When I started writing this blog over two years ago, I was living in a 1,500 sq ft house that featured 3 bedrooms, 1 bathroom, and tons of closet space. I had more space then I ever needed. One bedroom for me, one bedroom for my craft space, and the other upstairs for storage/media room/roommate area. I also had a huge kitchen and living room to fill.
Fortunately, I didn't go crazy stuffing the place with furnishings. When I moved in the summer of 2016, it was into an 1,100 sq ft 2 bedroom, 2 bathroom apartment. All of my stuff fit more or less neatly into the apartment. I still had big closets to put my stash of empty boxes in. My kitchen still had great counter space and even came with a nicely sized pantry! Of course, I paid through the nose for it but it was well worth it to be close to work.
Then I moved again. This time into a friend's basement. It consists of one big room, a small bedroom, an even smaller bathroom, and one tiny closet under the stairs. I've been living with a good portion of my stuff in boxes the last few months. For $400/mo (all-inclusive!), I've been dealing with it. It hasn't been my favorite place to live, but it's done the job nicely.
And now….. it's time to move again!
But this time is special.
This time I'm moving into my very own house and it's going to be awesome.
Or is it?
Since I'm buying a triplex, I'm moving into one unit (to be determined if it's unit 2 or 3. The utility company and I were not on the same page). This unit is the smallest one in the house. It's a studio. I'm talking one bathroom, one medium-sized room, a small kitchen, and a closet. Fortunately, access to the attic is in the unit, so I will be working on cleaning that up and finishing it off to make more space. For now, it will serve as desperately needed storage space for the equipment I have for my hobbies.
I'm not sure how I'll manage being in a studio after having such spacious accommodations in the past. I had a studio unit as an intern and disliked it intensely. A good chunk of that dislike was aimed at the shitty neighbors who smoked outside my only window and kept their places so gross that I got bugs. I suspect not having to pay for housing will help abate my dislike of small living spaces.
This also has the added bonus of helping me pare down my stuff. Why do I have extra bottles of shampoo and conditioner sitting around when I don't even like how it cleans my hair? Why am I hanging on to so many clothes when I don't wear them any more because they don't fit or aren't my style? Why do I have a box full of paperwork?
I've been hauling this crap around for too long. It's time to say farewell to my towel collection. (currently at 13). I am one person. I need 4 towels, max. (Every day, beach, spare, and old towel for leaks and gross stuff I don't want on my nice towels). I have an excessive number of blankets, but I'm not ready to give those up quite yet.
My kitchen doesn't have much space in it, so I will probably be downsizing a bunch of kitchen stuff as well. Just gotta move it over there first!
Paring down my stuff isn't the only thing on my mind lately. I've been thinking about a lot of the “behind the scenes” stuff that goes along with rentals.
For instance……. depreciation. That's a thing I had no reason to care about until now. My 2016 taxes are uncomplicated still, thank goodness, but that will not be the case in 2017. I found this article from PT Money (of FinCon fame) that explained depreciation clearly. I will be referencing it in the future when it comes time to put this all into action.
I've also been busy looking over sample leases and researching my state's landlord and tenant rights. I would've included that in the title too, but it didn't go with the nice alliteration flow I had going on. If you've got a lease you're willing to share with me, please feel free! I want this to go smoothly from the get go. Gwen@fierymillennials.com is my email 🙂
The other thing weighing on my mind is the debt I'm taking on by buying this house. Except for one small $2500 loan to buy my first car, I've never had any debt. I love seeing a big fat ZERO next to the word debt when I check Mint.
I'm not sure how I'll handle having debt.
Sure, it's “good” debt.
This mortgage is the leverage I need to put gasoline on my FIRE plans and fan the flames into a bonfire.
It's also only – “ONLY” – $77,647. Or, eerily enough, damn close to my entire salary for the year. It's not like I'm buying a $200k McMansion. I just rent the basement of those, not buy them.
I will not be making extra payments on the mortgage for the first few years. I will need every penny for improvements and buying more rentals. After I fix everything up all pretty and buy all the rental properties, I will take a deep breath. And then probably pay down the mortgage. I am not paying $60k extra in interest when this property only cost $85k to begin with. I don't care if that interest is spread out over 30 years. That is a lot of extra money and I don't want the bank to get it.
The main spreadsheet I use has a home equity tab. It's been fun to put in various numbers and see how even a $100 extra a month makes a huge impact! I did have a minor heart attack at first when I put in the numbers and it messed up my entire spreadsheet. My panicking only lasted as long as it took me to zero out all the other months in my spreadsheet that didn't need home equity. Still seeing my spreadsheet go feet up was not pleasant and I don't want that to happen ever again.
But I am thrilled to see how the mortgage and extra rental income will impact my financial journey, and I'm even more excited I get to share it all with you! Wish me luck!
What did you feel like before you bought your first property? Did you freak out like me or were you cool as a cucumber?
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