EPISODE 9: Starter Homes – Dream Home or Nightmare?

Starter Homes – Dream Home or Nightmare

Hey look, it’s the Double Wide Dudes!

Mousetrap: Alright, alright. Welcome back to another episode of Double Wide Dudes. I appreciate you guys tuning in. We’ve had a pretty fun week AP, haven’t we?

AP: We have.

Mousetrap: With the fiesta shenanigans going on.

AP: Just been around the city the last few of weeks.

Mousetrap: I don’t think it is going to slow down though because we got the Spurs in the playoffs.

AP: It’s playoff time. This I-10 rivalry going on right now real hot and heavy.

Mousetrap: I am excited about that. Game six in Memphis was a pretty good showing of what the Spurs are actually capable of. So, if I was any team in the West I would be shaking in my boots right now.

AP: Yeah Khawai’s really come alive. I have to say he’s probably the number one player in the league right now.

Mousetrap: Best pound for pound?

AP: I am going to say so, the best two way player for sure, without a doubt.

Mousetrap: You’re going to dethrone the king there?

AP: I think I got to after this year’s performance, yes sir.

Mousetrap: I mean, we have a lot of sleepers on our team, that’s just the way Greg Popovich does it. He picks up sly players, players that aren’t really on anyone’s radar during the draft or when trade is going on.

AP: Yeah, kind of like Jonathan Simmons. He probably has one of the coolest stories out there. Do you know he actually paid $150 for an audition to try out for the D league up there in Austin? Now he’s one of my favorite players, definitely one of the most exciting that the Spurs have and getting a multimillion dollar contract. And that’s really a good lesson for a lot of us out there. You know, most of us are not going to get our dreams overnight. Most of us are going to have to put in hard work, long work and it is going to take some time before we see the fruits of our labor. And that’s absolutely true for the dream of homeownership.

Mousetrap: Yeah, not everyone is blessed with the opportunity to be 7ft to play in the NBA or to be born into a family where everything is easy.

AP: That’s right, most of us are going to have to put in a hard days work today, tomorrow and for however long it takes to achieve our goals and our dreams.

Mousetrap: That is why I’m really excited about this podcast AP. It is important to bring these topics to light and help people realize that you’re not going to get the home of your dreams the first go around. And even though the bank says you can afford it, it doesn’t necessarily mean it is in your best interest.

AP: Right, and it either becomes the home of their dreams or the home of their nightmares when these folks bite off more than they can chew. And that is definitely something we saw here in South Texas at the height of the oil boom; young kids in their 20s and 30s and all of a sudden they’re making $100,000 driving for these oil trucks. And definitely working crazy hours. I don’t want to take that away from them. But just because the bank says you can afford a home, doesn’t always mean that that’s the right choice for you. And unfortunately, a lot of those folks ended up losing their homes when the oil boom crashed.

It’s not always just about foreclosure either Mousetrap, I know that both you and I have friends that bit of more than they could chew at the beginning just because the bank said that they could and all their friends and family thought it was a nice-looking home. And it was but now it is essentially a nice-looking prison because they are going to work, they’re paying the mortgage, they’re going to work, they’re paying their mortgage and they can’t even go out at night and enjoy their best friend who just got married.

Mousetrap: I mean these weekends get stretched real thin when you’re going to go out for a nice dinner or movie or just do something fun that is going to kind of alleviate the stress from your daily life; just winding down and taking time to set apart for yourself is going to be really important on your health and your happiness. Things are going to keep your level and just keep you moving forward.

AP: Right, and it’s not just time either Mousetrap. You also have to put away some money for yourself. And it certainly important to invest and to think about the future. But at the end of the day none of us are taking this with us when we go and I really think it’s critical to put a little aside, to get out and enjoy life. We joke about you being the most interesting man on the team but is just really cool to see the pictures of your trips to Australia and I can’t even think of all the places that you have been to. But I have to imagine if you had a sky-high mortgage you probably wouldn’t be taking those trips.

Mousetrap: Absolutely. I had just got out of college and thankful I had a job but it wasn’t something that I was passionate about or would really be enthused about doing on a day-to-day basis. So I had the opportunity to go traveling. I bought a one-way ticket to Thailand. I did a little country hopping you would say; me and my buddy from high school, well really, from elementary. Some of the friends that I was talking about in the last episode; he is living an incredible lifestyle. He has been doing this since 2009. In the summers he works up in Alaska as a tour guide and in the winters he can travel. And back in 2013, I saw him going to Thailand and it was just a perfect opportunity for me. And if I had a mortgage or something to tie me down that definitely wasn’t in my plans and I wouldn’t be able to do that.

AP: Yes, it’s important for folks Mousetrap to think about what they want out of life. I have seen a lot of my friends that got out of high school, they went to college because that’s what everybody said that they were supposed to do. Got their masters because that’s what everybody said they were supposed to do. And now they’re just getting newly married, no kids but they are looking at 2,000 to 3,000 square foot homes because that’s where everybody says they’re supposed to do. And life is not necessarily supposed to be lived like that. Buying a home is a huge decision and is one that only you can make for yourself. And if you’re buying a home that you love because you love it, fantastic. If you’re not considering a starter home because of what others may say or think about you, well unless they’re paying your mortgage, I don’t know how much that really should matter.

Mousetrap: Yeah, that is why it’s really important to consider an affordable housing in your first home as an option AP. You don’t want to be a slave to paying your mortgage. I mean if you enjoy your job, that’s a good. You’re going to keep working and keep moving forward. When you jump out of the gate and get into a high paying mortgage right out of the back, it is really going to leave you little options to go to the lake or go to the beach, take short vacations with your friends, visit family in another state, whatever it may be. Those funds that you would normally use for that are basically going to go to your high mortgage.

AP: Right, and let’s not forget about the people that don’t love their job. A lot of folks out there, especially right out of college – you were just talking about how that job wasn’t your passion. And I think that right out of college, folks in their 20s and 30s, they deserve to find something that they’re passionate about to go to work to every day. And like you said, if you have a high mortgage, you then essentially have to go to work because your slave to that high mortgage.

Mousetrap: That’s a nightmare, especially when it’s repetitive and you really feel dragged down by the whole situation. I have been lucky enough to have the opposite of that but a lot of people don’t. That is why it is really important to consider an affordable house as your starter home AP because that gives you the freedom to do things that you want to do and not be stuck to paying a high mortgage.

AP: Overall, quality of life should improve with the housing purchase. And if you have a beautiful house from the outside but you are trapped inside of it because you can’t afford to go pay to do anything else, then that might not be the dream situation you thought you are getting into.

And one really important thing to consider when making a purchase is what is called an opportunity cost. And basically, what that is, is if you spend a dollar here on the left then that’s a dollar you don’t have to spend here on the right, if that makes sense. And even something as simple as keeping your mortgage $500 less than you might have been looking at either frees up $500 to go to the beach like you are talking about, go take a trip to see a friend get married, $500 to put away in savings for something bigger and better. And that’s really what a starter home is all about. You know, I’ve got a buddy up in the hill country, up there in Pipe Creek and him and his wife, they purchased a single wide for their first home. And they also purchased a beautiful 5 acre piece of property for it. And this is when they just got married and back before they had kids. But because of the decisions they made then and there to truly purchase a starter home, a home they could afford, they were able to pay off the note on both the single wide and the land much much quicker and when it was all said and done they used that land is equity on a loan to build a custom site built home of their dreams.

Mousetrap: That’s a really good example AP. He didn’t go with the house of his dreams in the country; you know get a builder to go out there and drop a ridiculous amount of money. He made a smart choice of going with an affordable house at first, that way he could put more money towards the land and then essentially do what he and his wife originally planned.

And that kind of reminds me of my brother, he recently just sold his house to move into an apartment because they are going to start saving a little bit more money to actually get into the home that they want. Things were a little tight and he didn’t want something happening to the house, the AC going out, if something with the foundation were to happen, he didn’t really have the funds to pay for a fix like that. So he made the choice to sell the home and save a little bit more money by getting an apartment for now and then him and his wife and family can get into something that they want.

AP: Yes, buying a home is a long-term play. It is something that needs to be thought out for the long term, not just the here and now. And even if you have to stay with your folks an extra year or two or stay in an apartment or rental home for an extra year or two to get a good solid foundation under you, it’s definitely something that makes the experience of buying a home that much more enjoyable. You know homes definitely do take maintenance and definitely do cost money to keep in good working order and that’s the benefit of starter homes or affordable housing in general. It gives you something you can get in, it keeps the mortgage low and frees up money not just for travel and other freedoms we talked about but also for things like maintenance or repairs or remodels that you want to do in your current home. You know, statistically most folks move every 5 to 7 years and there is a reason they call it a starter home. Chances are by the numbers, your first home is not going to be your forever home. And with that in mind I think it’s a really good idea to going to this home purchase with the long-term goals in mind and really making sure that this initial home purchase sets you and your family up for where you want to be 10 to 20 years from now.

Mousetrap: It’s really a step-by-step process AP. You need to be looking at your first home as a long-term investment, you know what are you going to be doing five or six years from now? Are you going to sell the home, are you going to keep it, are you going to renovate it, are you going to rent it out; there is a lot of possibilities that you can do. Sometimes you have to make a short-term sacrifice today to be more comfortable tomorrow.

AP: Absolutely. I couldn’t agree more. I remember the first house Elsa and I bought. We are going on seven years of marriage this year and we have had three houses in our relationship together. As our family got bigger, we kept adding kids; we’re at four now, we had to keep expanding and growing our houses.

But I remember our first home up in Canyon Lake and having to wake up at 5 o’clock in the mornings so I could make the hour – hour and a half drive to work and do it all over again at the end of the day. It definitely wasn’t something I wanted to do but for us it made a lot more sense than buying an apartment closer to town and spending our money that way. So now it is not a home that we live in currently but it’s one that we are able to rent out and someone else is helping us to pay the mortgage on that one. You know, what is easy today is usually not what’s going to be easier for tomorrow. And what’s fun today is usually not what is going to set you up for success tomorrow. And that is what starter homes are really all about. You know getting something that is good for now. Getting something that sets you up better today than you were yesterday but also sets you up better for tomorrow then maybe making another decision. And buying the home of your dreams your first go around, I can’t emphasize enough has set more people up for failure than I really care to mention.

Mousetrap: That definitely doesn’t sound like fun – that hour and a half commute.

AP: It makes fiesta traffic looks like a cakewalk. But I’m really glad we did it. We were a newly married couple, I was still try to find my career, my path in life and had we purchased a home that maybe we wanted to at the time, that cost a bit more, then there is a strong possibility that we could have lost that house.

Mousetrap: Yes, it is important to get an affordable home as your starter home. If you are first-time homebuyer, you don’t necessarily want to max out your budget just because the bank says you can. You want to leave money to enjoy time with your family and friends, be able to have those freedoms when you’re young and make those good memories while at the same time set yourself up for long-term success.

Well that does it for this episode guys. Tune in for the next one where we are going to give you three starter home hacks to do just that. Thanks again and will talk to you soon.