Paul Geromini

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Monday 10 October 2016


It may have taken some time, but I finally have my own tiny slice of middle class pie in the form of a house. And not just a house, but land, and trees, and a strip of asphalt as a driveway. This is the end result of a long, frustrating, vexing, and stressful process that began all the way back in 2014. A process resulting in 50 private house tours and open houses, thousands of real estate listings, and countless sleepless nights. After all that hard work I ended up paying more than I thought I would. I estimated it would cost me $260,000 (with interest after the down payment), but in actually it will cost me $310,000 (+ interest). A difference of $50,000 + interest. I also underestimated my yearly houses costs by about $3,000 (estimated $5,500 with an actual more around $20,000). The good news is I got exactly what I wanted (garage, close to work, decent square footage, gas heat, quiet neighbor hood) with only one draw back (an above ground pool).

Some Thoughts on the Process

1. The time of no financial obligations is over. I now have a very large obligation (a mortgage for 30 years) and monthly bills of various forms. While I hope to pay the mortgage off as quick as I can, monthly bills and quarterly property tax payments are going to be no fun and will reduce the aggressive savings plan I have had up to this point.

2. Dangerous financial waters ahead. While I do have some cushion to an unexpected income loss (read job loss) I will be exposed for a bit to this possibility. This will lesson with each paycheck, but it will always be a possibility until the mortgage is paid and my investments start generating enough money to live off of. That will be some time. A quick review of what can happen if you do not pay is enough to keep me saving for those bills and mortgage payments.

3. There are a lot of hungry mouths to feed when buying a home. Everyone wants a cut of the action. The bank will add on a bunch of fees so you can take out a mortgage, your lawyer has a fee to look over the agreements, the home inspector wants a few dollars for every square foot he or she inspects. It can be a little frustrating to see your hard earned green backs flowing out just so you can buy a house, but they are providing a service, so it was not all a waste.

4. A sense of melancholy. I had thought I would be very happy buying a house, but for a few weeks or so I have felt pretty melancholy about the whole affair. It is nice living very close work to work, and my friends and family are only a 30 minute drive away, but something about living alone with all the responsibilities that comes with that seems to be getting me down. I also have very quickly changed my relationship with my parents. I am less child and more family relation now. With time I think I will feel better, but it will take some adjustment.

5. Heightened cost awareness. I am now very aware that I have to pay for everything: food, electricity, heat. As such I have become hyper aware of limiting when I can these costs. This is good for my bottom line, but perhaps being so serious about turning lights on or off is of little importance in the long term.

Ultimately, I am glad this has all been taken care of, but after exerting so much time and effort what do I do now?

Saturday 2 August 2014

Notes on House Hunting

I have been at the house hunting gig for over a month now and I have learned a couple things I would like to put to words in an ordered list. This is mostly me just complaining so if you have better things to do (which if you are reading my blog you probably do not), go do them.

1. You are buying a house for the next person who lives there.

You cannot just buy a house with only yourself in mind. You have to consider the resell value which means you have to consider who might buy this house from you. This means things like three bedrooms, good schools nearby, a decent neighborhood, is of great importance even if you do not care at all. That two bedroom on a busy road might be nice, but how can you sell that 10 years from now to the family with three kids? This should not stop you from buying a house that appeals to you, but keep it in mind.

2. House hunting is great for nosy people.

The most private place you can have is your home. Now how would you like letting a bunch of strangers tramp around taking a bunch of photos, poking and prodding in all your little hidey-holes. I am just acting in my best interest, trying to find flaws in the property, but it is another magnitude of social awkwardness to look in other people's closets. I also now have a great quantity of photos of other people's houses.

3. House hunting is about convincing yourself to spend more money.

The first time you start considering to buy a house you will arbitrarily pick a number and start to look at houses near that number. For me it was $150k. Every house below that price is a crack house. Every house above that price is a mansion. So unless you want to live like an extra on The Wire, you bump that number up. Then when you are at $200k the houses start looking better, but you also start seeing some real estate euphemisms like 'needs sweat equity' or 'perfect for a diy person'. This basically means the house stands up, but you are gonna have to fix some stuff. I am pretty lazy about things like that so you start thinking well, maybe I can bust it up to $250k and not worry about stuff like that. Houses at this level are nice and even livable for the most part, but they just are not quite there yet. It is like having eggs with no bacon. Either the road the house is on is too busy, it is too far from the highway, it abuts a train track, etc. So then you start thinking, maybe I should stretch to $275k-$300k. Then you realize you exceeded your down payment and bank loan and you have to stop. The point is you can always spend more money on a house, at some point you need to compromise on something that is not the price.

4. The easiest thing you can do is not buy a house.

I visited four houses, and looked at around a 100 hundred online listings at this point. If this were a bar it would be 7:00AM, aka amateur hour. That said, you can always find something you do not like about a house that would make you not want to live there. Chief among them at this point is all the houses in Massachusetts that have oil heat. So many promising prospects dashed because of oil heat. Natural gas is cheaper home owners! Get your neighbors to band together and get the gas company in to install a line. Then sell your house to me for a reasonable price. This is just one example, but it is a whole litany of big/tiny things like this that just make it so easy to not do anything. It is of course not helping that it generally takes me forever to change anything. I literally have worn the same shoes for five years because I cannot be bothered to buy new ones.

5. This task is not exciting, you are not a better person for doing it.

People keep saying, "It is great you are looking for a house at your age." or "It must be fun to go house touring." The last thing I need is more people to inflate my head further. I am not especially smart or good with money, I just happen to be easily amused which means most of my money ends up getting saved. It is real easy to get a house down payment going if you just SAVE MONEY. Everyone also needs to disabuse themselves of the notion that this task is at all entertaining. Every other homeowner must be so much more level minded than me, because I am going mental running through all the possibilities here. This will probably be the most expensive thing I have ever bought. Which means I have to be extremely careful I do not buy a dud or a home that needs a lot of work or a home that will lose all its value or any number of other obvious/not obvious pitfalls I teeter on the edge of falling into daily. I cannot wait until I am done with the whole sordid affair and have to (maybe) never deal with it ever again.

So despite all that complaining I still want to do this. If that does not make you question my mental state, stay tuned readers yet more disasters await!

Sunday 27 July 2014

Why I Want a House

I have started to actually visit houses with the intent to evaluate them for purchase so it seems important that I justify why I am so insistent on buying a house. My reasoning stems from the concrete to the nebulous.

1. A Generally Safe Financial Bet

Lets look at the big picture here: Source

It is a bit misleading to see just the chart so the source bears reading, but for the most part the chart tells a pretty convincing story. Generally the price of a home will rise. The actual realized profit is mitigated by upkeep costs, mortgage interest, real estate taxes, inflation, but in my estimation this is a safe bet to make. In the best case I make some money. If I just break even that is ok too, because then it is like I lived someplace rent free. If I lose money, that is no good, but the market would have to be radically different for the loss to be painful. Not to say that such things are impossible, as evidenced by the downward trend on the graph. If I am going to spend money to pay for housing I may as well try and have something to show for it at the end as opposed to renting where I will have nothing.

2. Good Timing

Refer back to the graph and see how we are on a downward trend. Housing prices now have not yet returned to their 2008 levels. There is no guarantee such a thing will happen, but generally the housing market falls a cycle of boom, bust, recovery. We had our boom, now we are in a bust (slump) where prices are depressed. Eventually, those prices will rise as we start to boom again. Best buy now when the prices are lower and ride the wave up. This is no guarantee, but it is the historical model.

3. I Could Never Live With A Landlord

I have always had a mistrust of authority. This does not carry over into the workplace, as my employer buys control of me through my salary and benefits. But the idea that I would willingly pay someone money and still let them exert some authority of my domicile is not reconcilable. They may be completely trustworthy and reasonable, but I would never be able to fully forgot that this is their place, I do not own it, I have little to no influence over it, and they can do as they will with it (minus certain legal restrictions). If I own a house then the only authority over that house will be me.

4. I Need Space

I have spent my entire life living in a single room. Granted it is a statement taken to an absurd exaggeration, but that is the way it feels. I want space to spread things out. I want an office to fill with my book and machines, I want a workshop stocked with tools and in flight projects, I want a living room I can nap in. An apartment is not going to give me that, or at least my budget is not going to allow for that. I house can give me all the space I will need.

5. I Want To Build A Home

This is where I start to go off the track a little. Clearly if I am buying a house that already exists I do not want to physically build a home. The idea here is I want to build a place for the people I know. We are diaspora, scattered. I want common ground if you will. A place anyone can come at any time. Even more than that though I want people to think of it as their house as much as it is mine. I may be on the financial and legal hook, but I do not want to people think of this place as my home, but as the home of everyone I know.

6. It Is Time For Some Risk

This reason is almost totally devoid from my standard character, but life has just been too safe. This may be my most regrettable reason in the future, but I just want more stochasticity. I want to take the risk that this plan will absolutely lead to nothing but disaster. That is exciting or to put another way exhilarating. I have always suspected I had some well repressed gambling tendencies and this may be an unfortunate time for their presence to be known, still I love the idea of taking a big chance, considering such a huge payoff.