WEBVTT - Developing a Home Buying Strategy #263 0:00:00.120 --> 0:00:02.600 Welcome to How the Money. I'm Joel and I and 0:00:02.720 --> 0:00:23.479 Matt's and today we're discussing developing a home buying strategy. 0:00:25.560 --> 0:00:28.480 This episode is dedicated to everyone who has purchased a 0:00:28.560 --> 0:00:31.400 home or who is considering purchasing a home. Did that 0:00:31.440 --> 0:00:33.080 kind of sound like an ad like this episode has 0:00:33.080 --> 0:00:38.280 brought to you by home buying. Yeah, the general ability 0:00:38.360 --> 0:00:40.000 to buy a home. We're gonna talk about that, and 0:00:40.040 --> 0:00:43.160 Matt strategy is it's such an important part of buying 0:00:43.159 --> 0:00:46.000 a home. I think it's something that people don't consider 0:00:46.400 --> 0:00:50.080 enough and it can leave you over pain right for 0:00:50.479 --> 0:00:53.480 the most expensive purchase you'll ever make in your life. 0:00:53.479 --> 0:00:56.600 So there's an important topic for us to tackle. Absolutely. Man, 0:00:56.640 --> 0:00:58.240 I know a lot of what we're going to talk 0:00:58.240 --> 0:01:00.640 about in this episode. I never even can ordered back 0:01:00.640 --> 0:01:02.240 when Kate and I bought our first house over ten 0:01:02.320 --> 0:01:04.480 years ago, and so I wish that we had been 0:01:04.560 --> 0:01:06.360 challenged in the way that we are going to challenge 0:01:06.360 --> 0:01:08.520 our listeners today. So I'm excited to get to that, man. 0:01:08.560 --> 0:01:10.720 But first, I've got a quick little frugal or cheap 0:01:10.760 --> 0:01:13.080 for you. How do you feel about keeping something that 0:01:13.120 --> 0:01:16.880 you got on sale if it doesn't fit perfect perfectly well, 0:01:17.959 --> 0:01:19.600 Because here I'll give you a little bit of backround 0:01:19.600 --> 0:01:22.480 while you consider. I got a nice jackets on sale 0:01:22.480 --> 0:01:25.959 from a website that sells discounted outdoor clothing, and it's 0:01:25.959 --> 0:01:28.319 a really nice jacket, and it was on tremendous sale, 0:01:28.319 --> 0:01:30.200 and these kind of jackets never go on sale by 0:01:30.200 --> 0:01:33.559 this particular company. It was over off, and so I pounced. 0:01:33.680 --> 0:01:36.039 I thought, man, that's a great looking jacket. But the 0:01:36.080 --> 0:01:38.639 thing is, it doesn't fit me the way I wished 0:01:38.680 --> 0:01:40.399 it would fit me, and so that bums me out. 0:01:40.440 --> 0:01:41.960 But I'm a little bit torn because I did get 0:01:42.000 --> 0:01:44.520 such a good deal on it. So what are your 0:01:44.520 --> 0:01:46.520 thoughts if I were to keep this jacket even though 0:01:46.560 --> 0:01:48.440 it doesn't fit me so well? In my being cheap? 0:01:48.920 --> 0:01:51.120 I think it's a cheap move. And and here's why 0:01:51.120 --> 0:01:53.400 I've completely changed my tune on this. I used to 0:01:53.440 --> 0:01:56.360 be all about paying a rock bottom price and if 0:01:56.360 --> 0:01:57.800 it was something that I got, if it was I 0:01:57.800 --> 0:01:59.160 think we've talked about this before. If it was like 0:01:59.200 --> 0:02:02.920 an eleven dollar pair jeans, I'm gonna keep it, but 0:02:02.960 --> 0:02:04.520 I'm not gonna wear them. And they just sit in 0:02:04.520 --> 0:02:08.080 my drawer and you can't wash them. Otherwise they dissolve exactly. 0:02:08.520 --> 0:02:11.040 So I think sometimes buying something on sale, getting a 0:02:11.040 --> 0:02:12.680 great deal, I used to hold that in like the 0:02:12.720 --> 0:02:16.280 highest esteem, and and then that just led to clutter 0:02:16.440 --> 0:02:18.799 in my house and in my life. And so yeah, 0:02:18.800 --> 0:02:22.320 I would recommend uh sending back, either getting a size 0:02:22.320 --> 0:02:26.200 that fits you better, or finding just another jacket, maybe 0:02:26.240 --> 0:02:28.359 that that you're actually gonna wear. I know, at least 0:02:28.400 --> 0:02:30.200 for me, if it doesn't fit me, well, I'm not 0:02:30.240 --> 0:02:32.720 gonna wear it, And so it's a complete waste of money. 0:02:33.160 --> 0:02:35.280 Maybe some people don't care as much about the fit 0:02:35.320 --> 0:02:36.760 and they're like, oh, it's a little bag, who cares. 0:02:36.760 --> 0:02:38.640 I'm gonna wear it anyway. But but for me, it's like, man, 0:02:38.680 --> 0:02:41.079 if it doesn't fit me, well, I'm not wearing it. Yeah. 0:02:41.080 --> 0:02:42.399 I wonder if that's because you and I are both 0:02:42.400 --> 0:02:45.560 like two skinny guys, and so it really is important 0:02:45.560 --> 0:02:46.720 to me as well, Like I would rather wear a 0:02:46.760 --> 0:02:49.320 shirt that I am less excited about wearing from like 0:02:49.360 --> 0:02:52.600 a color or graphic or material stepoint pink with unicorns 0:02:52.600 --> 0:02:54.720 on it takes me really well, I'm gonna wear it. 0:02:55.440 --> 0:02:57.120 So I kind of agree with you. I'm of the 0:02:57.160 --> 0:02:59.440 mindset of sending it back because it does in my 0:02:59.480 --> 0:03:02.120 mind depending on the product. If it's something that's I 0:03:02.160 --> 0:03:04.799 don't care much about. So for instance, I recently bought 0:03:04.840 --> 0:03:06.440 like a bike light. I just picked one up that 0:03:06.520 --> 0:03:08.400 was really cheap that had really great reviews. Like I 0:03:08.440 --> 0:03:10.840 don't care about the brand. I don't care what other 0:03:10.880 --> 0:03:12.840 features it has. It just needs to be able to 0:03:12.919 --> 0:03:14.600 light up on the front, you know, for the handlebars 0:03:14.639 --> 0:03:15.920 and the little red light on the back. It just 0:03:15.960 --> 0:03:18.680 needs to blink, Like I really do not care. Uh, 0:03:18.720 --> 0:03:20.400 And you might think that I would care because it's 0:03:20.440 --> 0:03:22.200 bike related. As long as the cars can see you 0:03:22.240 --> 0:03:24.119 and you can see the road exactly when it comes 0:03:24.160 --> 0:03:26.480 to fit, I wanted to to sit a certain way 0:03:26.919 --> 0:03:29.359 and especially to man like in the winter, I wear 0:03:29.440 --> 0:03:31.200 jackets basically all the time, Like I just wear like 0:03:31.200 --> 0:03:33.280 a T shirt and I wear a jacket over and 0:03:33.320 --> 0:03:35.480 so basically that's like my all time shirt, Like it's 0:03:35.480 --> 0:03:37.119 what people see. And so in that case, I'm willing 0:03:37.120 --> 0:03:39.200 to pay a little bit more to have something that 0:03:39.280 --> 0:03:41.760 I am excited to wear, not something that I you know, 0:03:41.760 --> 0:03:44.000 I am not excited to wear, or even worst case scenario, 0:03:44.040 --> 0:03:45.760 like you said, it just sits around ends up cluttering 0:03:45.800 --> 0:03:47.520 your house and then you end up selling it for 0:03:47.640 --> 0:03:49.600 you know, like ten bucks at the yard sale. Yeah, 0:03:49.800 --> 0:03:51.520 and I think sometimes, I don't know, maybe some people 0:03:51.600 --> 0:03:56.160 replace their jacket every winter every season. No, no, I'm 0:03:56.200 --> 0:03:58.720 talking five ten years baby, right. I know you're not, 0:03:58.760 --> 0:04:00.640 but I'm sure some people do that. Right. But but 0:04:00.720 --> 0:04:03.080 you and I especially, we live in Atlanta, so like 0:04:03.120 --> 0:04:05.080 the winner is not that cold, pretty mild, you know, 0:04:05.120 --> 0:04:07.000 we can we can if we find the right jacket 0:04:07.000 --> 0:04:09.600 that looks good, and then we can wear the that 0:04:09.720 --> 0:04:12.840 same jacket for yeah, ten years. I know I have 0:04:13.280 --> 0:04:15.400 most of the jackets I own, I've owned for about 0:04:15.400 --> 0:04:17.680 a decade, and you know, I probably only have two 0:04:17.760 --> 0:04:20.520 or three because again, it doesn't get super cold down here. 0:04:20.680 --> 0:04:22.840 But that's just another factor. The more that you love 0:04:22.880 --> 0:04:25.560 that jacket, you're drawn to it it fits well, Uh, 0:04:25.600 --> 0:04:27.400 it doesn't matter even if you didn't get it on 0:04:27.400 --> 0:04:30.520 at off sale. If you're gonna get more years out 0:04:30.520 --> 0:04:32.360 of it and you're gonna enjoy wearing it, then I 0:04:32.400 --> 0:04:35.040 think that's an important consideration. Nice. I'm glad we are 0:04:35.080 --> 0:04:37.080 on the same page. I've got it right here in 0:04:37.120 --> 0:04:38.920 the back of my chair. Do you notice I was 0:04:38.960 --> 0:04:40.560 trying it out here in the office to see how 0:04:40.640 --> 0:04:42.720 how it felt and whatnot. But I don't don't cut 0:04:42.720 --> 0:04:45.040 the tags office yet. All right, let's go ahead and 0:04:45.040 --> 0:04:46.960 introduce our beer for this episode. We are drinking a 0:04:47.040 --> 0:04:50.200 Labonte with figs and this is a beer by Wicked Wheat. 0:04:50.640 --> 0:04:53.080 This is a great brewery out of Asheville, North Carolina, 0:04:53.440 --> 0:04:56.040 Beer City, USA. I'm looking forward to sharing this one 0:04:56.040 --> 0:04:57.960 with you, buddy, and talking about it at the end 0:04:57.960 --> 0:05:02.840 of the episode. Labonte sounds fran labonte. It is all right, yeah, 0:05:02.920 --> 0:05:06.479 so you're saying that word. Yeah, right, it's labonte. It's cute. 0:05:06.680 --> 0:05:08.560 All right, Let's get onto the subject at Handmatt. We're 0:05:08.560 --> 0:05:12.640 talking about developing a home buying strategy. And it's interesting 0:05:12.680 --> 0:05:17.000 because millennials, like they've often been considered to be behind 0:05:17.000 --> 0:05:19.440 the curve when it comes to home buying. But now 0:05:19.800 --> 0:05:23.200 that generation, the generation of millennials, the people in their 0:05:23.400 --> 0:05:28.640 twenties and up to what eight uh, those people are 0:05:29.120 --> 0:05:31.760 starting to get into the idea of homeownership in a 0:05:31.800 --> 0:05:34.000 meaningful way. And the average price of a new home 0:05:34.279 --> 0:05:37.640 it now exceeds thousand dollars. Crazy. Yeah, we recently just 0:05:37.680 --> 0:05:40.320 crossed that line. There are lots of things to consider 0:05:40.360 --> 0:05:43.240 in order to make a wise purchase, and at the 0:05:43.240 --> 0:05:45.640 same time, interest rates are at all time lows. That 0:05:45.640 --> 0:05:47.400 creates this feeling I think for a lot of people 0:05:47.600 --> 0:05:49.680 like you have to move quickly before those rates start 0:05:49.760 --> 0:05:52.400 to creep back up. But if you move too quickly, 0:05:52.560 --> 0:05:54.600 you can make some missteps. So let's talk about the 0:05:54.640 --> 0:05:56.960 home buying process today, Matt, and what it looks like 0:05:57.000 --> 0:05:59.760 to have a solid strategy in place so that our 0:05:59.800 --> 0:06:02.920 list seners can make a smart purchase, one that's going 0:06:02.920 --> 0:06:04.839 to serve them well for years to come, and not 0:06:04.920 --> 0:06:07.799 a hasty purchase that's still conceived. Kind of like your jacket. 0:06:07.920 --> 0:06:09.920 It wasn't hasty, it was well thought out, you know, 0:06:09.960 --> 0:06:12.120 and I pounced on the sale. But sometimes you can't 0:06:12.120 --> 0:06:13.839 tell the fit until you get it in personally. I 0:06:14.000 --> 0:06:16.240 felt the need to throw that in there, ruffle my 0:06:16.240 --> 0:06:18.920 feathers a little bit. Uh. And So another reason that 0:06:19.279 --> 0:06:21.560 home buying right, why this is so important to get right, 0:06:22.080 --> 0:06:24.839 is that because once typical Americans purchased their first home, 0:06:25.120 --> 0:06:28.320 a large portion of their wealth is instantly tied up 0:06:28.360 --> 0:06:31.799 in that home right nearly, and as folks get older, 0:06:31.839 --> 0:06:34.680 that percentage only increases. Households where folks are older than 0:06:34.680 --> 0:06:38.080 seventy five have nearly half of their wealth as equity 0:06:38.200 --> 0:06:41.240 in their primary residence. Now, this isn't necessarily a good 0:06:41.240 --> 0:06:43.400 thing because it's tricky, you know, to survive off of 0:06:43.400 --> 0:06:45.800 your home equity when you retire. You can't eat your 0:06:45.800 --> 0:06:48.240 house unless you're a gingerbread man. I guess, yeah, but 0:06:48.279 --> 0:06:51.520 then or with a helock. But he likes take time. 0:06:51.680 --> 0:06:54.200 And as we've seen now that they're not readily available, 0:06:54.240 --> 0:06:56.600 a lot of banks and credit unions are not offering them. 0:06:56.680 --> 0:06:59.800 And even then you're paying money to access that that wealth, 0:07:00.000 --> 0:07:01.719 it's tied up. Yeah. Yeah, And so whether we like 0:07:01.760 --> 0:07:04.840 it or not, though, that's the reality for most folks. 0:07:04.880 --> 0:07:08.160 But by developing a strategy for your home purchase, our 0:07:08.160 --> 0:07:10.280 goal is that you'll you'll save a good bit of 0:07:10.320 --> 0:07:13.240 money on that purchase, you know, along the way, and 0:07:13.240 --> 0:07:16.240 then hopefully too, you might even consider spending less on 0:07:16.280 --> 0:07:18.280 your house to begin with. So let's go ahead and 0:07:18.320 --> 0:07:21.000 get into some of the most important considerations that we're 0:07:21.040 --> 0:07:23.720 gonna talk about today. Yeah, part of this really involves 0:07:23.760 --> 0:07:27.920 asking yourself a few incredibly important questions, right, And the 0:07:27.960 --> 0:07:31.120 first one that you should be asking is should I 0:07:31.200 --> 0:07:34.160 even be buying a home? Or does renting serve me better. 0:07:34.640 --> 0:07:37.400 It's so important to note that buying isn't necessarily the 0:07:37.400 --> 0:07:39.880 best option for everyone, and in fact, it's not the 0:07:39.880 --> 0:07:43.120 best option for a decent swath of the population. Renting 0:07:43.160 --> 0:07:46.240 can be a better move for people of all stages, 0:07:46.320 --> 0:07:48.120 depending on how long you plan to live in that 0:07:48.200 --> 0:07:51.360 location and your overall money goals. So part of your 0:07:51.360 --> 0:07:55.880 strategy should involve a little thinking about why you're wanting 0:07:55.920 --> 0:07:58.000 to buy a home. Is it because your friends have 0:07:58.040 --> 0:08:00.000 started buying homes? That can be a factor for a 0:08:00.040 --> 0:08:02.360 lot of people, but it's important not to base your 0:08:02.400 --> 0:08:06.120 decision on your peers. It's a personal decision that is 0:08:06.200 --> 0:08:09.200 going to affect you for years to come. Right at 0:08:09.200 --> 0:08:11.160 the same time, a home can be an incredible place 0:08:11.200 --> 0:08:14.200 to feel settled in a community or to raise a family, 0:08:14.720 --> 0:08:17.520 But if you can't get rid of that home because 0:08:17.640 --> 0:08:20.040 you were maybe a little shortsighted on the front end, 0:08:20.200 --> 0:08:22.160 it can feel like a burden that you can't get 0:08:22.240 --> 0:08:24.800 rid of. And that's why it's important to know that 0:08:24.840 --> 0:08:27.040 you're ready to be planted in a place for a 0:08:27.080 --> 0:08:30.440 while before you're making that purchase. Otherwise, buying that home 0:08:30.680 --> 0:08:32.600 the day of closing it can be a joyous occasion. 0:08:32.800 --> 0:08:35.160 The day that you list it, and the months that 0:08:35.200 --> 0:08:36.880 it might be on the market while you're trying to 0:08:36.920 --> 0:08:40.439 sell it and not lose money can be incredibly frustrating. Yeah, man, 0:08:40.600 --> 0:08:43.280 And so you mentioned some of those personal lifestyle considerations, right, 0:08:43.320 --> 0:08:46.280 But then of course there's also the financial considerations as well. 0:08:46.600 --> 0:08:48.440 You know, you mentioned it being a burden. It's a 0:08:48.440 --> 0:08:51.200 burden because financially speaking, you're either going to take a loss, 0:08:51.280 --> 0:08:52.760 like you said, when when it when it comes time 0:08:52.800 --> 0:08:55.319 to sell it, or if you can't afford it um 0:08:55.360 --> 0:08:57.679 if you have a boatload of other debts. Maybe if 0:08:57.679 --> 0:08:59.600 you have poor credit, and if you live in an 0:08:59.640 --> 0:09:02.480 expense of market, then buying a house might be a 0:09:02.520 --> 0:09:05.120 bad decision for you. The same goes to if your 0:09:05.120 --> 0:09:07.640 employment is a bit tenuous. You know, we've seen this 0:09:07.760 --> 0:09:10.120 past year. Sometimes it's not even about how great of 0:09:10.160 --> 0:09:13.559 an employee you are, but there are larger issues at play, 0:09:14.320 --> 0:09:17.079 which then in turn impacts your industry and then your company. 0:09:17.840 --> 0:09:21.040 Where you feel the effects of something like a pandemic, 0:09:21.280 --> 0:09:23.120 it can be tough, you know, especially for a single 0:09:23.120 --> 0:09:25.960 individual with just one source of income, to have solid 0:09:26.000 --> 0:09:28.400 financial footing. And so if that's you, if you're not 0:09:28.480 --> 0:09:31.120 in a solid position, you might be better off running 0:09:31.240 --> 0:09:34.000 matt And sometimes that doesn't necessarily mean you'll never own 0:09:34.000 --> 0:09:36.440 a home. That's just right for the time being, right, 0:09:36.559 --> 0:09:37.880 And I know there are a lot of people who 0:09:37.960 --> 0:09:40.600 that's a goal, that's a dream, that's an aspiration, and 0:09:40.640 --> 0:09:44.640 that's great. But if your financial circumstances currently dictate that 0:09:44.760 --> 0:09:46.760 it's not the smartest move for you, you don't want 0:09:46.760 --> 0:09:48.560 to buy a home at the wrong time, then it 0:09:48.640 --> 0:09:51.440 becomes again, like we were saying, like this this plague 0:09:51.760 --> 0:09:54.680 on your personal finances and a source of frustration instead 0:09:54.720 --> 0:09:56.840 of that source of joy. So again, it doesn't mean 0:09:56.920 --> 0:09:59.160 that it's not a possibility at some point. It just 0:09:59.240 --> 0:10:01.440 means that it's not a great idea right now. Yeah, 0:10:01.440 --> 0:10:03.040 that's right, man. And so we wanted to mention that 0:10:03.040 --> 0:10:04.960 that renting might be a good option before we dive 0:10:05.000 --> 0:10:07.959 into you know, all this home purchasing talk. But that's 0:10:07.960 --> 0:10:10.640 what we're gonna get into next. Specifically, we're gonna talk about, 0:10:10.720 --> 0:10:13.480 you know, sort of an overarching strategy for for buying 0:10:13.480 --> 0:10:16.400 a home that will have a dramatic impact on your 0:10:16.440 --> 0:10:18.480 ability to grow your wealth. And so we're gonna get 0:10:18.480 --> 0:10:30.400 to that right after the break. All right, we're back 0:10:30.400 --> 0:10:33.920 from the break. Let's keep talking about developing that home 0:10:34.040 --> 0:10:38.439 buying strategy, Matt. And and again there's a few important 0:10:38.480 --> 0:10:40.840 questions we talked about. One isn't even the right time 0:10:40.880 --> 0:10:45.240 to buy home. But the next most important question for 0:10:45.280 --> 0:10:48.360 anybody to ask themselves when they're thinking about buying home 0:10:48.440 --> 0:10:51.679 is what's the purpose of this home? Right? What's the 0:10:51.760 --> 0:10:55.000 core to how you're approaching purchasing a home, Like if 0:10:55.000 --> 0:10:57.320 you're going to be house hacking or if you're buying 0:10:57.360 --> 0:11:01.480 a multifamily property, there's a different a set of circumstances 0:11:01.480 --> 0:11:05.520 that you need to consider versus buying a single family residence. 0:11:05.840 --> 0:11:08.240 And so yeah, that that overarching question of what's the 0:11:08.240 --> 0:11:10.760 purpose of this house is an important one. It can 0:11:10.800 --> 0:11:14.760 significantly change how you approach purchasing that home, Right, Matt. 0:11:14.800 --> 0:11:16.640 We've talked about house hacking on the show a good 0:11:16.640 --> 0:11:18.560 bit and you know what, maybe we'll do it more 0:11:18.600 --> 0:11:21.600 in the future. I'm sure that's because the ability that 0:11:21.679 --> 0:11:24.440 we have to significantly reduce the cost of our housing, 0:11:24.679 --> 0:11:27.439 which is of course the largest expense many of us 0:11:27.520 --> 0:11:31.160 face across the board, it's unmatched. Right. If we can 0:11:31.480 --> 0:11:34.200 find a way to use our home and profit from it, 0:11:34.600 --> 0:11:38.080 or at least drastically lower the costs of our own 0:11:38.080 --> 0:11:42.800 housing by renting out a room or having a multifamily 0:11:42.880 --> 0:11:46.000 home where other tenants essentially pay the mortgage for us, 0:11:46.280 --> 0:11:49.600 that's gonna change the equation on our buying strategy, right. 0:11:49.600 --> 0:11:51.760 And most folks out there, they just don't really consider 0:11:51.800 --> 0:11:54.720 house hacking or moving out and renting out their old place. 0:11:55.040 --> 0:11:56.959 But that's something that that we think is important to 0:11:57.040 --> 0:11:59.800 challenge people to at least consider because it has a 0:11:59.800 --> 0:12:02.200 mans have impact on the strategy, but also a massive 0:12:02.240 --> 0:12:05.200 impact on your ability to grow your net worth over time. 0:12:05.400 --> 0:12:08.160 If you can choose house hacking as opposed to the 0:12:08.200 --> 0:12:11.560 traditional way of buying a home, you're gonna completely alter 0:12:11.640 --> 0:12:13.920 your financial future. Yeah, and just to clarify, I mean, 0:12:13.920 --> 0:12:16.040 like you said, you like, house hacking can be as 0:12:16.120 --> 0:12:19.040 simple literally as just having roommates, right. It doesn't have 0:12:19.080 --> 0:12:22.559 to be this overly complicated thing, but it can be. Right, 0:12:22.600 --> 0:12:24.719 if you want to buy a quadplex where you are 0:12:24.760 --> 0:12:27.360 only living in a single unit, maybe the smallest unit 0:12:27.400 --> 0:12:29.520 there is in that quadplex, and then you're running out 0:12:29.520 --> 0:12:31.560 the other three units and then you're cash fling every 0:12:31.559 --> 0:12:33.959 single month. Or maybe even more complicated is say adding 0:12:33.960 --> 0:12:35.720 onto your house like we did and finishing out a 0:12:35.720 --> 0:12:38.480 basement that you plan to list on Airbnb. There's a 0:12:38.520 --> 0:12:41.120 wide spectrum of what house hacking could look like. In 0:12:41.160 --> 0:12:43.280 our book, every single one of those is a type 0:12:43.280 --> 0:12:45.440 of house hacking, and so that's what we are referring 0:12:45.480 --> 0:12:47.960 to when we are talking about house hacking. Yeah, Matt. 0:12:47.960 --> 0:12:50.760 And another example, like when I bought my first and 0:12:51.000 --> 0:12:54.440 second house, each one of those purchases was done with 0:12:54.520 --> 0:12:57.160 the intention of becoming a rental property in the future, 0:12:57.440 --> 0:12:59.640 and that changed the parameters of what I was looking for. 0:13:00.240 --> 0:13:02.960 I was looking more at multifamily properties and I had 0:13:03.000 --> 0:13:04.720 like a hard cap on the price I was willing 0:13:04.760 --> 0:13:07.240 to pay for a single family home. Both homes that 0:13:07.280 --> 0:13:09.080 we ended up purchasing a couple of years apart from 0:13:09.120 --> 0:13:11.760 each other ended up being single family homes and they've 0:13:11.760 --> 0:13:14.000 been great. But knowing the purpose behind the home I 0:13:14.040 --> 0:13:16.960 was looking for before we began our search and even 0:13:17.000 --> 0:13:19.800 started making offers was crucial to the path that we 0:13:19.920 --> 0:13:23.560 ended up taking, because if I wasn't ultimately thinking with 0:13:23.960 --> 0:13:27.400 a future investment in mind, the homes I'm actually pursuing 0:13:27.600 --> 0:13:30.640 probably would have cost more and wouldn't have been nearly 0:13:30.679 --> 0:13:33.720 as good of a fit for an investment or rental property. 0:13:33.760 --> 0:13:36.040 So yeah, that's definitely an important thing to keep in mind. 0:13:36.120 --> 0:13:37.400 What's going to be the current and what's going to 0:13:37.480 --> 0:13:39.920 be the potential future use of this home in your life. 0:13:40.040 --> 0:13:42.720 It also takes the pressure off of that first house 0:13:42.800 --> 0:13:45.000 perhaps being like the perfect house, you know, like it 0:13:45.000 --> 0:13:46.679 doesn't have to be a perfect fit. It doesn't have 0:13:46.760 --> 0:13:49.760 to be your dream house. Basically, if you can look 0:13:49.760 --> 0:13:51.439 at it and say, hey, this is a house I 0:13:51.440 --> 0:13:53.319 can see myself in for the next couple of years, 0:13:53.679 --> 0:13:55.439 and the numbers make sense, it kind of comes down 0:13:55.480 --> 0:13:57.040 to the numbers at that point. It's more of a 0:13:57.120 --> 0:13:59.840 math equation versus could I see myself here for the 0:13:59.840 --> 0:14:02.120 next ten twenty years. Can I seem myself raising a 0:14:02.160 --> 0:14:04.640 family in this house? Probably not, you know, like, if 0:14:04.679 --> 0:14:07.120 you can happen to find a house that can evolve 0:14:07.200 --> 0:14:09.760 with you, uh, I think that's amazing, Like that's great. 0:14:09.960 --> 0:14:11.520 But at the same time, I think there can be 0:14:11.559 --> 0:14:14.920 so much pressure on individuals finding the perfect house for 0:14:15.040 --> 0:14:17.480 their very first house purchase, and like you mentioned, I 0:14:17.480 --> 0:14:19.320 think that can cause a lot of folks to to 0:14:19.360 --> 0:14:22.440 overpay maybe and and even over extend themselves to choose 0:14:22.440 --> 0:14:24.720 something that's a little bit maybe beyond their reach. And 0:14:24.760 --> 0:14:26.880 so you know, another question too for folks to consider 0:14:26.960 --> 0:14:30.400 is what's your timeline? Second to what's your purpose behind 0:14:30.400 --> 0:14:32.920 this house? This is probably the most important question you 0:14:32.960 --> 0:14:35.520 can ask, uh, And it's also a consideration that is 0:14:35.600 --> 0:14:38.520 impacted by whether or not you're planning on house hacking 0:14:38.640 --> 0:14:40.280 or not. So for example, if you're buying a to 0:14:40.440 --> 0:14:43.080 one and then you're planning maybe on having four kids 0:14:43.080 --> 0:14:46.360 in the next few years or in our case ten years, uh, 0:14:46.400 --> 0:14:48.360 you might not be there for very long and it 0:14:48.560 --> 0:14:52.360 may be an unwise purchase, unless again, you are planning 0:14:52.400 --> 0:14:54.920 to convert that house to a rental, which is actually 0:14:54.920 --> 0:14:56.720 what we did. So when it comes to houses, kay, 0:14:56.760 --> 0:14:58.480 now we've only moved once. We moved from you know, 0:14:58.520 --> 0:15:00.400 one house to the house that we're in. Now you've 0:15:00.440 --> 0:15:03.120 moved twice. So you've got to convert two houses in Tormentos, 0:15:03.120 --> 0:15:05.200 we've only converted one. And so again that's something that's 0:15:05.200 --> 0:15:08.360 going to be significantly impacted depending on what it is 0:15:08.360 --> 0:15:09.840 that you're planning to do with that house when you're 0:15:09.840 --> 0:15:13.680 ready to move on. Yeah, the timeline, Matt, is crucial, crucial, 0:15:13.720 --> 0:15:16.520 crucial for how to think about the home that you're buying. 0:15:16.720 --> 0:15:19.320 And I think a lot of people haven't thought through 0:15:19.440 --> 0:15:21.480 maybe how long they plan on living in that city, 0:15:21.760 --> 0:15:23.600 or whether that home is going to meet their needs 0:15:23.640 --> 0:15:26.000 for a number of years to come. They buy something 0:15:26.040 --> 0:15:29.280 because it fits their lifestyle right now, and when it 0:15:29.280 --> 0:15:32.000 comes to something like buying a home, because of the 0:15:32.160 --> 0:15:36.320 massive amount of transaction costs involved in that move, you 0:15:36.400 --> 0:15:39.040 can't think like that. You can't afford to be shortsighted. 0:15:39.080 --> 0:15:40.800 So you have to ask yourself this question of what's 0:15:40.800 --> 0:15:43.320 your timeline. And let's say, Matt, somebody's in the army 0:15:43.360 --> 0:15:45.760 in their station somewhere for the next three years, but 0:15:45.800 --> 0:15:48.080 they have no idea where they're going to be after that, Like, 0:15:48.120 --> 0:15:50.560 buying a home doesn't make a whole lot of sense, uh, 0:15:50.720 --> 0:15:54.120 in particular financial sense for that person either. Right, it's 0:15:54.120 --> 0:15:56.400 important to think about some of the likely scenarios of 0:15:56.400 --> 0:15:58.640 how long you're gonna own the home. But again, if 0:15:58.680 --> 0:16:00.960 you serve in the military and you're like, you know what, 0:16:01.000 --> 0:16:03.800 I'm totally cool being a long distance landlord, then maybe 0:16:03.800 --> 0:16:06.000 buying a home with that in mind makes a whole 0:16:06.040 --> 0:16:08.560 lot of sense. Right, If you're cool with that property 0:16:08.600 --> 0:16:11.880 becoming an investment property in the future, your personal timeline 0:16:11.880 --> 0:16:13.440 of how long you're going to live in the property 0:16:13.680 --> 0:16:15.520 matters less. But at the same time, there are a 0:16:15.600 --> 0:16:18.520 whole lot of people that aren't interested in becoming landlords, 0:16:18.560 --> 0:16:20.880 and so your timeline and how long you're planning on 0:16:20.920 --> 0:16:23.800 living in the property is just of massive importance. Yeah, 0:16:23.800 --> 0:16:26.960 I've heard that the most unhappy landlords are the landlords 0:16:27.000 --> 0:16:30.440 by default. Yeah, it's a whether you're planning on your 0:16:30.440 --> 0:16:33.080 house being a personal residence only versus a house hack. 0:16:33.320 --> 0:16:35.400 That also has an impact on how much you need 0:16:35.520 --> 0:16:38.200 to have saved up for a down payment. We're all 0:16:38.200 --> 0:16:40.800 about pushing people to have a down payment if it's 0:16:40.840 --> 0:16:43.160 for a personal residence, but you know what, we're okay 0:16:43.240 --> 0:16:45.480 with a smaller down payment. If you're buying the home 0:16:45.560 --> 0:16:48.360 partially as an investment property. You know, if your home 0:16:48.400 --> 0:16:51.760 will provide cash flow as a house hack, or you're 0:16:51.800 --> 0:16:54.840 looking to buy some multi family housing that will provide income, well, 0:16:54.920 --> 0:16:58.800 that threshold is less important. This is another instance where 0:16:58.800 --> 0:17:00.760 you're basically looking at the numbs. If you can crunch 0:17:00.760 --> 0:17:02.520 the numbers and it makes sense if you're getting a 0:17:02.520 --> 0:17:04.800 good return on your investment versus what you'd be able 0:17:04.800 --> 0:17:06.520 to get in the market, then this becomes less of 0:17:06.520 --> 0:17:09.679 a personal kind of qualitative decision and it becomes more 0:17:09.720 --> 0:17:13.359 of a numbers decision. Yeah, accelerating your savings for a 0:17:13.359 --> 0:17:16.440 down payment is huge when it comes to your strategy 0:17:16.520 --> 0:17:19.600 for buying a home, and Matt, for people out there 0:17:19.640 --> 0:17:21.680 listening who have been running for a number of years 0:17:21.720 --> 0:17:23.960 with the goal of owning a home, maybe in the 0:17:24.000 --> 0:17:25.640 back of their mind, maybe in the front of their mind, 0:17:25.840 --> 0:17:27.879 it's really really important to start saving up for that 0:17:27.960 --> 0:17:30.840 now and making it a major goal in your monthly budget. 0:17:31.160 --> 0:17:33.359 But if that's kind of been on your radar but 0:17:33.400 --> 0:17:36.119 you haven't been able to save maybe even a dime 0:17:36.160 --> 0:17:38.680 towards that goal yet, then you know, we would say 0:17:38.720 --> 0:17:40.880 buying a home needs to be put off until you've 0:17:40.920 --> 0:17:43.399 been able to accrue at least a meaningful amount of 0:17:43.440 --> 0:17:46.760 savings towards the down payment. Right and in particular, Matt, 0:17:46.800 --> 0:17:50.640 you mentioned pushing people towards the number, that's not necessarily 0:17:50.680 --> 0:17:54.359 a hard and fast thing. We think it works better 0:17:54.440 --> 0:17:56.880 for people for so many reasons, right, uh, to get 0:17:56.920 --> 0:17:59.359 to that market, it allows people to avoid p M. 0:17:59.400 --> 0:18:01.680 I can add quite a bit to your monthly payments, 0:18:01.960 --> 0:18:05.359 roughly one percent of the overall cost of the mortgage annually, 0:18:05.560 --> 0:18:07.600