Buying a House- And Why You Should, ASAP

Buying a home is something many Americans dream of. Sounds like the life, doesn’t it? A home with a fantastic spouse, great backyard, maybe a kid or a dog running around… #goals, amirite?

Wrong.

Now, I don’t know where you live, and maybe rents are $200 a month while the average home price is $750,000 in your area. I have no clue. But in the vast majority of cities and suburbs, it is quickly becoming much cheaper to buy than to rent. Of course, the closer you get to a downtown area, the more expensive both rents and homes will be. However, in many areas (Seattle certainly included) you can rent a place 10 minutes from downtown for not a heck of a lot more than the same place 20 minutes from downtown. Or worse, you have to drive 15+ miles away (and around here, that’s about 45 minutes with traffic) in order to get something affordable. If you’re really lucky, you have a nice landlord or you’ve been in the same apartment for years or you have rent control and have a great place for a great price.

Closing day!!

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When I moved into my old two bedroom apartment with my old roommate, we were pumped to pay $1,450 a month to get a crappy 1950s apartment with terrible parking and 0 amenities about 10 minutes from downtown Bellevue (a city/suburb of Seattle) and 25 minutes to Seattle proper. Long story short, she ditched me and the lease a few weeks after move in, and by the time the year lease was up, I knew I needed to renew. At that point, I was starting to think about buying a place, and didn’t want to have to deal with moving, losing my deposit (who ever gets their deposit back?!) and being locked into another year long lease. They informed me that they were raising prices, and the new lease price was $1,950 for month-to-month, or $1,850 if I wanted to sign up for 6 months or more. WHAT?! Well, at that point, I had no choice (and no roommate!! Eek). I signed for 6 months (thought I would save money, I did…. hmm. Not so much). I was able to rent the spare room on AirBnb and stay with friends/family a few times to make ends meet, since I couldn’t exactly get a new roommate for the 2 or so months I would be living there and then say hey, sorry, you either have to take this monster lease over or leave.

Right off the bat, I knew I wasn’t going to be able to live in the location I wanted. Even at $1,850, my apartment was pretty cheap for the area (it’s a place where you can easily pay $2,000 for a crappy, 250 square foot studio), so I knew there was no way I would be able to buy something and keep my payments lower than that. I wanted something well under $1850, with a spare room or two so I could rent it out if needed. I ended up moving about 30 minutes north (which was actually nearly equidistant between Seattle and Bellevue at 25 [no traffic] minutes). It’s an area that is slated for a ton of development in the coming decade, but has a somewhat higher crime rate (still well under national averages, lucky me) and affordable housing.

Guess what my mortgage is? $981 per month, including property taxes. Yep. And guess how much I rent my spare room for? $675 a month. So I am essentially living for $300 a month, compared to the $1,850 I was paying before. Not only that, but I actually have a third room that I can use as a tax-deductible office. And I can write off a reasonable portion of my electricity bill and other costs as part of my rental expenses, to keep my taxes even lower. I could live this way, eventually getting paid to live in my house (thank you rent raises!), for the rest of my life. If I want to, I never have to pay more than $300 a month to live. If I really wanted to, I could rent each room for $600, and MAKE $300 a month. But I don’t like roommates.

This is maybe my favorite chart ever… SO SCARY.

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To be fair, I got really, really lucky with this place. I bought it right before the market in my city blew up- the same day we went pending, the sellers received a full-price CASH offer (thank goodness I had already signed everything and they were stuck with me!) I paid 5% under market value, and got the seller to cover my closing costs, which actually paid for most of my remodel (this is why it is so important to have an awesome real estate agent- like me!). The seller also agreed to pay one year of HOA dues, so in August I will have to start paying my own WSG. My final purchase cost on my three bedroom, two bath condo was $175,000- while I realize this is a lot in many markets, around here, it’s unheard of. The neighbor’s identical floor plan condo (last remodeled in the early 1990s and filthy) just went pending for $220,000+, just 9 months later. I have made $55,000 in 9 months, just by living. If I were to rent my condo out right now, it would be worth about $2,000 a month.

buying v renting

Like I previously mentioned, I pay about $300 a month to live in my remodeled, lovely, spacious condo, 25 minutes from two major downtown areas, 15 minutes from the ocean, 5 minutes from stores and a giant shopping mall… I am so happy! My apartment was great and I often miss being so close to the city, but I would happily pay the amount I was paying in Bellevue to have the same set up I have here, and again, it’s less than $300. And I don’t have a landlord! No one is ever going to raise rents on me, or evict me, or kick me out, or say I can’t paint the walls. Sure, I don’t have anyone to call when there is a maintenance problem, but I’m pretty handy, and I have yet to encounter any issues, to be honest.

But Briana, I don’t have any money for a down payment!

I totally get it. With rent prices so high, it’s really hard to save money. But, did you know that you can get an FHA loan (more flexible on credit and income restrictions) for 3.5% down!? And conventional loans are as low as 3% down? Did you also know that many states have programs for down payment assistance, so you may not have to put any money down?

Crazy.

A year outdated but still super useful. Note: interest rates are rising.

home buying myths

Briana, what if the market crashes again!

I feel you. It could. BUT, here’s why we won’t experience something like 2008 again:

*disclaimer: I am NOT an economist, lender, or financial analyst, and I have had no formal training in any of those topics. But I do a lot of research and am in the industry 24/7.

  1. Lending standards have drastically changed. Back in the day, just about anyone could get a loan. You could tell them you made 6 figures and they’d pretty much be like okay, cool. You’re approved up to a million. This is subprime lending. That is super not the case now.
  2. Many of the loans that were given to people prior to 2008 simply didn’t exist. I’m not kidding. The money wasn’t there. The Big Short is a pretty fun way to understand this.
  3. People are scared. No one wants to be caught in an underwater mortgage.
  4. And nor do banks! Appraisers are a lot more conservative now.
  5. The market is cyclical. This means that yes, we will see prices at the very least, level out. They may dip. This isn’t anything to be afraid of. This just means that we’re restarting the cycle.

Yeah, but you forgot how much you are going to pay in interest.

Aha, you’ve invalidated my entire article! Kidding, you didn’t. Yes, right now, I pay a lot in interest (the longer your loan goes on, the more you pay towards your principal [actual price] and the less you pay in interest [what the bank charges to loan you the money]). Yes, interest adds up. But rates are lower now than they have been in decades, or pretty much ever. If you plan to buy at any point in your life, you will have to pay interest. This is a good reason why it’s important to not over-leverage yourself when you buy- if you pay less for your mortgage than you are paying for rent, it’s much easier to make additional payments towards your principal and pay less in interest.

Well I would rather just keep renting and invest in the stock market instead.

Someone actually told this to me once. Are you planning on living in a box? Because if not, this is not a valid argument and please re-read this entire page. Kthxbye.

I like to travel/don’t want to be tied down/am only going to live here for a couple years.

Some or all of those may be very valid. It is definitely case by case. If I were going to move every two months, I would not buy a place. But if I were going to live in this area, and travel for six months out of the year, or travel one week a month, or whatever, I would put it on AirBnb or use it as a traditional rental. You can easily hire a property manager (for both long and short term rentals) and use the extra income to help fund your worldly lifestyle.

Overall, I like to plan for the worst case scenario. But if you let your fear keep you from doing something that could be really great for your future, you will likely regret it. What I recommend is to have a back-up plan- can you rent out a room if times get tough? (For this reason, I don’t recommend a one-bedroom condo, unless you are buying it for a rental or with cash, or it is significantly less than you are paying now). Are you paying a premium for new construction? (It’s important to realize that a building devalues over time. The land and space the building is sitting on goes up. The steepest decline is in the first couple decades- i.e. no one will pay the same price for an identical 2018 build and a 2004 build, but they may pay the same or very close price for identical 1960 and 1974 builds.)

There is a lot that goes into home buying. And this is a lot of information! I hope it is easy to understand and helpful for some of you. I am a huge nerd and this stuff is my forte. It just makes sense. If you have any questions, especially if you are in the Seattle area, feel free to contact me here and I will help you however I can. I love making the dream of home ownership a reality!

 

 

Eating on a Budget

I am a total priss about food. And I LOVE takeout.

But you know what doesn’t love takeout? My wallet. And honestly, neither does my gut (more about that later). One day, after listening to this awesome podcast from BiggerPockets Money (if you aren’t familiar with BiggerPockets, it may change your life- especially if you are interested in real estate investing), I stumbled upon this Frugalwoods article. I decided that I would cut out takeout- not an easy feat for lazy ole’ me! Coincidentally, a couple days after I decided this, I had to start an extremely restrictive diet, and I would have had to mostly remove takeout and restaurant dining from the situation anyway.

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For fun, I decided to tally up my grocery and restaurant food bills from February. I was beyond shocked. My grocery bill, which I thought would be maybe $200, was $430.18. Even worse, my restaurant charges (which I, again, thought would be small- I only ate out once or twice a week!! Or so I thought…) was a whopping $478.29. I was spending nearly one thousand dollars a month on food. When compared to the national averages, this was appalling, even given the cost of living in my area. And remember, this was me thinking I was being conservative with my food spending. I buy on sale! I buy extra large meals at restaurants so I can have it for lunch (and dinner!) the next day! I am frugal, dangit!

Given that the average American spends $605 a month on food, my $908-and-some-change was not looking too hot. And I have no excuses- I have a wide variety of grocery stores to choose from within 5 minutes of home, I work from home, I have a decent cooking space, etc. I am signed up for all the gas/grocery rewards programs (side note: if you haven’t done that, make sure you do!! Discounts on both gas and groceries.) So I decided to employ a two restaurant meals per month policy and cut back both my grocery and unnecessary expenditures for March.

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And let me tell you- I failed. BUT, I did save about $317. And that is not a small amount! And like I said earlier, I am massively prissy about my food. I only eat organic, cage-free meat and eggs, and my unfortunate diet right now means that I am eating almost exclusively protein. I don’t eat red meat, so I am eating a lot of chicken, cheese and fish. I can’t have much in the way of carbs, including wheat, corn, potatoes, rice, and whatever else is actually tasty. Many vegetables are off-limits, as are most fruits. (Yes, SIBO sucks!!) This is the SIBO Specific Diet, which is essentially FODMAPS + SCD (Specific Carbohydrate Diet). I’m at the point now where I can eat small amounts of wheat, rice, and potatoes, but still no garlic, leafy greens or dark green vegetables, fruit, onions or garlic, etc. It’s rough! But I’m getting there. I did learn how to make amazing gluten-free Red Lobster copycat biscuits with coconut flour, which was delightful! I have also purchased a yogurt maker, and make probiotic-rich 24 hour yogurt.

Anyway, back to the budgeting! My total spending on non-home cooked food was $136.20. I ended up getting takeout/delivery twice and having dinner with friends or lunch on the go three times. Not great, but soo much better than $478! My total grocery spending- amazingly- only went up a few bucks, to $454.65. Whaat, so I can spend almost the same amount on groceries and cut my takeout bill by 72%?! Sounds like a deal. My goal for this month is to cut back on both groceries and restaurants. I do feel like I’m doing okay so far- I spent about $13.50 at Trader Joe’s to make turkey and bell pepper burritos, and I ended up with five meals. That breaks down to $2.70 a meal for organic and cage-free ground turkey, organic avocados and three types of bell peppers, tortillas, and goat cheese. I did use some of my 24-hour probiotic yogurt in place of sour cream.

What do you currently spend on food every month? If you don’t know for sure, keep track for a month and find out. I bet it’s more than you think! If you were able to cut that bill back by 64%, what would you spend that extra money on, or save it for?

 

 

 

 

 

 

Blogging… what is that?!

Thanks for joining me! It seems that everyone and their grandmother has a blog (mine definitely does not, for the record!) so I thought I’d better jump on that train or risk seeming uncool (side note: I’m definitely uncool). My first blog post was actually back in January, when I posted some tips for DIY remodeling. However, my intention for this blog is to be less about remodeling a condo, and maybe more about how to get that condo in the first place. No one ever knows everything about lifing, but I do feel like I can consider myself well on my way.

The only thing predictable about life is it’s unpredictability. – Ratatouille, 2007

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Allie, my retired 21 year old ex-racehorse, me, and Scout, my 3 year old Australian Cattle Dog/Kelpie/German Shepherd/Husky/baby angel mix

You’re probably thinking, ‘WHY SHOULD I LISTEN TO YOU?!’ And to that, I will answer that there is no reason you should, or shouldn’t. However, I will tell you about my accomplishments, and you can choose. I am a big believer in making educated and thought-out decisions! (#lesson1).

  1. I started college at 16, got my Associate’s Degree at 17, and I did not have to pay for it (and nor did my parents). I’ll do a post on that later.
  2. I moved out from my parent’s house and started paying my own bills shortly after my 18th birthday.
  3. At one point, I had sorely underestimated the cost of lifing, and been really, really poor.
  4. I got myself out of that poor-hole, and worked 39 hours a week, commuted 15, had a horse, and was in my junior year of college full-time. That SUCKED.
  5. I own two investment properties (one is my personal residence, but a) I rent out a room for 70% of my mortgage, and b) when I move on, it will net me about $500+ a month in profit, after all my expenses.
  6. I own and manage a HALFWAY house (yes, a halfway house! This is investment property #2).
  7. Although I would consider myself beginner-to-intermediate in terms of stock investing, I have done decently, despite being extremely conservative in my stock portfolio.
  8. My highest credit score (when I was working really hard to qualify for my house) was 799, and my average score is 750.
  9. I remodeled my condo mostly by myself, saving about $15,000 in labor and construction costs.
  10. I live in one of the hottest housing markets in the country (Seattle)
  11. I work full-time, from home! Yay pajamas!
  12. Oh yeah, and I’m 21.

Okay, DONE humble-bragging! Or is that straight-up bragging?! You decide… Anyway, I do think it’s really important to take stock of your accomplishments, and allow yourself to be proud of them. I’ve worked hard, yo! I deserve to brag! And you know what? You do too! Even if you live in a box on the side of the road, you have a shelter! (And amazingly, an internet connection). Or maybe you just got your first apartment. Congrats, that’s super exciting! Or you’re going to college in your 40s, or you mastered the art of cake decorating, or you just got a hamster/house plant, or you learned how to do laundry, or you just got a credit card, or WHATEVER. You have to be happy with your accomplishments, no matter how small or insignificant they are. Someone will always, always be doing better than you. But someone will also always be doing worse. We all come from wildly different backgrounds and life experiences, and unfortunately, many of us can’t hit the ground running. Public education doesn’t exactly prepare you for being an adult, that’s for dang sure.

Anyway, the point is, read my blog or don’t. It’s all good, I won’t be offended (mostly because I will actually be shocked if I end up with even one reader 😉 ). I will strive to provide you with useful information, that isn’t “save each and every penny” or “never order a Starbucks again”. We could always be doing better financially, but we could also always be doing worse. Why not work at it together? There is more than enough of the pie to go around! 🙂