We are First Time Homebuyers – Part I – The Reasons

Well, mi amigos, we did it. 

We are officially first-time home buyers and closed on that badass bitch on March 12, 2021. 

Whew… (picture of my hand swiping my sweaty forehead like one of those over emphasized cartoon images inserted here).  That was not a fun process and I hope I don’t have to do it again for a very… very… very long time. 

Yes, we are now a true COVID experiment.  Hahaha. 

What the fuck did I just get myself into?  Soul crushing debt, millions of endless side projects, hidden catastrophes peering around every new hallway corner at me like Gremlins sharpening knives? 

Maybe. 

Have we made it?  Is the American dream now complete?  Golden halos sitting upon our noble brows like gleaming crowns to the next caste level in life? 

I don’t know.  I’ll let you know some day down the road.  But my best guess is probably not. 

Am I signaling superficially to the world all my insecurities hidden by superhero corporate accomplishments and the greatest success story ever? 

No.  My fixer-upper in suburban America definitely does not do that.  I think that’s pretty safe to say. 

Alright, I had to start off with a little fun to break the ice.  But what the Q-FI family is doing, is embarking on a new adventure. 

For the extremely savvy and adept – or simply those that still have their eyesight, you might have picked up on the title that this will be Part I of II… and maybe even III… we’ll just have to see how these first two go. 

So let’s get into it. 

There’s really two parts to the homebuying experience that I think are important to expand upon: 

1. The lifestyle choices – the reasoning behind the decision 

2. What we actually did – actions speak louder than words 

Today is part I, me trying to explain to you why I just made the largest purchase of my entire life at such a late stage in life (relatively here, no offense to anyone buying a home for the first time in their early forties and on).  Which essentially, this will be a tirade that you, need to do you, and the buy vs. rent debate is really just a figment of your imagination – It’s like asking would you rather have a dog or a cat?  I don’t know.  They’re two entirely different species! 

So, without further ado, let’s begin. 

I think it is spoken by ancient tongues around selective campfires in hidden jungles the lore of the ultimate FI debate: should you rent or should you buy.  It has already been written in the blood of better men than I, what you should do, when you should do it, and with whom. 

However, here’s my problem.  How the fuck is this even a question?  Let’s just ignore the rent side of the equation first.  Pretend that option doesn’t even exist for a moment. 

Oh yeah, I forgot to mention I’m talking only HCOL areas.  It’s important I interject that here.  If you live in a LCOL area, then you should already be FI.  Shame on you if you aren’t already… hahahaha.  J/K.  I’m a dick, but not that much of a dick. 

To each their own. 

Here’s the thing with real estate; plus, another side bar – you should never believe anything I ever say.  However, I have spent most of my career on the business side of real estate, not residential that is.  So, I might know a little bit.  But only a little, don’t go being all gushy and giving me credit here.  Be sharp, agile and suspicious my gullible reader. 

Back to my tirade… 

You can’t compare properties on the same coast.  You can’t compare properties within the same state.  You can’t compare properties within the same county.  You can’t compare properties within the same city.  You can’t compare properties within the same neighborhood.  You can’t compare properties on the same street. 

Yet, everyone will tell you that you can. 

Just like every human’s DNA, every piece of real estate is unique.  No two pieces exactly the same.  Even two houses sitting right next to each other can be very different. 

There will be algorithms, apps, appraisal methodologies that say you can.  But here’s the basic truth that everyone seems to forget.  Your property is worth what the next emotional nimrod is willing to pay for it. 

That’s it. 

I drop the mic. 

You can do all the research and data analysis in the world, it all boils down to that simple fact – what will an insecure, fragile, illogical Joe Schmo pay for my property? 

 So, if that is the case, if emotions and imaginations running wild are the key metrics of value for home buying, how do you ever compare pieces of real estate or get an apples to apples view of rent vs buying? 

My answer is, I don’t think you can.  But be my guest.  Go for it.  Knock yourself out. 

I’m sidestepping the math argument, for the reasons above.  I know, it’s an absolute cop out.  But it doesn’t really matter in my case because I never trust math to make a decision.  I’d rather use my unstable and egotistical mind to make whimsical decisions like a riverboat gambler to determine my Iliad fate.  Hahahaha. 

Alright, so after I just burned 750 words with gibberish, let’s take a look at my lifestyle decisions behind buying in an expensive HCOL area so that we can hurry up to part II next week and get into all the fun in a kill-your-neighbor-and-piss-on-their-grave-to-close red hot residential real estate market. 

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The Q-FI household, made the decision to buy a home for the following reasons (most likely in this order of importance… or somewhere close to it.  I don’t like being held to ultimatums.) 

1. Space:  I’ve mentioned before that the wife and I have made the decision to foster.  This lifestyle choice means we need more space from our one bedroom/one bath 800sqft rental of the past 10 years.  It was a great little backhouse, but with the work-from-home era beginning, we need additional bedrooms to make a beginning family work. 

2. Location:  With the fostering decision came a few other lifestyle related decisions.  We wanted to be able for my wife to leave her toxic job and take a stab at being a stay-at-home mom.  Only living off one salary and being closer to my work so I can cut down on a 75-mile round trip commute, were also motivators for finding a new location with a cheaper cost of living.  Just for perspective, our same 4/2 house we just bought without moving 30 miles away and closer to my office would have cost $500K more in our previous city.  That’s a big chunk of change to me.  Plus, only being on one salary soon, I needed to cut costs somewhere.  Where we actually bought sure as fuck wasn’t cheap (we moved from an extremely high cost of living city to an only high cost of living city – hahaha – oh, first world problems). I still have a hefty mortgage (within reason of course), but it was way more affordable than the city we had been renting closer to the heart of LA.  Moving farther out to the ‘burbs made buying vs renting a much more viable financial decision for us. 

3. Security:  A landlord at any time can tell you your times up.  Something different will be done with this property and you need to move.  Or raise the rent to a level you don’t’ want to pay.  In starting a new family, it was important for us to be able to control our own destiny so to speak.  We wanted the peace of mind knowing that we couldn’t be forced to move by a landlord. 

4. Control:  When it comes to a house, I’m the outside person (yard) and my wife is the inside person (interior decorating).  As you probably already know reader, with any property, renting or owning, there are things you want to change.  In a rental, it’s hard to invest your time and money into improving things (whether that be landscaping or interior upgrades) when you know you won’t be living there forever.  Having the control to do what you want with a property and reap the benefits of those improvements if you do sell someday, was also important to us. 

5. Very low interest rates/affordability:  Although seeking more space was our ultimate driver, locking in a low interest rate was also on my mind.  You can’t pick the market you decide to buy in or have a crystal ball to know whether it was a good short-term decision.  But if you’re making a decision for the long haul, it shouldn’t matter what the market is doing.  However, interest rates will affect you for the long term.  When we’re talking 25 basis points on large sums of money, that savings can be in the tens of thousands of dollars way down the road.  Knowing that locking in such a low rate for 30 years helped nudge me toward the buying side as well, even though the market was on fire and bidding wars were a free-for-all. 

6. Predictability:  In order to really plan our FI timeline/flexible range, yes, you can estimate rents and put in placeholders.  But to finally lock in an interest rate, have that set mortgage, now I have predictable details that I can run numbers and different scenarios with.  Inflation isn’t as much a factor since I have home appreciation to offset it than it would have been with rental increases (sure, other stuff goes up as well, like home fixes and maintenance, but having that fixed payment now takes some uncertainty out of the game). 

7. Pride:  I’ll admit it.  I won’t lie that it does mean a lot to me owning my own home.  There’s just a flavor of vanity and presence of accomplishment that tilts the scales in my favor.  It just feels right.  This is superficial, this is signaling, and this is petty.  But people like to feel good.  They like to feel validated, accepted and that they belong.  For how stupid this may sound, it feels good to finally be part of the club of homeownership.  

I want to be clear that most of the reasons listed above were based off LIFESTYLE DECISIONS and not the math.  I know that the majority of people care more about the #’s than the “why” part, but I feel it is necessary to list all of those reasons so that you, dear reader, can understand why we made this decision to take on a large mortgage (probably one of the biggest variables in determining that cloudy and elusive “when” you will float off into that FI landscape – successfully and smugger than a burglar who just robbed your home). 

Whether you would have done the same, or don’t like my reasons, is up for you to apply to your own life situation.  Feel free to disassemble, slice or judge any of them whichever way you want.  If they don’t make sense or seem stupid to you, then hopefully laying out our logic will help you make a better decision in your own personal situation of doing the opposite. 

For me personally, understanding someone’s “why” helps me assess my own life much more than just seeing numbers on a page. 

However, to provide some context on the numbers, from a strictly financial perspective, renting would still be the superior financial decision.  The rents on similar houses in my area would be close to covering my mortgage payment and property taxes.  However, you’d lose out with the house maintenance costs.  Maybe home appreciation in CA would balance this out – now we’re splitting hairs – but simply with closing/transaction costs, furnishing and upkeep, you would be well behind for a while on the owning side before you could ever catch up to the advantage of renting by appreciation. 

The caveat with the numbers leaning towards renting though – there are not many good 3/2 or 4/2 single family homes to rent in the areas I wanted to live.  Most of these homes I looked at, would have been an upgrade in space from our current renting situation, but not in lifestyle.  These houses were basic, not well upkept, meaning very old styles and appliances, the minimum done for a typical rental – basically, just not desirable homes to live in.  Seeing these options was disappointing to me and made our potential trade-up in space almost look like a downgrade.  And this was surprising to me.  I began looking at rentals in early 2019 and it’s remained a poor market since then.  I don’t know if that is demand or what, but I hadn’t expected how limited the options were on renting single family homes in Southern California. 

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I think Part II will be next week, but no guarantees.  I haven’t written it yet and things seem to shift daily around here now being two full weeks into the new home.  But I’m going to give it my best shot only because I really like you dear reader.  Just rest assured, you’re going to get the good ol’ Q-FI-anito VIP treatment. 

Happy Easter all and I hope you have a relaxing Sunday. 

-Q-FI 

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Do you remember when you bought your first home?  Remember that first week of moving in?  Remember your biggest reasons why you bought it?  Enamor me with some tales of tribulation my wise, thoughtful and experienced reader.