We closed on our new home in March, after a two years search, a hundred plus home tours. We saw prices swell, rates increase and buyers go berserk, shelling out tens of thousands over asking, snapping homes sometimes without seeing them. If a Tesla passed a home we’d just seen, we knew it was lost.
Even after we cast our net wider, our ‘forever’ home – a three bedroom, single family with a small backyard – felt distant. Perhaps if we waited another year, the frenzy might subside. Except we didn’t know if waiting was the right thing to do.
Because the one question I could never reasonably find an answer for was if they were even homes, the kind we wanted, in our price range, in and around Denver. Further out, new developments cram taller structures next to each other for significantly higher property taxes and absurd final prices.
By sheer luck, and there’s no other way to call this, perhaps God’s grace is more humble, and some bravado, we managed to get quite possibly the best home for us. How it came our way, I’m not sure, except we offered the most we could. But it should’ve still gone for a much higher price.
The home feels just right for us. It is larger, but not too much larger, prettier, but not too pretty, and sturdy. The neighborhood is clean and quite, and the schools are good. The only two downsides are Mrs. Gofi’s commute to work which now increases by 15 minutes, and our savings rate which decreases by 50% for the next three years. The latter should recuperate once our daughter starts kindergarten in 2025, and daycare is no longer required.
This purchase makes us ‘accidental’ landlords. The rent just about covers the mortgage payment, HOA and property management. We are not expecting any positive cashflow, but the equity should grow by ~$700/month or $8400/year. Our current equity on the home is about $200K, so that’s akin to a 4.2% ROI ($8400/$200000). Add home value appreciation to this rudimentary metric, and we can assume a reasonable total return. If, in a year, we feel like this is a drain, we will sell it.
In Q1,our investment portfolio dropped 3.31%, slightly less then the S&P500 which fell by 4.2%. Our net worth fell by 1.14%, despite 3 months of income added. Our asset allocation of ~98% stocks is as aggressive as it gets. But the stock position dilutes when home equity is added to the mix, to become ~61% stocks, ~38% home equity/real estate, ~1% cash.
We finally closed our Betterment accounts, and used the funds to get small positions in VXUS (International), VNQ (REIT) and TSM (Individual Stock) in Vanguard – goals we set last quarter.
Our plan for the next few years remains, in order:
- Max our Roth IRAs (done for the year)
- Fund our 401Ks, as much as we can
- Build a cash buffer equal to about six-seven months of expenses, ~$45K
- Once we hit those, we’ll buy VTI with what we can spare, irrespective of the market – we’ll dollar cost average
Where does all this leave us? I think we are in track for FI. In ten years, if we’re still working, it should be out of choice, not necessity. And that has always been the goal, to build a portfolio that will give us options to do as we please.
We also have a change in our outlook this quarter. My father passed away last year, and he could’ve enjoyed life slightly more, in a better house perhaps. It was sudden, just a month after his physicals for a trip to visit us. He uplifted many lives, generously giving away (about half his wealth, to be precise). He didn’t quite fit the mold of his contemporaries, preferring to always shoot straight. He was strong and incredibly stoic, enough to convince me that he’d beat the ailment that took him to the surgery room.
My father was one of a kind, sometimes even godly. I know I will never be able to fill his boots, but I will try to live the fuller life he missed, starting with going bold on the new home. Because, well, why not. Because in the end, we are all dust and spirit. And his, our Buddhist monks have confirmed, now lives with his deity.
I guess what I’m trying to say is, and Warren Buffet says it with better wit: “It’s nice to have a lot of money, but you know, you don’t want to keep it around forever. I prefer buying things. Otherwise, it’s a little like saving sex for your old age.”
That said, we will be careful and prudent. Perhaps, a bit more active. I don’t think that’s too unreasonable.