Closed on House #4

We were able to successfully close on House #4. This house will be our new home perhaps for the rest of our lives. This house has much of what my wife and I were looking for in a home that its hard to see why we would want to move again. Regardless this will our home for a long time to come.

We debated on using movers or trying to move ourselves. After getting some quotes for both options we ended up deciding to move ourselves. With my wife not working, baby on the way, and the economy not looking good I figured it made sense to save where we could. We have also opted not to get cable/satelite hooked up at least initially - at least not until we are fully settled in. I am hoping I can ultimately kill the subscription, but still haven't been able to convince the wife yet.

Our mortgage payment for the new home will be ~$1,500/mo for PITI. Falling interest rates certainly help us get a mortgage that I feel pretty comfortable paying. Orginally I felt we were really stretching ourselves to buy the house for ~$300k, but the mortgage payment is certainly managable at this point.

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Comments (11)

I'm shocked that taxes + insurance are only ~ $200 per month. That's about the same amount I pay on a house worth $130,000, but I live in high-tax Illinois.

"...with my wife not working, baby on the way, and the economy not looking good I figured it made sense to save where we could..."

And so you decided to take on a property requiring $18,000 in payments, not including repairs & maintenance?

Congratulations on the new place! My wife an I are in the BEGINNING stages of thinking 'bout a new place. Keep us informed w/ details of how things go. Rock on, NCN

Being that you own 4 houses in one area, have you thought about what you would do if you lost your job and the only other job you could find after a 6 month search was located on the west coast for half your current pay?

It's amazing to me how many nay-sayers there are that read this blog. 2mil has proven to be both frugal and prudent with his money, as well as confident enough to take reasonable risks. He owns 4 houses in Raliegh...big deal. Could all 3 of his rentals go vacant at the same time? Possibly, but not at all probable. There are much worse places to own real estate than Raliegh and with lending tight and not many people buying houses, rental rates are high...people have to live somewhere, so a tight credit market in the housing sector will only help people who own rental properties. He also works in a very high-tech city so if, heaven forbid, something were to happen at IBM, he seems like a confident/talented enough fellow to get another job quickly, and even if he chooses to sit back and be choiceful about his next employment move, he can collect unemployment for 6 months + and tap into the 6 figure cash reserve he's built up. Pretty sure he could still make that $1,500 mortgage payment. 2mil - keep doing what you are're numbers speak for themselves.

What Michael C characterizes as "nay-saying" I consider to be honest and open feedback. 2mil blogs anonymously for a reason; he probably can't discuss his personal finances w/ co-workers and family.

You shouldn't allow your wife to lift anything heavy or lift for long periods of time. It can be a risk to the pregnancy (and her back).

I was just trying to point out that sometimes we underestimate the value of liquidity and diversification. 2mill is:
- long US stocks;
- long a tech stock (IBM via employment);
- long $500k worth of Raleigh, NC real-estate, which is another long strongly correlated with the US tech industry.

So there are scenarios (with not insignificant probabilities) in which all these bets can go against him, big. Not saying that the bets couldn't also work in his favor, and big, too, but personally I'd prefer more liquidity (than 4 houses) and more diversification for a $500k net worth portfolio. I have no pony in this race, so just saying.

Belated congrats. You've been a homeowner before several times, so I figure you know how the costs will add up.

I agree with hf12358. With only $430k in total net worth it is very risky and scary that most of it is in real estate which he hasn't even marked down. North Carolina has one of the highest unemployment rates and Zillow estimates are absurdly inaccurate in this market which is why you never hear anyone talking about it anymore. I would knock off a minimum of 20% from each of the property values he has listed, and that is still being optimistic on price and also not taking into account transaction costs.

My philosophy has been to track these assets per their cost basis on our balance sheet. Given the long term nature of these property assets (except house #3) I feel extremely comfortable maintaining their value as the cost basis. The two rental properties would maintain positive cash flow even if we had to move away from the area and hire a property manager. This newest property will likely be the house we living in for the rest of our working careers unless we are forced to move.

I believe there are good reasons why people would suggest that I should mark down the value of the property, except these are very illiquid assets - ie very hard to accurately value. I didn't mark these properties up during the housing bubble and Im not going to mark them down during the housing recession. Long term their value is likely going to be higher than what I paid for them.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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