“If you fail to plan… then plan to fail.”
Growing up, my mother used to tell me that. Success in life is granted to those who plan ahead. Even if you don’t entirely know where you’re going–always be aware of where you don’t want to be.
Around January of 2018, the finish line of our debt free journey was rapidly approaching. We had paid off $40,000+ in debt in 18 months, and freed up over $1,500 per month in new income that was previously being used to make monthly payments on junk we thought we needed years ago. If we didn’t plan what was going to happen next, then that influx of disposable cash was going to hit our balance sheets like lottery winnings and we’d likely squander every penny of it. The time had finally come.
I sat down with my husband and informed him that we have two options ahead of us.
Pursue the dream we share of relocating our lives to Maryland.
Pursue the dream we share of upgrading our home in Tennessee.
The next step happened faster than we anticipated–but the major move that we just finished will hopefully explain my absence over the last few months.
My husband was raised in rural Tennessee. His hometown had two traffic lights, one bank, one grocery store, a couple of restaurants, and a population of 1,700 residents.
The most major landmark to his hometown is Norris Dam, a hydroelectric and flood control dam operated by the Tennessee Valley Authority located a few miles outside of town and on the county line (in another town). The dam is arguably the most iconic structure in the area, even though it’s not located in his hometown—nor is it even a minor employer in the area. If you are missing what i’m getting at… his hometown is a place of few opportunities. (No shade).
When my husband and I started dating 7 years ago and things got serious, we found an apartment together in our current city of Knoxville, located about an hour away from his hometown, with a population 868,000+ people (much larger than 1,700). For me, this is the city that I grew up in. Half of my family, all of my friends, and every career opportunity I have ever pursued has been in Knoxville.
Like most people who live in one city for their entire lives, I was itching for a change of scenery. After our first trip to Maryland, my husband and I had always discussed eventually relocating there. When the time came that we were financially stable and able to afford the move, he made a very valid realization: He already made his “major” move.
He was right, too.
For him, moving to Knoxville meant finding a new grocery store, doctor, dentist, job, and friends. This move caused him to learn new traffic patterns, government, economies, and figure out where everything outside of a few landmarks were located. I had taken for granted my knowledge of Knoxville without realizing that he walked away from everything he knew to move here.
That conversation, mixed with some cost of living realizations, cemented our decision to do the following: Stay in Knoxville, and buy a new house.
In March, we began our search by declaring whats the most that we wanted to pay per month for the new house. I do not believe in maxing out my financial capability to buy something, because the payment lasts substantially longer than the “new/exciting” feelings you get when you first buy it tend to last.
The two of us decided on some of our Must Have items (2 car garage, two living spaces, area of town) and came up with a few things that were Deal-breakers (crowded neighborhoods, galley kitchens). We hit the Open House ads to see if our list of wants/needs was realistic to our budget, and began searching.
If you haven’t heard that almost the entire country is in a Sellers Market right now, we are.
A sellers market is “an economic situation in which goods or shares are scarce and sellers can keep prices high.” In other words, there are more buyers looking for homes than there are sellers attempting to sell their place. If you’re looking to buy a home, you are facing competition. If you’re a seller, you can almost expect a full price offer within days (or even hours) of listing your house for sale.
We are in a sellers market mostly due to the Great Recession of 2008. For the years that followed, new homes were not being built and mortgage lending was regulated/tightened so that the guidelines to qualify for a mortgage were stringent. If you’re thinking what I thought (Adrian: most people buy existing homes, not new ones. Why does that matter?) the reasoning is because existing homes go off the market indefinitely every year:
- A home that was for sale has been purchased by somebody (the minority) who truly lives in this home for decades–until death.
- A home that could be for sale has instead been converted into a rental property.
- The home has been rezoned and is no longer available for residential occupancy.
- Years of use have taken the house beyond economic feasibility to repair the home for future/continued use.
Just like collectible coins or classic cars, we always see older homes that look great and are built with quality in mind, but we discount the fact that we are only seeing the BEST examples, as thousands of other homes didn’t win the luck-of-the-draw and were eventually demolished.
Once my husband and I got a good grasp on what we wanted in a new home, we got pre-qualified for a mortgage. We made an offer on one house and got outbid, then we took a break for three months before hitting the streets again.
I kid you not… somehow, we did it “house hunters” style where some young couple looks at only 3 homes in a city and picks between them. When we bought our first house, we looked at 30 homes, but when you’ve been a homeowner for a while and have a razor-sharp eye for what you want/don’t want…it’s really easy to weed through homes.
Here’s what we saw…
- “Close To Work” – 3 bed, 2.5 bath, 2 car garage with a fenced yard located close to downtown. The neighborhood had a pool, and the home was in need of some cosmetic changes to reach its full potential.
- “Great Bones” – 3 bed, 2.5 bath, 2 car garage with a screened in porch in one of the most sought-after neighborhoods in the entire county. It was an estate home and was going to need rehabbing throughout, but it was the cheapest of the three.
- “Hillside Home” – 3 bed, 2.5 bath, 2 car garage that was fully updated with a picturesque kitchen and plenty of entertaining space, but at the top of our budget.
We checked out the Close To Work home first and was greeted by a tight floor-plan. No matter which way I turned, I just couldn’t make the house feel like its actual size. I could pour in the cash to bring the home into 2018, but it was going to take more than a weekend Home Depot trip to make that layout work.
The Great Bones home was next. The listing agent didn’t tell the owner that we scheduled a showing, so my realtor greeted a surprised man at the front door. Oops. We walked into the second room and just sort of knew that this home was more than we could realistically ever finish. Every room needed paint, carpet, and light fixtures. There was a rough smell of stagnated suburban dreams throughout, water damage in the kitchen, and possibly prior hoarding going on. The back yard was immaculate, however. It might have been the nicest back yard I had ever stepped foot in.
The Hillside Home was the last one of the night. Jay and I were blown away by the kitchen and bathrooms, and loved the three decks that the home offered (the square footage of the decks combined was bigger than our old house, altogether). There was obvious evidence that the home had a repaired foundation in its lifetime, and I kept questioning whether or not the sloping yard was going to be an issue.
We went to a local Starbucks with my realtor to pull records on one of the houses…and Jay and I talked it over.
Make Me A Deal
I can’t explain why my reasoning suddenly shifted, but over an hour of conversation with my husband… we went from “lets keep looking” to “lets make an offer”.
We offered $3,000 off asking price, with the seller to pay our closing costs, and time for us to complete a home inspection and mold test. They counter offered us on the price, and we accepted.
I had just bought a second house.
A week later, we performed our home inspection to identify any issues/faults with the home. As always, I prefer to be there in person. Not only does it give me the opportunity to bond with the home and really study things, but I can also ask the home inspector questions and receive explanations. The inspection came back with a few minor repairs that the seller agreed to fix, and the mold test came back clear.
In 16 days, we went from “let’s look at a few houses” to physically holding the keys with a new deed on its way down to the courthouse.
What helped us make our decision? Since we had spent so many months looking at what our dollar could buy us, we recognized pretty instantly that we were standing inside a bargain. The house checked off every single box of what we required, and the only thing on the “nice to have” list that this home was missing was double sinks in the master bathroom. I was willing to compromise on that.
The previous owner had bought the home six months earlier when she got divorced, but just couldn’t get used to it–so she went back to her old home. She simply wanted to offload the house and get back to her life. I looked up public records, and her story was true.
The house was ours.
The Winner: Hillside Home
Don’t worry. We did our due diligence prior to buying, naturally. The foundation issue is well documented as repaired, and the new support beams will likely outlive the entire house around it. We checked the grading, and even heavy rain isn’t an issue as far as the structure is concerned. The home is surrounded by trees–which is going to be an ongoing project, but it’s kind of nice to not live in a work zone.
HGTV never shows you how close you get to divorce when you’re remodeling a home. Jay and I redid our old house, by hand, and tested our marriage in the process. Thankfully, now we can work on trimming back trees at the new home, finish for the day, and relax inside a clean, gorgeous, and construction-free home.
It’s been an adjustment living here, so far. We owned our last house for 5 years and had really become accustomed to it. I bought furniture that custom fit the old living room, we had just enough stuff for each bedroom, and the yard we moved from was substantially larger–so our lawnmower is a little to big now.
The most pleasant change for myself is having space to breathe. The new house is double the size of the old one, so it’s peculiar not being able to yell to my husband from virtually any point in the house–and him hear me. However, that’s a sacrifice that I am willing to make, because we gained a kitchen that is conducive for more than 2 people to stand in at any given moment. Since we entertain almost weekly, the added space has been a godsend.
Even though we picked the most expensive house between the three, it’s still $58 less per month than our agreed-on budget. Nonetheless, we didn’t even “max out” our true capacity on buying this home, either. The two of us could have easily spent tens-of-thousands more… but working 40 hours a week to own a nicer house and support an expensive mortgage isn’t our idea of fun. We would rather use that money to enjoy other things in life.
Unfortunately, we unpacked the crucial parts of the house, and before we had a moment to enjoy the new house, we went back to deal with the old one…
We are landlords, now.
Stay tuned for my full write-up on my experience as an “official” real estate investor.
Hint: few people ever admit how much work/money actually goes into rental properties. It’s a LOT.