1500 Days to Freedom

Think different and escape the rat race.

Ask the Readers: What do you look for in a neighborhood or house?

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Screenshot 2015-03-08 at 10.20.11 PMMr. 1500 here again today. Before we get to last week’s responses and this week’s question, I have a fun little story to tell you.

On Tuesday, I published a performance update where I talked about my home.  I mentioned that one reason I wanted to improve my house was to show others that the street was coming up. In other words, I want to be a catalyst for people to improve their homes to bring up values:

Screen Shot 2015-03-06 at 9.47.39 PM

I also wrote about how the home across the street in not-so-great condition sold for $300,000. Since the new owners closed on the home, they’ve been gutting it.

On Wednesday, the day after I published that post, I talked to the new owner, Chuck. This is how part of the conversation went down (I swear, I can’t make this stuff up):

  • Me: I’m curious, why did you choose our street to live on?
  • Chuck: We’ve been watching the street and your pop-top addition. We wanted to move to an area that is on the upswing. People are putting money into their homes here and we liked that, especially since we have big plans for our house here.

Ding! Ding!! Ding!!!

We have a winner! Johnny, tell Mr. 1500 what he’s won!

Mr. 1500 has won some delicious home price appreciation! He’ll sleep well at night knowing his home value is going up, up, up!

applause-sign

We received so many awesome answers to last week’s question. I don’t even know where to begin. With your help, I think we have the whole thing just about figured out.

OK, so over to Mrs. 1500 to recap last week’s answers to the question, Can I borrow some money?

If you recall, we offered some great incentives for those of you who would be willing to part with your Benjamins.

At the $0 level, earning a sneer from Spendosaurus and my Alanis Morissette, Milli Vanilli and Vanilla Ice tapes is Brian from Debt Discipline. Thanks Brian. I was actually surprised that more people didn’t join you.

Retired to Win Alex suggested setting up an auto-deposit from an IRA account to our checking account. When he went in to get a loan, his lender suggested either two years of income, OR 3 months of fixed income payments from an IRA or similar account. I have never heard of this before, but we are checking into it.

Even Steven teased us with the $50K lunch… Chris from Flipping a Dollar suggested getting a HELOC on our current house. A great idea for many, but our house isn’t finished yet. The perils of DIY.

Gen Y Finance Guy (every single time I read his name, I hear it sung to the Bill Nye the Science Guy theme…) Anyway, he had an idea I haven’t heard before – liquidate all our after tax investments and put them into a self-directed IRA that allows us to purchase rental properties.

Writing2reality suggested finding a wealthy person and kidnapping their child. That was our backup plan! OK, so he then went on to suggest bringing on a partner who has a consistent job and good credit. They can help us get the mortgage, and we could give them a pre-set buyout date when we could refinance into a mortgage we can qualify for ourselves. Another suggestion he had was to find someone we trust, have them put some money into it and then get a share of the profits. Yet another idea was a commercial loan, which we knew nothing about until…

Jason from Reaching Our Balance and ProfitProphet suggested contacting Churchill Mortgage from the Dave Ramsey show. We did contact them, but they aren’t able to give us a loan, either. They were really nice and took the time to explain that Fannie Mae wants two years of consistent employment, and since most banks sell their mortgages to Fannie Mae, they use those guidelines. They also went on to suggest we talk to a local credit union, and ask about a portfolio loan, because those loans aren’t sold, and therefore have a little more wiggle room in them.

So I emailed a lady in my real estate office who is also a mortgage lender for our local credit union. She reviewed our information and agreed that a typical residential mortgage isn’t going to work, but a commercial loan might work out. She gave me the contact information for the commercial side, and he feels that we should be able to work something out.

The commercial loan is at a slightly higher interest rate, and after 5 years it automatically readjusts to the current interest rate. After an additional 5 years, there is a balloon payment due, or we can refinance. Also, there is a prepayment penalty, which is almost unheard of in the residential side.

Also, no fewer than three people offered to partner with us on the deal, which is astounding. We didn’t really think anyone would give us money. So hey, we found this amazing deal for ocean front property in Arizona. Call us if you are interested!

Seriously, we don’t know what we are going to do about this. It is so great to get so many creative ideas from you all. We truly appreciate your taking the time to share with us.

Now, to today’s question. What do you look for when house shopping? Do you want an old, crappy home that you’re going to have to pour your heart, soul and wallet into? Or, do you prefer a new cookie cutter home that demands little more than mowing the lawn and paying your association dues? Or, something else altogether. We’ll tell you our thoughts on it next week after we hear from all of you.

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Comments

  1. Our home hit a lot of our requirements. Older, smaller home with good bones, lots of natural light, views of nature in a nice neighborhood with no HOA that I could jog to the beach without crossing any major streets from. Honestly you guys might have called it Uglyhouse if you had seen it when we first bought, but we love the neighborhood, love the lot, and we’re having fun fixing it up over time to turn it into exactly what we want for decades to come.
    Mrs. PoP recently posted…Happy Friday: Almost Finished Home Sweet HomeMy Profile

  2. We definitely wanted a house we could improve ourselves! Our current place was the lowest price per square foot for sales of habitable homes in all of Cambridge the month we bought it. We absolutely wanted something with the potential to appreciate in value–and boy has it. We also sought out an up-and-coming neighborhood, the gentrification of which has added to our home’s increase in value.

    Another factor for us with our city home was the avoidance of a home owner’s association. The fact that our house is a single-family without an HOA sealed the deal for us. In addition to monthly fees (blerg), many HOAs here have stringent restrictions on an owner’s ability to rent out their unit. Since we plan to turn this into a rental once we buy a homestead, we knew we didn’t want to be hamstrung by an HOA.
    Mrs. Frugalwoods recently posted…How I Let Go Of Caring What People ThinkMy Profile

  3. I’m not sure I would buy a house even if I could afford one — I think a condo lifestyle suits me as a singleton. Here’s what I’m looking for:

    – A mixed neighbourhood. I don’t want to be in an apartment among apartments — I like neighbourhoods with larger buildings and houses as well. You get a good mix of people, and there are often parks and schools. I think neighbourhoods benefit from mixed demographics as well.
    – I’d like to avoid areas overpopulated with students, but close enough to the colleges/universities, a bus route and walking distance of amenities so I can rent the place later on if I choose.
    – I too would like to be in a neighbour that’s on the upswing. However, I don’t have a lot of time, energy or money to fix up a place so I’m not looking for a gut job. I’m looking for good bones and cosmetic fixes like new floors and a good paint job.

    I’m content with renting at the moment because where I live fits all of these criteria. I’m not really in a hurry to move — I’m happy to stay put and invest the difference for now.

  4. The house we are in now – we looked for move in ready. We had a 1 year old and I was pregnant. No time to fix it up. We are casually shopping for our next house – and we have been looking for a house with good bones, that won’t need walls moved, but we are hoping to be able to do some major renovations – to turn it into our style. So, looking for outdated bathrooms, kitchens – stuff that will help us get it for a good price!
    Mrs SSC recently posted…February 2015: Our money went where?My Profile

    • Well, Mrs SSC, the house we’ve been in now for 18 months was anything BUT move-in ready when we bought it. A foreclosure that had lingered for well over a year on the market. With a terminal roof, a contaminated well, inefficient windows, rotted exterior wood siding here and there, and so on. (Oh, and a resident raccoon in the attic.) Were we nuts?!

      Ahhh… No. It was, in fact, a great deal. The PROPERTY was all we were looking for: rural, few neighbors, near a nice small town, 2.5 gorgeous acres, all the outbuildings (3!!) we had on our wish list. And the house just needed some serious attention. Bought it well below market, and took the difference and fixed EVERYTHING.

      Now, we have a house that’s ideal for us on a property that is perfect for us. And, all in, it cost only 60% of what our previous house sold for. Yippee!
      Retired To Win Alex recently posted…What My Unfrugal Side Costs MeMy Profile

  6. Our most recent house search focused on space – outside space. We were tired of living on top of the neighbors. We wanted to have the space to spread out in the backyard. Like Mrs. SSC, we were also expecting a baby with a young sibling-to-be, so a house with lots of projects was out.

    In all honesty, I think we’d only do a fixer-upper for our forever home in our post-retirement days. That way we’d be able to enjoy the fruits of our hard work, while having as much time as we needed to get the project done.
    Mrs. Maroon recently posted…FF #14 – My New Cleaning SolutionMy Profile

  7. I was looking for and bought an old home in an urban neighborhood. It hadn’t been touched since it was built 80 years ago, so we have been updating it exactly the way we want. The first 2 phases (kitchen and master suite) are done, we are saving up to do the basement.
    kristin recently posted…Living room updateMy Profile

  8. When we were looking, we had a specific area pre-selected as it has the best schools in the district, family friendly, and new-ish homes that are less than ~20 years old. The real estate market here is as HOT as hot can get – 30-50k over asking cash is pretty standard and if something is on the market for more than a day or two something is wrong with it.

    It took us a while to actually get a house as there were often 20 or 30 offers and packs of families with small children attending open houses. We got lucky and found a beautiful house with a pool (necessary for summers here) that is perfect for us.

    So that was the long version of location, location, location – the value has gone up at least 30k in the 1.5 years since we bought.
    Brian @ Debtless in Texas recently posted…Liebster AwardMy Profile

  9. Got to love Bill Nye the Science Guy (Bill, Bill, Billl….). I loved science class when they included Bill Nye on the boob tube.

    When we bought our house we were looking for something that was move in ready and on a decent lot in a quiet and clean neighborhood. Close to shopping centers and the freeway are a plus. But not so close to the freeway that you could see or here it.

    Cheers!
    Gen Y Finance Guy recently posted…Nominated For The Liebster AwardMy Profile

  10. I guess I like traditional tree-lined streets, upkeep of the neighborhood, but really the house itself. When we bought the house it was really my wife who wanted it. To me a house is just a house. I mean I like the idea of owning it and such, but I guess I am just not into the upkeep and diy projects needed. I want to learn how to do that more, but I guess I take a more passive approach to the whole thing.

    Don’t get me wrong I love a nice house, but after the current one we have, which needs some updates I can go really with anything. As long as my wife is happy I am good.
    Jason recently posted…Why Gold Is a Terrible InvestmentMy Profile

  11. We have a niche we look for: old house that hasn’t yet been updated. Certain styles we like more than others, but basically we’re looking for little touches that tell us what time period the house is from. We figure it’s easier to add modern stuff to that, than to try to recreate it once it’s gone.

    Something walkable is good, too. Not too far from downtown.

    Stuff like well manicured yards and whatnot is not high on our list. We don’t mind a little rough around the edges, and often we feel like this allows us to buy a little cheaper.
    Done by Forty recently posted…You Down with ESPP?My Profile

  12. The husband and I both agreed we wanted a smaller house (no larger than 1400 sq ft) but with an open floorplan, two bathrooms, mature trees, a quiet street, and with a low crime rate, near our favorite shops and eateries. Oh, and also close to a major freeway to make the work commute easier. And under 100K (which was the easy part – we live in a part of the country where the COL is quite nice for the rate of salaries). We got pretty much all of that but some of our lovely trees had to be taken out about 3 years into living here (one nearly took out our living room falling down in a storm!).

    My dream house (and it WILL happen) is a small traditional farm house on a couple of acres with room for a few horses and chickens and other livestock, a stocked pond and large garden, but still within an hour’s drive of our city. I do real estate searches in my down time just in case “the” house is listed, but so far, I think I’m quite picky lookingfor this particular home as I haven’t found it yet. 😉

  13. I look for two main things: entertainment and walkability. I’m not a homebody, so the surrounding area is just as important for me than what is inside.

  14. We built our home from scratch in a newer neighborhood a few years ago. The neighborhood is great … we live in a cul-de-sac where our kids can play in the street without having to worry about cars running them over. But sometimes I do wish we had just bought a house in an older neighborhood.
    Steve Flynn recently posted…The Ultimate Robot Lawn Mower ReviewMy Profile

  15. Both times that I’ve been in the housing market, I had my mind set on buying something modern and in model-home condition. And both times, I fell in love with something older, quirky, and in need of some major updating and TLC. I don’t love living with the mess, but I honestly do love DIY, and pouring my heart and soul into my home. I haven’t done much wall moving type construction (except removing a closet), but I have no problem stripping a kitchen/bathroom down to the bare walls, and rebuilding from the floor up. And, much like Mr. 1500, I have an unhealthy obsession with my tile saw (I think we have the same model!).
    Cindy recently posted…The Future You’ve EarnedMy Profile

  16. Our home is definitely the definition of a fixer upper in the nice part of town. It has a great structure and we have enough room in the back for a garden. If we ever had to move, we would look for something around the same sq. ft. (1200) but with 2 bathrooms and the ability to put our personalities into it.
    Amanda S @ Passionately Simple Life recently posted…That Time I Got Tricked…My Profile

  17. We’ve been slowly remodeling. I enjoy the projects but I’ve learned that if we move again, I want something move-in ready or enough budget to remodel prior to moving in. The slow incremental improvements drive me nuts after a while.

    We’re looking at rental property at the moment and are trying to focus on neighborhoods adjacent to areas that have been in huge upswings, that are at least 3/2’s and are move-in ready.
    Adam @ AdamChudy.com recently posted…Oliver Sacks on Gratitude and DeathMy Profile

  18. I love the idea of remodeling. The Mrs, not so much. Don’t think I’m going to win that one.

    Beyond that, it’s all about the neighborhood. I don’t need to walk to the grocery store, but I like to walk to a park or trail nearby. Someplace for easy outdoor exercise without getting into a car.
    James@StartingNegative recently posted…Looking back on February goalsMy Profile

  19. We want a large kitchen that we can both work in easily. Other than that, I look for a house that has good “bones”, but may not be updated yet. I like what I like, and I’d rather pay for appliances/carpeting/etc that *I* like, not the current hotness. We had to compromise on building (the builder only does granite – I *hate* granite, but we’ll live with it until I get around to doing something else).
    I go for energy efficiency and utility rather than “looks good”, which is at odds with the current “just get something that looks good so it sells” mentality.
    My problem is that I have to pick something that I can live with until it fails/dies and needs replacing – because no matter how enthusiastic I am about replacing things, I almost never actually do it until I need to….
    Mom @ Three is Plenty recently posted…Detailed Financial Picture – March 2015My Profile

  20. We got a town home. We rented since college, but figured moving into the new area, we’d like to buy. It has a really nice community, it’s just outside of the city taxes, and there’s a lot to do right around us. The house was not in the best shape it could have been, but they sell like hotcakes around here. We’re slowly improving the house. That’s why I’m re-selling on eBay still! Need money to cover the HVAC replacements and then the other stuff around the house!

    So our house is somewhere in the middle between fixer upper and perfect. Funniest part is that we literally have no lawn. All mulch. We’ll be changing this but still will be nice this year to not have to mow the grass!

    Big wants are to: replace the basement door set with a sliding one, add a storm door to the front, fix the 1st floor door onto the deck, update all the bathrooms (there are 4), tile the basement hallway, new deck, upgrade the kitchen. But that’s it! hah. I’m depressed typing all of that out.
    Chris @ Flipping A Dollar recently posted…Maniac Monday Recap – Items Everywhere!My Profile

  21. We have the “neighborhood” narrowed down since we will be moving back to the very rural town where we grew up to be closer to family (hint, one stoplight in town). And the pickings are very slim unless we want houses that would probably be better of demolished than fixed up.

    We would love to find something with good bones that needs some updating, but with such a thin housing market right now we are in more of a “take what you can get” situation.

    The things we do for family.
    Frugal Buckeye recently posted…Busyness is a Shitty ExcuseMy Profile