How Much Money Should I Put Into My House?

I’m sorry to break it to you, but you’ll never know the definitive answer to this question. It is the ultimate unanswerable question, and it’ll haunt you throughout your life as a homeowner. Tough breaks, but that’s just how it is.

See, when you first find your dream home, the question is: how much should you put down? Then, it becomes: how much should you spend on renovations? Then: should we pay off the mortgage faster or invest our money? Then, when your house is paid off: should we take a home equity loan to finance such-and-such project/business?

And the most frustrating thing is that the only answer to all these questions is: It Depends.

I know. Frustrating, right?

Everyone grapples with this question, partially because it just seems so nice not to have a mortgage hanging over your head. But then you start to realize how much you’d have to give up in your everyday life in order to offload that mortgage, and it starts feeling less desirable.

My general position is this. You have to look at your real estate holding as an investment. And what are you supposed to do with investments? Diversify! Therefore, you don’t want to put all of your money into real estate. Not only is it one of the least liquid assets (meaning it’s hard to access your cash), putting money into a house can potentially imprison you there. If you’re not sure you want to live in that house the rest of your life, you may want to reconsider tying up all your money there.

But that’s just me.

A reader recently sent me an interesting story of one man who was so committed to a debt-free life, he paid off his 2nd mortgage in three years. Despite his single-minded commitment, he still notes that aggressively paying down a mortgage isn’t the smart choice for everyone.

For an excellent rundown of the popular wisdom on the topic from personal finance heavyweights, check out Get Rich Slowly’s expert advice redux.
So readers, what do you think? Are you planning to pay down your debt fast and furiously, or are you ok paying interest in exchange for flexibility?

A Man, A Rock, and the Sea

We humans seem to have an unstoppable drive to explore, conquer, and dominate…especially when it comes to real estate. From elaborate treehouses built high above the ground, to rural country cottages far from civilization, we practically dare Mother Nature to try to contain us.

This is not a new phenomenon. Back in the early 1900s, a man had a dream. He wanted to live on a rock in the Narrangansett Bay off the coast of Rhode Island:

And so, with the help of an artist, he sketched out the 3-story, 23-room Clingstone Mansion with lots of big windows. Despite heavy skepticism from the public, he made his dream into reality. It was to be a place where no one could bother him:

The man died in 1938. His house stood empty for decades, suffering from brutal weather and vandalism, until it was purchased by a distant cousin in 1961 for $3,600. The cousin is an architect named Henry Wood, and he undertook the monumental effort of putting the home back together (as quoted in the New York Times):

Every spring for a decade or so after the sale, Mr. Wood said, he cursed “this albatross,” his roofless, windowless, floorless, powerless, waterless house. Wrangling what had been a rich man’s plaything, attended by servants and even its own shipyard, into a working couple’s weekend getaway turned out to be much more than a working couple could handle. Eventually, though, as the Woods mustered the talents of their friends, Clingstone and its maintenance evolved into a communal lifestyle, and ultimately a kind of religion.

The house is an exercise in constant maintenance and pseudo-camping. In the early days, power was supplied by a generator, drinking water was brought in from the mainland, and toilets flushed into the sea. Now, solar panels, a wind turbine, and rainwater collection help the house run a bit more efficiently.

Henry has even found a solution for the epic maintenance Clingstone requires: every year around Memorial Day, he hosts a Clingstone work weekend, where 70 friends and volunteers come to the house to do everything from wash the house’s 65 windows to replace the sewer lines.

The house is stunning, but don’t plan on holding your wedding here. Not only is Henry Wood twice divorced, the three weddings hosted to date in Clingstone have all ended in divorce. I suppose the house is interested in supporting the free spirit, not matrimony.

Clingstone’s story is one of devotion, imagination, passion, and maybe a dash of insanity – I highly recommend reading the full account of its history in the New York Times.

Images courtesy the NYT

‘Townhouse or Condo’ Guessing Game

We throw around the terms “townhouse” and “condo” pretty regularly, but when it comes down to it, do we really know the technical definition of each?

To save us all future cocktail party embarrassment, I’ll clear this up once and for all.

• A Townhouse (or Townhome) is a style of architecture, usually defined as having multiple floors, often with shared walls between units.
• A Condo (or Condominium) is a form of ownership, usually meaning owners have ownership rights from the “paint, in” and all other space is commonly owned.

You can have a condo that’s not a townhouse. You can have a townhouse that’s not a condo. Or you can have a townhouse-style condo.

Make sense? More discussion on the matter here.

Ask a Realtor: Do you ever get the jealousies?

When it comes to East Los Angeles real estate, Rob Kallick is your man. With an affinity for mid-century and craftsman architecture, Rob seeks out the most stunning homes in East Los Angeles (including hip ‘hoods like Silver Lake, Echo Park, and Los Feliz) for his blog, Take Sunset. And because he’s a realtor, they all happen to be for sale (yipee!). I sat down with Rob recently to dig into the mind of a realtor.

• Do you ever get jealous of clients, watching them buy amazing, jaw-dropping homes?

I do! There are some AMAZING homes in LA and I definitely fantasize about trading places with some of the owners. However this only drives me to work harder so I can someday (hopefully soon) have an amazing house of my own. But when I’m checking out a million dollar mid-century in the Hills with a pool it’s hard not to get a little jealous sometimes!

• I’m sure you’ve seen a few dream homes while showing houses…what’s the latest favorite? And what would your perfect dream home be?
  

My dream home right now is an updated mid-century by a well-known architect. I think it would be so cool to live in a house with great design yet updated for today’s living standards. In general, my dream home would have a view, be high up in the hills and my fiance really wants a pool so we need that too. The interior would be very open, get lots of light, high ceilings, high end finishes and have three bedrooms.  A guest house would be nice, too.

• Do you think agent specialization in certain neighborhoods and types of homes really matters, or is it a marketing tool?

I think specialization is very legit. There’s something to be said about working with an agent who TRULY knows the neighborhood. They can help you avoid bad situations (like overpaying for a home) and point out not-so-obvious good situations. Furthermore, if an agent specializes in a type of home, it can come in very handy during home inspections and appraisals.

• Have you ever dealt with homebuyers who you can tell aren’t really ready to buy a home? What do you do in that situation?

Long term business and referrals are super important for a realtor, but our time is our most valuable asset. That means we have to be careful not to be “doormen” -  i.e., if someone just wants to see homes for fun and they aren’t real buyers, then a good agent needs to suss that out and focus their time on real buyers. It’s definitely important to engage with everyone we come in contact with on a regular basis, but not necessarily by driving them around to see homes. There are other ways to do that.

• How do you feel about working in an industry with such a bad reputation? It seems realtors get short shrift, similar to lawyers and insurance salesmen.

It’s hard. People definitely come into a relationship with a realtor with a pre-conceived notion and some skepticism. It’s a good realtor’s job to win them over and earn their trust. I think some realtors just don’t give the time and attention to their clients, but most of the “shady” agents get pushed out of the business.

• How can a homebuyer ensure they’re working with a good realtor?

It’s really about making sure your agent is committed to you and has your best interests in mind. Does your agent reply to your emails in a timely manner? Are they available to take you out for showings or do they brush you off? Are they writing offers with other clients on the same house (be sure they’re not!)?

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If you love East LA or mid-century modern homes, I encourage you to follow Rob’s blog, Take Sunset. You’ll notice I source a lot of my Real Estate Porn from there. Get your fix straight from the source! Also, if you’re interested in moving to LA, Take Sunset has a bunch of useful neighborhood guides.

Live Like a Saint in Seattle’s Sanctuary

Living in a church is all the rage these days, so it shouldn’t be a surprise to see a townhouse development within a massive church in Seattle’s hip Capitol Hill neighborhood.

The townhouses started selling a year ago, and I believe most are sold, since I can’t seem to find MLS listings anywhere online. The price tags on these 2 bedroom places was anywhere from $900k – $1.6 million. If you can imagine it, each townhouse is unique, and is arranged in a circle around the old church, with a courtyard “Sanctuary” in the middle. Pretty neat!

But take a look at the photos and tell me: would you live in it?

The stained glass is very pretty, but ponder this: all the light would have a yellow twinge. And you could never really see OUT. Hope the buyers aren’t claustrophobic.

Take a look at the full tour:

While I’m skeptical about living in a grand landmark with such an unusual light situation, it seems the people who’ve seen the units in person are over the moon about them. If you’re into old landmark renovations, you should check out UrbnLivn’s video tour and review and Capitol Hill Seattle’s full scoop.

So what do you think? Would you live in an old church? Or is the stained glass and crown molding too much for you?

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