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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5068  
Subject: FI Part III: Buy a distressed home Date: 9/26/2013 11:58 PM
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Part 3: Purchase the crappiest house on the block... and fix it up!

Again in no particular order; getting on the "wealth escalator" was a key enabler for me. There are many paths towards FI, and this is just the details on mine, and I'm not there yet.... still on this journey. But as I'm crossing the 1e6 NW line, I'm reflecting on how I've reach this milestone at 39yo.

We actually jumped on this bandwagon later than we should have. Housing prices nearly doubled from 1997 to 2002 when we purchased our first home. We looked long and hard for a home, and prices kept increasing. But at one point we found a very distressed property in a very good location in an excellent neighborhood. Owners were underwater and by some miracle we closed on this property. We had to get it appraised before tearing into it to pass section 1 California repairs to get the loan. Literally capping off plumbing, tearing out walls to pass... without even owning the home.

Then over the next 7 years I put in a bunch of sweat equity and we thoroughly enjoyed the home. After having kids we needed a larger house and eventually sold in 2009... and despite the housing crash we still made about $75k net profit on the sale. And with the crash we were able to jump up to a larger home and ride the next wave on an even larger investment.

We've continued to refi and are now locked into a 3.675% 30 yr, at about 60%LTV. And threw a little cash at the principal... the opposite of most folks.

Some random frugalness indicators:
1. Built all the kitchen cabinets from scratch... dovetailed drawers and all.
2. Hand tilled the backyard with a shovel and planted grass from seed.
3. Drove a Geo Metro for 9 years.
4. Front yard vegetable garden.
5. Have always done my own brake jobs.

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whyohwhyoh
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Author: akck Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4990 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 9/27/2013 12:08 PM
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Ditto here on the brake jobs. Parts cost $50-130, depending on the brake type versus $300-600 to have it done. You might have a one-time investment of $25-50 for special tools, but they work on all vehicles. It's almost as easy as repairing your clothes dryer yourself.

We got you beat on the vehicles. We kept a Grand Voyager for about 18 years and our 4-Runner is 10 years old. While I haven't built any kitchen cabinets, I did build some for a bathroom. While we did pay ex-logger to drop a tree (it was forked with branches intertwined), we did remove the stump and seeded grass ourselves. The ex-logger worked with my son, so we saved a lot over a tree service (did risk the liability though).

We haven't flipped houses though. But, as you've said, every little bit helps.

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Author: nagdabbit Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4991 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 9/28/2013 8:42 AM
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whyohwhyoh, we too are frugal.

I am curious, do you include your house in the NW?
We paid ours off years ago (always paying extra).
nag

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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4992 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 9/28/2013 12:48 PM
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I am curious, do you include your house in the NW?

I do. And I break it out in the year end summaries on this board.

However, the calculation is (Conservative Home Value not Zillow) *0.93 to account for cost to sell - mortgage.

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whyohwhyoh

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Author: AcmeFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4993 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 9/29/2013 11:10 AM
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(Conservative Home Value not Zillow)

For both of my homes, Zillow is very conservative. 5 - 10% below the actual value of the home...

Acme

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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4994 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 9/29/2013 10:12 PM
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Ditto here on the brake jobs. Parts cost $50-130,

Just did another brake job... this time on my wife's car today. It's not that often, but she just had her car smogged and they scared her about her brakes. Her brakes actually had at least another 20-30k left (only 85k on the Subaru)... but did the 4 anyway. $55 in parts... and maybe 2 hours with my 5 year old daughter "helping"... and a few beer "brakes". It was the first time I've done a Subaru, so I went to the youtubes for a minute or so... just to see if any special tools were needed and nope. Our old Jetta required some weird fork tool that you could rent for free at the parts store.

With the youtubes almost anyone can do these types of tasks (no excuses). There are actual incredibly detailed videos where one can watch someone do the job bolt by bolt on their actual make/model. Crazy what is available nowadays.

We got you beat on the vehicles.

Yeah I wrecked the Metro so had to get rid of it, loved the "go-cart"...

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whyohwhyoh

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Author: akck Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 4996 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 9/30/2013 12:12 PM
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... and maybe 2 hours with my 5 year old daughter "helping"..

You're starting them young. I had one of my sons (17 at the time), help me with the brakes once. After we were done, he asked, "is that all there is to it?" He's done his own brakes ever since and has always done his own oil changes.

The only tools I have are for the old rear drum brakes, the tool for removing and mounting all the springs. Oh, I did invest in a vacuum pump, so I could bleed the brakes by myself.

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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 5001 of 5068
Subject: Re: FI Part III: Buy a distressed home Date: 10/2/2013 10:46 PM
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You're starting them young.

She really wanted to help. Her job was using the jack to lift the car, and screwing on the lug nuts, little finger tight.

I don't do oil changes as often anymore. On my 2007 Honda the service manual requires changing the oil filter every other oil change. So I do the oil only changes, and take it in for the oil+filter changes. The $/hr including cleanup isn't there on the oil changes.

Brakes on the other hand... I save/make quite a bit $/hr... what maybe $150+/hr... and not that messy.

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whyohwhyoh

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