a home as soon as I graduated. I’ve always been a saver: I don’t spend much money on food, and shopping stresses me out. So I didn’t have to change my spending habits.
I wanted to put 20% down and take out a 15-year loan, as well as put money toward home furnishings and improvements.
Would you have done anything differently?
I expected the process to be stressful, and it was. Coordinating the move-out and closing dates; dealing with mortgage rates, appliance deliveries, furniture deliveries; and determining how much you’re willing to spend on all of these things — it becomes a burden. At some points I questioned my decision, but I’m ultimately glad I bought.
However, one thing about flip homes is that the quality of the work is often a little lower, so I noticed a few things that weren’t done very well. My faucet popped off, my dishwasher leaked and one of the towel racks fell off — but it’s not a huge deal. I knew these were going to happen at some point. I feel like I’m training myself to do these things so that when I have a family, I’ll be prepared.
What advice would you give to someone looking for a home?
When you look at houses, bring someone who has been through the homebuying process. Leverage advice from friends and family who have done it before. Know what you want and what you’re willing to sacrifice.
As a first-time homebuyer, I knew I didn’t have the luxury of buying the perfect house, but I had an idea of what was important. I didn’t find my dream home; it’s my starter home. Eventually, when I settle down and have a family, hopefully putting equity into this house and making it a rental will help me get into the house I want.
Also know that buying a house is more expensive than you realize. I created a budget for how much I expected to spend on each item — including the appraisal, inspection, closing costs, appliances, furniture and insurance — and it all adds up very quickly. Keep in mind that there’s way more than just the down payment.