Home Sweet Home

Last month, after a few years of looking for the 'right' place, my spouse and I purchased a new (actually 5-year old) house in suburban Des Moines.  We loved our residence of the past 22 years, which we located and built, but it was time to move on.

In those two decades, we've gone from a family of five with three teens or pre-teens, to a family of two.  We neither need nor want a large 2-story house on a big corner lot.  We want something newer and easier to maintain.

It's been a while since I've been engaged in all that comes with selling and buying a house.  Of course. I have a bulleted list of the my thoughts:

• After living in the same home with three children for 22 years, you accumulate A LOT of stuff.  Some of of it qualifies as valuable, some as keepsake, but way too much are long forgotten items with no reason to be kept, much less packed up and moved.  Get started early with packing.

• Even the keepsake items don't all deserve to be kept.  Some things I thought I'd keep until I was old to look back on as a fond memory.  And then I realized, that's what I'm doing right now!  So it was time for some of it to go.  It's hard, but take a picture and digitize it forever, and it'll be fine.

• Take it from me -- don't have a garage sale.  We did, but let's do some math.  If it takes two days to get it ready, two days for the sale, and one day to clean up what's left, that's five days times let's say eight hours equals 40 hours.  (A low guess.)  Then if you have very above-average sale of mostly $10 or $5 or $1 or less items, let's say you end up with $600.  That's $15 an hour -- not bad, but I value my time at 5x or 10x that.  It isn't worth it.  Sell the higher priced things, and donate or toss everything else. 

• As for the move in part, if at all possible, spend a few days cleaning and making any repairs to the new house when it's empty.  So much easier than maneuvering around boxes.  There's so much ancillary stuff to do anyway, like re-key the doors and connect the Wi-Fi.

• Last but not least and probably most, we need reform in the residential realtor industry.  Just a month ago the industry agreed to more transparency in the commissions they charge, but transparent doesn't mean less expensive.  Realtors have coalesced around the idea they are entitled to a 6% commission on the sale price, regardless of their time or effort.  There is no substantive negotiation about whether that commission percentage should apply based on the actual sale price or the length of time it might take to sell.  They think they deserve it, even before doing anything.  I think they should be embarrassed. 

It's tough to say goodbye to a place where so many milestones occurred.  That's what the memories are for.

The Iowa Lakers

There comes a time in the life of some upper middle class (or higher) folks when they decide it would be a good idea to buy a second home.  It may be a small condo in a multi-story tower in a warm climate, it may be a log house in the mountains, it may be mansion on a beach estate in the Hamptons, it may be a lot of other things.  Whatever it is, it's usually a getaway from an already very nice dwelling somewhere in suburbia.

Here in the Midwest, where there are no mountain or oceans, a lot of folks are gung-ho about spending time somewhere else, but not always over 1000 miles away.  To fulfill this desire, many local jurisdictions have allowed small lake areas to be developed for housing and recreational purposes.

More specifically to where I live in Iowa, only a few of these lakes are natural, notably the so-called Iowa Great Lakes around Okoboji, Iowa.  This is an area that would accurately be described a summer resort, with plenty of restaurants, shops, and entertainment venues to justify a premium, vacation home price point.  There are perhaps one or two others like it in the state.

Most of Iowa lakes, however, are small and man-made, the result of damning rivers and streams for flood control.  All of these lakes also contain a higher content of agricultural fertilizer run-off of both the natural and man-made variety.  And none of them have the restaurants, shops, or entertainment venues to be considered anything close to a resort.

This is where it goes wrong for me.  I've no problem with owning more than one property.  I may well want that for myself one day (preferably on a golf course in the Southwest).  Also, I've no problem with those who want to live on a lake; that isn't for me, but it's different and calming, and I get it.  But what I find confusing is the number of people willing to pay inflated prices for a small, very part-time second residence, in a remote location on or near a dirty lake, in basically the same climate in which they already live.

Over the years, I've known quite a few people with these type of second homes, most of them with mixed feelings.  It's no exaggeration to say that at some point, I've heard every one of those people complain about that extra home at some point.  Either the cost, or the maintenance, or the lack of amenities, or the fact the weather only allows for a few months of lake enjoyment to begin with.

Regardless, they believe the serenity of a lake house - on any kind of lake - is worth those downsides.  It also helps that over the last 10 years, most of those properties have skyrocketed in price, due to a good economy and plenty of maturing buyers.  That's a good thing.

At least it is until we have another recession.  Then it could be a very bad thing.  It could be a major depreciating asset that can't be properly monetized, next to a polluted body of water, in the middle of nowhere.

But hey, at least it has a view for a few months a year.

Old Business / New Business

I’ve taken the last month off of blogging because I’ve been a little busy with something else.  Over the past month I've started my own financial planning firm.

This is something I’ve wanted to do for a while, but I didn't until now thanks to a need for medical insurance.  In this case, Necessity was truly the Mother of Invention.  (That's a long story, and maybe one good enough for a separate blog entry another time.)

Thanks to a lot of planning, I only had about 10 different things that needed to be done in the last month, down from a list of more than 20 when I began.  While I probably had a few more things to do than other start-up businesses thanks to state and federal securities regulations, I have new respect for anyone who starts their own organization.

In my case, I'd compare starting your own business as similar to building a new house rather than moving into a nice existing house.  It doesn’t take anywhere near as much time to buy an existing home, and frankly, you get more bang for your buck with fewer problems. The house has settled, the landscaping is done, the window treatments are in place, etc.  It’s just a much simpler process.

But that existing house isn’t going to be exactly what you want.  Maybe it isn’t quite in the right location, or maybe the layout isn’t exactly the best, or maybe it could use new appliances.  In the end, if you really want to customize your lifestyle, you have build your own house, and that comes with a lot of extra time and expense and contracting headaches.  For all that work, however, you’re going to have things the way you want them, or at least very, very close to it.

When I joined another financial planning firm in the past, it was analogous to moving into an existing home. The branding was completed, the accounting was set up, the compliance work was done, and so forth.  It could have used a few updates (people), but it was really only a matter of moving in the furniture in getting started.

Starting my own firm, though, I had to build or re-build all of those things from scratch, and it takes a lot of time and effort.  I fully expect it will be worth it.

In the future, I’ll probably write more specifically about a few of the decisions I made -- some that worked, and some that now only seemed like a good idea at the time.