I know it's been quiet around Money Boss recently, but that's because it's been a busy three weeks in Real Life.
Kim and I spent the latter half of June packing the condo and prepping to move. Last Friday evening, we picked up the keys to our new place. We brought the animals over and spent the night. Then, on Saturday morning, we started a four-day marathon of shifting our household eight miles south.
We're still not completely unpacked — and probably won't be for a couple of weeks — but we've made good progress. The kitchen, bathroom, bedroom, and living room are all functional (if somewhat cluttered). All of our remaining boxes are staged in the back office (which used to be a garage). The internet is now operational. Mail has begun to arrive. The cats and dog have already learned to love the place. So have we.
After only five nights in the new house, Kim and I do love it — warts and all. And make no mistake: This place has some warts.
Major Repairs Needed
The people who sold us this home are great. They're interesting and fun — the kind of couple we'd love to hang out with in our spare time. That said, they weren't responsible homeowners.
“This house shows a pattern of long-term deferred maintenance,” the inspector told us in May. Translation: Needed repairs have been left undone for a long, long time. Based on his inspection report, and based on our own observations after a few days, our best guess is that the previous owners did little (if any) preventive maintenance during the seventeen years they lived here.
- The duct work in the crawlspace was mangled and lying loose. Because the crawlspace has a heavy rodent population, that meant the furnace was pushing polluted air into the house. (We asked for the previous owners to fix this before closing.)
- There have been a variety of plumbing leaks over the years. The kitchen sink still has a minor leak. The toilet and tub had major leaks that we asked to have repaired before we moved in. Also, the subfloor beneath the bathroom had some rotting that needed to be fixed.
- The roof is at the end of its lifespan. The inspector found bare patches and spots where the shingles have lost their integrity. This is a top priority to replace before the Oregon rainy season begins in mid October. (The sellers provided a credit at closing to compensate some of the cost to replace the roof.)
- The siding, too, is in bad shape. According to the home inspector, it has “begun to fail”. It's feathering in spots. There are isolated patches of dry rot. That said, he believes (as do we) that it can function for a couple more years. We intend to replace it, but not until 2018 or 2019.
- The front and back decks are in the final stages of useful life. They have rotten spots (some of which the sellers cleverly hid beneath flower pots) and all-around weakness. That said, the decks aren't critical to the function of the house, so they too will have to wait.
- Some of the floors are in bad shape. We didn't notice this during our previous visits to the house, but the problems were clear when we moved in. The carpets are especially dirty and damaged. (Kim was so disgusted by them that she rented a steam cleaner at eight o'clock the first morning we were here. While I worked on moving stuff over from the condo, she cleaned the carpets.) The hardwood floors are also in rough shape. They're functional but they have tons of scars and stains from decades of use and abuse.
These are just the major problems we've found. There's lots of minor stuff too. The light over the kitchen sink doesn't work, for instance. The bathtub hasn't been caulked. (Really?) The walls need to be painted. We only have keys to one of the three doors. The furnace is thirty years old; it works, but we'd like to replace it before it fails, not after.
I don't want to sound like I'm complaining. I'm not. We knew about most of this stuff before we bought this place. Kim and I spent a lot of time talking about whether or not we wanted to take on this much work and responsibility. We decided that we did.
This might surprise some long-time readers. In the past, I haven't been much of a handyman. I've shied away from yardwork and home maintenance. But I'm in a different place than I was five or ten years ago. After much discussion, Kim and I agreed that the advantages of this home and its location outweighed the short-term headaches.
For the record, here's a brief description of the home we bought.
Officially, the house was built in 1948. In reality, it was built a few years before that, but moved to its current location after the catastrophic Vanport flood in 1948.
Officially, the home has a footprint of 950 square feet. In reality, it contains another 300 square feet of unpermitted remodels, giving it a total living space of 1250 square feet. (Our condo had 1550 square feet, so this is about 20% smaller.)
The home itself is quaint. (Or “quirky”, according to our real-estate agent.) To me, it looks and feels like an English cottage. Many of the rooms have low (seven-foot) ceilings. The floors aren't quite level. It has the same musty smell as the hundred-year-old farmhouse I bought with my ex-wife in 2004. And so on.
The house sits on just over an acre of land. Because the lot is long and narrow, though, it feels like we have more space than we actually do. The upper part of the property — where the house is — has a gentle slope; it has a lawn and there's some nice landscaping with native plants. The back two-thirds of the property is much steeper, dropping away quickly into a ravine where a seasonal creek flows. The bottom half of the lot is wooded. The upper half is fenced, which means we can let the pets roam freely.
Although our new place is very close to a major Portland suburb, it feels as if it's in the country. We're a quarter mile from the nearest housing development. Our location feels isolated.
Part of the reason I'm willing to take on this project is maturity. I no longer view household chores and yardwork as burdens. They're simply part of the price you pay to own a home like this. Besides, they're an opportunity to learn new skills and to make the place our own.
Another reason we're not stressed is that we're financially prepared for all of the work.
My condo sold for $530,000. After closing costs, I netted about $501,000. We paid about $442,000 for the new place (net, after closing). That gives us a “profit” of roughly $59,000 to use for upgrades and repairs.
Meanwhile, my monthly expenses should drop drastically due to this move. Counting utilities, I was paying roughly $1750 per month to live in a place I owned outright.
By moving to this house:
- I've eliminated our $570/month HOA fee.
- I've cut my property taxes in half, from $6000/year to $3000/year. That's a savings of $250 per month.
- My utilities ought to remain roughly the same (although time will tell). At the condo, the HOA fee included gas and water/sewer. Here, we have a well and septic tank. Plus, we don't have to pay to heat/light the common areas in the condo.
- I owned the condo. So far, I own 100% of this house. That said, Kim wants to have ownership here too, so she's going to pay me $500 per month to “vest” into the place.
The bottom line? It looks as if this move will improve my cash flow by $1200-$1300 per month. My net out-of-pocket costs to live here ought to be roughly $500 per month. (Again, this is all theoretical right now. I'll share actual numbers as they become available.)
Much of that “saved” money will be plowed into the afore-mentioned home repairs and remodeling, at least during the first few years that we live here. After our first big push to get the high-priority jobs finished this summer, we intend to budget for one major project every year. (Next year, for instance, we'll probably replace the decks.)
And, of course, we intend to budget in some fun stuff.
Budgeting in the Fun Stuff
Aside from the needed repairs, Kim and I have plans to perform some fun upgrades on the property. Although these are obviously lower priority than, say, replacing the roof, we do hope to pursue them sooner rather than later.
For instance, I want to build a writing shed on the back of our lot, where the lawn meets the wooded area. This home office will be a place for me to read and write. If it's large enough, it'll also be a spot for Kim to do yoga. I've been emailing with Mr. Money Mustache about the shed he built recently. He's urging me to consider a pre-fab shed, which I'll look into. Anyhow, the budget for this writing shed will come from the sale of our RV. Whatever I get out of that vehicle I'll put into the new office space. (When this project is completed, it'll save me $250/month in office rent.)
Plus, Kim and I both want a hot tub. She and I love spending time outdoors. We both also love baths. Our lot has a wonderful park-like setting, and it seems natural to install a spa so that we can relax outside year-round. We know we have to take care of the roof and floors first, but we do a lot of dreaming about what kind of hot tub we should purchase and where we should place it.
Before we can get to the fun stuff, however, we have to take care of the necessary repairs. Starting now. As soon as I press “publish” on this article, I'll start calling roofers. It's time to give this home some of the repairs and improvements that have been neglected for the past two decades!
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.