Flipping Houses | How Good is the Real Estate Market in Your Community?

Real Estate Market in Your Area is What Matters

We've recently had a pretty big event happen in our lives that directly effect the information discussed on this site. About a week ago my wife applied, interviewed, was offered, and accepted a job in a faraway place - Seattle. As a result, our plans for fixing and flipping our house have been accelerated somewhat.

Many people in this situation would be worried that the housing market is going to effect both the price received for their house and the time it takes to sell it. And many should. However, you should only be worried if your local housing market is acting the way those cold spots around the country are. For example, if I was selling a house in Las Vegas, Phoenix, or Miami, I'd be worried because those real estate markets are not only flooded with houses, but housing prices have dropped dramatically.

Our market, thankfully, has not acted in that way. It seemed that for a time people heard the news of the housing bubble, the housing crisis, and the mortgage crisis, and everyone was scared away from buying or selling their houses. After a bit of time, though, it became clear our market wasn't affected like some of the above named. As such, people, like they always are, are looking to buy a home for the first time, move out of a home that is too small, or move into a bigger home that reflects how important they are. All these reasons are great reasons to buy a house - and our flip in particular.

I haven't updated the status of our flip in a long time, and I plan to do so shortly. If you missed out, though, I've already talked about the flip in general, the kitchen, and the dining room. It is almost complete; only a few small things left to do (as there would be on any house about to go on the market), and I'm excited to see what we get for it.

So, stay tuned for updates on our house flip, and feel free to leave comments with suggestions, thoughts, comments, or anything else you might have.

Flipping Houses

Building Wealth | Should You Sell Your Home Yourself?

Should I Sell My Home "For Sale By Owner?"

These days, if you are selling your home, the greatest fear is that it will sit on the market forever, with no buyers, and possibly no one even looking. The second greatest fear is that you will get tons of interest but everyone will present offers far below your asking price, in hopes that you are in such dire straights that you have to take whatever you can get. Add on top of that closing costs, repair costs, and realtor's fees, and you may feel lucky just to break even.

One train of thought regarding getting the most bang out of selling your house is to forego the realtor and sell the house yourself. It seems like a quick and easy way to avoid a cost (which is part of building your wealth) and keep more of the money your house has created for you in your pocket. And for some people, selling a home without a realtor is a great idea. But for most, however, it can lead to your house being on the market longer and missing the buyer that wanted your home.

Realtors Know How To Price Your Home Right

A primary function of realtors (besides actually selling your house) is their duties before even listing the house for sale. One of these duties is helping you to set the price for your house that will both get it sold and maximize your profit. From a homeowner's standpoint, your best day in the market is the highest price a bidder would pay for your house. It is not what you think they should pay, what some magazine or publication says you should be getting per square foot, or any other hard and fast rule. The market determines what your house is worth.

What realtors can do for you before you put your house on the market is find out what the market is bringing for homes similar to yours. A primary way to value real estate is to see what has recently sold on the open market and find properties that match or are very close to your property. What those other properties are selling for is a good indication of what yours will probably sell for. If it is a little nicer than most, it will likely go for a little more. If it is a little less nice, it will likely go for slightly less. Finding out this number, though, is the key to selling your house quickly and getting the most money you can.

(Realtors also serve an important function of looking over your house before it is placed on the market and providing helpful hints and tips for getting your house ready for show to the public. For example, no one wants to see a picture of your grandmother's 90th birthday party. They want to picture themselves in the home. Your realtor can give you great information on how to prep your home for sale).

Realtors Get People to Your House

The way realtors sell houses is getting people to look at them. They don't eat if they don't sell houses. Because of this, when you hire a realtor, you can probably be rest assured that they will be spending some part of their day trying to let people know your house is for sale. This includes listing your house in the newspaper, in trade magazines, and on the multiple listing service, letting all the realtors in their office and other offices know a new property is on the market, and holding open houses for people to stop by and fall in love with your house. The best part of all this is, for you the homeowner, you don't have to do anything. It may seem like they are getting a lot of money from you, but to sell your house, especially in today's market, they have to bust their tail (most of the time).

Realtors Have Lock Boxes At Their Disposal

This again goes back to saving time for you. If you sell your house on your own, every time there is an appointment you are going to have to come by and let the people in, let them look at your house, and show them out. This could become very annoying after a while.

With a realtor, they simply put a lock box on the door and give the buyer's agent the code when they want to come in. That allows people to look at your house without your presence, and without hassling you.

Why Stay Away From Realtors?

I can only think of two reasons why you might want to list your home on your own. First, if your house is either in a very hot area or is sure to sell quick, you might want to think about listing it yourself. In this case contacting the local real estate agencies and listing the house on MLS yourself (small fee) should be enough to get someone to put an offer on your house.

Second, realtors have an interest in selling your house, not selling it for the highest possible dollar. If you didn't know, your realtor typically takes 1.5% of your purchase price as payment (1.5% goes to buyer's agent, 1.5% goes to buyers agent's company, and 1.5% goes to sellers agent's company). If you do the math, a $15,000 increase in price, while doing a lot for your pocket book, doesn't necessarily help out your realtor that much ($225.00!). It only makes sense that at some point they may be more interested in closing the deal than getting you the most money possible. I don't think this is reason enough to go out on your own to sell your house. Having this information at the back of your mind should keep you cognizant enough of the situation.

To Build Wealth Get a Realtor

In the end, getting a realtor is a pretty good deal, assuming they do the work I've discussed above. Selling a home is a big ordeal, and it is much easier to do with help.

Building Wealth, Personal Finance, Creating Wealth

Staying on Track with Personal Finances

All the time, in personal finance blogs, you hear people talking about personal finance and financial planning. They discuss the best ways to reduce debt, the best ways to save for retirement, handy-dandy tools to get things cheaper, and generally how to better handle your money.

I know this, and I know that they know this, and I know that you know this, but managing money is not easy. It is extremely difficult to stick to a budget, to stay at home and eat instead of going out (which I would guess is one of the top 2 ways money is wasted), to put off that lavish vacation until the money to go has been saved, and just generally to do what is necessary to maintain a healthy financial situation.

Now, the people at these other sites have great information. The Get Rich Slowly author is in my blog reader, and I check out what they have to say every day. The information helps to keep everything in perspective for me. Same with I Will Teach You to Be Rich, Ramit's site. His information is geared more toward the 20 somethings coping with new money and accumulated debt, and I think the things he has to say are great.

But it is hard, and I just wanted to let everyone know that I know it is hard, and I struggle with it as much as you do. A perfect analogy is this. Yesterday, I was playing golf with my wife. My wife is a pretty good golfer - so am I. She always talks about how she is going to beat me, straight up. Yesterday we put it to the test. Now, I am an avid golfer. I play at least 3-4 times a week and practice whenever I can. My wife plays a couple times a week, but not nearly as much as I do. As we are out on the course playing she hit an errant shot. Being frustrated, she asked me if she could hit it again or not count it. I said "sure, but this round won't count as you beating me." She was confused as to why not. I told her that the only way you can say you beat me is if you play by the rules, no cutting corners. She took her stroke, I beat her by 4 (she is gaining fast though - a little practice putting and she'll be close).

This story fits exactly into the way personal finance works. When you are out there making decisions, every day you are faced with whether to do the right thing, the thing that will get you where you want to go, the thing that will get you closer to your goals, or the thing that will provide instant gratification and make you feel good at that instant. It doesn't matter if technically it is cutting a corner because everyone (your spouse) agrees that it is okay, just this one time. Well, when it comes time to play for real, or in this case balance the checkbook, it becomes clear that your goals have not been reached. Playing by the rules all the time is hard, but if you want to win the game, you have to practice, according to the rules, even if they are hard. In time you will groove your personal finances like you groove your golf swing, and success will come easy. But taking shortcuts doesn't do you any good, even if it causes pain you'd much rather alleviate.

I guess where I really wanted this post to go was to acknowledge that yes, personal finance is very hard. That yes, you will have to do some things and give up some things that will make you uncomfortable in the short run. But in the end, when your financial goals have been reached, and the lessons of building wealth are ingrained in your every day habits, you will look back on those hard times with longing and include them in stories to your kids and grand kids about "walking up hill both ways in the snow."

So keep at it. Keep working, and even if you hit some bumps in the road, take that next step toward financial freedom.

Building Our Empire

Building Wealth | Bush's Economic Stimulus Check

I received my economic stimulus check on Friday from the government. I'm married, so it totaled $1,200.00. Although when you just look at it like that and think about holding $1,200.00 it seems like a lot, when you think about what you can buy with it, it really doesn't amount to much.

Since we did get it though, and this is supposed to be a discussion on personal finance, building wealth, and retiring early, I thought I'd discuss how my wife and I planned on spending the stimulus money we received. What better way to talk about personal finance than to discuss what you are doing in a real world situation, right?

For starters, although we knew we were getting the $1,200 from the government, we didn't pre-spend the cash before we got it. This is a major problem for a lot of people. You know you are coming into some money, whether it is a lot or not, and you spend it before you get it, and when you get it you spend part of it on what you'd intended to and the other part on something else, and when you look back you actually have a net loss. So, great thing number one, we waited until we had the money to decide what to do with it.

Once we had it, we had a pretty clear plan for it: (1) save; (2) reduce debt; (3) reward ourselves for reducing debt; (4) let some linger in the bank account.

Saving

Actually, we aren't technically saving. We are saving to spend (which I guess what all saving really is technically). As I mentioned before, saving for fun is just as good as saving for a rainy day and is an important part of personal finance: it allows you to spend without worrying; it provides a sense of accomplishment as you see your bank account growing; and it gives you concrete financial goals to work toward. My wife and I recently set up a vacation fund, where we sock away a hundred to a couple hundred bucks a month to use at some point on a destination vacation (our vacation dream list is long and includes places such as Atlantis, Greece, Brazil, and Paris).

To get a great start off on this, we decided to put $500 of this money in our vacation fund (it has actually already been earmarked, as we have planned a trip to London this summer with family). But it technically is saving, and we'll be pulling the interest from it in our ING savings account.

Reducing debt

As you have heard, we've put ourselves on a debt snowball, to hopefully erase our debt and feel really great about it at the same time. Like many others, though, the debt is going down, but not nearly as fast as it should, because things come up that get put on the credit card, making the debt reduction more of a trickle than a flow (for example, a plane ticket to Seattle this summer was put on the credit card - it just doesn't hurt as much when your balance is going up - credit card balance - as it does when it's going down - bank account balance).

In an effort to feel better about our actions, we decided to take $300 of the economic stimulus check and put it toward our credit card debt, on top of what we already pay. That will make the Seattle tickets almost non-existent, and make us feel like we aren't completely wasting the money. Remember, the key to the debt snowball is to get it rolling. I know it's easier said than done, but you can't start building wealth if you don't get started.

Our Reward

Because we were so good with so much of the money, we decided that some of it we should just use for whatever guilty pleasure we want. To do that, we decided to divide up $300 between the two of us to spend on whatever we want. $150 went to my wife, in her separate account (marital finances is an interesting topic of discussion that I'll touch on some other time) and $150 went to me. Once again, the point is to use it for something you want that you may not need. Kind of like taking a bite of a cookie when you're on a diet - it's something that gets you through the hard times of personal finance.

If you are wondering what I'm doing with mine, I haven't decided yet. I'm trying to save for a trip to Wales in a couple of years for the Ryder Cup, so most of it will probably go there. A new golf club is also a distinct possibility. I have no idea what my wife will use it for, and would hate to speculate.

A Little Money Left Over

If you are doing the math, we have $100 left of our $1,200 that hasn't been earmarked for anything. We have decided to just keep that in our checking account and build that balance up just a little so the threat of over drafting is even further reduced. Again, probably doesn't sound very fun or very sexy, but building wealth and personal finance only gets sexy at the end. Spending the money you've been saving and ensuring the stability of your family feels great once its accomplished.

Personal Finance - Building Wealth

Building Wealth | Personal Finance | Tracking Expenses

Tracking Your Expenses the First Step Toward Building Wealth.

There is an old saying out there that goes something like, "you can't know where you're going if you don't know where you've been." This adage applies to many things: career; love; family; life; and, believe it or not, finances. So often in our lives we have dreams of wealth and happiness and early retirement, but we never seem to reach those goals. One of the primary reasons for this is that so much of our money slips through the cracks. Money that in the end could be used to buy that new car you want, pay off that credit card debt, or invest in that IRA so you can retire early.

Perosnal finance and building wealth begins with one very simple idea: you must bring in more money every month than you spend. If you do not, it will be impossible to build the wealth you need to retire, to accrue the compound earnings necessary to live the good life, and to live without having to worry about paying the bills every month.

I'm sure that you believe me that knowing what comes in and out every month is important to your personal finances, but you probably have no idea how to get started. Starting is simple. It is maintaining your data over the long hall that I have found to be the hardest thing to do.

To track what you spend (tracking what you make is usually fairly easy), the easiest thing to do is set up a spreadsheet. I use one sheet per month, and label each row with a category that I want to track. When you first begin, you may not have that many categories. That is okay. As you discover a category you can add it in for that month. Right now I have the following categories: fast food; dining out; booze; miscellaneous; bills; gas; and groceries. I think the more precise you are with your categories, the easier it will be to see what you can minimize to increase your savings potential.

I'd label each spreadsheet something like Personal Finance - Building Wealth - May, to give you a reminder of where you want to go each month. Then at the bottom of each tab I set it up to add everything up. So, for instance, you can instantly know what you've spent on groceries for the month. I then have a final tab that adds everything up so I can know exactly how much I've spent.

Once you have these numbers you are on your way to building wealth and retiring early. Armed with these figures, you can begin to tweak your lifestyle to shave some of those wasted dollars off your monthly expenses and put them where they are more beneficial.

I'll keep you up to tabs on my monthly numbers so we can all experience the journey that is personal finance, building wealth, and retiring early together. Implementing this into your life will help you get where you're going, because you will know where you've been.