Nicole Burdick – Home Ownership Story
Zach: [00:00:00] Hi, everybody. How’s it going? My name is Zach, and I’m with Black Diamond Mortgage. And today I have a very special guest with me. It’s somebody who’s been loosely affiliated with Black Diamond Mortgage since she was ten years old. She’s currently based in Washington. So this is why we are doing this recording by Zoom. We honestly just want to tell as many home ownership stories as we can. And so we’re looking for creative ways to do that. So, Nicole, thank you so much for coming on and spending some time with me. Let’s dig into your homeownership story. Kind of tell me where it began, what year? What were you guys doing at the time and what were you looking for?

Nicole: [00:00:38] Yeah, so my husband, Josh, and I started the journey of thinking about buying a home. We were currently renting a really discounted rate, a duplex unit. It was one of two. And I did the math and basically decided that I would we would never be able to buy a home like staying there. And we were kind of starting to think, do we move out of area to find something cheaper, like away from all of our family? And then we decided that we didn’t really know for sure that we needed 20% down like we thought we did. We had been told that we should. That was like the responsible thing to do. And I’m all about being responsible. But we ended up reaching out to a mortgage broker locally where we are and realize that there’s a lot of loan programs where you could buy a home with as little as three or 5% down. So we were actually able to connect directly with our landlord and we bought that duplex directly from him for $300,000 in December 2017.

Zach: [00:01:34] So then let me stop you real quick, you guys actually were living in one half, but when you went to purchase, you bought both halves.

Nicole: [00:01:42] Correct. Both halves. So we did not have to move, which was great because we had a five month old and. Yeah, and then we totally renovated the other side. So it had been a low income tenant that did not treat it well and she’d been there a long time, so we didn’t quite strip it to the studs, but it was like all new paint, all new flooring, new trim, lots of new appliances. In hindsight, it was like way more work than we should have tried to do in two months. But we lined up a tenant and they were moving in, so we made it work nice.

Zach: [00:02:16] I think what’s really important is you mentioned down payment and you were kind of operating under the idea that you might need 20% found out that’s not true. So I got to believe that some of the money for the renovation came as a result of being able to use a lower down payment. Is that a fair statement?

Nicole: [00:02:33] Yeah, we had the money kind of set aside. We kind of had it lined up and we were we were going to use some of our Roth accounts because we we could access some of that money penalty free. We had some family assistance with a down payment. And so that enabled us to take that entire amount that we had designated for the down payment and put that towards the renovations, because even though we did it all DIY, like all DIY, it was still a lot of money one year. The other thing I didn’t mention is we’re both self employed and we were not that far along in our businesses. So we both launched. I launched in January 2015 and my husband launched in like fully launched in September 2015. So we barely had two years of income, like, wow, barely qualified on multiple levels. We only qualified really because we could show that there would be rental potential on the other side.

Zach: [00:03:20] That’s perfect, though. That’s a way to utilize mortgages to figure out how to get into a home.

Nicole: [00:03:24] So I decided that I said I am never buying a house and having a baby in the same year again.

Zach: [00:03:32] So my wife was eight months pregnant when we moved into our first house, and I think I would still prefer that than having to move with a five month old.

Nicole: [00:03:41] Yeah, well, the funny thing is we did raise because two years later I was eight months pregnant and we moved into our current house.

Zach: [00:03:49] Awesome.

Nicole: [00:03:50] Yeah, different kinds of hard.

Zach: [00:03:52] Yes. So was the let’s talk about glamorous ness to butcher that word. Was the duplex glamorous?

Nicole: [00:04:01] No, it wasn’t glamorous. I mean, when we did the other side, we tried to use a nice enough materials. Like our philosophy was that we wanted to make it nice enough that if we had to move in, we wouldn’t mind. So we didn’t do, like the cheapest of cheap. And I made it look pretty. But I mean, it was like an 850 square foot duplex. And I can remember a friend’s kid asking like, Why is your house so small? Like, why is this so small? Why don’t you drive a nicer car? And it’s kind of awkward cause you don’t know how their parents talk to them at money. But I was like, It’s all on purpose, and we have a plan and we’re building a ton of equity. And without saying numbers like we’re we’re making some smarter choices than other people.

Zach: [00:04:40] While you’re living by the principle of delayed gratification.

Nicole: [00:04:43] Which is.

Zach: [00:04:44] The principle, that’s a lot. It’s really hard for people. But if you commit to it, it makes a lot of sense. Okay. So you mentioned this is December of 2017, right, when you buy this duplex.

Nicole: [00:04:55] Yep.

Zach: [00:04:56] And then what happens next? I think you mentioned a couple of years you were pregnant again. So did you move?

Nicole: [00:05:02] So what happened was we we were kind of realizing that. I mean, we were trying to delay gratification. It was hard to run a business that my husband does video production, so there’s a lot of gear. And it was just like trying to fit the gear and a small human plus a golden retriever plus the two of us, and then planning on adding another human. We were like, This is just too small. And so we basically had to mean like planning and Plan B. One plan would be that we would sell that house and use the funds to buy a new house that was a little bit bigger. And then the other plan was that we would just keep that as a rental and then become renters again. And then that way we didn’t have to come up with a new down payment and we’d only have the liability of one owning one home. That was our plan. But our realtor added a plan C to the mix, which is what we ended up choosing.

Zach: [00:05:52] That sounds like a good realtor.

Nicole: [00:05:54] She was great. She’s pretty passionate about helping people build equity through homeownership. She’s helped a lot of my. I’m a financial planner and she’s helped a lot of my clients, especially single women, get into homeownership, which I am super. I love that about her. But yeah, she basically helped us basically make an informed decision about how much risk we were taking on because there was risk involved. Like buying both these houses has been the best thing we’ve ever done, but also the most expensive both houses on like the one year anniversary, like gave us a gift of a broken pipe. So house number one, it was like a broken waterline under asphalt. So we got to excavate and that was like I mentioned, we bought this year and then bought two years later. So this was like right in the middle. We were trying to save up for our next house or whatever. So that was hard. And then our second house around the one year anniversary, January 2020, we basically a tree root went through a really old pipe and so our sewer line was broken and we were like, Well, at least we got the crappy, crappy part of the year out of the way. Nice pipe. Made a lot of funny jokes that weren’t really that funny. But yeah, lo and behold, that was not actually the worst part at 2020.

Zach: [00:06:59] That’s great. No, I love it. You guys are doing it because I think what people forget is that I like to say real estate is maybe not the easiest way to build wealth, but it’s probably one of the surest ways. And you guys have lived the reality of it not being the easiest, but you’ve committed to it and that’s okay, right?

Nicole: [00:07:18] Yep. I mean your own mind. Yeah. Keep in mind with my clients too, like the different risks involved in real estate, I mean, it’s kind of similar to buying stocks and investments in the stock market. Like if you need to make money quickly, it’s a very high risk investment because you may need to sell at a time when that investment has depreciated. But if you’re able to hold that for a long time, whether it’s a well diversified retirement account or if it’s a real estate holding like really almost I mean, as long as you’ve made a decent investment choice in the beginning, the biggest risk is that you have to sell at a time that’s not ideal and it’s the value has gone down from what you purchased it for. But for us, we were like we know that we’re not going to leave Bellingham if a job change happens, like we’re still going to stay in town because we just had so much family. All of our connections are here, communities here. So it was great. It was a risk that would present itself anywhere we went and we decided that it was a risk worth taking and it has definitely paid off.

Zach: [00:08:12] Good. So let’s hit that real quick before we wrap up. Yeah, you you said it’s paid off. So kind of in terms that might make sense. Describe that for me and then kind of cast the vision for you and your husband as you utilize the equity in your homes.

Nicole: [00:08:29] Yeah. So our first house we bought for 300,000, it’s probably worth six or 650 now, like five ish years later. Awesome. So that’s great because we got a really low interest rate on it and a great price by buying it directly from our landlord at a time when it felt like housing was unaffordable to buy, we’re able to cash flow. So that was very helpful in sustaining us through the early COVID a little bit. And then now any of that extra cash flow where we investing it back in that property to make sure it’s really well maintained, all that. And then our current house we bought for 365,000 in May 2019, and that was with a 3% down payment because we wanted to have that money because it was also a little bit of a fixer upper and we wanted to have more money on the side for emergencies and improvements and knew that if we wanted to pay off our mortgage faster, we could always add more to the principal later. But we didn’t want to commit all of our liquid cash into the house from the beginning because we knew from experience that we were going to need it for other things.

Zach: [00:09:37] Absolutely. That’s great. Okay, cool. So then so you’ve got a cash flowing duplex, you’ve got a primary residence that you live in. Are you going to continue buying real estate?

Nicole: [00:09:49] Well, I mean, last time I said I wasn’t going to do the same thing again. In my head I’m saying we have two businesses and two kids and two houses to two of everything. I would love to keep it at that.

Zach: [00:10:03] But sure.

Nicole: [00:10:04] I said that about the pets. Like we had two pets and now we added six chickens to the mix. So I don’t know what’s next.

Zach: [00:10:09] I’m really There you go.

Nicole: [00:10:11] I love to keep my kid count at two.

Zach: [00:10:13] I love it.

Nicole: [00:10:14] I’ll see about real estate. But yeah, it’s just nice to know what the options are. And I feel like it feels so much less scary now that we know our options.

Zach: [00:10:22] That’s great. Well, I really appreciate you mentioning this. I mean, it’s clear that you’ve built a buffer of equity. The personal wealth is on the trajectory that you like, and I think a lot of that is attributed to that initial decision to buy the duplex. And so that’s kind of for those of you watching this, that is the power of home ownership. So, Nicole, thank you so much. I appreciate your time

Nicole: [00:10:46] Thanks for having me on. It’s been fun.