This year has been strange! We are lucky the year has only been strange for us, and not devastating like 2020 has been for so many others. Our 2020 losses are mainly a series of well designed plans that have fallen apart due to travel restrictions, and due to regular life planning in an irregular time. We love having plans and following them, so at this point we have decided we will carry on making plans and try to laugh every time they change.
- In May we still had our old plan to live home-free and travel full time, until around 2025 when we would consider buying a house.
- In June we made a new plan to buy a house in Washington State in 2021.
- In July we decided to research other locations where we might buy a house.
- In August we decided to buy a house in Arizona in 2021.
- In September we actually bought a house in Arizona!
WHY Did We Buy a House?
For us, home is more than just housing. It’s a very emotional and personal decision combined with a complex financial commitment. We have been incredibly happy traveling full time and not owning a home or hardly anything else for the past couple years. Traveling full time really changed us. But COVID-19 changed us too. There has been so much uncertainty this year, and having no home base to return to when the world shut down was unsettling to say the least. Buying a home is our attempt to create something reliable and consistent when we need it. It gives us something we might have at least a shred of control over. It’s also a reprioritization of our family, chosen and biological.
One thing we talked about as we were selling our previous home back in 2018, was the importance of staying open to changing our full time travel plans and the possibility of buying a home some time again in the future. There’s always a possibility of something happening to one of us, or one of our family members, that would make us stop traveling for a while. We also thought there might be a market event that impacted the economy in a way that created a buying opportunity we couldn’t pass up.
We are fine, our family members are fine, and we did not wait for a potential housing market crash that still might come in the next year or so. The combination of COVID-19 and political instability were big enough motivators for us to make a change. Buying a home in the USA this year feels a bit like running back into a burning building. But we are intentionally choosing to make a home base for ourselves near family in our country of origin, knowing all of the swirling uncertainty may not be ending anytime soon.
The Emotional Side of Our Home Purchase
Last year in November of 2019, we attended the Ecuador Chautauqua. One of the presenters, Vicki Robin, asked some amazing questions that really got us thinking. “Now that you have reached financial independence and retired early, what kind of community do you want to create? Who do you depend on, and who depends on you?”
That experience got us thinking about what we care most about, including family, community, and giving back. We also spent a lot of our time at the retreat with Tanja Hester talking about social justice and those conversations helped inspire us to create our AOC Rainbow Scholarship. That Ecuador Chautauqua experience and all of the people we met there inspired a lot of change in us and in our lives over the past year.
The family member we want to spend the most time with is Alison’s mom. We really enjoyed all of our summers together in Seattle and Canada before we reached FIRE (financial independence retire early). And we especially loved our amazing summer together in Europe in 2019. We were all counting the days until we could start our summer together in Ireland this year in 2020, right up until all of our plans were canceled due to COVID-19. When that happened we made a new plan so the three of us could spend the summer together in Arizona. That was the decision that set us on the path to buying a house here.
Being in one house in Arizona with Alison’s mom this summer was amazing. It wasn’t Ireland, but it was still pretty awesome. Alison’s mom will be turning 82 years old soon, so even without COVID-19 we are ready to make a change that allows us to spend more time together on a regular basis.
The three of us talked briefly about whether we should go somewhere else together this summer, like driving up to the Pacific Northwest for example. But we decided it made more sense to stay here, only two hours away from Alison’s mom’s retirement community and all of her doctors. Just in case.
We didn’t feel comfortable really exploring our new home town this summer because of COVID-19, and we certainly were not willing to go inside any restaurants or shops. But we bumped into people outside on neighborhood walks and on hiking trails. We made new friends, and a few old friends made an effort to drive into town just for social distance visits out on the deck. We also had a few people reach out to us through our blog and social media that we met up with on the deck as well. So even though we hardly left the house we were still able to make lots of new friends here this summer.
The Financial Side of Our Home Purchase
We owned a condo in Seattle until we retired and sold it in 2018, and we also owned two rental houses during a previous chapter in our lives. The condo was a great financial decision and a wonderful home for us as well. Our rental property adventures were early in our FIRE journey, and we did everything wrong as rental property owners back then. Since then we have gotten great advice from Paula Pant and a bunch of other successful rental property owners in the FIRE community. We feel much more prepared to own a home and a rental property now.
We like the idea of owning property again just for the purpose of diversifying our portfolio. And we love the idea of owning property in a strong real estate market. When we evaluated the longterm health of the local real estate market we found it to be very strong for both longterm rentals and short-term vacation rentals as well. We feel confident about consistent growth in housing prices in our area.
Even if the USA continues to be politically crazy and feel unsafe due to COVID-19, we feel good about this home purchase. Is it early in our FIRE journey to make a purchase like this? Yes. But the emotional factors of creating a home outweigh the financial factors of buying a house. we feel good about our ability to live in this house full time for the longterm if we choose to do that. If we all decide we don’t want to be here we can turn the house into two rental units. And when we are ready to sell the house we are confident that it will hold its value (and probably also see a healthy gain).
Our Coliving Housing Plan
The community building questions Vicki Robin asked at the Ecuador Chautauqua also helped us focus on our other coliving ideas as well. Back when we lived in Seattle we had one close friend we talked pretty seriously with about coliving someday. We’ve probably said, “Lets get a compound!” to a ton of different people. But there’s one person who actually said yes, and really meant it.
Over the past year we have continued those coliving conversations and talked about every possible idea together. Including tiny homes on a big piece of property out in the woods, or living in a duplex in the middle of a downtown area. At this point in our lives none of us wants or needs a home of our own to live in full time by ourselves. The idea of coliving and being able to share the conveniences and efficiencies of living this way is really appealing to all three of us.
On the financial side, we have created a multifamily property real estate plan. Alison and I own the property outright, with our housemate as a longterm renter and an income source to help with home ownership and maintenance costs. Alison and I have our own separate space to enjoy, and we can consider renting that out as well when we are traveling. We all love to travel domestically and internationally, so we can take turns traveling and keeping an eye on the property.
On the emotional side, our new housing plan is all about creating a coliving space. We will be able to spend summers in our new home with Alison’s mom. And we will have a full time housemate to socialize with in our daily lives. I think Sunday dinners are a must! Our future housemate is currently getting ready to move over here to live with us starting next year.
We are really excited to have our own place again. It’s very easy to see how the future might look for our summers with Alison’s mom. And at this point living within an easy drive of mom and other family members just makes sense to us. If we’re lucky we’ll get all of our nieces and nephews to come visit us!
We Did Our Research!
I built a housing research spreadsheet in July starting with a few different cities in Washington State that we had been talking about. Then, along with input from our future housemate, we added other cities in Oregon, California, Nevada, Arizona, New Mexico, Texas, North Carolina, and New Hampshire. The main factors we were all focused on learning about for each place were politics, weather, cost of living, real estate prices, and income/social security taxes.
In the end Arizona won out for lots of reasons, especially when we added in proximity to family. But we also wanted many more days of sunshine compared to the area in Washington State we were previously considering. Arizona also has below average tax rates on retirement income and property, which we love! Most of our income will fall in Arizona’s lowest tax bracket at 2.59%. And Social Security is not taxed at all in Arizona. Admittedly, we would have paid no income taxes if we had stayed in Washington State, but at the same time we will be paying much lower property taxes in Arizona. Our county, which collects an average of 0.5% of a property’s assessed fair market value as property tax. That sounds fabulous to us.
We also like that Arizona is more centrally located in the USA, where Washington State definitely is not. Arizona will be a great jumping off location for us to explore more of the USA. I’m a huge fan of visiting National Parks, and we are all going to be excited to be able to drive to many of the parks more easily from Arizona. Additionally, it has a small regional airport that gives us quick access to hubs including Phoenix, Denver, and Dallas.
How Did the Home Purchase Really Happen?
Once we settled on Arizona as the right location for us to buy in, we introduced ourselves to a local real estate agent that we found in an LGBT+ business directory. We explained our plan to buy in 2021, and felt very comfortable that this agent understood what we were looking for including the coliving situation we wanted to set up.
Our new agent friend gave us lots of homework to do in terms of research about the town we chose. Every couple of days we hopped in the car with mom and drove around different neighborhoods to get a feel for how the different parts of town looked. We had a plan to narrow down our list of a dozen neighborhoods and all three of us had the right to drop neighborhoods from the list, which we all did and that made things entertaining. We narrowed down to two favorite neighborhoods pretty quickly so we could focus on them next year when we were going to start looking for a house in 2021. All of our research with our new real estate agent friend went according to plan. Except for the trick we played on her with the schedule.
A couple weeks ago on a Thursday we were taking a walk in one of our favorite neighborhoods. We heard a buzzing sound, so I screamed “Murder Hornets!” and cracked up. Alison said it sounded like a drone (because it was a drone) and assumed it might be a real estate agent getting ready to list a house. So we wandered over to investigate and quickly found the drone and the agent. It turned out this house was going up for sale on the following day and the agent offered to give us a sneak peek.
The house listed on Friday and immediately had an offer. We really liked the house and property, and we loved the price. Just not the timing. So we spent two days doing some hardcore number crunching and soul searching. We talked and worried and talked some more. We had a bunch of long discussions with Alison’s mom and with our future housemate as well. Then on Sunday we put in a backup offer for the house, at full price in cash with an inspection contingency.
We figured the backup offer would most likely only be part of our research process since backup offers rarely come into play in this area. Full price cash offers are fairly common in this strong real estate market and neither of the agents in this deal had ever had a backup offer go through. So of course one week later our agent called to tell us the original buyer had to back out, and the house was ours if we wanted it. Alison and I looked at each other and said, SHIT!
The Cost of Buying Our Home
We established an all-in-budget for our home purchase a year before we planned to buy a home, but in reality almost six months before we actually bought. Within that budget we had a number in mind for a turn key property, which would have to match the combined cost of a home purchase and repair work if we went with a fixer upper. Most importantly, our home buying budget was set at half of what we had sold our condo for in Seattle in 2018. We want to keep as much as possible of the original condo capital working for us in the market to keep our FIRE plan healthy.
It’s a good thing we always try to plan ahead, because that meant buying the house was shockingly simple. Part of working on our home buying plan meant we had already been aggressively carving out and setting aside accessible cash for almost six months. Once we decided we would buy in less than five years we were on the move financially, and our home purchase cash was ready to go when we spontaneously bought this new place. Setting the cash aside in a way we were comfortable with was a little tricky with the COVID-19 economic downturn, but we were able to collect our home buying cash without having to sell any down securities.
The whole process of buying the new house only took about three weeks, from the day we submitted our backup offer to the day it recorded and we got the keys, because we pushed for a fast closing. And since we were buying with cash and not getting a mortgage we only had to sign about a half dozen pieces of paper when the deal was done. So our post-FIRE home purchase was weirdly easy and stress-free. It’s all of the little ongoing purchases to turn the house into a home that might drive us crazy.
The Costs of Home Ownership
We got this place for a great deal for a reason — it’s a bit of a fixer upper. But we negotiated on price enough to cover the costs of the most important repairs, and we already have a contractor ready to start work on those repairs. We know the new house will need a lot of updating over the next couple of years and that will cost money. We will focus on modest improvements and functionality, and try really hard not to overdo anything. The best part about all of the upcoming projects is that we did a ton of remodeling ourselves in the two rental properties we owned years ago and we loved that, so we are going to have fun with this house!
Insurance. The first thing we did after we knew this home purchase was really happening was pay for home owner’s insurance. This is the one thing we can’t put off and needed to start paying for immediately. I compared six different policies and then we went with Progressive, which was tied for the lowest annual price, and also happens to be what we had in Seattle.
Utilities. We’ll be paying utilities for the first time in years which takes a minor adjustment. Water (from a private water utility since this house is not on city water) and electricity are more expensive in our new home town than we were used to in Seattle. We will have to rely on natural gas for more of our appliances, which is not ideal from a sustainability perspective but is the norm in our area. There are at least three different trash companies picking up trash in our neighborhood, which is something we’ve never seen before! Trash and recycling (from Waste Management) seems pretty reasonably priced, though we haven’t had to pay for those individually since 2008 since they were included in our condo HOA’s for our previous home. Last time we owned a home we also paid for a compost bucket along with trash and recycle, and since that’s not an option here we will be doing our own composting for sure!
Tree maintenance. Many neighborhoods around us are in forested areas, including ours. Unfortunately, the previous owner of this property did not do any tree maintenance, so there are trees that are dead or dying and other trees that need dead-wooding. It would be nice if we could put off the additional costs for tree maintenance for a year or two. But after talking with two arborists it’s clear that has to happen sooner rather than later, both to improve the health of the trees we are responsible for, but also to protect the house from them. We’ll probably do the initial tree work before this winter ends, within our original all-in purchase budget.
Furniture. Since the house is empty we know we’re going to have to buy some stuff (*gasp). Shopping and spending money is pretty much our least favorite thing to do so I’m sure there will be some anxiety about that. We’ll have to buy a bed, and a couch, and towels, and so much more. We’ll appreciate all of the cash back or travel rewards points we’ll earn when we do buy stuff. And we’ll make an effort to get some things from thrift stores and online resale markets. And best of all, it will be fun to go back to Seattle to get the little stash of things we love out of storage and bring them to our new house.
Vehicle. Buying a house in this location also means we need to own a vehicle again, and car insurance too. Eek! This is the only other “expensive” purchase we have on the agenda for now. And we are happy to put that purchase off until next year. We are planning to buy a 4 wheel drive vehicle that can cope with the hills and snow we will be living with here. We plan to buy used to avoid that new car sticker shock.
Off We Go!
About two weeks before we bought this house we decided to keep our international health insurance, which means leaving the USA by mid October and staying gone until early January.
We don’t love the idea of buying a house and immediately leaving so we came up with three potential housesitters who are all in a state of change themselves and looking for a place to get away to. Unfortunately none of them could commit to the housesit since there wasn’t much in the way of advanced notice. So we’re going to winterize the house and ask a few of our new friends to check on it while we’re gone.
We still love to travel and we are still willing to prioritize travel in our lives, so we are leaving Arizona in a few days even though we just bought a house. That works perfectly with our favorite saying — All Options Considered!
Are we nervous about traveling while COVID-19 is still an issue? YES! But we’ll save that story for another post.
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