Making the decision
Is this the right thing to do? Is it too expensive? Are we rushing into this? Are we sure we can afford it? What if there is another crisis? These are some of the questions that pop in your head when you are about to buy a property. We’ve done this before, in fact it is the third time. But it doesn’t matter how many times you do it, you are never sure until you have moved in, and then it’s too late.
Buying a house is no joke, and here in WA, is even scarier. The housing prices are crazy compared to what we are used to or in general to the average housing pricing across the US. They say Seattle is top #3 (rankings vary) But after running our pro’s and cons. We believed it was go time.
Although there are many factors that can influence this decision, and considering this is not a real-estate Blog (so look for better advise out there if you are looking for one). I would like to show you some of the things we think about when making these big decisions.
In my opinion, there are mainly 3 big factors: Financial, Timeline and Happiness. Buying a property is a long term commitment, and as much emotion you can put to it, you really have to think through these 3. If one is no, my friends, you might want to hold off the hole thing until all three are green. Otherwise, you just think of what happened to people in 2008.
Financial: The biggest questions that you might have to consider, can I really afford this? The system is created, although less aggressive than before, to reward the transaction. Real-estate broker will tell you, “now is the best time to buy” and the classic, “we have to move fast” and the loan officer will tell you “yes you an afford that 1M dollar home, of course!”. It is important to be level headed and make your decision based on those 3 aspects, if one is a no-go, the whole thing is a “no-go”.
This is a grotesque oversimplification, but the way we think about the financial aspect, it is just look at what are your total current living expenses, include rental cost, unit, fees, parking, all things that are attached to your living arrangement, plus utilities. Average them for the last 6 months (as they tend to vary). Add them all up and come to a number in our case was around $3,500 a month. After that, based on your estimated new mortgage depending on the house you are looking for add your utilities and multiply it by 1.2x our number in our case, somewhere around $4,200 (why? 1.2x I will let you know in a bit). If you can afford that new number, you can move to the next step.
Sometimes coming to that new baseline might be a stretch. Every time you do buy a property, it might be and you’ll feel different about it (depending on your level of risk tolerance). But you have to consider, that if you are planning on continue to grow on your job, perform etc… You should be able to increase your earnings as you move forward. And since your mortgage payments stay constant, versus the always increasing rentals, the odds stack on your favor. But this all depends on the time you want to stay in that place. Which takes you to #2.
Timeline: Although these 3 parameters are way more complex, again, this is a disgusting simplification. The second question to ask. If your financial test worked out, is what is the amount of time I project to be in this new property. Reason for that, is that the loans in order to be profitable for the banks, are front loaded on fees and taxes. So in this new home of yours, for the first big chunk of years you will be paying fees, and little to your principal. It is all personal preference, and again, there are TONs of moving pieces, but for us, less than 4 years for a mortgage might not be great. Also there’s a 9% sale average fee to sell it, so keep that in mind.
On the positive side, little monthly payment to your principal, is better than no payment to your principal. It is a good way to create a bit of equity. And I am not even mentioning the potential growth of the price of your home, which personally we prefer not to consider for the initial decision, we just usually buy the cheapest house in the block, in the best neighborhood we can afford, hoping ours will grow with the other fancy ones.
Happiness: Houses are not for everybody, you need to understand what do you like, as houses can be a lot of work. We always dream with the beautiful home, but they can be a pain, things break, you have to maintain stuff, pay for this, pay for that, etc… remember we multiplied your number for 1.2x? That is what is for, to keep a side running piggy bank to fix the next thing that will need attention.
On the other side, I am a heal walker, I enjoy loud music, I play electric guitar, I cook and sometimes I burn stuff while trying new recipes (specially Neapolitan pizza crusts due to the high temp needed in the oven) I enjoy laying in the grass, walking around with not much on during the summer, working in the garden while drinking beers, grilling with charcoal, etc… those my friends are good reasons to get a house. This math will be different for everybody.
Finding Peace in West Seattle
So it’s time, all the above was green. We found a place, we made an offer and got accepted the next day. We bought a house far from Kirkland, rich brats, loud cars, obnoxious Vegas crowds, petulant, entitled, flashy, tech infested town.
Where to? West Seattle, or how I like calling it, the independent republic of West Seattle. A small Brooklyn-like corner of Seattle, with a beautiful view of the city, but far enough from wild downtown, that truly feels like a quiet, beautiful charming corner, perhaps like how Seattle was 20 years ago. The best? you take a water taxi and you are downtown in 15mins. Rumors say Eddie Vedder from Pearl Jam lives here too.
So we’ve been here for few weeks now, taking care of our 1939 house. A little fixer upper, that used to be a rental. Although it looks a bit like an SS headquarters, it has its charm. Like the original hardwood floors and a view to the city from the living room window. I wrote a little love letter to the people who we bought it from, might be good to share it with you:
“I remember spending hours looking out the window. Outside, people rushing up the steep hills of Valparaiso trying to find cover from the rain. Gray skies, gloomy weather and water rolls down fast turning the street into a small river. It is winter in Chile in the early 90’s. I have a cassette tape recorder, I listen to Nirvana on repeat while my mom is not around, she just doesn’t get it. I also have a poster of Eddie Vedder on the wall. I try to play “Castles made of sand” in a cheap Spanish guitar, I am not good enough yet, Hendrix always gets me.
Across the ocean, in Poland. A younger lady loves going to the P-patch. It is summer there; we have opposite seasons. There are some serious contests with her older brother of who can grow the biggest tomato or the tallest sunflower. She always wins. Summers in Poland are not very warm, but when the sun is out is beautiful. It is green, it rains, it is just like here.
We made it to the US almost 10 years ago. Went to school, fell in love, got married and moved to Seattle. We went to your house yesterday. When I looked out the window, for a minute I saw that boy back looking back at me, Nirvana, Eddie, Hendrix all came back. The rain rolling down the hills? Perhaps in few months. Wife went outside, she imagined a backyard full of tomatoes, fruit trees and many flowers.
We will take care of your place, get all the bits and pieces aligned to make it shine again so we can call it home.
We hope you consider our offer, “The writing monkey.
they did, and now we live here,
Thank you for reading, follow, like etc..
The Writing Monkey.