Author Topic: 1st time home buyer looking for any words of wisdom...  (Read 6658 times)

remaofaes

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1st time home buyer looking for any words of wisdom...
« on: February 27, 2015, 12:26:36 AM »
Hi, I've always appreciated the folks on this forum, but have been sooo busy lately I haven't been able to visit much recently.
At 41 y/o I am finally ending my search & travels and am purchasing my first house here in Portland, Or.  I will be closing on the house next week and am buying in cash. I will have somewhere around $95,000 left in my back account after buying the house.
As a first time home owner, I don't know much about things like home insurance and such. Any advice on that would be appreciated!
I am planning on turning the home & property into my urban homestead using the 6000 sq/ft plot to grow food, compost, line dry clothes, etc, etc...
It's been a long time coming, traveling, searching, planning, & dreaming about having my small home on a nice size plot to do my homesteading. Hard work is ahead, but it's the hard work i've been dreaming of doing.  Any advice, or words of wisdom would be much appreciated! Thanks!!

surfhb

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #1 on: February 27, 2015, 02:46:43 AM »
Can I ask how much you paid and what area and why?   I'm also looking in the Portland area.

Good Job!!

chesebert

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #2 on: February 27, 2015, 03:56:37 AM »
Why pay cash for primary residence with the current rate?

2Birds1Stone

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #3 on: February 27, 2015, 06:57:19 AM »
Why pay cash for primary residence with the current rate?

Unless there are some circumstances you are not sharing I would have to ask the same question, even getting a 15 yr note with 20% down would get you a great rate, increase liquidity, and you should easily be able to get over 3-4% ROI in a conservative allocation over the next few decades.

ShoulderThingThatGoesUp

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #4 on: February 27, 2015, 07:17:45 AM »
Some people feel better not having debt. I'm one of them, I bought a $175k house cash last year.

HAULIN3

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #5 on: February 27, 2015, 11:24:26 AM »
In my opinion if you think getting a mortgage and "investing" your money instead, isa better ROI, you are leaving out risk... I love the idea of  not owing on a mortgage.  Such an awesome feeling that must be.  You just don't know what could happen with investments.  Just My opinion though

Retired To Win

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #6 on: February 27, 2015, 09:30:42 PM »
On your home insurance, shop it around for a good price.  Particularly, get a price quote from the company from which you buy your auto insurance.  Most carriers will give you a big discount for carrying both policies with the same company.  Also, don't be afraid of having a higher deductible if it cranks down your premium enough.

And, I am assuming that you have had a licensed/certified home inspector go through the property with a fine toothcomb.  That inspector is the person that is going to find all the hidden problems before you close and while you still can get the Seller to take repair responsibility for them.

Good luck!

remaofaes

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #7 on: March 08, 2015, 12:12:42 AM »
Can I ask how much you paid and what area and why?   I'm also looking in the Portland area.

Good Job!!

Thanks! Still waiting to close, but the house is in the Montevilla neighborhood.

remaofaes

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #8 on: March 08, 2015, 12:15:22 AM »
Reasons why I bought in cash instead of getting a loan and investing:
  • I hate debt
  • I don't have a job, so probably couldn't get a mortgage
  • I have yet to learn enough about investing to feel comfortable, but hope to start learning soon
  • I hate debt

lostamonkey

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #9 on: March 08, 2015, 12:21:12 AM »
That's fine but you have to realize that you added a few years to your FIRE date by making that choice.

remaofaes

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #10 on: March 21, 2015, 12:46:21 AM »
That's fine but you have to realize that you added a few years to your FIRE date by making that choice.

I don't think I would be able to get a loan without a job.  I like to think that my other mustachian habits (like growing food, riding bicycles, etc etc) will make up a bit for my financial ignorance, at least until I educate myself more in that realm. 

Abe

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #11 on: March 21, 2015, 01:22:29 AM »
When I first bought our condo, I checked all the plumbing fixtures and exposed piping for small leaks or poor seals. Also check all windows and exterior doors for drafts and weatherstrip them. Your inspector should do this for you, but go with them through it so you know what to look for down the road. Water-related damage is easily preventable in most cases and the most annoying to fix. Weatherstripping is quite possibly the cheapest way to save money on a house. If anything needs fixing now, get the costs deducted from your closing price especially since you are paying in cash.

dcheesi

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #12 on: March 21, 2015, 06:13:36 AM »
Reasons why I bought in cash instead of getting a loan and investing:
  • I hate debt
  • I don't have a job, so probably couldn't get a mortgage
  • I have yet to learn enough about investing to feel comfortable, but hope to start learning soon
  • I hate debt

No job, 95k in the bank (after purchase)... I assume you have some other source of income lined up? Otherwise I would hesitate to sacrifice a big chunk of my liquid capital until I figured that part out.

kpd905

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #13 on: March 21, 2015, 06:38:09 AM »
That's fine but you have to realize that you added a few years to your FIRE date by making that choice.

I don't think I would be able to get a loan without a job.  I like to think that my other mustachian habits (like growing food, riding bicycles, etc etc) will make up a bit for my financial ignorance, at least until I educate myself more in that realm.

How did you save up enough cash to buy a house without a job?

remaofaes

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #14 on: March 21, 2015, 12:43:28 PM »
No job, 95k in the bank (after purchase)... I assume you have some other source of income lined up? Otherwise I would hesitate to sacrifice a big chunk of my liquid capital until I figured that part out.


How did you save up enough cash to buy a house without a job?

Now that I'm settling, I'll be lining up some income options.  I was a public school band director for years & play a myriad of instruments that I can private teach. I have an BA from Berklee College of Music & a MM from The Boston Conservatory.  Before I was a school band director I had 55 private students a week. I hope to get back to that.  I also mainly play jazz guitar and in the past have backed up a female vocalist in a jazz duo setting at restaurants and pubs.  Being certified as a teacher, I shouldn't have problems occasionally substitute teaching in public schools as income is needed, although would prefer not to.
I plan to garden my entire land and hopefully grow tons of food, trade food (I live in an area where lots of people are homesteading) and maybe even sell some produce to the local fine dining establishments of which there are lots in portland. 
Also I'm 41 now, but at 55 I'll have a pretty decent (to me) monthly retirement allowance to draw on. 
I'm kinda excited about embarking on living my simple life on my urban homestead and making it work.  I see where some of you folks are trying to be helpful but I also kinda find it weird that I'm feeling some doubts on this site where I thought I might feel at least a bit more encouragement. Maybe that I've disclosed more I that clears some things up, or maybe it will just confirm to folks that I'm screwed, ha! Either way thanks for the thoughts!
« Last Edit: March 21, 2015, 12:45:23 PM by remaofaes »

mrshudson

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #15 on: March 21, 2015, 01:24:53 PM »
Human nature to cast doubts, always a bitter pill to swallow. Human nature also, to seek validation. :)

That aside, OP, have you read/encountered Jacob's blog, Early Retirement Extreme? I find his voice more mature than most early retirement/personal finance writers - MMM included. May want to go have a peek if you are interested. I believe he considered himself "retired" and was able to live off of $7,000 per year (his wife works/worked, and the $7,000 includes only his share of the expenses).

At a 3.5-4% safe withdrawal rate, you need about $200,000 saved/invested to theoretically live off of it forever, to draw $7k to 8k per year. I believe that's exactly what Jacob did.

Housing is just one piece of that puzzle. You indicate that you would homestead and grow your own food, that will help lower your annual expenses.  But basically, if you haven't encountered this "advice" yet, you need 25-30 times of your annual income invested before you can consider yourself retired.  If you don't add to your 95k capital in the bank, you can invest it and theoretically withdraw $3300 per year, before tax and not deplete that 95k during your lifetime. With your house paid off and assuming $300 per year that you would need to maintain your garden (seeds, supplies and the like, assuming you are able to get your own rich soil by composting and minimal watering needs in Portland), you have about $ 3000 left out each year. Is that going to be sufficient is a question that you would have to address/answer. But by the time you turn 55, if you have, say, 200,000 invested, you can draw may be 7000 each year and not deplete that fund.

ClaycordJCA

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #16 on: March 21, 2015, 08:27:29 PM »
As someone said, shop around for insurance - get quotes from different companies at different deductible levels. Get the insurance so it is in place as soon as you close. Don't want to risk a fire or other loss and being uninsured. Also be aware that your standard homeowner's policy will not insure against flood or earthquake.  Those are extra. 

Emg03063

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #17 on: March 22, 2015, 03:24:03 AM »
When buying a house with a mortgage, the bank will require title search and title insurance.  Not necessarily done on a cash deal.  I don't know if lawyers are customarily involved in the state where you are closing, but if not, it might not be a bad idea to have one review your contract.  Real estate is a very local thing, and making sure your ownership of the property is as real as you think it is is not a bad idea, especially if you don't have a big mortgage company forcing that due diligence to be done.

deborah

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #18 on: March 22, 2015, 03:32:48 AM »
Well, you sound like you might be set for life, if you can live of the pension you will get in 14 years, and can stretch out your $95,000 to cover 14 years! Especially as you will have students beating a path to your door...

Good luck with making it all happen!

remaofaes

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Re: 1st time home buyer looking for any words of wisdom...
« Reply #19 on: March 23, 2015, 11:53:30 PM »
Thank you folks for the thoughts!!
Thanks medusa for reminding me to check in w/ Jacob's blog, as it's been a while since I've stopped by there!
And yes deborah, that's exactly what i'm hoping will happen! Thanks for the luck wishes.
Btw, the house is already closed on and in oregon we have "title insurance" w/ a Title company that ensures all that stuff is taken care of. So, I now own a small house on a decent plot and will be able to get in there soon and starting living my homesteading dream life!
Thanks again for all the thoughts!!