Might as well rent forever.

renter problems

If you didn’t already know, Girl Ninja and I live in an ADU (additional dwelling unit), also known as a mother-in-law apartment. Two summers ago, our Landlord built a huge, I mean HUGE, house. He decided, during the last part of the building phase, to throw on an ADU on the upper back portion of the house. Check out where we live….

Our ADU

Do you see how massive his house is? I mean look at the size of the house to the left…haha.

Our landlord is obviously doing well for himself. He paid cash for this place and by collecting rent from us ($1,175/month, all utilities included) he is able to live free and clear. That’s right, our payments cover his property tax, utilities, homeowners insurance, and cable/internet.

Could you imagine living with out a house related payment?! 

As I was pulling in to our driveway yesterday, he was out in the front yard. We started chatting and he asked how our house-hunting process was going. I let him know that Girl Ninja and I hadn’t even gone and looked at a place in the last 6 weeks due to the Bubble market in Seattle. What’s more, Girl Ninja decided to teach another year at her school (5 minutes away from our pad, 30 minutes away from where we would want to buy). I told him not to worry about us moving out any time soon unless one of three things happens:

  1. Housing inventory picks up dramatically.
  2. We get pregnant.
  3. He raises rent prices on us.

I read horror stories all the time about rising rent prices and how it can devastate a person’s budget. One day you are scraping by with a $1,200/month rent payment, and the next day you’re told that rent is jumping up to $1,500. That would seriously suck.

Girl Ninja and I frequently talk about what we would do if our landlord tried to raise rent on us. We’ve decided if that day ever comes, we would start looking for another place.

Fortunately, it doesn’t sound like that will need to happen any time soon. As I shared point three above with our landlord, he immediately cut me off and said “Dude, are you kidding me? I will not raise rent on you guys as long as you’re my tenants.”

That made my heart happy. I laughed and asked him when we could change our month-to-month lease to a ten-year contract. You know I gotta try to lock in that agreement, haha.

I’m not quiet about my extreme fondness of renting. Knowing that for as long as we are here, our rent will never increase, just makes renting that much more amazing. And it makes buying a house even less attractive than it already is#ImRentingForLife

Have you ever dealt with a rent increase? 

p.s. Here’s a picture tour of our tiny little abode 😉

We’re engaged, should we buy a house now?

Screen shot 2013-02-20 at Feb 20, 2013, 8.50.46 PM

John Doe writes in…

Ninja! I read your blog everyday, it’s awesome! I recommend it to everyone I talk to… My fiancé and I have been together for 6 years and recently became engaged. We have lived together the last 3 years. We are really interested in buying a house. We are getting married in September. Should we wait until we are married to buy a house? Why?

We are both 24 years old. No credit card debt, 2 car payments that will be paid off within 4 months, and I have student loans I am punching. We live in a small Texas town so housing prices are a little different then what you have in Seattle.

Let me know what you think.

Thanks.

Don’t do it!!!!!

How’s that for telling you what I think? Haha! I guess I should preface this post with the reminder that I love me some Jesus. As a result, I do my best to follow his teachings. Back in October 2009, I wrote a post titled “Leave me alone, I don’t want to live with my girlfriend.

Marriage to me is a pretty big deal. I didn’t want to play the part until I was actually married. That means, even though Girl Ninja and I dated for 4.5 years, we never had sex, slept in the same bed together, went on trips together, etc previous to getting hitched. This also means, I didn’t think it was appropriate for us to start combining our finances until we were legally a family. Her money was her money, and my money was mine, until legally we became one family unit.

Okay, so those are my personal convictions and since I was asked for my opinion I thought I would share them. That said, I don’t live under a rock, and I realize people don’t necessarily value my values. Regardless of my personal moral convictions, I would recommend you hold off buying a home. Here’s why…

  1. The possibility exists that the wedding day never comes. It’s probably a small chance, like not-even-1%, but it’s still a possibility. Until you’ve said “I do.” nothing is official. You’ve waited all this time, another seven months isn’t going to kill you. No one wants to own a home with an ex-fiance.
  2. I don’t foresee house prices or interest rates changing dramatically by fall. Sure prices could go up a bit, or interest rates my raise half a percent or so, but I don’t think there is going to be a huge change. I’m far more concerned about the layout, condition, location of our future house than I am about a 3.5% vs 4% interest rate.
  3. You live in Texas, and as you mentioned, it’s a different market than Seattle. I remember being on business in Houston seeing some AWESOME homes for sale for like $120,000. It boggled my mind. My understanding is the market it also a little more stable than Seattle (not as many ups and downs). If a house bumps up from $120,000 to $126,000 (a 5% spike) in the next year, that will have a negligible effect on your monthly payment.
  4. You still have other debt. Granted it doesn’t sound like it’s an overwhelming amount. But if you wait to buy a house AFTER you’ve paid off your cars (and/or student loans), you should qualify for a larger mortgage. Maybe this would afford you the opportunity to buy a better house in a better neighborhood? I plan on skipping over the “starter home” neighborhoods and buying something we could be happy with for the long-term. Real estate transactions are expensive, so the less of them you have, the more equity you get to keep.
  5. Why do you want to buy a house now so badly? Is there something I’m missing that makes buying today a better decision than buying tomorrow? Try and keep emotions out of the house hunting experience. Wait on a great property. You should be comfortable buying a house two years from now if that’s how long it takes to find a place that meets your standards. I’ve been saving our down payment fund for five years now, it’s been a very slow, methodical, and intentional process.

As I always say when I throw out my two cents, I’m just one person, with one opinion. You have to do what you think is best for you.

Let’s see what some other PDITFers have to say. Would you buy a house with your significant other prior to tying the knot? Why or why not?

F*** You!!!

As I drove through the city I grew up in yesterday, I couldn’t help but laugh when I drove by this neighborhood…

vacant lot

You see that white house kinda near the center? There’s an interesting story about that house.

According to Zillow it was built in 1961. You see the roads surrounding that house? You notice how there are multiple cul-de-sacs with no houses around them? It looks like a developer is going to be building a good 100+ houses in that community huh?

Not so much. Those roads were actually put in around 2004. A developer bought all that vacant land you see and had plans to build a starter home community. There was only one problem. The developer couldn’t convince the person that owned the white house in the center to sell their property.

After a bunch unsuccessful negotiation attempts, the builder quickly realized it was a lost cause. They would just build all of their new homes around the 1960’s abode.

That was, until something interesting happened.

The homeowner took a stand. They bought a couple of cans of spray paint and wrote the words “F*** You” in big bold letters along each side of the house. It was a big, offensive, eyesore.

The developer, obviously angry, went to the city hoping they would force the resident to remove the profanity. The city, however, refused to involve themselves, citing “free speech” rights.

So here we are eight years later. The builder had to walk away from the land, realizing he would never be able to sell homes in the area.

I mean, how would you list these homes? “Three bed, two bath charmer with wonderful views of the olympic mountains and the words”F*** You” from the living room and master suite”.

Live Girls

The lots are vacant and will probably stay that way for the forseeable future.

You can’t help but feel bad for the builder. He lost his business because of this one pesky homeowner. But I also feel bad for the resident. His amazing view of the Olympic Mountains were threatened and he didn’t want his home to be smack dab in the middle of suburbia. Turns out something similar happened in Utah.

A Riverton, UT resident was forced by the city to reduce his roofline by 18 inches after his neighbor complained about a height violation. This violation cost the resident 10’s of thousands of dollars to correct. So what did the homeowner do? He got revenge. He had new “air-vents” installed on the side of his house that faced the complaining neighbors abode. Check it out

middle finger

Seems crazy, but I can totally understand where these frustrated homeowners are coming from.

Would you go to extreme measures if your view, privacy, or safety was at stake?

Another bubble

house bubble

You know how I keep saying Seattle real estate is crazy right now? Well, an 1,110sqft home (with 800sqft unfinished basement) went on the market yesterday for $275,000. I called my agent to schedule a viewing for this morning. Turns out, I wont be able to see the house. It received 10 offers in about four hours and they aren’t accepting any more. My agent guesstimates the house is going to sell for no less than $350,000 as a result of the competition.

Now obviously the house is under-priced (it’s part of an estate sale). I knew that it was going to sell for above asking. Heck, I even ran the numbers on the property assuming we paid $30,000 above asking. The math looked good. But at $350,000 it’s not so appealing. Buyers in Seattle are like piranas right now. Snapping up anything and everything that comes up on the market.

It doesn’t make any sense to me.

The housing market is up over 15% since last year. I get that interest rates are at all time lows, but a 15% YOY growth is not sustainable. Especially not when interest rates are being artificially kept low by the fed. Interest rates will have to begin creeping up, and when they do, I suspect property values will creep down.

Seattle is in another real estate bubble.

A crappy house shouldn’t receive 15 offers in two days and sell for thousands above market value. You’re suppose to buy low and sell high people, not the other way around.

Inventory in Seattle has never been this low (1.6 months). That tells me we are in a sellers market. When it comes to making the largest financial decision of our lives, we’d like to have a healthy selection to pick from. That’s not the case right now and it sucks.

I’m skeptical that we will be able to buy anything in our target area. If a decent house is listed for a reasonable price, it’s going to get dozens of offers, within a few days, and probably sell for more than it’s worth. I’m not willing to play that game. Our current living situation is flexible; we can move out next week or next year. Once inventory reaches more normal levels (like 4 months), and quantitative easing is a thing of the past, I’ll have a better idea of how much a Seattle house is actually worth.

How’s real estate in your neck of the woods? Anyone else feeling like we are experiencing a mini-bubble?

Too conservative for my own good.

Screen shot 2013-01-16 at Jan 16, 2013, 11.56.18 PM
I was chatting with a close friend a few days ago about the housing market. Big surprise right? We know what the median household income is in Seattle ($66,000), and we also know the median sales price of a home in Seattle right now is $380,000. What we don’t know is how the crap people can afford a $380,000 house on a $66,000 annual income! There are only a few logical conclusions…

1. They inherited the property

2. They received a financial windfall

3. They are house poor. 

4. They are risk takers.

If they inherited the property, or received a financial windfall, good for them.

If they are house poor, I can’t say I’m jealous of them. Nothing about living paycheck to paycheck appeals to me. I would never want to be in a position where I have to sacrifice traveling, eating out, or skiing just so I can make a mortgage payment. No thank you.

But what about the people who are just willing to take a risk. Debt has a pretty bad rap. Heck, I even named my blog Punch Debt In The Face because I think it’s so dumb. But reality is, debt can be a powerful tool for building wealth; like when one takes out a line of credit to start a business, or when someone finances a rental property.

Sure it’s risky. If the business fails, or the real estate market crumbles, you could lose everything. But how bad is that really? It’s not like you have to worry about going to jail. Maybe you get sent to collections and settle your debt for less than you owe, maybe you walk away from your house and get foreclosed on. Maybe you have to consider filing bankruptcy. While none of these things are particularly enjoyable, they are solutions.

Maybe I’m too conservative for my own good?

I mean, if we bought a $500,000 house last year, we’d have about 15% equity in the thing based on recent market appreciation. That’s a $75,000 gain in 12 months!!!

What did I do? Oh that’s right. I decided to keep saving money so we could easily afford a 20% down payment on a house priced $150,000 under what we are qualified to borrow. At last check, my savings account earned a paltry 0.75%. 

Do you see what I’m saying friends? It seems to me that the risk/reward comparison of using debt to leverage one’s financial position often favors reward. Think about it.

We buy a $500,000 house and sell it a year later for a $50,000 profit (after commissions). Or we buy a $500,000 house, watch the markets tank, and walk away from the property and let the bank deal with it (Washington is a non-recourse state). The system is set up to protect one against their own stupid decisions, so much so, that these stupid decisions are no longer necessarily stupid.

Interest rates are low, and house prices are still lower than pre-bubble days. Why not use the depressed market, and government bailouts (quantitative easing), as an opportunity to make some extra dough?

Oh that’s right, because I’m a wuss.

Screen shot 2013-01-17 at Jan 17, 2013, 12.02.52 AM

Being conservative might not make me rich, but I guess it beats the possibility of being poor?

Video tour of the house

As promised here is the video walk-through of our potential Ninja abode. Like an idiot, I shot the video vertically which makes it a little squished. Next time I’ll be sure to film in landscape mode. Go ahead and watch the video below, then scroll down for my comments…

http://www.youtube.com/watch?v=-KL24KU8abM&feature=youtu.be

So will we be putting in an offer?

Nope. 

After walking through a second time we left being sad about our sadness. Haha, does that make sense? We really wanted to love the house. It for sure has a ton of potential and is cuter than a puppy licking a baby. That said, there were some serious concerns.

First and foremost, the busy road.

  • We were in the house from about 4:30-5:15, right when people were commuting home. Since the house sits on the corner of a relatively popular street, the road noise was pretty evident from inside the house, especially considering the living room sits on the side of the house nearest the road (could you hear it in the video?). What’s more, the backyard/porch is definitely the biggest bonus to the property. We imagined ourselves sitting on the back patio, sipping some lemonade, and reading a book. Peaceful right? Not so much when there is the sound of a huge truck driving by every 10 seconds.

The bedrooms all have issues.

  • The downstairs bedroom is pretty large, but it’s also in an odd location (off the living room and dining room). The “master bedroom” doesn’t have a door and can’t be closed off to the stairway. The closet in the master is also the smallest closet I’ve ever seen. The third bedroom isn’t really a bedroom. It would work for a nursery, but I’m doubting a twin sized mattress could fit comfortably. It’s also only about 10 feet away from the master bedroom, which is a huge concern considering there is no door on the master. Mommy and Daddy Ninja’s room will be a child-free zone 😉

We also had to think about resale.

  • If the house was in Seattle, we would buy it in a second. Edmonds, however, is more suburban. Not too many Edmonds buyers are looking for a two bedroom (since the 3rd bedroom is technically not legal) one bath house, on busy roads, with no garage or driveway. Makes the house a tough sell when someone can buy a 4 bedroom 2 bath house for the same price two doors down.

I think Girl Ninja took it the hardest. She loves the house, but after walking through it again, realizes is is a superficial, and not a deep seeded this-is-the-best-house-for-us, love. There is no denying its charm, the size of the lot, or it’s relatively good condition. I’m sure it will sell, we just wont be the ones making an offer. Goodbye first prospective Ninja pad. Hello new opportunities.

What did you think of the place? 

All those annoying things you don’t think about

Today at 4:30 Girl Ninja and I will be going on our second walk-through of that really freaking cute house that I blogged about on Friday. I’m planning on taking some video and will give y’all a full tour later this week since many of you seemed to be interested in the property. Our plan is to spend at least 30 minutes in the house, trying to figure out what our life would be like if we called it home. There’s only one problem with this plan…

We don’t know what the heck we should be looking for!!!!

Haha, how’s that for a problem? Seriously though, as a renter for the last 9 years, I haven’t really given much thought to where we live, because I knew a year later I’d probably be living somewhere else. Things like dishwashers, garages, and laundry are often luxuries for renters, but for someone looking to purchase a property many of these things are non-negotiable.

I know I want to make a list of things to look for, or take note of, when we are walking through. I just can’t possibly wrap my mind around all of those things. Here’s what I’ve come up with so far…

    • Where would Baby Ninja 1 Sleep? Where would Baby Ninja 1 sleep once Baby Ninja 2 is born? What about when they are 5 years old? Will the rooms be sufficient for a toddler and/or an elementary student?
    • How big are the closets? Since the house was built in 1916 I know the closet is pretty tiny, just don’t know if it’s like “Holy crap this can never work” tiny.
    • Are the windows double pane and are there screens?
    • The house has forced air, but does that run upstairs or is it only on the main level? (upstairs was converted attic)
    • Any evidence of water in walls, ceilings, or basement?
    • Does the huge backyard appear to puddle water in any concerning way?
    • Can you hear road noise inside?
    • Is a garage important to me, and where is best spot to build one if the answer is yes?
    • Where are the outlets?
    • Is there adequate kitchen storage?
    • Where would we put the vacuum?
    • Any noticeable cracking in drywall or foundation?

And that’s all I got. I’m hoping those of you that are homeowners will be like “Don’t forget to check and see if there are outlets in the bathroom” or some other random thing that one doesn’t really think about when they are house hunting, but turns out to be majorly annoying when you actually move in. What annoyed you about your house after you moved in that you missed on your initial walk-through? Or what is something you didn’t think would bother you (like no backyard space), but now you realize it was more important to you than you thought?

p.s. I know an inspection would take care of most of the major concerns, but before I pay $500 for an inspection, I want to know if this is an alright house to put an offer in on.