September 18, 2017

Living spaces: how much and what do you need?

Once upon a time, and as recently as this spring, I wanted a house with at least five rooms: three bedrooms, an office, and a library. Maybe four bedrooms. Wide spaces, with room to stretch your arms out wide and wiggle your fingers. Then to race the dog down the hallway and see who successfully skids to a stop before slamming into a wall. Dreams of a country girl.

Thus I confess, occasionally I get bitten by the jealousy bug when friends buy a 5-7 bedroom colossus on a 10,000 square foot lot for much less than our down payment.

But the reality of our lifestyle (low-key, low-energy, focused on financial freedom) doesn’t line up with the commitment of such mansion style living. And just as important, the reality of where we’ve chosen to make our lives means that we’d pay dearly and be mortgaged forever and a day if we were so very expansive when we finally found our next home.

On the lower end, the average price per square foot ranges from $500-700 hereabouts. On the higher end, I’ve seen $900-1000 per square foot.

At these prices, we would be giving up our dream of being financially free for a house.

Now, if ever there was a hermit who could flog down that cost per hour-lived-in, I’m your daisy. It took me two and a half years of working solo before I even considered it might be a good idea to see people occasionally. Maybe. (No.)

Thankfully, sense and a bit of luck prevailed – we didn’t paying our maximum bid on the purchase, but we surely paid enough that I’m simmering some ideas on bringing down the principal, stat!

Even at that cost, we didn’t get the sprawling ranch home with a moat, and carriage house (and murder holes) I fancied.

We’ve maybe 1400 square feet. It makes up 3 bedrooms, 2 bathrooms, and a wee sma office. I have and would give up a lot for the balance of comfort and safety (physical or financial) of my family but if either of us ever have any choice in the matter, two bathrooms is a must. No coveted laundry room, unfortunately, nor my wished-for piano or library.

In short, it is enough room to live in, grow a little, host a friend or three temporarily, and grow old together without fighting over whose turn it is to clean the sixth bathroom.

We have a lovely bit of yard where I can have micro container garden adventures, and Seamus can sun his bones. We splurged on the Fancy Stove for my cookery and a bench for my bath because it’s every day now that I’m too tired to shower. PiC got to pick all the design and color elements so that this is a home he’d be proud of, though it was never designed with showings in mind. That’s why, though I’m proud of the work we did, I won’t be sharing pictures. We were making our home, not a showcase.

I have mild pangs of regret thinking we should have held out for something a touch bigger, a few more amenities, a few less compromises. But PiC is confident this is what we need and I trust his judgment too. Besides, what a wreck I’d be if I had to build my dream library during this very small window of time we had to work on the house!

Anyway this is all luxury, in the end. I grew up poor in Southern California so space to myself still feels like an amazing thing. A whole house for just my family is like the icing on the icing on the cake.

  • Age 1, our family of four shared a 2 bedroom house with four other families.
  • Age 3-12, our family of four shared a 600 square foot, 2 bedroom, 1 bathroom apartment on and off with single family members. We had one room, they had the other.
  • Age 13-17, our family of four lived in a 1300 square foot house with three dogs.
  • Age 17-now, our family of four, then three, then two, were in a 1500 square foot house with three, then two, then one dog(s).

Now we’re a family of three humans and large dog going from 1000 square feet to 1400 square feet, with enough room to comfortably lodge our rather frequent visitors.

PiC’s probably right, this is the right place for us. We were told to only list three Must Haves and we ended up getting 15 of our 20.

We can make this work!

:: What’s your living space minimum/ maximum? What are your dealbreaker amenities? 

September 11, 2017

Selling our home in California: Part 2

Preparing the place

It takes me an hour, after several weeks of packing and shoving things into temporary storage, to hide away all proof we actually live here.

I could maintain a show ready house at all times if I got rid of a full storage unit of furniture, books, toys, comic books, records and junk, and I spent 2 hours tidying and cleaning every day.

No, thank you.

I fully intend to get rid of a good portion of that stuff once we’re moved. But as much as it’s nice that the floors are gleaming and all surfaces are clear, the result doesn’t bring me nearly as much joy as spending the time on something else instead. Like cooking for my family!

I managed to do take out on paper plates (the imagined “easy” way to do it) exactly once during the show season. The very next day I couldn’t bear it and whipped up a nutritionally balanced and even good-lookin meal. That’s where the satisfaction’s at!

Decisions with the California timeline

Our market in the Bay Area has cooled from a white hot frenzy to just a frenzy. The spring and summer were literally unbelievable. Homes were selling a couple days after being listed, even before the scheduled open houses!

Our sale period going into the fall, delayed from the original plan to list in the summer because there was a good solid chance I’d be checking myself into an institution otherwise, meant that we expected a slightly more sedate pace.

Even the slightly more sedate pace meant a great deal of planning for a ton of activity in a short ten day window, though.

First, identify all repairs needed. You wouldn’t think it was necessary given how much some of the literal teardowns were going for but again, we missed that period.

Second, gather all ye olde paperwork. We had seller disclosures to fill out, HOA documentation to hunt down, and a stack of papers to sign.

Third, this is where the timing gets tense – in the same week, and in this order: get the repairs done, the photographer in to take photos for the listing, decide on a listing price and dates and times of your open houses, write the MLS listing and post it, get the inspection done (why? See here), have the place deep cleaned and from there on keep your home spic and span because interested buyers may schedule a visit any time after you’ve listed.

*deep breath*

We listed on Monday, had a broker tour and inspection on Tuesday, and open house on Wednesday, Saturday and Sunday.

Offers were due by Wednesday, 9 calendar days after listing.

You wouldn’t think that we would have time to take a breath, much less be worried, with such a compressed timeline. But I’m a pro at multi-tasking so not only was I keeping our home show-ready, my family fed, my work done, I was also being a Nervous Nelly and officially a wreck by Wednesday morning. I was convinced that my timing, and the horrible political situation, combined to mean that we didn’t have any motivated buyers and our pricing strategy was going to come back and bite us.

Thank everything (and everyone rooting for us) that I was wrong on that score.

The negotiation

We had some very solid offers. In keeping with the cooler market, though, no all cash offers for us.

We had a handful of offers, two stood out as good offers. They were good for different reasons and also not good for different reasons. Our strategy, after discussing all factors: price, contingencies, strength of the likely loan applicant, the lender’s experience with this area (because we’ve had some regional difficulties that have tanked loans in the past), was to ask the second highest offer (B) to beat the highest priced (A) offer.

I know that seems counter-intuitive but this is why it made sense: A’s lending situation seemed iffy. Asking someone to adjust their lending situation isn’t an easy ask, though, and the agent was also insisting that we do some unnecessary work, citing (wrongly) mandatory regulations which we already met. B’s offer was weaker because it had more contingencies and a lower price, but those are things the buyer can personally  choose to change if they really wanted to. Offer B also wasn’t wrongly insisting that we fix things that aren’t actually problematic, and their preapproval was with a reliable lender we’ve already worked with in the past.

Our other approach was to have our agent initiate a conversation instead of just writing a counter and sending it without comment. This allowed us to informally negotiate and come to an amicable agreement quickly and easily.

B’s agent and our agent hashed out the details and our agent came back to us with a much cleaner proposal. The follow-up matched the money A was offering, didn’t come with extra work, and conceded the appraisal contingencies. Given the pre-approval with a reliable lender, keeping only the loan contingency worked for us so we wrote up the official counteroffer and by the next morning, we had a ratified contract.

You wouldn’t think a “small” thing like asking for one repair would be a dealbreaker but in this market, it can be. With all the plates that we’re spinning, I don’t want to take on even half another thing to worry about, and their request wasn’t a small thing.

Now, what’s next? 30 days until closing.

We have to be appraised, their loan has to be approved, we have to finish work on our new place, and we have to move by the date that we close escrow.

There’s going to be a lot of breath-holding while all this is happening, you already know that. Even though this seems like a good buyer and loan situation, anything can happen and that little catastrophizing prepper voice of mine won’t stop reminding me of that until the money is in our hands. Thankfully it’ll be evened out with keeping busy and reminding myself that it’s just a tense time but worrying over it won’t help anything.

I haven’t even touched on how much I hate change, so this entire process has had all my switches flipped to “NOOOO” for weeks. That’s probably why the catastrophizing voice gets so loud these days.

:: Have you ever had to sell a home before? What’s your least favorite thing about moving? Most  favorite?

Read Part 1!

August 28, 2017

On the home(buying) front: getting the work done

Interrupting this regularly scheduled post to say a few words about Hurricane Harvey. This weekend has been physically critically bad for me and it’s even worse for the people in Houston who were hit by the storm. If you want to help, please consider giving to some of the organizations below that I’ve found while reading the updates on the storm and rescue efforts. I know the Red Cross is an easy choice and if that’s what you can do, great. But local and smaller orgs also do important work and don’t have the same funding opportunities so I’m highlighting those.

Texas Diaper Fund. I’m hearing that disaster relief agencies don’t provide diapers. Babies always need diapers and can you imagine the added stress of losing your home and needing to find basics like diapers and formula? Using cut up materials like shower curtains after Hugo gave the poor babies horrible skin infections – let’s make sure they get the supplies they need.

Portlight focuses on disaster relief for disabled people. It’s hard enough being rescued or helped when you’re able bodied. Even worse when you’ve lost your mobility aids or badly needed medication or other critical to survival aids. I know that one day without my pain meds would be excruciating and I’m not even among the worst off.

Team Rubicon is a team of veterans who help on the ground and have a special fund for those affected by Harvey.

Humanity First is a disaster relief NGO that’s partnering with Muslim Youth USA to help in Houston.

And of course animals are always displaced by these natural disasters so thank goodness we have people helping here as well:

SPCA of TexasHouston Humane Society, Austin Pets Alive!, San Antonio Humane Society

Notes – the best thing to do if you’re not local is give money so that the people on site can easily get the supplies they know are needed. Donations of actual things being shipped in creates more work for the volunteers who have to figure out what to do with them.

***** Back to our regularly scheduled post *****

I can’t even tell you how tired I am.

I could try, but words haven’t been invented for the exhaustion created by taking on a massive home renovation, selling the home you’re living in, working full time, while raising a toddler and tending to our senior dog, as a chronic pain and fatigue person.

If such a word exists, it’s probably in Japanese or German. With JB’s language skills burgeoning, who knows, maybe we’ll discover that word soon!

I’ve spent several days literally shaking, like my glucose levels just can’t perk up, gritting my teeth to get through the day, and hoping that it’s just stress and fatigue that’s affecting me. They definitely are affecting me, I’m just hoping that’s the only cause of this marrow-deep, three tons of pressure crushing my bones feeling.

The work itself

Our biggest drain is all the decisions we have had to make every single day. For example:

  • where to place every electrical receptable,
  • where to place every single light fixture,
  • picking every light fixture,
  • figuring out what our style is we stand amidst the dust and the bare walls,
  • buying all the cabinetry, hoping the colors match what we’ll have to pick later for our walls, tiles, wood, or carpeting that we can barely conceive of right now,
  • picking said wall paints, tile styles and colors, wood, and carpeting,
  • deciding what appliances we’ll take or leave in the old place, so that we buy the right things for the new place.

Each decision by itself isn’t a big deal but it’s a relentless march of several decisions a day. Day after day, it’s been decision after decision, big and seemingly small.

Even the smallest decisions can have huge impacts, like when we decided to place our receptacle on that part of the bath wall. What we didn’t realize was that it would impact the height of the side splash, which affects the placement of the mirror, and so the mirror had to be smaller.

Or like the walls in one room aren’t straight because this is an old house but we didn’t realize it until we had already purchased our flooring and so the wider floorboards look terrible. It’s going to be fine in the end but each hiccup takes away precious brain processing space.

The money

We’ve burned through all our cash savings now and have blown through the personal loan fund from a very dear friend. We’re incredibly lucky to have this resource, and incredibly grateful, and you bet your buttons that my checkbook is ready to repay them as soon as we have the funds back.

My stash is keeping me sane, but it’s still frustrating to spin our wheels financially. We can’t do anything but keep trying to get the work done here, the work done at work, and not spend beyond reason. We are spending, though. We’re spending on the house, we’re spending on selling the old place, we’re spending to keep ourselves fed day to day.

We’re not buying any more than is strictly necessary for a functional house. It’s going to be prettier than I was looking for, but these were all careful selections of things that were needed to consider the place finished. We couldn’t very well run around on a house with no floor!

Seeking serenity

I’ve been working hard at maintaining my Zen. Really really hard. Lots of deep breathing, lots of biting back grouchy words when I’m about to lose my temper.

I’ve inherited two legendary tempers, it’s taken decades of practice reining it in. If it should get loose, watch OUT. Thus, legendary control, my friends.  Fraying a bit around the edges, but still holding on.

The occasional craving is now being entertained. We bought the fancy cheese and it’s a minor miracle we still have some Brie in the fridge. PiC was shocked to come home and find half a wedge left.

It feels like this slog is endless and that’s what’s kept me going. As long as it felt like I had time to get it all done, the stress was about keeping a lid on my impatience to be done. Once we hit the halfway point, though, it meant that the pressure was really on to see it through to the end.

I’m amazing at getting through things, but I’m not great at being finished with them. In this case, it’s because being finished with the reno means a whole new world looms in front of us: moving, leaving our home, making a new home, and CHANGE.

I hate change. My oh my do I hate change. Isn’t that rich, coming from someone who works on change every day?

:: Do you love or hate change?

 

August 21, 2017

Selling our home in California: Part 1

Part 1 of selling our home in CA Do we rent out or do we sell?

I was sorely tempted to keep this home as a rental property but ultimately decided against it for several reasons:

  1. Because of our refinance last year, our monthly costs are quite, relatively, low now. All told, our mortgage, HOA, insurance, and taxes run about $3350 per month. A home this size would probably be renting out for around $3500-3700 per month. That’s a cash flow of $179 to $379 per month. That’s not nearly enough to cover the maintenance and have a real profit margin. The two first years of cash flow would have to be banked against maintenance costs. That could work if I wasn’t so risk averse, we didn’t have any other drains on our income, and we had a comfortable savings cushion to cover our new home expenses. Which leads me to Reason number 2…
  2. We’re comfortable right now but not once you subtract the new mortgage and reno costs. We need the profit from the sale to recoup that spending. Short term thinking, admittedly, but I’m ok with that given Reasons 3 and 4.
  3. Both our CA properties are in the worst subduction zone possible. If and when the big one hits, both properties are highly likely to be completely destroyed. I’m not willing to bank my sense of stability on hoping there’s no major earthquake until we can easily afford the deductible on our earthquake insurance for two properties, and deal with the pain of rebuilding both. One will be painful enough.
  4. I don’t want to be a hands on real estate investor. I’ll do the accounting and management from afar but if we owned a property as nearby as this, I would feel compelled to do much of the property management myself. At this stage in life, that’s not something I’m prepared to do. The other option, hiring a property manager who would take 10% off the top, means the cash flow would be even less. In fact, that expense would drop our cash flow down to nearly nothing.
  5. After five years, we wouldn’t even qualify for the cap gains exclusion.

What’s the point, then?

I know that this is the right decision for us even if I am grumpy that the math doesn’t work.

Tax implications: Capital gains exclusion

I know, this may not be the first place your head goes to when we’re talking about getting ready to sell your home but this is a huge one in our state, given our market. Once I was sure that selling was the right way to go, I went straight to the IRS for the goods to make absolutely sure our sale qualified and that we were eligible for the exclusion.

How your sale qualifies. Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if all of the following requirements are met.

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
  • You didn’t acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
  • You didn’t claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

All of these are true: PiC purchased this home long before we married, we’ve both lived here for much longer than the 2-year use requirement. We file jointly but I had to be sure that only one of us had to be an owner for the 2-year ownership requirement because we left the title in his name.

Marriage. Married individuals may exclude up to $500,000 of gain if they file a joint return and neither spouse excluded gain on the sale of another home within a previous 2-year period. If one spouse meets the ownership requirement, both are considered to have met the requirement.

I’m still working on whether or not we are exempt for CA state taxes but I’m reasonably certain that we should be.

Hiring an agent

I know most PF bloggers would say “go take a real estate course, and sell it yourself!” But I’m not (mostly) an idiot. That works for people who don’t have serious and severe limitations on their time and energy. I’m hiring someone to perform a service and to spare me the real pain of having to learn an entirely new skill in a compressed period of time.

I can take the real estate course when I’m not juggling fireballs and spinning ten plates in the air. Later.

We had a great agent referred to us by our friends who were really happy with her services, twice. After meeting with her and chatting by email, we determined that her rate and style were in line with our expectations.

Out of her fee, she would be paying for all marketing, the deep cleaning service, the photography. We’re paying her to advise us of regulations, the best way to market the sale, strategize pricing, do all the marketing legwork, and handling all our negotiations.

She’s the antidote for needing to sell while suffering from a fair amount of information overload, and serious decision fatigue. She’s been incredibly responsive and flexible, going to great lengths to minimize the disruption to our lives, which was highly appreciated considering how much we’re keeping moving at the same time between this sale and our renovations.

She’s even been helping with the seemingly endless packing and transporting furniture to get this place show ready. But that leads into a whole other story, for a whole other day.

:: Have you ever done a FSBO or been tempted to? Or did you go the agent route when it’s time to buy or sell? How was that experience?

July 31, 2017

On the home(buying) front: money choices

The costs to build our future castle (home!) This whole post is going to be so much money. About so much money, I mean. Lots and lots of money. Stimulating the economy beyond anything I’d ever imagined would happen in this lifetime.

Hiring out work

The contractor’s labor, and the subcontractors’ labor, is a set price for the most part. I’m saying up front that we’re paying a premium for the general contractor whom we’ll call Bob and I didn’t negotiate a penny of that. Those of you who know me won’t even open your mouths to ask if I was “too embarrassed” to ask for a discount like some people thought.

It was deliberate. I’m a star performer at work, and I know how to treat them. You pay good money to get exceptional results. You do not nickel and dime someone who is going to play a huge role in quality control, and attend to your every need. That’s the best way to demotivate them.

Every week, my decision and refusal to negotiate his rate proves that Bob is worth every penny. He’s honest, hardworking, prompt to reply to any and all questions (stupid or not), shows up whenever and wherever we ask, on top of keeping the project on schedule. By the way, he wrote up a highly detailed schedule for us to work by. All of that makes him a total gem and a complete anomaly as a General Contractor, from the anecdotes of all the horrified friends and family hearing we were on a tight timeline.

But that’s not all!

  • He advises us on the best places to source our materials and helps us find discounts without compromising on quality.
  • He’s cultivated relationships in the contracting world: he chatted up the project reviewer which resulted in the job being classified as an update, instead of a renovation, and saved us $2700 in permitting costs. I would not have known to ask for that concession!
  • When we decided to save money on one of the “work in every room” aspects of the project (lighting) delaying it for later, he discounted his own rate by $350 to do the full job now. We didn’t ask, he offered.
  • When he made the wrong call on one of the walls, costing us an additional $500 in work, he made up for it by footing the bill for expensive aesthetic work that I wouldn’t have wanted to pay for, but PiC would have wanted.
  • He’s offered us lots of reclaimed and leftover supplies from previous jobs that the owners just wanted dumped. So far, that’s worth a smidge north of $1000.
  • The quality of his work is top notch so we passed rough inspection with flying colors.

By the end of this job, I anticipate that he will save us at least half the cost of his fees by doing stuff like this for us. Then there’s simply no price I can put on the sanity that he preserves by doing his actual services: coordinating all the work, hiring and managing the subcontractors, picking up all the materials that we purchase and checking them for damage, making all the returns.

The power of a warranty

Pretty much everything in this place is old enough to be replaced but we have to pick our battles. The roof is old, the wiring is old, the plumbing is old, the water heater is older, the furnace probably has a beard.

However, our realtor bought us a warranty that will cover all appliances, minor roof leaks, the water heater failing. She’s not so sure how well it covers plumbing because her experience has been that they’re finicky on which bits of pipes they’ll cover. Neither of us are willing to play the odds on whether or not the old wiring will catch fire, either, so we’re attacking those items now.

We’ll cross our fingers that the roof isn’t damaged and the water heater keeps truckin’ – but if it does, the warranty is more straightforward on those.

Negotiating costs

There are two places where we can really run up the bills, according to Bob.

The first is our selection of the finished materials like cabinets, flooring, fixtures, and so on. You can choose a $200 toilet, or an $800 toilet. A $20 showerhead, or an $800 shower fixture. Oh yes, you can spend $2000 on a door! (We did not.)

There’s not a lot of negotiation to be done but there are some bits you can do, aside from asking yourself if you REALLY need that super awesome rain bath showerhead.

  1.  Ask for large volume discounts. Home Depot’s Pro shop gives a high volume discount on any orders that are over $1500 in addition to whatever other sales and discounts you can get.
  2. Ask for small discounts. Our contractor gets a small discount if you use his pro account. We do!
  3. Bob also advised us that you can often request a 10% discount at Home Depot just because if you go to the assistant store manager, or escalating to the store manager.
  4. Ask for discounts just because! I online chatted with the good folks at Build.com to ask if they could beat the pricing I had in my cart and they did.

The second place is scope creep, AKA those AWOs that pop up on our progress invoices: Add Work Orders.

Those come up when you’re taking down walls to studs, thank crepes that you did and howl a few choice curses at the moon for what you found: more dry rot. If you didn’t find it, you would have fallen through the floor in about 8 months. Or your new windows would have fallen out when the dry rotted framing inside turned into a pile of splinters. Or when you realize that there’s black mold creeping across the back walls that the seller’s piles of belongings covered up. These weren’t in your original contract and that’s how the Bobs of the contracting world really make their money.

I’m so grateful that Bob was upfront about this little detail – we restructured our entire plan in the first week based on that advice and the saving is clear.

Spending choices: charge it up!

I could have chased down discounted gift cards to pay for supplies, saving 5-7%. For this project, though, I wanted the price protection from my credit card.

American Express will make it right if a store won’t honor their return policy. If something breaks or goes missing, I have protection for 90 days. We are buying tens of thousands of dollars worth of merchandise. I do not need to expend any personal energy fighting with any single merchant, and paying with the credit card is my insurance against that.

:: Would you (have you) have made any decisions differently? Do you have regrets on hiring someone cut-rate or did you have a great success story in getting a deal?

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