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in Budgeting Tips | Money Talk · August 13, 2020

Why Buying My Dream Home Was My Worst Money Mistake

Growing up, a lot of us dream of graduating from college, landing the perfect job, getting married, and buying an amazing home for our future family. After all, that’s the American dream.

That’s pretty much what we did. A month before our wedding, Ryan and I bought a super nice house with a pool just like I had always wanted. It was $340,000 and we put 5% down so we were left with a $2,400 payment including escrows for homeowner’s insurance, taxes, and mortgage insurance. No big deal, we had the salary to support it, right? Additionally, we spent another $20,000 in renovations because why not? It’s our dream home and we deserve the best, don’t you think? After all, we worked so hard to be able to afford it.

All in, we ended up putting about $40,000 into this home. Our house looked amazing with a brand-new kitchen, top-notch appliances, and hurricane impact windows. It was a dream come true.

Then eventually, reality sunk in. The plan was to first buy our primary residence and then start investing in real estate. Here’s the thing, our salaries were just enough to cover the cost to maintain our house and our lifestyle.

About 6 months into our marriage we finally began to take our finances seriously. We realized that while we were making enough money to support our lifestyle, we were living paycheck to paycheck. If we wanted to invest in real estate, we needed to change the way we were handling money.

We eventually began eliminating a lot of unnecessary expenses. To give you an idea, we had a housekeeper coming every two weeks, a poop-scooping company to pick up dog poop from the backyard (I know! 🤦🏻‍♀️), pool maintenance, landscaping service, among others. All these little items added up. Not to mention, my nails, my hair, massages, and eating out every day.

I am shaking my head as I write this because I can’t believe that I fell into the make more, spend more trap. I’m an accountant so I should know better, right?

Here is the thing, I was working two jobs so that I could make 6 figures because that’s was the dream. I then justified my spending with “I deserve this because I work so much.”

I was not tracking my spending or financial position, so I didn’t realize how my decisions were affecting my ability to begin making my dream to become a real estate investor a reality.

When I sat down and finally looked at my numbers, I was devastated. Our home, while amazing, now cost more than what we could sell it for because we spent money on renovations that didn’t necessarily increase the value of the home. Additionally, we still had credit card debt and student loans.

That was our turning point. Ryan and I sat down and truly evaluated our goals and priorities. Since then we have taken action to put ourselves on a path that aligns with what we truly want. We still find ourselves buying unnecessary items from time to time just because we can, but we are conscious of how these decisions affect our overall goal and address it immediately.

So, yes. Buying that house was our worst money mistake.

I failed to evaluate my long-term goals before buying this home and made an emotional decision.

Had I sat down and done a truly in-depth analysis of my financial position and how this payment would set me back, I would have reconsidered.

If I were to do it all over again, I would have bought a duplex, lived in one unit, and take advantage of having a tenant take care of my mortgage while saving money to continue buying real estate. We’d probably be a lot closer to retirement, but that’s life. Lesson learned.

As of the date of this post, we have moved out of that house, rented it out temporarily until we can sell, and moved to Georgia to live a similar lifestyle, but at a much lower cost. If you read my first post, you know that our expenses are less than 50% of our income today!

The lesson here is that before you decide to buy your dream home or any home, consider everything that comes with homeownership. It is easy to become emotionally attached to a home and justify a purchase if you don’t have a clear understanding of your goals and the impact that making such a big commitment has on your long-term goals. Ask yourself, how does this purchase align with my goals and the life I want?

If it is, great! If not, reconsider your options 🙂

This post may contain affiliate links. I may get commissions for purchases made through links in this blog.

Previous Post: « Here is the Deal #2 – Purchasing Little Mermaid
Next Post: Here is the Deal #3 – Purchasing Big Horn »

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New Blog Post 🚨 In this week’s blog post I am New Blog Post 🚨 In this week’s blog post I am going over why we bought a short-term rental, our experience so far. Plus what we did prior, during and after purchasing our first short-term rental in March 2022, a Cabin in Blue Ridge, GA.

Check it out at www.beyondjustnumbers.com or link in bio @beyondjustnumbers
I can’t stress this enough. Some investors are l I can’t stress this enough. Some investors are looking to make money from day one, but that’s not always the case. It wasn’t for us and I’ve talked to a lot of rookie investors who have told me “Thank God I have my personal finance situation together.” 

This is just my opinion. Do you agree? Let me know in the comments!

Want to join a free community of like-minded individuals? Join our REI Coffee Chat Community where we talk real estate investing, personal finance and financial freedom, and much more! Link in bio @beyondjustnumbers

Want to learn more about investing in real estate? Read my blog www.beyondjustnumbers.com

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I used to think that investing in real estate was I used to think that investing in real estate was for the rich. I became in love with real estate while working for a real estate investment company that owned hundreds of units. This was back in 2011 and I was 20 years old at the time. I had less than 5 years permanently living the US, so I had no idea about anything. I grew up in Colombia and the only talk of money we ever had was the lack of it. 

The investors I worked for were a wealthy family, so naturally, I thought… Real Estate requires wealth. I don’t have wealth. Therefore, I cannot invest. 

I figured… well shit, I need become wealthy so I can invest in real estate. Eventually, after educating myself I realized how wrong I had it. You can build wealth BY INVESTING in real estate.

Took me a couple of years to figure it all out. Hence, why I didn’t start investing until 2019. I wish I had figured out earlier, but it is what it is. In just 3 years of investing in real estate, I was able to accumulate more wealth than I ever thought possible. 

Just to give you an idea…Did you know you could invest in real estate with as little at 3.5% of the purchase price? For a $150,000, that’s only $5,750. Buy a duplex that needs a little bit of work, fix it up, rent one side and live in the other. This will reduce your monthly expenses significantly, save the money and do it all over again.*

Of course it’s not that simple, but it’s also not that difficult. There are some particular steps and considerations which is  why I recommend doing further reading on the subject. 

Book Recommendation:
✅“The House Hacking Strategy” by Craig Curelop and ✅“Investing in Real Estate with No (and Low) Money Down” by Brandon Turner. 

#realestate #realestateinvesting
🚨 New Blog Post! Continuing the “Getting Star 🚨 New Blog Post! Continuing the “Getting Started in Real Estate Series” 

You’ve found a property either on your own or through a realtor, you’ve run your numbers, you’ve got a lender and now you are ready to make an offer. What’s next?

In this post I want to discuss a few items:

✅Key components of a real estate contract
✅How do you make a compelling offer to ensure you get the property you want
✅The main contract contingencies and how they work
✅Communicating with your realtor

I also provide real examples of what we have done personally. 

Check it out at www.beyondjustnumbers.com

Let me know what you think!
If I listed all of the hats, I’d never end 😂. If I listed all of the hats, I’d never end 😂. Anyone else? Show me the multiple hats you wear and tag me. Let’s have fun with some reels.

Trying to get good at the real game like @investinginyourwealth. How did I do?
The fact that you are not where you want to be doe The fact that you are not where you want to be doesn’t mean you won’t get there. Greatness takes time. Focus on what you control.

And remember, it’s okay to pivot.

#mindset #realestate #firemovement #realestateinvesting #realestateinvestor #rentalpropertyinvestor #rentalproperty #cashflow #motivation #financialfreedom #financialindependence #financialindependenceretireearly
We see a lot of advice around hiring a real estate We see a lot of advice around hiring a real estate friendly CPA. However, when you look up  CPAs that specialize in real estate, they can be pricey.  However, that doesn’t mean that other CPAs or tax professionals aren’t good. They might not be particularly aware of certain items, but they can research and collaborate with theirs peers. Perhaps it may require you to do a little of work to compensate. Things you can do:
✅ listen to The Real Estate CPA podcast or join the Facebook group
✅follow social media accounts of the pricey Real Estate CPA and take notes of what they are saying
✅attend free educational events 
✅read BiggerPocket book on Real Estate taxes 
✅if you know anyone working with a really good Real Estate CPA firm, ask them what they are doing

Then use that to go your CPA or tax professional and be like “Hey, is this something we can do for me?” They’ll probably say, “Let me look into it”. 

If they are good, they are going to research it and/or ask their CPA peer group. (CPAs and tax preparers also have Facebook groups where they collaborate with each other).

Here is a piece of advice, if they tell you “No, we can’t use this loophole or no, you don’t qualify to use this strategy” —> Ask WHY and “How can I qualify in the future?.” This way you confirm they did their homework and aren’t just being lazy. Don’t just take no for an answer. You can then get a second opinion by asking a question in a forum or to your peers.

So don’t panic if you don’t have a real estate CPA or tax professional. 

Next video I’ll be answering the question… “Can I skip the tax professional altogether and do my own taxes?”

#realestate
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