by Mrs. Xennial
Our house in Hawaii is FINALLY sold. It’s been a struggle for several reasons. We vacated the house by September 2019, but had leftover things to do for the house before it could be listed. Aside from bulky item pickup, lawn service, and house cleaning, the biggest pain was PAINTING. We had to arrange most of the above services remotely, and had our real estate agent go and check it out to make sure the work was completed to satisfaction. House cleaning wasn’t supposed to be painful; but the first person who did it (a friend/former student of mine) literally twisted her ankle mid-cleaning, so we hired the second person, who was recommended by the realtor, who then almost burnt the house down. (The painters said it was filled with smoke because the stove was still on. Luckily, there was no damage to the house.) Worst of it all, the painter was scheduled to be done by October, but they didn’t even start until November. Guess when the house was listed? THE SUNDAY AFTER THANKSGIVING (FML amiright?). So with the holidays and the Airbnb house sellers, we were STUCK.
(Note: in 2019, the State government of Hawaii decided to charge a whole lot more towards vacation rental homes, and thus a lot of investors were in a hurry to get rid of the properties because it may just not be worth keeping the property.)
We had an offer some time in December. The number was so low we thought it was an insult. Then it went quiet for so long I almost had a heart attack. Then finally, almost right after we had reduced the price a little, we got another offer. We counter-offered a bit, but it was finally under contract.
We cannot emphasize enough about how lucky we are even with the insulting offer, painter getting in their GD Hawaiian timeline… we were lucky because the house went under contract before COVID hits. Even though real estate was categorized as essential, I still cannot imagine what would have happened if we didn’t go under contract in time. Still, with the “Hawaiian Time,” we had to extend the closing date by 10 days. To us, it’s simply “yes, take the 10 days but close already.” It is now officially in the hands of the new buyers, who I hope will enjoy the Hawaii experience like we had hoped to have in this house near the ocean.
Yet, reflecting on this whole journey of my first home ownership (second for Mr. Xennial), there are a few things I really hope I had known before we bought the house, and of course, selling it after…
- LOCATION LOCATION LOCATION…can cost you.
If you watch HGTV shows as much as we do, you have heard people repetitively say “location, location, location” in just about every episode. In our mind almost 6 years ago, we wanted to live away from the hustle and bustle. That, in Hawaii term, means “living in the country.” We did enjoy the drive in the beginning because we were so close to the ocean, and we had a pretty good sized yard. Then after a while when our careers seemed to hit the fan (workload wise), the drive became another burden on top of everything that went wrong, and the project list to maintain the house just keeps piling up. Mind you, we lived somewhere we could see sunrise every morning over the ocean, and we had stopped enjoying the view because the struggles blurred our mind so much. In fairness, even if we could start all over in Hawaii, I doubt we would be okay living near our work just because how crowded it is EVERYWHERE on the south shore of Oahu. (Fun fact: there are one million people living on the island of Oahu alone, NOT counting the tourists.) But even though our house was beautiful and its location was good (in a vacation/retirement sense), the commute eventually killed the beauty of it.
2. WE WEREN’T AWARE OF THE TERM, “HOUSE POOR“
Like most people (I hope I’m not the only one here), we listened to the mortgage broker saying how great our credit score was, and how we can qualify for more, blah blah blah. AND WE WENT FOR THE TRAP. One thing I learn later on is that those peeps make commission based on the amount we lend (strike 1); they weren’t just being helpful and cheerful. So we were basically at the maximum payment amount that we want to pay for from the very beginning, and didn’t calculate in the fact that it doesn’t get any fucking cheaper over the years. I think by the end of year one, we were notified of a $700 increase in mortgage payment. We panicked, and re-financed (strike 2) TWICE (strike wtf). All because we didn’t know what we were doing and we let the mortgage peeps take over and tell us what to do.
Another thing that was devastating was that as we were paying the monthly payment, I failed to recognize living near the ocean literally came with a price. Our flood insurance, under the new ruling of FEMA, was $500 a month ALONE (not including the main property insurance). Also, we went with whatever the mortgage peeps recommended, too, without price comparison on our own. I honestly don’t know how much lower we could find insurance simply because that house was sitting in the worst flood zone, and thus would be pricey regardless (even though it was built to code and lifted). Yet, not doing price comparison was definitely no bueno now that I know a bit more.
3. WE DIDN’T KNOW JACK ABOUT OUR PROPERTY
This kind of goes hand in hand with #2. The $700 increase actually wasn’t and shouldn’t be a surprise. We just didn’t know enough to foresee this. The contractor/builder, who bought the land built the two properties on it, had to tear down the original house that was deemed unlivable. So at the time of our purchase, our property was valued as a vacant land with nothing on it. The second year, the property was then valued as the “half acre yard with a 3 bedroom 2 baths on top of it”, which almost doubled the value, and hence doubled the property tax , which caused the increase. We also didn’t know enough to file the tax break for owner occupancy, and continued to let the mortgage broker and government take advantage of our lack of knowledge. I’m still not an expert, but learning over the past year or so definitely helped me questioning every payment and number that comes our way (when I can).
4. WE WEREN’T SMART ENOUGH TO HOUSE HACK
Okay, for this, I was the jackass that wasn’t smart enough. Mr. Xennial actually had this idea from time to time (particularly around the year before we move), that we’d move downstairs (which wouldn’t be quite legal, actually), and rent out the top floor to a family to help with the mortgage payment. However, my stubborn ass can’t seem to be okay with the fact that we will have a hard time when his son comes over every other weekend, since there’s no bedrooms to divide us for any type of privacy . And I was NOT ready to be that open and close to a teenager who is going through FULL-ON PUBERTY. (Okay and I’m the evil step mother, I admit.)
That’s the four things that came first through my head when I was thinking about writing on this topic, and honestly I still think there’s much to learn. We are currently under contract to purchase another property, and we used a good chunk of what we made from selling the house in Hawaii for the down payment, and also to pay off whatever loans we have currently. I also did a rough mortgage calculation and we settle on a number that I would be comfortable paying even if we don’t have any tenants. The mortgage broker also asked for a property insurance quote, and I requested several just to compare. Here’s the funny thing: remember for our ocean view property, the flood insurance was $500 a month? The new property in Washington, the property insurance that I settled with is estimated at $690 a YEAR (thanks for the WA state employee discount on insurance).
To summarize, if you are not yet a home owner, really calculate the pros and cons of owning a property, and learn more before you jump head in. Living this American dream like everyone else isn’t always the right path for everyone financially. For us, owning a property is a must because we struggled to find a rental unit that allows all of our furry kids, and the one that allows (like our current dwelling) is a shithole at best. I joke about us being in a “Tiger King” apartment complex even though I have never watched the show, and we are at the point where we are stressed out quite regularly from all the shit from our neighbors. I can’t guarantee we’d get the best neighbors after we move, but at least no one is directly next to us or on top of us with paper-thin walls…
Questions? Comments? I may not have answers, but I would love to hear your experiences. 🙂
Xennials on FI/RE 