Monday, June 17, 2013


So the sellers accepted the reduced price dictated by the appraisal, now we see if the seller's bank will take it...

I'll not lie: owning a house is appealing.  Having a pool, a garage, a nice open area for kids and guests...  All of these are lifestyle appeals, not hard-and-fast, measurable, objective targets.

Owning a home will also be expensive.  Maintaining that pool, redoing the roof, renovating the inside, etc.  These costs will add up.  I have about $18k mentally budgeted to get this house into nice shape, exclusive of capital investments (tools) and my own time.  The roof (which will be done by a pro) is a big chunk of that ($8k), but we intend to do floors, plumbing, bathrooms, cabinets, walls, and yard ourselves.  I will have to see how that notional budget expands when I actually make a spreadsheet, but we want to use this opportunity to learn about a LOT of different home-improvement projects, so I feel like we'll get paid back for our time in experience.  If this was my fifth renovation, I would want to monetize my time, but right now I just need to do and learn.

Now, the above paragraph can be deleted and the second paragraph emended to "renting a home..." and THAT WOULD BE AWESOME TOO.  It would not change our cashflow situation (a 15year mortgage on this house has a monthly payment about equivalent to decent-looking rentals in nice areas).  It would completely eliminate the bunches-of-work side of the equation.  It would enable all of the lifestyle choices we desire (almost...gardening comes to mind). 

So why are we even looking at houses?  Why have we come within a gnat's eyelash of buying one?

Well, honestly, we really only see one advantage: the long-term bet on home appreciation.  Yes, I know it historically only tracks inflation.  Yes, I know it's an "illiquid investment" (in which you can live) and it is subject to highly local variation in the market (over which you have a small degree of direct influence).  But just as the stock market goes up over the long term, so does the housing market in a growing city (and I think our city is still growing - the Sunbelt is doing OK job-wise, and those baby boomers do like golf all year round).  So we expect the dollar value of the house to go up even as we pay down what we owe on it (in less than 5 years), allowing us to 1) cash out if we want/need to or 2) live in a house where we only pay maintenance costs, taxes, but no fixed monthly amount (it's not free to live anywhere, ever).  Either option is cool with us. 

We realize that putting the mortgage as a leading priority in our saving will delay financial independence, and that we could be debt free essentially immediately if we rented a house and sold our condo.  It's a choice, and choices have costs and benefits.  If the seller's bank agrees to take a hit on purchase price, we'll cheerfully sign on to the joys and heartaches of a house, and if they balk, we'll cheerfully find a nice rental house with a local landlord who's willing to deal with somebody who'll haggle down rent in exchange for maintenance work.  And then we'll fix up the condo for sale, and I'll still get my fix-up fix. 

The less you want, the more you have, right? 

*Note* - I just figured out that the house is within a mile and a half of a Habitat for Humanity ReStore, which sells donated building materials!  I have not scoped their selection, but MMM is a big fan of recycled building materials (for obvious reasons), so it's definitely a destination once renovations are underway.

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