Time Jump Forward – Green Thumb

One of the items on my “must have” list for the house was “low maintenance outdoor space.”  A big ol’ lawn just wasn’t appealing, and a garden wasn’t something I saw having any interest in really.  So I managed to find a place with a minimal front yard – which, incidentally it turns out my neighbour mows – and no lawn in the back; it’s all deck.  Amazing.

Except now I’m having lots of fun planting things.  I have baskets and pots all over the deck, and it’s all feeling very lush.  I’ve even (with help) planted (gifted) hostas in the front, too, along with some wee flowers.  I’m actually really happy that this week I’ve been finding so much joy in my outdoor space.  Every morning, watering things, playing in the dirt, and puttering with the flowers.  We’ll see how this goes this year, and then next year I’ll try to expand beyond the herbs and blueberries and grow more food in planters in the back.

Front and back are weeded at last, plants are watered and happy

A photo posted by Jessica (@613jess) on May 28, 2016 at 8:32am PDT

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More Time Jump.

Well.  After starting up with a solid plan and the best of intentions, this blog kind of fell by the wayside.  Over the last few days I’d been thinking about it, though, and am here to resurrect it.

Since I last blogged – just after I got the keys – it’s been eight months.  I’ve been through first visits, first winter, and first forays into contracting work.

I’ve also changed jobs, dealt with some family emergencies, and just generally tried to get through life.  But re-reading my blog posts as I was starting this was a lot of fun, so I’m back – some of the posts that I had lots of thoughts about while they were fresh are probably going to end up a bit lighter, now, but then I can get into some meatier bits on fun subjects like buying furniture and figuring out what to do when parts of your fence randomly fall down.

More on those things later.

Time Jump.

Ok, so I have lots of other stuff along the way that I want to post about – but while it’s fresh, let’s fast forward to the past couple of weeks.  I’m updating from the new digs, amazeballs.

The Prep.

Two weeks ago, I figured it was time to start moving my money around, ensuring it all arrived in the right accounts at the right time.  Unfortunately, since I’m a totally spoiled Gen-Y’er, I expect all of this to happen immediately on-demand.  That’s not how banks work – transferring large sums of money between your accounts takes time, and things get put on hold because the banks go “listen, miss spends-money-in-ten-dollar-increments-usually… you can’t just go throwing that kinda coin around.”  Even though I did everything with plenty of time to spare, had everything lined up and timed out according to the way the banks work, it was nonetheless quite stressful.

Last week involved all the final arrangements for things – doing the final walk-through of the house, signing a billion documents with the lawyer, getting The Big Cheque at the bank, and then finally the keys and the move.

The Keys.

Getting the keys was very anticlimactic.  After all the work that goes into this whole process and decision, you get a phone call, show up at the lawyer’s office, and are handed a key.  That’s it.  Congratulations, best of luck in your new home, general niceties and whatnot, but it somehow doesn’t seem real that getting this tiny piece of metal means you now own a house (or co-own it with the bank, I guess).

What I will say, however, is this moment was a great example of “under promise and over deliver.”  I was prepared – by my realtor, by the bank, by my lawyer – for the key-moment to happen at the end of business or close-to then; I got my keys at 1:15 p.m.

The Chaos.

After getting the keys, I took a load of small stuff including cleaning supplies to the house, with the help of my folks.  We walked around, made sure everything looked good, and then cleaned up, then grabbed dinner and then I chaotically finished packing anything that wasn’t yet done.

The next morning, the movers arrived at 8:15 a.m. and were finished by 1:00 p.m.  Movers are the best, it is so worth it – they picked up all the furniture and boxes from two locations, did some additional moving in one of those locations, and then unpacked everything on an exceptionally hot day.  The only hiccups were a broken fixture (no biggie) and my box springs don’t fit up my staircase.  Alas – my first unexpected pain-in-the-ass expense as a homeowner will be for split box springs.

Since the movers finished, I’ve been going out and picking up things that I thought I had but don’t seem to, or that I never really needed before now – like a hose, and a step-stool.

All but two boxes of books are unpacked, and I’ve been purging away as much as I can.

So that’s what’s up!  Today’s adventures included the purchase of some storage binders for CD’s to try and save space on that, and actually using the stove for the first time even though I was super paranoid that despite cooking all the time somehow THIS time I’d set my house on fire… I was victorious, and dinner was delicious.

The Realtor.

Note: I first wrote this about eight months ago, just as I was getting ready to purchase.  I’ve left the post largely unedited to capture what was going through at the time.

The past couple of weeks have been so stressful, it’s been a nice break to blog about times I was more organized and thoughtful about everything.  Last week was all about making sure all my finances were in order, and this week was the final walkthrough, a visit to the lawyer, getting all my final arrangements made with the movers and utilities and all that fun stuff, and ensuring everything is ready for the move.  The move stuff is the most difficult part, believe it or not, in part because everything’s basically been in storage for a couple of years.  Trying to think ahead and plan out where things will go is tough when you have boxes and boxes of “mystery stuff.”

Anyway.  My former rational self.

Up to now in the search everything’s been pretty hypothetical – what would I want, what would it cost, etc.  After doing all that researching and thinking, I was ready to bring in a professional to help actually search.  This timing coincided, of course, with being financially ready to make a move.  In March, I began reaching out to a couple of realtors and was on-the-hunt by April.  By June, I’d found my house.

Before I get into what to look for in a realtor as a buyer, I think it’s important to point out why you should work with a realtor, as a buyer.  The reason comes back to why I called out to the Facebook Hive Mind – most people don’t have a lot of experience on their own in buying and selling real estate.  Even if you’ve bought a house or two, compare that to the amount of experience you have in other things – for most of us, with home buying, it’s not a lot.  A realtor deals with this all the time and helps guide you through stressful, emotional, and a financially critical process.  And – they do this with no direct cost to you as a buyer; the seller pays realtor fees, not the buyer.  Check out howrealtorshelp.ca for more on why you should hire a realtor.

I met up with my now-realtor, who was a contact I had from a personal referral – we chatted about what I was looking for, what their strategy would be, and it really didn’t take long to know that it would be a good working relationship.

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Maybe don’t hire someone like Lionel Hutz or Gil Gunderson…

There are a few things to talk about with a potential realtor – before making my decision formally, the things I wanted to know about were:

  • Details on past experience; how long have you been doing this, how well do you know the communities I’m interested in?
  • Details on the strategy and approach for both the search and for negotiations
  • Details on how we would stay in touch throughout the process (we mostly texted and phoned, I was always responded to essentially immediately, no matter what day or time)
  • Details on managing my expectations – including a discussion around the list-to-sale-price ratio

One other consideration was how does this work – contractually speaking.  Did I need to sign anything?  Several realtors I spoke to – including mine – did not require anything in writing to work together until it got time to work on a deal, and the term of that arrangement could be as short or as long as I liked – in other words, once I found a house I wanted to buy, we could do the paperwork such that we were only formally working on that deal.  If that deal didn’t work out, I wasn’t stuck.  Not all realtors work this way, however – and it’s important to understand what you are (or are not) signing up for.

Once I had made my decision about the realtor, it took no time at all before I was being e-mailed listings.  This is something that the realtor sets up with/for you through MLS.  Basically a bunch of search criteria that you discuss are set up and then when new listings match that criteria you get an e-mail – and so does your realtor.  The critical thing here, in competitive markets, is that by working with a realtor you’re getting access to information before it goes on the MLS website publicly.  So does everyone else working with a realtor who has the same sort of search criteria that would make that listing pop up, but it was definitely helpful getting that early heads up.

Once you find some listings you are interested in from these search criteria, you start going to look at the houses.  It’s so much different – and so much better – going with a realtor to a house than going to an Open House.  We started out by going to all kinds of things – several listings at a time – and then were a little more targeted in our viewings.  My realtor was great at pointing out things that I had no idea about – like efflorescence in the basement, signs of poor maintenance, and of course things that maybe didn’t look amazing right then but had potential and were worth thinking about.  The important thing for me was that I never felt pressured in any house – there was never a sense that I was being pitched on every house we went to; in fact sometimes I would look at a house and go “I love this!” and my realtor would remind me of little things like how difficult it was to get in and out of the driveway and other things that you might think in the heat of the moment aren’t THAT big of a deal but ultimately would probably grate on you.

At any rate – work with a realtor, and make sure it’s someone you’re comfortable with, someone who gets what you want and what you don’t, someone who is very responsive – and someone who can remind you of potential, seeing past what’s immediately obvious, when that’s called for; as well as someone who brings things back to reality when needed, too.

Facebook Hive Mind.

Most people don’t buy and sell a lot of real estate – so I thought I would turn to social media to crowd-source that experience.

Enter Facebook Hive Mind.

I asked five questions, broadly, through Facebook – in addition to all the private conversations I had with all kinds of people over the last year or so about this.  Each question was answered by a dozen different people on average, and these answers were so helpful.

The questions I asked, and some of my favourite answers, follow.

What’s one thing you wish you knew to look for, while you were looking?

Basically every answer I got here was amazing.  One thing that in a million years I never would have thought to consider – and I did end up thinking about it, at every single property – was ‘where will I shovel the snow?’ – big thanks to Jon W. for that tip.  I maybe didn’t actually buy a property that demonstrates that very well, but the point is that I did think about it!

Although there was a lot of other really useful stuff packed into Janine F.‘s reply, what I kept hearing in my head at each house was “how big are the rooms in NUMBERS, not in how you feel about them.”  This is so critical, especially when looking at an empty space – and actually also when looking at some spaces that were way over-crowded.

What did you look for in your realtor?

A number of the responders here recommended their realtors, which is great. I didn’t go with any of those people, but I too would recommend my realtor.

Best piece of advice here was from Sharon A., who noted that “quick responsiveness and client prioritization” were priorities, and that it was key to work with “someone with good communication skills so you’re both very clearly on the same page.”  That’s ultimately what I went for – someone who was consistently very responsive and someone who understood what I wanted and was always making sure we were on the same page.

How did you know when you found ‘the one’?

Some of the replies here were very practical, and others were of the ‘you just know’ variety.  In the end, I think for me that both were true.  I knew when I spotted good value, in a location that I liked, with all my major must-haves met and none of my can’t-haves spoiling the deal.  I also just knew it was the one.

I likened the “you just know”-ness of the whole process, though, when talking with someone about all of this, as being like dating.  Sometimes, the houses that were perfect on paper – everything that I should want, everything that is good for me – I just wasn’t that into; and sometimes, the houses that made NO sense on paper – the ones that were a little older, maybe a little rugged, came with all kinds of issues – were the ones that I’d fall for.  Ugh, c’est la vie.

In the end I did let the more practical side win out, but man did I fall pretty hard for a couple of bad-boy houses earlier in the search.

Did you take on any home renos after you bought?

You did it again, Facebook Hive Mind, and came through with great answers to this one.  Per Janine‘s recommendation, I picked up a copy of The Holmes Inspection, and read about what to look for and for some projects what kinds of things are involved.  A number of people’s replies were along the lines of “know your limits.”  There are things you can do, and things that require a professional – for some people, the “things you can do” is painting; for others, it’s remodelling an entire floor of the house.  Know which kind of person you are.

For those who took on a lot of work, I think my favourite replies were from Jenn O-T., due to the great detail and amazing results that she shared, as well as Amanda W., who noted that over their past eight years in their current home, they have taken on about one project a year.  I really appreciated that sense of pacing.

Did you buy mortgage insurance?

This was my most recent ask.  Survey says… do not get mortgage insurance, and instead get (or top up) term-life/disability insurance (if anything).  Lots of input and experience from people on this one, but I think a really key point was raised by Jon G., who noted that with mortgage insurance your premium never shrinks despite the fact that your payout is constantly shrinking every time you pay off a bit more of your mortgage; whereas with term life/disability, your payout stays the same.

So thank you, Facebook Hive Mind.  All of your responses were fantastic, and I really and truly did think of all your great feedback as I searched through house after house.

Beware of HGTV

I’m closing in on the fun stuff – figuring out what you want from your new home.  I started watching a ton of HGTV to see what kind of decision making was being presented… and for more on that, I point you to McSweeney’s List of Features of I Demand in a Home After Watching HGTV’s House Hunters.

With that in mind as you begin your search, maybe don’t watch too much HGTV.  Except… I watched and still watch a ton of HGTV, and by the way if you know any Ottawa-area Bryan Baeumler-types who are on the market, holla at me, alright?

Anyway.  Figuring out what you want.

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Father of The Bride

Location, Location, Location

This is the one thing that absolutely cannot be changed about a house; you can fix or change or learn to live with a lot of things, but the neighbourhood is not one of them.  For me, I wanted to live downtown – but I knew that my budget would restrict me from that, so I opened my search to “as close to downtown as is reasonably affordable.”  Maybe I couldn’t stumble home from the pub, but I wanted to be a cheap Uber-ride away.

To Condo, or Not To Condo

The condo question.  There are a few things going on here.  First, on the financial side of things – while the initial cost may be substantially cheaper (or may not be in some cases), you really need to consider your condo fees as part of the equation in terms of ongoing monthly expenses; if, say, you just shifted those fees into your mortgage payment instead, you’re likely to find that you can afford a lot more house.  At the same time, the condo fees will include some of the maintenance on the home, so to really get an apples-to-apples comparison you need to estimate what it would cost for you to maintain the things that are part of the condo fee in a freehold.

Beyond finances, it’s a lifestyle question – based on the location, a condo might be the only realistic option.  As well, in terms of benefits, many of the perks of being a tenant apply – it’s someone else’s job to worry about all kinds of maintenance and fixes.  On the other hand, in a condo you may find you’re accountable financially for far more than you really and truly need.  You may be paying to maintain a pool, a gym, employ on-site staff, not to mention the additional property and assets – like, say, roads and sewers – that you may be paying for with your condo.  It adds up fast; and your condo fees certainly won’t cover everything – you’ll still have surprises, and you’ll still have things to maintain as a homeowner.  I found, in some instances, condos that had fees that were as much as my mortgage payment would have been!

Some condos are managed very well, and some very poorly.  I know people who live in really well-run condos, and they are very happy; I know people who live in not-so-well-run condos, and they are pissed.  One thing I’ve noticed is that many people I know who have purchased condos end up getting on their condo board ASAP to ensure that they have some more control over how the condo is run; maybe you’re not super comfortable just leaving a lot of things up to your neighbours.  Consider whether or not you’re going to be able to give up a certain level of autonomy in a condo – or are you going to forego all the benefits of the time you save by not mowing your lawn and shovelling your driveway because you’re now spending this time in board meetings?

It’s all about risk tolerance – am I more comfortable with the risk associated with allowing other people to have a vote on the maintenance and prioritization of things on my property, or am I more comfortable carrying the entire burden of maintenance and prioritization on my own?  For me, it was the latter – so I entirely excluded condos from my search.

The Building

This is an area where many people have a vision.  I did not at all.  The building itself wasn’t a big driving factor for me – if I could theoretically live in an apartment that was not a condo, I’d have been open to that; I was open to townhomes, semi-detached homes and detached single-family homes.  Bungalows, split-levels, and multi-storey homes.  I prioritized location over building type – because if I worried too much about building type, what I wanted was that house from Father of The Bride, and I wanted it in Centertown, fully upgraded with quartz counters, gas range, spa-like bathrooms, a wine cellar, a butler, and a cheap mortgage.  Alas.  Knowing that what I wanted were the wants of a crazy person, the wants of someone who’s been watching too much HGTV, I was entirely flexible.

What am I willing to take on?

The last things I considered were my deal breakers.  Not what did I want the house to have – number of rooms, number of baths, key features, etc. – but what could it absolutely not have?  What was the work that might be needed that I was not willing to do?  New roof? Heat source?  Basement troubles?  Looking in older, more established neighbourhoods meant looking at older homes.  The budget was going to dictate how much of that older home may or may not have been upgraded since it was originally built.

I decided that I was willing to take on cosmetic issues – so what if I didn’t like some finishes and fixtures – but what it absolutely could not require was major electrical work, or foundation work of any kind.  Unsurprisingly, of course, many of the homes I saw required either substantial electric or foundation work.  Knowing up front what my deal breakers were helped me not to get too attached as I was looking at houses that might have seemed really great, but required more work than I would have the capacity – the finances or the knowledge – to take on.

In the next few posts, I’ll talk about actually conducting the search, some of the crazy and some of the awesome things I saw, and tapping into one of the best resources ever – FACEBOOK HIVE MIND!

The Money.

You’ve made the decision.  You want to buy a house.  Through your initial estimates of your finances, you conclude that you have approximately zero dollars for this.

Hopefully, dear reader, you are a smarter person than I am and you have some savings set aside, because you imagined that someday this might be your goal, so you could be prepared for that.  If not, you’ve now gotta figure out a way to find that money – maybe you need to ditch some discretionary expenses, or maybe you need to take on a roommate, or maybe you need to move back in with your family – who will let you live with them rent free so that you can get back the hell out of their house as soon as you can.  That’s what I did.  It was drastic, it was not an easy decision, but it was absolutely the right one.  Thanks, mom.

But how much do you need to save?  When you have the coin for a house, how much house can you afford?  My thought process around finances went something like this:

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How much can I borrow?

What is the bank willing to lend me?  I started figuring this out by googling mortgage affordability calculators and trying a few of them to see what they said.  A few you might want to consider:

You’ll need to enter your gross income, a downpayment amount, any debt information you have, an estimate of what your property tax might be, and an estimate of what your heating costs might be, in addition to a mortgage rate and an amortization period.

After trying these calculators, you’ll have a rough idea of what a lender might be willing to give you.  But, as they say, the banks will loan you just enough rope to hang yourself.

How much can I afford?

How much does “what a lender is willing to give me” line up with “how much should I actually consider borrowing”? To figure that out, you’ll need to figure out what your debt service ratios are.

First, there’s your Gross Debt Service ratio – your monthly housing costs (including mortgage principal and interest, property taxes and heating) should not be in excess of 32% of your gross monthly income.

Then, there’s your Total Debt Service ratio – your entire debt load (so, the above things plus any other debt you might be carrying, like credit cards, student loans, your car, etc.) should not be in excess of 40% of your gross monthly income.

You can learn more about calculating your GDS and TDS on the CMHC website.

Now you know how much you can borrow and how much you can afford to borrow, according to what “they” say.

But how much am I comfortable borrowing?

Me? I wanted to be more conservative.  These calculations above are all about where you max out – they really don’t consider what your spending habits are like on other things (discretionary expenses like, oh, I dunno – food, entertainment, Apple products, handbags… ok, so maybe some of those are just my problem).  My point is that they’re not necessarily calculations as to what you should do; they’re not necessarily what you’re comfortable doing, not what makes the most sense for you based on other things like ‘if you take on your max affordability, are you actually pretty terrible at sticking to your budget, and will you run out of money for wine?’ I don’t want that happening to you, and I absolutely cannot have that happen to me.

So now that you know your maxed-out ceiling, you should sit down and write out a budget.  You should include paying off your debts, as well as your spending habits on food, entertainment, medical expenses, travel, gifts, etc.  You should think about cash savings for short term goals and emergencies, and how you’re going to approach longer-term savings and investing.  When I did this, I started whittling down my desired mortgage payment.

For help with budgeting, check out this list of Best Budgeting Apps – I’ve tried YNAB and Spendee, but always find myself just creating my own spreadsheet in the end.

Let’s just get to looking at houses already, amirite??

Okay.  So now you have a pretty solid idea about your money situation.  At this point, I started looking at what houses in my affordable range looked like – and you know what? I wasn’t exactly thrilled.  So I had to take some time to think about what I really wanted (more on that in the next post) and reconcile that with what I could actually afford and be comfortable with.  I now had an idea of the kind of downpayment I was going to be shooting for – I had a goal.

With that goal in mind, I set up a plan – save a certain amount, every month – and I had to remind myself that I needed to actually put in the effort to stick to that plan and reach that goal, while also not beating myself up about it if I didn’t rigidly stick to that plan – off I went.

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