It's time for the b a q A the b aqa. Wait, what was the bat manby? What's the b the b a q?
So the b a q I'm frozen. I don't know. Did we have a beat.
We did have a kind of vock cadence, like it's time for them, it's time give me a bee. Anyway, y'all know, it's talk with the BAQA. That's Brown Ambition, Question and Answer episode. You guys have the questions and we kind of have some answers, although legally we're not responsible for anything that you decide to do because you're grown and we dump some idea. Yes, we have some ideas. That's what we have some ideas, and then you can decide, as a grown adult with your own agency, what do
you want to do. Either way, that's a much longer title than baqa, so we just stick with BAQA, all right. So we've got two questions that are home related. So this is from our homies. Mandy want to.
Start roll in with the homemides.
Yeah, I would love to start as professional homeowners ourselves. We feel very specially equipped for this, and plus there's a lot of talk out there about owning a home in this.
Crazy, crazy market.
Okay.
First comes from listener who asks, Hello, my financial girlfriends. I love the show. I'm looking to make some upgrades, upgrades to our home, but the price tag for all the changes I want to make keeps me from moving forward. How did you guys go about making renovations to your home? Did you set a budget? If so, how did you determine the budget? I'm looking for any tips you can share.
Oh, hey girlfriend, Hey girl, Hey, Hi.
Well, you and I both had very different renaut situations, So what was your approach so well?
With our kind of situation, we were doing a complete gut I'm talking about like new electric plumbing, and so, you know, we would look for a contractor to you know, who was going to give us like basically a general bid. But what I realized first, which was actually really helpful, is I actually found a designer first, which actually helped because the designer was able to help me really see through some of the things I was not thinking about.
So we kind of created like this like wish list of all the things I wanted in the house, and so when we met with contractors, she was able to be like, so I might be like new plumbing she said, yes, but this bathroom has to be resized. So it was like these there were things. So if I was going to do like a huge, huge project, to me, it's worth it to also get some like design consulting, you know,
on top of that. And so we had like a general you know, not a general like we had the contract to give us a very detail oriented how much it was going to cost. So we bought the house from one for one eighty and I believe the proposal was for one eighty although we got proposals for like
sixty ninety thousand, We got proposals for two fifty. And so I kind of went with someone in the middle because like the high one seemed too high because it's like based upon what we needed, and the low one was clearly a lie because oftentimes folks will lowball you just so they can rise the price leader they're just trying to get you in the door. And so we chose this guy justin and for the most part he
was cool. But also having the designer really helped because, like I remember the first day, I don't know like the size of a half bath when it's framed out, meaning it's just the wood, it looks big. So she went and was like, oh, heck no, And now she pushed it down a few feet. I'm like, it's gonna be two bicks. She says, no, Tiffany, you're not understanding how many inches you know, the walls and the dry
wall everything are going to take up. And she was right because now the half bath it's like just big enough, and it had if it hadn't been smaller, it would have been, honestly just like unusable.
And so that the little tiny one downstairs, yes, the little powder room. Girl, when I tell you, if my hips were an inch bigger, I would not have made it out of that bathroom, okayould I had to come with the butter, like I almost had to call for help.
I was like, yeah, and so.
He wanted he was gonna make it smaller. She was like no, no, no, no, no. So yeah, so you like these are things like so for us, we kind of had I had it in my mind that one one eighty, but then we had a thirty percent reserve, meaning that we knew that something might come up, like there was a sewage pipe that we didn't anticipate having a move.
That was ten thousand dollars. There were some other things that, like you know, came up, and so I want to say, all together, we probably spent two hundred thousand dollars renovating the house. So for us, you know, we had saved and and budgeted for a number of years before we
purchased the house and did the renovations. But if there was something that we were going to do that was lighter, Honestly, one of the things I learned from that renovation was my realtor was I mean, my designer was also a realtor. She was a my reltor, but she was also a realtor, and so she would tell us certain areas of the house, like this is where I should splurge, and this is where a girl. It's not even that serious based upon where I was going to get my money back for
resell value. So that's, honestly, if I was going to do it differently. Now, let's just say I got another house. It doesn't need a huge renovation, but I wanted to make some changes. I would connect with a realtor to kind of get a better understanding of where I was going to get my return on investment from and to understand how much money I should put into it. She was really good. Her name is Rihanna, her business is called Remain Home. Her husband is an engineer and a contractor,
and she's a designer. So they used to walk through with us and say, Tiffany, it's worth it to get the ACS, but it's honestly not worth it to put Marvel in Supergirl's bathroom because that's what I wanted to do. She's like, no, girl, she does not need more, you know. And then he would sell like Jermaine, her husband would be like, you know, this is where you're gonna You'll get sixty cents on the dollar back from here, but you'll probably get eighty cents on the dollar back from here.
So partnering with a designer, partnering with a realtor to figure out where you're going to get the most bang for your buck, it's probably my advice.
Yeah, that's great, And you did everything kind of all at once, right seven months?
Seven months?
Yeah. So we did a big renovation when we got our house and it was a I can't imagine what was our house.
Before it was a two.
It was a three bedroom, two, one and a half bath, and we turned it into a still a three bedroom, but we added a master bath and a master closet and all these big things, and flip the kitchen and turn that into a put a laundry room in and a powder room, et cetera, added in an extra bathroom. It was a big deal at the time. It was about We were quoted one hundred and ten thousand from our contractor, and we were the same way to if
we had three different bids. My first thing is to get three different bids for whatever work you're trying to get done.
It's tedious, it's annoying, they'll flake on you, et cetera.
But it's really important to get that out of the way so that you can tell if they're flaking, they're probably gonna flake later, and then you can get a good sense of the ranges. And we went with the middle estimate from the guy who routinely showed up for us one hundred and ten, and he broke that into ten payments, so you paid. We were cutting like ten eleven thousand dollars checks every time a phase was complete.
In our case, we had the cash on hand, but by the end of the renovation we were down to like the last amount of money that I felt comfortable spending on the renovation, so we didn't do everything at that one time cut too, So that was twenty eighteen renovation done. Like early twenty nineteen, we just finally did a big project that we've been wanting to do since the beginning, but we wanted to wait until we had more cash on hand. And that was our backyard, our deck.
I'm pointing to it like y'all can see.
But our deck in the backyard. For that, we did set a budget.
I said I didn't want to go over fifteen thousand, and that to me, based on my research, was a reasonable amount of money. And a couple of my neighbors had gotten decks done, and we went ahead and we got quotes, and when I had that budget in mind, also I also thought about the size of the deck and the materials that went into the deck, because it can get more expensive depending on do you want stone, do you want real wood, do you want composite wood? Da, DA,
all these different options. So we settled on the budget. And then it was like, even if you settle on your budget and you'd get the plans approved, they start the work, inevitably, they're going to come to you and say, ooh, the color brown that you wanted for the deposit is just it's delayed because of COVID. So how about these. They're priced at thirty percent more than it, but you know they're nice. They're available now. And I had to stick to my budget and say, you know, we'll wait
a few more weeks. It'll be fine, you know, And that was happening. But we really did manage to stay on budget for that fifteen K. We chose to pay for it in one lump sum because we had the cash on hand. But another tool that I've used when we did our HVAC for example, which was part of our initial renovation, we replaced all of our steam radiators with a central air conditioning unit and we also put individual units on the.
Upstairs, et cetera.
And for that that was about thirty thousand dollars and they offered zero percent financing for eighteen months, and so we financed it that way. And I think that that gave us one it's the power of having good credit because you can qualify for those zero percent financing offers, and it gave us additional cash flow because just so I could sleep at night having those cash reserves, knowing that I didn't have to part with thirty grand right up front, and that worked out. But we had to
I think we yeah, we had. We ended up making a pretty big final payment because even with eighteen months at the term of the loan and at the monthly payment that we were paying, we were not going to fully pay out the loan in eighteen months the way that it was written, and had we left even one
cent on that loan, there was a third interest clause. Yeah, yeah, there was a well, there was a deferred interest clause, which means they would have pretended as if we had not been that they would have gone back to the beginning of the thirty grand and applied interest to the loan, which could have made it over forty grand. You know. So I put my gall my calendar alert, and I was like, you need to pay that off, you know, seventeen months, not eighteen months. So that's that's definitely a
word of caution. But zero percent financing plans if you got them, and they and a lot of established contractors or businesses that do home remodeling, they will offer that, so read the fine print if you have good credit. I think that that's an option. Another option is a home equity loan, so a lot of and this was wildly popular in the pandemic. You saw a lot of homeowners because home prices were just going up everywhere, right, and suddenly you had a lot more equity in your
home that you could leverage. And just to kind of back it up, when you have equity in your home, it's it's how much your home is worth minus how much loan you still owe on it. So if you have a five hundred thousand dollars house, you only owe one hundred grand on it, and it's worth today five hundred thousand, then you have four hundred thousand dollars in equity. And banks will often loan you money through a home equity loan up to like eighty ninety percent of that equity.
So if you have four hundred thousand dollars of equity, suddenly you've got if you want, four hundred thousand dollars worth of you know, money that you could get out in the loan and then use that loan to pay for remodels or repairs or whatnot. That's an extreme example, but home equity loans tend to be a more a low rate option, a low rate alternative. When it comes to taking on debt to pay for a home expense or home remodel, then say a credit card or a
personal loan. But there's a key reason why they're cheaper because they're like girls will take us house.
We will take us a house.
Yes, okay, so it's secured by your home, that is the collateral. So keep that in mind. You have to, you know, pay it back or you will be homeless with a really nice bathroom that you can't use anymore.
Exactly. So all so, all in, I'll try your best to create a list, you know, connect with the realtor to see like where your money is going to be best maximized, and budget for project by project until you can get the things done that.
You want project by project.
Take your time.
Yes, there will always be more stuff to do.
It never ends, never.
Does, because you'll always want to renovate. I'm telling you, all right, yeah, all right, our next question, I don't think this person what they said. I see hashtag prideful plug, so we'll just call you pride for blug. Okay. I recently attended a first time home buyer seminar Good for you, and the speaker spoke about and emphasized on FA ch loans.
I spoke to her one on one about my home purchasing plan, and she mentioned using this type of loan for an investment property, then purchasing the home of my dreams, my personal home. Afterwards, she mentioned that purchasing my personal home first then an investment property would be more difficult
and expensive. My plgunda Spanish for those of you who don't speak it for both of you, is should I purchase an investment property as my first home so I can take advantage of the low down payment of an
fa ch loan. Here was my plan before attending the seminar and my financial profile, single in my early thirties, no kids, credit score is seven to twenty, salary one hundred and forty K. Wants to purchase personal home in two years in twenty twenty three or twenty four currently saving for down payment for a conventional loan, purchase an investment property two to three years after purchasing personal home, paying down twenty K of debt which will be used,
which will be paid off by beginning of twenty twenty two. All this is acuse she's a go purchase, get it with money and Rea chapter four, So you can learn more about y'all. More about this y'all powerful plug. Thank you, thank you girl. So this is very interesting. So if I'm going to recap it of the recap. So she's like, I want to get two homes, one for investment, one for like, you know, my dream home. Right now, she's single,
ready to mingle. She makes great money. Credit score is decent, although I'll say, sis, wait until you get to a seven fifty, just so we're clear, that's the beginning of perfect credit. You will get the best interest rate of that loan. Went to a home buyers course. They emphasize that FAHA loans might be the way to go, especially with your first home. And you're trying to figure out, so do I do my ideal property like my personal home first or do I do an investment property first?
So Mandred, can do you want to like explain to the people, like what an FAHA loan is? And can you even use an FHA loan for an investment property? Cliff note, No, but can you share it?
Wait as you can?
Okay, in a way an fah loan, Yeah, yeah, and fah loan is like the first time home buyer's loan in America. If you're a first time home buyer, it allows you to get a home for a low down payment. I think it's three point five or five percent, depending on credit score and things like that. So it is a very it's it's definitely an option, especially for a
first time homeowners. Sometimes I wonder why we didn't just do this, because you know, we we scraped our little coins together to put down I think fifteen percent, just because I had it in my mind that I.
Needed a big down payment. That's the right way to do it.
But you know, that left us with less cash on hand for the renovation. But kindsight twenty twenty. So that's a huge benefit of the FAHA is that you do not have to have such a large down payment, which makes it more accessible for first time home buyers such as yourself. Here in her question, she talks about wanting
a personal home first. She says she's currently saving for a down payment, and she wants to buy that home in the next two years and then an investment property two to three years later, and she's wondering could she use an FAHA loan. I suppose for both of these, So you can definitely buy home your primary residence with an FAHA loan. As far as investment properties go, it's going to be a yes, but yes, but yes, but yes. You can use an FHA loan to purchase an investment property,
but there are some quid pro quos. You need to actually live in that home and call it your primary residence for at least a year, and you have to move into the home within sixty days after closing on the mortgage. On Tiffany, when we were kind of reading this before, you mentioned you could also maybe even and use you know, and to kind of get at both things at once. Get an investment property but also a primary residence. Is purchasing a multi family home yep, with an FAHA loan.
Yeah, Well, let's be I want to be really clear on the language, because we might we're saying investment property because we're talking about it as like almost like lightly like if you go to FAHA and say I would like a loan for this investment property, they're going to say no because it has to be technically what they consider your primary residence, which means that you're going to, like Mada said, move in here after sixty days and
live here for a year. Now on internally, you could say this is an investment you know, so meaning that you might exactly meaning that you can say, you know what, I'm going to get a multi family house, so of course you can't live in every single one up to four four family you can't live in four families, So you can live in one and you can rent out the other three. But they because you live there, they
won't technically consider it and an investment property. Like if you live here, this is your primary residence, and as long as you live there for a year, you can keep the benefits of the fah loan and also just
keep that in mind. So your homever was not incorrect, but you would just want to be mindful because fah loans cannot be used to finance a second home, a rental home, a vacation home, or the technical term for an investment property, meaning you're not living here, You're just you're using this property just for the sole purpose of
making money. So what I would do is and this is what a lot of people you know will truly suggest to you that if you are considering, you know, getting investment property or you know, wanting to make money off of a home. You know that you're going to purchase that that first property should be your quote unquote primary residence at least for a year faha, multi family live there for a year. Then what you do? They
call it house hacking. And this is when when we had who are those that amazing couple, Amon and Christina are Rich Journey Yes, I know, I always love their name, but they say them everything. So so they did house hacking house. And there's also this woman named ken Jah Barnes that I always partner with that she teaches people how to house hack. So house hacking is just when you live in a place, you let someone else pay for that place and then you can move on to
another place as a result. And so then I would you know, continue like after that year, you know, you get to keep all the benefits for your fah loan and then you get your primary residence a new primary residence. And that's what I would do, honestly, I would. I would do that, you know like it' and it's it would be worth it to wait your thirty sis, you are young, young and younger.
So yeah, I love I love a lady with a five year plan though, shout out to you five year plan in a seven hundred credit score.
Noki, Yes, but definitely wait till you get that seven fitty. Here's why seven fifty is the beginning of perfect credit, meaning they can't deny you the best interest rate that they have to offer you. So it's worth it to push yourself up those thirty points in the next year, which you can pay for card in full every Month's this get you one of the one of your cards paid off and then put your Netflix on it and then automatically pay that off every month. Uful you easily jump up so well.
She does talk about that twenty k I'm thinking that twenty k debt that she says she has to pay off, that's probably what's holding her card her credit score back. So once you get that debt paid down and plus that will help you qualify for loans as well. Once you get that debt paid off, girl, yeah, yeah, and I And the last thing is yes, and just the last thing on you know, purchasing a home for the first time is stay.
Within your budget.
Yes, and stay within your budget. Home prices out there are so insane, even if you do have a low down payment loan. It can still be a lot of money when you talk about the prices of homes that are going up, And just make sure again, like you're buying a home for the right reason, because even if you think it's going to be a great investment, maybe it will be, but you don't.
You only know what you know now, and nobody.
Knows for sure you know what the future may hold, So just make sure you know doing it for the right reasons.
Yes, stay well within your brother. Like if you were to see where I live, like it's it's I mean, it's a nice house, but could I afford a house probably four times more expensive, Yes, but it would also make me nervous, you know, like a lot would have to shake for me to lose this home. And after I've already lost the home, I said, we ain't never going back. We ain't never going back, you know. So as a result, I wanted to be able to have a house I really enjoyed and loved with my family.
But that you know, I can more than more than afford it. So if a lot of things fall, will be good and I don't have to worry about where are we going to sleep? So just keep that I mean, don't be as fraid as I am. But just keep that in mind.
Yeah, hell yeah, when I left work, like nine to five work, if this house was incredibly I wouldn't have been able to you know, it would have been It would have.
Been a very different story, bandy.
Money would not have been born had I not had a home that was you know, a third of our household income instead of in some places you're seeing people spend two thirds of their household then come on on housing. So yes, absolutely, if that's one takeaway, that is the takeaway homies. Yes, don't go don't be house don't be house poor. It ain't a good look.
This is for my homemass. That's what this episode is deprecated to. This is for my homies. See I get there.
I can't want to jump in, but I have no idea.
Well, who's saying you know what I'm gonna doing? Real quick? Who's sang this is for my homies? Come on?
Now we just sing the clueless one. I like the clueless song?
What that one?
Hoies? You know?
Clueless? Yeah?
Yeah, that's rolling with my home.
Oh yeah, rolling with my homies, rolling with my Come on, Mandy, I'm getting me yo, they're gonna be so sick of us. That's why I love that everyone's like Mandy is hilarious and Tiffy's laugh just.
To your life has always been the best thing. When I used to edit the show, I would just I would end it on on your chuckle.
Whenever we would go out with Tiffany giggling, I'd be like, there's the show. Forget what I said after that. That's the ending.
Well, if you have any additional questions, please we love them. Continue to ask.
Yes, hit us up.
We are on IG at Brand Ambition Podcast. You can also hit us up directly Brand Ambisson podcast at gmail dot com.
H And, if you really thought this episode was really helpful, you know a friend that's buying a house, a mom, dad, sister, cousin and them, you know, take the link from this show and share with them directly, share in your group chat, you know the group chat want to chat? So yeah, we would love, love, love to connect with more people, your people, because if you like us, that means we would like them.
Okay, hopefully, yes, it'll be awkward, all right until next week