Our 5 Checklist Items on Keepin’ it Real (estate)

We closed on our first real property together in Fall 2013.  This was a big step to our goals in becoming financially free more so by not spreading ourselves thin.  There are plenty of “Rent vs. Buy” debates out there, but this one squarely focuses on the first part of the financial freedom equation, ASSETS. If renting, your assets tend to be savings, retirement, market investments, personal property, or other purchased businesses.  These variables in the equation likely add up, but for most people, the single most expensive thing they’ll buy in their lifetime is a home, creating their largest asset.

See, that’s where we’ve diverged.Eye hole

Depending on the region, or city, you live, real estate investment can be very tricky.  Some places, such as NYC, prices are so high that people save and save and when they buy a property, it may take them another lifetime to pay off the mortgage plus save enough capital for another down payment.  In this case, savvy agents should inform you of the 1031 Exchange which allows an investor to upgrade their property by reinvesting all the equity capital into a new property without having to pay capital gains tax.  I’ve learned that most return on investment in NYC is through capital appreciation and not by rental income.  This is how you can leverage your dollars.  Ask your buyer’s agent for details.  They should give sound advice, and if they don’t, inquire with the brokers at Elegran Real Estate & Development.

Then there’s the South, or other places like Las Vegas, where the market took a hit and only slowly returning to its former self.  We placed our bets on a growing population, job growth and overall gentrification.  The decision was made.  Unlike the Seattle Seahawks, we chose to NOT feed the beast.  Why occupy a majority of our revenue stream for 30 years on an affordable mansion: 4000+ sq ft and a half acre backyard with white picket fences? Okay, that may be some of y’all’s dreams, but not ours… yet.  So here’s the zinger. Remember when we talked about the other part of the equation in the link above: NECESSITIES?  We don’t have little humans or critters to feed, nor were we interested in spending every night or weekend at home (travel-nista!)  So this is what we ended up with for our

2013 House Hunting Checklist:

  1. Location (easy access in up and coming area of town)
  2. Distressed property (below normal market)
  3. Open floor plan or favorable layout for roommates
  4. Minimal to moderate repairs just to move in
  5. Minimal outdoor maintenance by the resident

We kept asking ourselves, what’s the most we NEED versus the most we can AFFORD.  This was not the time to spread ourselves thin.  Ultimately, we checked off those items on this home that we love.  And much thanks to our buyer’s agent and Short Sale expert, Steve Hannaford of Keller Williams, who set our expectations of the short sale process appropriately (more to come on that in a future post).  Hopefully, we can turn this around into a future rental while keeping our eyes and ears peeled for the next target along with saving cash for a potential business venture, diversifying our assets.  For our future, it’s an investment strategy that’s keepin’ it Real.

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