Living as a freelancer - buying a house?

Wes.

Wes.

Well-known member
Whatsup, I'm just wondering who of you out there are living as full time freelancers for years now. Who owns homes, have families, things like that.

I'm 27, I've worked a few good staff TV jobs and now I've gotten to a point where I own my own gear and have been freelancing as my primary income for just over 6 months. Things are going well. Living in NY, rents are high. Saving is hard, but that's more on me and how I manage my money. But I had a full-time job last time I needed to search for an apartment. I had provable income with pay stubs. Next time I move, if I ever need to, that will be a different conversation for sure.... and how about buying a house one day? *seems impossible to me* aside from the "need a big ol' deposit up front" there's the whole "self employed" business to navigate through.


Maybe we can discuss some of these types of experiences you may have had? Or just share some insight on the subject.

-Wes
 
To buy a house you probably need to get a manual underwrite mortgage; the bank will probably want 10% down though. I like Dave Ramsey for general financial advice, he makes boring financial stuff a lot more fun.
 
Wes. said:
Whatsup, I'm just wondering who of you out there are living as full time freelancers for years now. Who owns homes, have families, things like that.

I'm 27, I've worked a few good staff TV jobs and now I've gotten to a point where I own my own gear and have been freelancing as my primary income for just over 6 months. Things are going well. Living in NY, rents are high. Saving is hard, but that's more on me and how I manage my money. But I had a full-time job last time I needed to search for an apartment. I had provable income with pay stubs. Next time I move, if I ever need to, that will be a different conversation for sure.... and how about buying a house one day? *seems impossible to me* aside from the "need a big ol' deposit up front" there's the whole "self employed" business to navigate through.


Maybe we can discuss some of these types of experiences you may have had? Or just share some insight on the subject.

-Wes
Click to expand...

Oh it can be done. I'm in NYC and I've been freelancing here for 9 years and after 8 years of renting, I bought an apartment 3.5 years ago. I have a wife and kid and feel pretty comfortable, though we are both chronic money savers. In some ways, I feel like in NYC you can't afford NOT to buy a place if you want to stay long term, unless maybe you get an amazing landlord or rent stabilization. If you can find a way to get a down payment together, it's almost definitely worth buying as long as you don't need the flexibility of renting (and you like NYC and want to stay a few years). Rents keep going up but mortgage payments stay the same and my maintenance fee has hardly increased and you get interest deductions and build equity and home values pretty much keep going up in NYC. That said, a lot of NYC is Co-ops, and board packages are a lot of work, I had to really get my freelance accounting in order for my application and it definitely helped that I have a wife with a salary job who made more money than me at the time.

Worth noting that I would've had a lot more trouble settling down in Brooklyn or Manhattan. I'm in Queens now after living half my NYC-life in Manhattan and often considering moving to brooklyn, but Queens makes everything simpler since I've looked for apartments all over Manhattan, Brooklyn and Queens, and stretching the budget for a 1bedroom in Brooklyn really makes things feel unmanageable but I felt like I won the lottery when I found Jackson Heights and bought a 3bedroom by 5 train lines for below our budget. You're in NYC so I assume you're talking about buying an apartment? There are houses but those seem especially out of reach especially with real estate taxes.

Happy to share more experiences if it helps.
 
Yup, buying a home as a freelance guy isn't easy. And for sure, navigating the 'self employed'
paperwork to try and get a house stinks. I'm lucky, I'm a 'saver' and don't spend money
almost ever. I literally lived on about $7500 a year...had a trashy little apartment,
no car, walked everywhere, and ate ramen and rice....which is how I was able to
save money to start my video business while making about $21,000 as a staff
video guy. So when I went to buy a house, having enough to put a hefty down
payment down, seemed to calm a lot of the bank's potential fears. They figure
when you put 20% down that you aren't going to default on your house payment.
And after you get the house it's nice, because yo can turn a room into your edit
bay/gear room/studio and have an additional write off.
 
Been doing it for 13 years. Have a wife, kid, dog, a nice house in a good neighbourhood. I had to move to Canada to get all that. I had bought a duplex at the bottom of the market several years ago. The price doubled by the time I sold it, so I was able to put 25 percent down on a house. As long as you can show several years of stable income on your tax returns you should be able to find someone to give you a mortgage. Just be prepared to put down more up front than usual.
 
Once upon a time I did very well as a freelancer. Bought a nice house, put kids through school, restored a stable of classic F-cars, even campaigned an historic Can-Am race car. But times have changed since then.

My thoughts..... 6 months as your primary income source coming from freelance work is just a spit in the bucket. Things could change at the drop of a hat.

Wes, If it were me knowing what I do now, I would keep any job security you have along with any insurance for as long as possible. While also working any freelance gigs you can. Next, start some form of IRA retirement fund and put the maximum amount allowable per year into it. Yes it's less to live on now, but retirement time comes in the blink of an eye, and if you don't start saving in the now you won't have the needed funds when you do retire.

All the best!

Dave
 
Freelance or not, you just need to be making money to be able to buy a house. Freelance does not have to equal being poor. I just means you work for different people instead of one employer. One could have a low paying full time job and have issues with buying a house etc...

It sounds like you are more concerned with your income or success and a freelancer. It is not easy but you have to find ways to make income. Treat it as a business which means it has to sustain itself or it is a part time job.
 
Winder is coming which is usually very slow period for work so see that you establish yourself long enough to compute that knowledge into your yearly income calculations.
Property in NYC is a hit or miss. My friends's property in Williamsbur has doubled in 10 years and my mom's apt in Woodhaven has stayed exactly the same in that time period (while her maintenance fees have doubled).
Rent of my rent stabilized apt has grown by $150 in that period so in essence my mom has lost money, my friend has made money and i'm just "living."

The hidden secret of buying in NYC is "1h+ away from the city" - then prices of properties drop dramatically and in your $250k price you can even expect a piece of land. Who wants to live away from the city though? In the city itself the way to do it cheaply is to go into undesirable neighborhoods (due to your "neighbors" or distance from Manhattan) in hopes that it will come up in value when it's time to sell (clearly didn't happen to my mom's place, though if she holds it for another 10 years it might change).

As for the mortgage, banks in the city understand the freelance. They will want to see the comings and goings of your money in the past few years. Obviously getting the mortgage from the bank that you have your account at is best but since those fractional percentages of the interest add up to a fortune, it might not always be the best solution. That said, no system is perfectly designed for people living outside of it so even though banks in the city understand it, the process will be less streamlined than if you kept your 9-to-5.
 
When I was a magazine editor, a few of our good contributing editors (ie- freelancers we used regularly) asked me to write letters to the banks (or wherever they were trying to get a mortgage) saying we (the magazine) planned to keep using them into the future. The freelancers also each got letters from other reliable clients of theirs. The banks wanted to be sure they had a high likelihood of continued and more-or-less stable future income. A couple of the people were in San Francisco (where the magazine was based); the local market wasn't as crazy then as it is now, but it was still pretty tough.

I happily wrote those letters. Didn't have to stretch the truth (we did keep working with those people), the banks had their paper backup, the people got their mortgages.

You're probably way ahead of me but if you already have regular clients, be willing to ask them for letters of support if your mortgage lender asks for them.

Also, maybe look at a mortgage trust? You pay a bit higher interest rate and that sucks...but interests rates are still rather low (though pay attention to possible upcoming cuts in the mortgage-interest tax deduction; I'm not making a political comment...this is just something to factor into your affordability calculations).

Good luck!
 
Not everyone understands it, but frankly I see freelancing as somewhat more stable than a salaried job. As a freelancer you have huge potential for financial growth versus the small yearly raises people on salaries get. Also you can't suddenly lose your job if you have a diversified client base. You can lose one client here and there but there will always be more if you know what you're doing and that new client could take you to the next level. Yes it definitely helps to show banks/boards letters from companies who you have worked with for years, most regular clients are happy to write letters saying they have worked with you for years and plan to continue hiring you in the future etc. It may depend on the kinds of relationships and positions you have though.
 
I can't speak to NYC, since I haven't lived there in several years. But I do own my house, in Pittsburgh, which is a more affordable market.

I used my w2's from my NYC job (teaching), to combine it with my partner's income, which was slightly higher than mine.

From time to time, I do wish we had less of an overhead, but I'm always able to make my base payments...plus, we always have the option to sell and get most of our money back...if not a profit.

I live in Pittsburgh, but find myself mostly working in NYC, DC, Boston, Philly, Chicago, etc... So I'm not networking as much and I can't take the rush jobs that I would if I lived in the larger markets, but I find myself having more money to travel and invest in my own personal projects in a way I would likely not be able to in NYC. Plus, I'm still in the beginning of my career as a DP, mostly working in independent low-budget drama, music videos and docs...with a few commercial jobs sprinkled in.

I guess in conclusion I'd say, maybe consider owning, if you can be confident you'll be able to keep up with payments, and don't be afraid of exploring the option of living slightly outside of NYC. It may not be the right decision for you, but at least consider it.
 
Disclaimer - not a freelancer, but someone with a 3/4th of an accounting degree.

Rafael is correct above in that you might have a significantly higher upside as a freelancer but I would recommend having, at least, six months of cash on hand (checking or savings acct, but not money market) and calculating your income from a previous year rather than projecting it a year forward. That's just hedging your risks.

Purchasing property can also involve other risks. Here, in coastal Southeastern Florida, prices went down as much as 60% following the "subprime crash" of 2007. One can only luck into purchasing something at the trough but most buyers bought at the peak and waited a decade for the market to come back to previous heights. And, if you have to sell when the market is slow, you're likely to take a bath on whatever you purchased.*

* Lower priced neighborhoods declined less than the luxury zip codes.
 
Worth noting the NYC real estate market is pretty different from most other markets. I don't think you could find any >3year period where median values went down in the past couple decades. And this is median for the whole city, growth was much greater for neighborhoods that would be very easy to identify for anyone who knows the city. Think close/fast trains to Manhattan. Maybe I'm not right to be so bullish on NYC, but most Queens neighborhoods have always had pretty conservative growth but my home value has probably increased about 25-40% since I bought it 3.5 years ago. Many Brooklyn neighborhoods have seen ridiculous growth (more than doubling value) in the past decade, but frankly I think Brooklyn is a bit of a bubble versus Queens. Not so much that it will bust but that such growth is not sustainable and is hitting a hard limit and may retract a bit as people discover other affordable neighborhoods such as certain ones in Queens.


https://www.trulia.com/real_estate/New_York-New_York/market-trends/ (look at the maximum time trend)
 
nyvz said:
Not everyone understands it, but frankly I see freelancing as somewhat more stable than a salaried job. As a freelancer you have huge potential for financial growth versus the small yearly raises people on salaries get. Also you can't suddenly lose your job if you have a diversified client base. You can lose one client here and there but there will always be more if you know what you're doing and that new client could take you to the next level. Yes it definitely helps to show banks/boards letters from companies who you have worked with for years, most regular clients are happy to write letters saying they have worked with you for years and plan to continue hiring you in the future etc. It may depend on the kinds of relationships and positions you have though.
Click to expand...

Although i agree in principle, i feel the statement about freelance as more secure is too broad. We operate within a system and all systems set-up certain set of rules that if followed will reward you. A bank operating withing the same system assumes that 9-to-5 means security. Even though it might not be the case, within THEIR system they develop their set of rules that says so. Within THEIR system they too reward people who follow the set rules. Their office done in charge of mortgages really doesn't care if you pay back your mortgage or not but only if the rules of the system are followed to asses if you are worthy of that mortgage. This is why it IS more difficult to get a mortgage as freelancer because by definition we chose not to play by the rules.

Again, i do agree that freelance is more secure but for vast majority of people stuck in 9-to-5 it might not appear to be so and those are the people who control certain aspects of the system.
 
I agree banks won't likely see it that way since most conventional wisdom is that people need regular income to make regular payments and assumes most people are terrible at saving, which is not untrue... In most cases earning potential is hard to communicate or prove so it is boiled down to consistent current and past paystubs which don't tend to look so good for freelancers, since freelance income appears sporadic and volatile, even if through proper saving it can average out better with proper buffers in place. In some ways it is true that the freedom of freelance could allow people to change their employment status more suddenly and more drastically than salaried employees and I could see that as being scary for a credors, even if in practice that is not the case.
 
Just curious - what do you guys/gals charge in NYC? With and w/out your gear? And how many billable days (per month or year) can one expect as a freelancer?

PS. In terms of price trends, one has to consider inventory vs. population in/out flow. Coastal and near-coastal Florida has seen a ton of new projects (thanks to Vladimir Vladimirovich, among others), accompanied by the inflow of monied newcomers.
 
My NYC rate is $1k/day. For me, this means I throw in some gear.

For features or longer term projects, my rate is half that.

However, I'm not working as much as others more advanced than me...and I don't always work there.
 
Last edited:
Thanks for the perspectives. To clarify, I'm mostly looking to hear what your situation is, and how you ended up there. ("i own my house, i do ___ for work, these are the hurdles I jumped in order to purchase my house x amount of years ago" etc etc)

I realize NYC is a unique market in terms of home ownership, I grew up in North Jersey and if I was buying a house would probably start there - queens is another place I'd look - but i'm quite happy in my apartment for now.

-Wes
 
You must log in or register to reply here.
Back
Top