Jacob's other journal

Where are you and where are you going?
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theanimal
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Post by theanimal »

If you end up in the western suburbs or want more info let me know...I live in Western Springs and Burr Ridge


jacob
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Post by jacob »

When I grew up, I lived 45-60 minutes from school...connected by an hourly bus between 6am and 9pm. Not having to meet a transportation schedule really makes a difference in terms of life quality (hence L, the subway, beats metra, because the L runs around the clock .. or at least until after midnight). When I finally moved into my "own" place 13 minutes from school, I gained an extra two hours per day + I was able to participate in social activities because I didn't have to catch the last bus as 9:30pm.
I've also browsed the RE listings for Fox Lake (I really do like water fronts :) ). However, the commute is 1:40 hours each way and the train is $220/month ~ $2500/year. So if that's the case for two persons + add RE taxes, we might as well stay and rent in Chicago.
Conversely, if we didn't have to get to the city on a daily basis, we might as well live anywhere else :) I think Fox Lake has something going for it... looks like a nice place. While I haven't been to Jolliet or North Chicago, they don't look like places we'd like to live if we could like anywhere.
BTW the western suburbs seem rather pricey, even compared to Evanston. I'm willing to spend up to 200k on a house, but I'd vastly prefer to keep it around 100k. Also, we're looking for 1000sqft domiciles, so looking for something built around 1950 or earlier before people went squarefoot crazy.
A lot really depends on 1) whether I make a break trough at work at start making $$$ this year; and 2) what DW wants to do after she gets her AA in accounting in a few months.
However, we could also just do a lock-in on a fixer-upper... spend 2-3 years learning how to fix a house and accept the geographic limitations that come with ownership.
One of our [tempera]mental problems is that we've both moved around regularly for the past 15+ years---since age 20. My record for living in the same city is 4 years and 7 months ...and I move 2000+ miles at a time. No place really feels like "home" as in "we would want to live here for the next 20 years.


teewonk
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Post by teewonk »

Before your latest career, you were looking for cities that had certain qualities. Is that still important to you? When you move on from finance, are you going to be happy staying put in the Chicago area?
If you bought a fixer-upper, it wouldn't be so bad to finish in a few years, sell, and move, especially if you pay cash. You or your wife could get a real estate license to further reduce transaction costs, or find a FSBO, maybe on Craigslist.
The other option is going back to a mobile house. Would DW reconsider the tiny house?
I don't know anything about the Evanston/Chicago area, but looking at listings on Redfin, I'm surprised to see so many houses around $100K about a mile from the Davis stop. This house looks promising, though not without issues.


chicago81
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Post by chicago81 »

Something to keep in mind: Property taxes in Evanston are quite a bit higher than property taxes within the city limits of Chicago.


Scott 2
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Post by Scott 2 »

Westmont and Clarendon Hills still have some of those older, smaller houses. They were the "poor" area in the western suburbs, maybe 40-50 years ago:
http://www.trulia.com/property/30739741 ... t-IL-60559
One of those small houses in westmont is what I wish I'd bought into, instead of the 300k townhouse that is now worth 200k.
The people in westmont tend to be young professionals working downtown or older people that have been around for a long time. You'd probably get more land / lower taxes than evanston. There's an aldi around 63rd and cass, a little further down the road a whole foods. It's walkable, if a little far. Easily bikeable. Evanston has a far better library, and if you consider access to Northwestern, a much better academic culture.
The last train home to the western suburbs is at 12:40. I think the purple line running out to evanston goes till 2am. When I took the metra, I was able to get a transit check taken out my pay, pre-tax. That helped with the cost a little bit.
Living in the city definitely offers more time flexibility and easier access to stuff to do in the city. Metra is a little better than a bus IMO, but not as easy as the L. The riding experience is much less pleasant on the L. I'm happy to break out a laptop on the metra, not so much on the L. That's actually what made the train commute tolerable to me. Very nice to get 40 minutes heads down on something twice a day.
I personally would not want to live in Joliet or North Chicago. I'd rather spend the same money for a little less house / land, and get a better neighborhood.
I camped in Fox Lake a few times. It's approaching rural America. Lots of boating on the lakes, but I'd imagine nothing like you can get on the Great Lakes, let alone in San Fransico.
If you are going to move again in a few years, it does kind of seem like staying in the city to do city stuff is the rational choice. The sucky part of buying real estate is that 6% bite the real estate brokers try to take from every transaction. I've not tried to buy / sell a house while avoiding it, but it must make things harder.


secretwealth
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Post by secretwealth »

"The sucky part of buying real estate is that 6% bite the real estate brokers try to take from every transaction."
Not to mention the mortgage fees, recording fees, insurance fees, and taxes!


chenda
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Post by chenda »

Is 6% a standard agency fee in the US ?? I charge a standard 2% and even that is negotiable


Seneca
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Post by Seneca »

@Chenda- In the US typically 3% goes to the agent on either side of the transaction.
In hot markets with high real estate prices, negotiating a 5% fee (2.5% to each agent or even 2% to listing and 3% to buyer's) isn't uncommon, although not all agents will agree to it. We did this when we sold our house in the SF Bay.
The house we just bought was listed by the agent we were working with. He dropped his fees to 4% total. This is risky as the agent basically is treading conflict of interest through the whole deal, but it worked out spectacularly for us this time. My wife is an attorney, which provides some incentive for the agent to keep from getting squirrely too.
A way to reduce the bite of real estate when you're a buyer is to find a property you like yourself, and just pay an agent a flat fee to act as your transactional buyer's agent. (The MLS will show what the buyer's agent should've got, just have this amount deducted off the sale price.) Since they don't have to drive you all over in their car or look for properties for you, it is possible to negotiate this fee down too. Again, really this works best in high priced markets and for people who know something about the buying process.


chenda
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Post by chenda »

@seneca thanks that's interesting. We don't really have buying agents here; I just sell on behalf of the vendor directly to the purchaser, and obviously try to maximise the price for both the vendor and me for my % commission.


George the original one
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Post by George the original one »

Agent commission works a little differently here in Oregon. Standard is 4% for listing agent and 2% for buyer's agent, all of which comes out of the sales price, so only the seller is responsible for the fees.
As a seller, it is entirely possible to negotiate a lower fee. Biggest problem with FSBO (for sale by owner) is getting the same exposure that an RMLS listing agent can provide. Second biggest problem is improper paperwork (as a seller, one has to provide disclosure and things like the lead hazard pamphlet).


Seneca
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Post by Seneca »

Yes, seller is responsible for fees in California and Idaho too. (I suspect the whole of the US, but don't know this for sure)
For the home we bought in Idaho, we made a lower offer price by the 2% of the realtor's fees he agreed to drop, then had it explained to the seller their cash in pocket at close was the same. We benefited from negotiating the fees even though we were the buyer.


jacob
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Post by jacob »

I think I need to carry out the same exercise for the metra (the Chicago commuter train system) as I did for the el (the Chicago subway...or is that superway since it's mostly above ground?).
The primary reason for buying a house are, in no particular order

1) Diversify out of paper assets

2) Buy low in the RE market and sell high in the equity/bond market

3) Be able to do things that's not impossible in an apartment, like growing vegetables and welding.
I've started looking at Brookfield, IL.
DW likes the midwest---but would probably like the east even more. She also likes seasons. I like seasons too as long is it's dry spring/summer. I loved the CA weather except for the three weeks of monsoon. DW didn't like the fact that the weather didn't turn crappy for 3/4 of the year ;-P. I like the social connections that a big city offer but don't feel particularly attached to this area. I would like to try living in some more extreme environments (South Dakoto, Wyoming?!), but DW does not. On the other hand, I don't think I have a "rural personality". My mindset is definitely cosmopolitan.
PS: I deleted the ~10 posts discussing RE agent fees in various states. I prefer to keep my journal on topic :)


secretwealth
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Post by secretwealth »

Those are all great reasons to buy.
One other thing worth considering: if you buy in a wealthier enclave like Evanston, you'll be buying into a different market. If incomes/purchasing power rise for one economic group more than another, the return will be better if you buy into that group. NYC real estate market is pretty interest in that regard--the multi-million dollar market has seen double-digit growth while the affordable housing market has seen flat or declining prices.


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Ego
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Post by Ego »

The primary reason for buying a house are, in no particular order

1) Diversify out of paper

Can be done without buying a house.
2) Buy low in the RE market and sell high in the equity/bond market

Can be done without buying a house.
3) Be able to do things that's not impossible in an apartment, like growing vegetables and welding.

Can be done without buying a house. Veggies and Welding


jacob
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Post by jacob »

Well, anything can be done by throwing money at it :) However, part of my philosophy is that the environment tends to set thresholds for taking various actions. For example, it is unlikely that I'll fork out $1400 for a welding course. It is also unlikely that I'll currently take action to engage in longer bike rides if I have to spend the first 20 miles merely to get out of the city. If I had a garden plot a mile from here, I'd probably only visit it a couple of times.
Conversely, if we owned the home, the threshold for moving elsewhere would be correspondingly raised. If the RV hadn't been so easy to sell (about 16 days!!), or if we needed two incomes, we probably wouldn't have been able to move halfway across the country on a dream [job].
So the question is: What choices can I make that increases the opportunities we're mostly interested in?
Seems like RE ownership is the best current option. There's also the opportunity cost. Given that we've already been here for 13 months, it would have been smarter to have already owned it for that time instead of sinking $10k+ into rent already.
At some point we just gotta do it ...


secretwealth
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Post by secretwealth »

"What choices can I make that increases the opportunities we're mostly interested in?"
This is a pretty important point, and the converse is also true: what choices can you make to limit the choices you have available to you? When I suddenly was able to telecommute for work and could live anywhere on Earth, I was daunted by the choices, and I realized that I needed to make certain choices to give my life some structure. Having a house with its own garden in Chicago might force you to keep the job--or at least stay in Chicago--for the next 7-10 years. If you're like me and your first instinct is to run but you know you should stick in one place for a while to build a life in one locale, buying real estate is a good excuse to stay put.


Scott 2
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Post by Scott 2 »

The extra money you spent on rent was a very reasonable hedge against the risk of your job not working out. The capital you would have invested in a house was still working for you in other investments. Costs to care for an apartment are lower than a house. I bet little of that 10k spent on rent was wasted money.
I've walked from the metra stop in Brookfield to the zoo a couple times. It's a fine area. The zoo is one of the best in the country, if you're into that sort of thing.
If you end up with a car again, there are plenty of opportunities for work / fun in the nearby suburbs. Depending what type of accounting DW wants to go into, the proximity to large corporations in oak brook and busy professionals in oak park / la grange could be a big plus.
If you're relying solely upon the Metra to get into the city, travel times from Brookfield are about the same as an express train from the further west suburbs, since those express trains make so few stops. You do get a faster trip during off-peak hours though. You'll get a more diverse group of people on the train when it's stopping in areas like Berwyn and Cicero.
I know sales taxes go down if you can get out of cook county. Not sure about property taxes.
Another thought about Evanston - not sure what would happen if the education bubble bursts. The city economy is centered around the university. Although, you'd probably be able to see it coming and leave more quickly than most in the area.
As you and DW continue to succeed, consider that sometimes spending extra for the life you want is reasonable. You have more than enough banked, have extra money flowing in and seem drawn to hobbies that provide income. If you pay a $1400 premium for a welding course, or even drop an extra 10k a year to live in the city AND have a garden, that's ok. Sure it's a luxury, but so is getting down to a 2% SWR. If the money doesn't do anything for you, what's the point of having it?


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Ego
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Post by Ego »

I love to live somewhere between black and white.
When I saw that you wanted to weld I immediately thought of our community college. A friend took an HVAC class two years ago purely for fun. One class. Three credits. He and one other guy were the only interested students. Everyone else was a lowlife loser. The instructor naturally took a liking to my buddy and now looks the other way when my friend shows up to use the drill press or other industrial tools they've got.
Another friend loves the college step-aerobics class. She's been signing up every semester for years by having friends register for her. The instructor just smiles when she takes roll.
$89 per credit for the Intro to Welding Principles class at City College of Chicago. Once you put one foot through the first door other doors begin to open.
Overgrown backyards in your neighborhood? Ask to rent it for the summer. Vacant lot? Just take it over. One of my neighbors planted tons of flowers in a lot adjacent to their house. I asked them about it a few months ago when I noticed a For-Sale sign had gone up. The wife giggled while the husband explained that they got tired of it being overgrown so they started using as if it was their own property. She said the guy who came to put up the sign knocked on her door to ask where they wanted the sign.
Very little money being thrown around.


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Ego
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Post by Ego »

@jacob, "So the question is: What choices can I make that increases the opportunities we're mostly interested in?"
I think you once said your interests go in seven year cycles. Was it seven years? Maybe it was five... It was something like that.
So the question is, does it make sense to make the largest long-term financial commitment of your life for the purpose of satisfying your short-term interest cycle?
Moreover, if your life depended on it could you find ways to satisfy those interests without making the largest long-term financial commitment of your life? I think you could.


George the original one
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Post by George the original one »

You've never said you ruled out having children, so maybe another criteria are the potential schooling opportunities when considering a home?


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