Three Out of the Box Solutions to Owning a Piece of San Luis Obispo County

With a warm, temperate climate, miles of coastline and open space, a wealth of local organic foods and wine, and recreation and social activities for all interests and ages — there are endless reasons to want to call the central coast your home! Particularly in the last decade, the region has expanded in terms of opportunities and experiences for residents and visitors; the popularity of San Luis Obispo County, as a wine destination, has led to the expansion of agricultural technology, businesses, and hospitality across the region. Alongside these thriving industries is the proximity of Cal Poly, a University ranked “Best in the West” for 26 consecutive years, is an institution that is bringing many young innovators to the region, skills that have the potential to continue to drive the continued and future prosperity that identifies California.

However, anyone who knows coastal California knows that the beauty, opportunity, and activities come at a high price. While the median wage in SLO County is above the national average, at $71,148 for a family of four, with a median housing cost of $637,626 and high rents, homeownership can seem a difficult prospect. Anyone who dreams of owning a house on the Central Coast is likely to be all too familiar with the sinking feeling of entering your price range into Zillow and seeing all the sweet downtown craftsmen homes, the beach bungalows, and ranch homes dwindle down to well – just about no results.

The high price of a house in San Luis Obispo can seem to be an impossible prospect for young professionals looking to buy in SLO County or a tremendous barrier for those considering relocating to the region. The median home cost in SLO County is $637,626, can be even higher depending on the city or neighborhood. Recent prospects like the groundbreaking on the San Luis Obispo Ranch development, that developers have promised will be affordable to the workforce in the region are exciting additions for the future affordability of SLO County. However, there are many people who are dedicated to the Central Coast and have found creative strategies to make homeownership in SLO County their reality.  For those who may be interested in straying from the traditional model of buying a home SLO County Works, an initiative of the Economic Vitality Corporation (EVC), investigated three creative ways to buy a house in San Luis Obispo County.

Buy a duplex as an investment strategy

The idea that the solution to not being able to afford a home is to buy a larger, likely more expensive home may feel like a bit of a headscratcher. That being said, purchasing a duplex is a strategy that allows a homebuyer to immediately transform their purchase into an investment strategy by renting out the other unit to help cover the cost of the mortgage. Particularly, with the help of an FHA (Federal Housing Administration) loan that allows first time home buyers, even those with less than ideal credit, to finance a home with as low as 3.5% down — a rate that has the potential to allow a buyer to expand their price range if they are getting help with the monthly payment. FHA loans do, however, come with an additional cost of mortgage insurance to a monthly payment — this is an additional cost that can be refinanced in time as a homeowner builds equity in the property over time.

This strategy extends beyond the traditional duplex as well, new California legislation allows up to three ADUs (accessory dwelling units), or granny units as they are sometimes called, to be built by right on a property. These units can be as large as another unit on the property or as small as an attached junior ADU or tiny home. Purchasing a unit with an existing ADU is a strategy to help a homeowner meet their payment while helping another renter find housing! 

Can’t find a duplex or a home with an existing secondary structure? Consider alternatives like ESCAPE, who will give qualifying residents a free tiny home on their property on the condition they rent it out.

Angel loan/crowdfunding 

For many people looking to purchase their first home, the largest hurdle is often gathering enough savings for a downpayment. As is true for many coastal communities rents can be as high as a monthly mortgage payment. This catch 22 of having enough money to afford a monthly mortgage payment but never being able to save enough capital to secure a downpayment is a predicament many are facing.

An unorthodox method, some first time home buyers are turning to crowdfunding as a strategy to bolster their savings. Crowdfunding, defined as using small amounts of capital from a large group of individual contributors to finance a new venture, according to Investopedia, is often used by entrepreneurs or for activist causes, has gained some momentum as a homebuying strategy. Sites like HomeFundMe do not charge for use and will match $2 for every $1 raised, up to $2,500 or 1 percent of the purchase price, (whichever is lower), so long as users borrow with their partner bank for their home purchase. Similar strategies include the use of sites like Honeyfund wherein engaged couples will ask wedding guests to donate into a fund, typically for a honeymoon but in some cases, users will ask for the gifts as a contribution to their downpayment savings.

Asking people for donations towards your buying a home may seem uncomfortable particularly when many of your peers may be in the same situation. However, what you may not realize is the number of people who may hold a vested interest in your staying in the region! For occupations that build communities like teachers, firefighters, social workers, and so many more essential roles, by developing a pitch about your dedication to the region you could inspire others to pay that investment forward. Even from sources, you may not expect, like your employer, who is dedicated to not losing you as an employee or a local landlord who may be open to a rent to own contract because they don’t want to lose you as a tenant. 

Buy a tiny house

There are two primary types of tiny homes, first the mobile tiny home, on wheels, and second, a stand-alone small unit sometimes called a micro-unit or an ADU, which is typically under 1,000 square feet. Mobile tiny homes and tiny living are having a moment, popular with millennials tiny house allows people the flexibility of mobility and a sustainable lifestyle. San Luis Obispo was just one of two cities in California to pass an ordinance legalizing tiny homes on wheels in residential neighborhoods back in 2018. There is an incredible diversity of tiny home options. The typical size for a mobile tiny home on wheels is less than 8 by 20 ft, with livable space totaling 120 sq ft or less, for ease of towing, however, these structures can be as big as 400 sq ft. Except for a typical price range to purchase or construct a mobile unit to be between $30,000-40,000, though luxury units have been known to cost as much as $180,000. To qualify for residential neighborhoods in San Luis Obispo a mobile tiny home must remain on its wheels, be under 400 sq ft (excluding a loft space), must resemble a home, and be connected to the primary structure’s utilities. 

While tiny homes on wheels are currently only an option in the city of San Luis Obispo the high level of interest and events like the 2019 Tiny Home Expo are positive indicators that these regulations could one day be extended throughout the county. If you’re interested in learning more about tinyhomes or seeking a homeowner to rent a space from check out this local tiny home meet up group or speak with a local tiny home consultant.

 Another exciting prospect for individuals interested in living small is the recent groundbreaking of the Grand Oak Paseos development in Atascadero, which is constructing a neighborhood of tiny cottages ranging from 700 to 900 sq ft and between 1.5 to 4 bedrooms, because of the small size and practical designs some of these units are more half of the County’s median income starting in the mid $200,000’s. 

Are you ready to take the next step in making your dream SLO County home a reality? Get started with a mortgage calculator, and get in touch with a local mortgage loan expert to see what you are prequalified for today.