ANGELA YEE
The secret ingredient in here. I can’t even tell you what it is cause it’s a secret, but you can taste all of the spices. But I will say my secret ingredient is always love, but I also want to make sure as we’re sitting here, we’re also talking about homeownership with love.
I’m so excited that we’re all sitting here to have this meal together, and I want to thank Progressive Insurance for bringing us together to talk about one of my favorite topics, homeownership. I’m just happy that we get to do this over a great meal. And Brett, I know you recently bought a home.
BRETT GRAY
Yeah, I’m like here representing first-time homeowners.
ANGELA YEE
And Caleb, you go into people’s homes all the time.
CALEB SIMPSON
Yeah.
ANGELA YEE
And we’ve seen yours too.
CALEB SIMPSON
Yeah, totally. I pretty much recreated MTV Cribs, so I just go in there.
ANGELA YEE
One day I’m hoping that you’ll pop up on me when my house is clean. You know, to come inside and take a look at my house and ask me how much I pay for rent and then I can be like, I own it. And Vivian, you are the rich BFF that we all need. Also, our former Wall Street trader, and she’s going to help us learn everything that we need to know about being comfortable in purchasing a home, the path to homeownership, and everything Progressive.
VIVIAN TU
Yeah. Thanks so much for having me. I’m really excited. We’re going to talk about all of my favorite things, and all with friends. I’m excited to eat too.
ANGELA YEE
The best advice I got from the broker I had, she was like, this is your first home, not your forever home. What is the best piece of advice you would give to a first-time home buyer?
VIVIAN TU
With your first place? Odds are good you’re going to have to make some sort of concessions, right? Unless you’re like really, really ballin’ like that and you can have whatever you want, you’re going to have to make concessions on location, the size. Maybe it’s not fully renovated, you aren’t going to want to fix it up, but that’s kind of a great thing. Because then you have a canvas to figure out what matters to you. One of the big mistakes is people immediately, they’re like, okay, I’m going to buy a home, and the first step is I’m going to go look at houses. No, no, no, no, no, no. Don’t even start thinking about that until you know what you want, what you need. And also just making sure you do all of the steps. Here are my three key ingredients when it comes to buying a home.
One, make sure you have a strong credit score and a debt-to-income ratio that you can actually get a mortgage with. Two, make sure you have a squad of people you trust. So a good attorney, a good broker, just making sure that everybody is taking care of you. Make sure the appraiser does the right job, the inspector does a good job.
ANGELA YEE
That’s a fact.
VIVIAN TU
And then, last but not least, make sure that you are taking the time to actually find a place that you feel like is going to serve you today, but also going to serve you for the next five to seven years. Cause you’re going to grow into that home just a little bit, and while it doesn’t need to be your forever home, you do want to make sure that you are in that place or at least using it as an investment property for long enough to make sure those closing costs make sense. People always think like, oh, buying a home, I got to get the money for the down payment. I got to make sure I have the mortgage. People forget about closing costs.
BRETT GRAY
Yes!
VIVIAN TU
It is the frictional cost. Like the one-time cost of buying a home. That’s why people say if you don’t think you’re going to be somewhere or at least, you know, be using it as an investment property or something, if you’re not going to be there for at least five to seven years, you may want to just take a beat because you want to make sure that those one-time costs are worth it. So, some of those mortgage origination fees, you got to hire the inspector to come around and the property has to be assessed.
ANGELA YEE
And you have to have money left in reserves for after you close on the house. You have to have a certain amount of money in the bank that they want to make sure you have. Those are great tips. And I do want to say as far as the inspection, man, listen, you have to get an inspection. I know that there was a period of time where people were just buying things like sight unseen, but the inspection is so important because that’s somebody that is working independently to let you know everything that you need to know about a house, what to look out for, people will try to cover things up, so you want to make sure that you do your due diligence. What about you? What do you think, Caleb? What’s the most important part to you?
CALEB SIMPSON
I actually just moved into my first apartment by myself with no roommates. No roommates. I graduated there. And the reason why I did that, everyone was like, why don’t you buy right now? And I was like, I’ve never even lived by myself.
ANGELA YEE
Okay.
CALEB SIMPSON
So, I was like, I would like to do this test on an apartment that I rent for a year to really like step into a space as a sort of starter pack. And that whole process has been so challenging and overwhelming already. Just cause I don’t own any furniture.
ANGELA YEE
Oh my gosh!
CALEB SIMPSON
Or, hey, what do I do with lights? Like I don’t have roommates making decisions.
ANGELA YEE
Brett, what was it like for you? Was it a home that was fully done? Did you have to renovate?
BRETT GRAY
It was like move-in ready. There was again concessions of course. So for me it was a little liberating. It’s like my little diamond in the rough. It’s like you said, like a canvas.
VIVIAN TU
You know what’s great? If you actually buy a turnkey place, it more often than not costs a lot more than if you find a place that’s maybe 75% of the way there and you’re like, I can put the finishing touches on this myself. I can hire somebody to paint, I can do it myself, whatever. It’s okay to make a couple of concessions and fix it up.
ANGELA YEE
Caleb, when you’re going into other people’s homes, how inspiring is that for you because you’ve seen so much?
CALEB SIMPSON
Oh gosh, that’s a really good question. It’s actually the most inspiring because I’m one of nine children and I, we, grew up …
VIVIAN TU
Where in the nine?
CALEB SIMPSON
I’m the middle of nine.
VIVIAN TU
Middle nine. Okay.
CALEB SIMPSON
Two older brothers, two older sisters, two younger brothers, two younger sisters.
ANGELA YEE
Oh wow. Literally dead smack.
CALEB SIMPSON
Yeah, it’s literally dead smack. And I grew up with a bunch of bunk beds in a room, and then I’ve just lived in tiny shoe boxes pretty much in New York City or in school. So just being able to tangibly go and touch and see how other people live is the most inspiring thing. And it also makes it feel real.
ANGELA YEE
Right.
CALEB SIMPSON
And being able to share that with other people online, I think it also makes it feel like, oh, maybe that’s something I’m capable of doing. Maybe I could buy a place in New York City or anywhere else.
ANGELA YEE
Yeah, no, I think when you see it, it was when my best friend bought a house, it made me feel like I could do it. And that’s what you really need is people that are around you who inspire you to do things that you’re like, I hadn’t really thought about it before that, especially living in Brooklyn. Vivian, what’s the most important part for you of your house?
VIVIAN TU
I know this is kind of an age-old trope, but location, location, location. I always want to be buying in what I call shoulder zones. For example, there are certain areas in New York City that are really expensive. If you’re close enough to essentially where you want to be, you can save a lot because oftentimes places are priced based on their comps, their other competitive set. So, if you’re looking in one specific neighborhood, they’re going to be like, okay, well this is 1,200 square feet, this is 1,700 square feet for this type of place. If you go somewhere with a slightly cheaper price per square foot, you’re going to be able to essentially get the place you want for a lot less. So, I like to buy slightly outside of where I actually want to be.
ANGELA YEE
Okay. That makes sense.
CALEB SIMPSON
That’s a good tip.
ANGELA YEE
What about you? What do you think, Caleb, about you when it comes to buying a house? What’s the most important part to you?
CALEB SIMPSON
Personally? I would love to live in Brooklyn, in a brownstone in Brooklyn.
ANGELA YEE
We would love that.
VIVIAN TU
Love.
ANGELA YEE
Yeah. I have a brownstone, and let me tell you something. I feel like the first house I bought, it was house hacking. It’s a two family, and so the downstairs tenant really helped pay my mortgage.
CALEB SIMPSON
When you say house hacking, can you break that down?
ANGELA YEE
Oh, it’s basically the rent that the person pays downstairs helps pay your mortgage.
VIVIAN TU
It’s essentially like when instead of buying a single family home or a unit where only you can live, if you buy a duplex or a triplex in a scenario where maybe you live in one of the units, but then you have two other units, instead of letting them sit empty or knocking down the wall to just make your place bigger, you can actually rent those out. And so now you’re collecting rental income every single month, and that’s helping you go towards paying your mortgage while you essentially might be able to live there for free or you might be able to make money living there.
ANGELA YEE
Right, when you buy a brownstone, a lot of them are two, three, four family homes, and that’s the way to get it done.
CALEB SIMPSON
That makes sense. Okay. I’m coming to you when it’s time.
ANGELA YEE
Brett, how did you get into your first home? What was that process like? Who helped you?
BRETT GRAY
My friend Bree, she actually introduced me to a realtor, and they laid out some options for me and stuff that I never was thinking about.
Mortgages were really daunting for me because I don’t know where I’m going to be in five years, you know. It’s seasons in acting, so it was just really scary, but she kind of inspired me and started to get me thinking about the asset piece, which is why I really love that you talked about, it’s kind of like a cool savings account because if anything happens, you can always take your equity out. You can raise the value of your home, you can add value for selling it later. It was really great to talk to people who have been there before and have the tools to help you make decisions based off of what you want and where you are right now.
ANGELA YEE
Well, we don’t all have a Bree, but what we do have is we have a Vivian.
BRETT GRAY
Yes.
ANGELA YEE
And I know this is also about Progressive and how they can actually help you. So, can you talk to us about helping people get into homeownership?
VIVIAN TU
I think first and foremost, you want to figure out how much home you can afford because you don’t really know until you actually do the math. Progressive actually has a great calculator that can help you do this. And then another really wonderful resource is actually from the Consumer Financial Protection Bureau.
ANGELA YEE
Okay.
VIVIAN TU
They have a roadmap essentially of what are kind of the things you need to think about before you’re ready to buy. Getting a pre-approval so when you go and look at places, they’re just ready to unlock the doors because if they don’t know you have the money for it, what’s really incentivizing a broker to call you back and show the place to you.
ANGELA YEE
Yeah, that’s so true. If it’s a competitive place that you’re trying to put an offer in and you have a pre-approval, it puts you ahead of the game.
CALEB SIMPSON
I got a question as someone who hasn’t bought a home at this table. From a timeframe perspective, could you do that in a day? Or could you do half of it in a day?
VIVIAN TU
No, no. It depends. No, just straight up, no. But it depends on the circumstances of the place you want to buy and the circumstances of you trying to get out of your current place. Do it as quickly as you can while taking as much time as you need to get it done right.
ANGELA YEE
And that’s why contingencies are important. You know what contingencies?
CALEB SIMPSON
Lay it on me.
VIVIAN TU
Contingencies are, it’s based on the word contingent. So, I will do this if this happens for me.
ANGELA YEE
Like, I just sold a house and there’s a tenant there. The person who’s buying the house is buying the house, but it’s contingent on us giving it to them vacant. So we have to wait for the tenant to move out, and in order for the tenant to move, we had to help her find another place. You know, pay her some money, like her down payment, her moving costs.
VIVIAN TU
Brett made a really great point earlier. There’s a lot of resources out there, especially for first-time home buyers. Everybody thinks you need to put 20% down, 20% down. That’s not true, actually. You can put a lot less than 20% down. The only thing you have to think about is paying PMI, private mortgage insurance. So, if you have less than 20% equity in your home, you got to pay essentially an insurance policy because what happens if you can’t pay it? But you can get things like an FHA loan or even just like a conventional loan and put down less than 20% and still be able to get into a home.
There’s a lot of options. It just requires you to do a little research to see what you qualify for and what you’re comfortable in terms of the math. Make sure you get a good attorney when you are trying to close on a home. That’s probably second, maybe equal, to having a good broker. They’re just going to watch out for you. Make sure you don’t get yourself into any hot water. You’re not signing your entire life away. And if you don’t know where to get one, what I actually, is like my little secret hint, is talk to a mentor you have. Maybe your boss at work, maybe someone who you look up to who has the life you want. If they’ve already purchased a home, and if they’re quite a bit older they might have already, ask them for their person.
ANGELA YEE
We have Vivian.
VIVIAN TU
Right.
ANGELA YEE
Where do you think you want to be? If you had to think about a place where you wanted to know, five to seven years, I’ll be here.
CALEB SIMPSON
Yeah, New York for life.
ANGELA YEE
Okay.
CALEB SIMPSON
Definitely. I’m not from here and I’m about to hit 10 years and I still can’t claim it. So I figured I have to buy a house here and marry my girlfriend. And then we have a kid, and then I’m 50% New York.
ANGELA YEE
Right.
BRETT GRAY
Done.
ANGELA YEE
What did you learn about yourself now living by yourself, and what did you learn about what you like and what you want?
CALEB SIMPSON
Oh, man. Well, I still have no furniture, so that’s where we’re at. I moved in three days ago because I didn’t own any furniture. I have my bedroom.
ANGELA YEE
Okay.
CALEB SIMPSON
And what I did learn about myself is I really don’t care about any of that stuff. To be completely honest, I’m like, oh gosh, I just like showing up into my space and working and that’s really what I care about. And going in and designing a space, because I’ve seen so many spaces now and I’ve met so many designers and it just eats up a lot of your brain space to go, and then it takes attention off of other things that you like. And I’ve just walked into my apartment now and I realized like, oh wait, I don’t want to spend all my time designing a space. Okay. Lesson learned.
ANGELA YEE
Okay. That sweater screams designer, I just have to say.
CALEB SIMPSON
It’s all a lie, it’s all a lie.
GRETT GRAY
What’s been your favorite thing about owning a home so far?
ANGELA YEE
My favorite thing is the stability that I feel like it brings me. Even the Caribbean culture growing up, my grandfather used to be like, save your money, buy a house, save your money, buy a house. That was his literal mantra. What it was like for me, buying my first home. The home was like a gut renovation and we put the chandelier up and my friend was with me, and she just broke down in tears crying. It just felt monumental. And so, I feel more secure in knowing that regardless of whatever else happens, pay the taxes on it and I have a place to live.
VIVIAN TU
It’s also a really good way to essentially force yourself to save, right? Because the money that’s locked up in your house, you’re not going to go and spend on other stuff that maybe you don’t need. And that’s ideally, hopefully going to appreciate over time for you and just be a really great way to keep that nest egg nest eggy.
ANGELA YEE
Yeah, absolutely. And if you don’t have a Vivian, then Progressive does have resources for you, right?
VIVIAN TU
Yes, definitely. Their website is a treasure trove. Use the calculators, use the outlines. All of it will really help.
ANGELA YEE
Vivian, thank you so much. We learned so much from you. Honestly. You are a wealth of information, and I feel like Caleb, just from what you do, I feel like you have the bug. And I cannot wait to see what you do next also.
BRETT GRAY
Thank you.
ANGELA YEE
Not just on Broadway, not just on our screens all the time, but also just in investing. I think all of those things are full circle. So I want to toast to all of you. This has been an amazing experience.
BRETT GRAY
Thanks for having us.
VIVIAN TU
Cheers!
ANGELA YEE
And thank you to Progressive.
