I came home from work on Monday to find two things waiting for me. The first was a giant bouquet of red and white roses leaning like so many supermodels against my doorframe. The after-dinner dancing must have compensated for the during-dinner inquisition. A note said, “We can get through anything together. Tony.” He wanted me to call him Tony, but somehow I still couldn’t shake Anthony.
Behind the roses, taped to my door, was an unstamped envelope. Inside was a letter from my landlord letting me know my lease was up in two months, and she’d be happy to renew with only a 5% increase in rent.
I trimmed the stems of the roses and arranged them around the apartment. They filled all three vases I owned, and I needed to use a pitcher to contain the overflow. I loved this apartment, with its exposed brick walls and tall windows, the kitchen where I regularly made magic happen, the bedroom with its plush down quilts perfect for snuggling into with a good book (though where, alas, no magic had ever happened). The roses brought additional color and life to the place.
I looked again at the renewal notice, and couldn’t help wondering how much longer I’d live here. The apartment’s simple elegance was such a far cry from both Anthony’s luxury and Dylan’s austerity. I had told Dylan when we first started dating that my apartment was a non-negotiable; I wasn’t going anywhere. But beautiful as it was, I no longer felt that way.
Was it because Anthony had been hinting about my moving in? I thought about it. A lot. Especially because his apartment was so stunning, with views of the river, and the building had a full gym and private indoor swimming pool. And Anthony treated me like gold. But, no, I wasn’t ready for that yet. I wasn’t even ready to spend the night with him, much to Anthony’s chagrin.
I couldn’t fully articulate the difference, but something had shifted in me since my father’s heart attack. It was time to take a step forward into the next phase of my life, a phase where committing myself to a new, year-long lease no longer made sense. I picked up my phone, but I didn’t call Anthony. I called Phil.
A half-hour later, I sat down across from Phil’s desk with a hot cup of tea. “Such a pleasant surprise to hear from you, Amber. What can I do for you?”
I’d already told Phil over the phone that I wanted to keep our meeting confidential, that I didn’t want him telling Dylan about it. “I want a house hack with training wheels.”
“Training wheels?”
“Doing renovations scares the hell out of me. Being a landlord scares the hell out of me. Buying a house…”
“Scares the hell out of you.” Phil laughed easily, which allowed me to relax a bit. “I got it. You want a safe property, a good value—.”
“Right, it doesn’t have to be a great value. No diamonds in the rough.” My hands crisscrossed in the air. “No rough at all.”
“What about neighborhoods? Last time you were willing to look at C neighborhoods and above. Is that still the case?”
I gripped my teacup, and felt its warmth seep into my fingers. “You know, Phil, that’s part of what I mean by training wheels. I know a house hack can be a great investment, but first and foremost, it’s going to be my home. I’d rather take a worse investment for a better location.”
“Where do you want to live?”
“Someplace with character and buzz. I love the Historic District, and I’m down in Little Italy at least twice a week as it is. Someplace like that.”
“Anywhere else?”
I took a sip of the tea. “You know what I liked? That very first property you showed me.”
“The triplex near the hospital? Can’t blame you. That was a great house.”
“But it’s gone?”
His head tipped to the side with either sarcasm or pity; I couldn’t tell which. “A house like that? In this market?”
“I know. Of course, it’s gone. But I like that whole thing you were saying about the short-term rentals to the doctors. I could see myself doing that.”
“And duplexes are out, right?”
I shook my head. “That was when Dylan was calling the shots. A duplex sounds great to me.”
“Any other conditions?”
I remember the abject fear I’d felt with the idea of my parents entering The Death Trap on Haber. I felt stupid saying it out loud, but I added, “My father needs to approve.”
“Not a problem. Is he local?”
“No, but if he needs to get down here in a hurry, he will.”
Phil showed me five homes, none of which were it. Three were in neighborhoods I didn’t want to live in, and two were overpriced. Then a week later, I received an urgent call from him at work. “Can you come meet me right now?”
“I’ve got class in twenty minutes.”
“Can someone cover for you?”
“Is it that urgent?”
“Oh, yes. Forwarding you the listing. Call me when you’re on your way.”
I ran down to the principal’s office and told her it was an emergency. When she pushed for details, I said, “I’m sorry, but I can’t go into it.” I’m sure she assumed it was my father again, which was fine with me. I’d feel like an idiot telling her it was a real estate shopping emergency.
I called Phil from the car. “So what’s the big rush? Did this place just go on the market?”
“No, it’s been on for three months. It started too high, so last month they lowered it. Then I’m guessing their exclusive period with their agent expired, because last week they relisted it as ‘for sale by owner’ and lowered it again. At the time, I thought they were asking a fair market value. I even considered showing it to you, but it wasn’t in the areas you wanted.”
“You pulled me out of school to look at a property that’s been at the same price for a week, in not such an ideal area?” I was starting to wonder about Phil’s judgment. “Where is it anyway? I don’t recognize the address.”
“It’s in Little Havana, just three blocks from Little Italy.”
I stopped at a light and pulled up the listing on my phone. It was a cute brownstone. At least that part he’d gotten right. “Hardly my favorite neighborhood, though I guess three blocks isn’t too bad.”
“Forget about the three blocks. This is where you want to be now.” I could almost hear him bouncing in his seat.
“But it wasn’t last week?”
“Correct.”
“What’s going on, Phil?”
“The city planning commission just voted this morning on their new light rail expansion, the blue line. They were looking at three possible paths, and most everyone thought they were going to vote on the one that ran along Southview. But they went with one of the alternatives instead. They’re planning a stop a block from the house. That line will go straight downtown into the financial district.”
I turned left on Charley Avenue. “Won’t that take years to construct?”
“Three at least. But smart money is proactive, dumb money is reactive. Before long, this area will be packed with new restaurants, cafes, clubs, all catering to the young professional scene. Little Havana was already starting to gentrify, but now it’s going to explode.”
“Three years sounds like a mighty slow explosion.”
“Amber, you’ll be lucky to get this place at this price three hours from now. By the time the news hits the morning papers, forget about it. I just hope no one beats us there.”
The light in front of me turned from green to yellow. Normally, I’d stop, but this time I gunned the car forward. My sporty little coupe shot through just as it flipped to red. My old dented Honda couldn’t have done that. Perhaps this car hadn’t been such a frivolous purchase. “Be there in a few.”
Phil met me at the car. “Don’t say a word about what we talked about earlier. When you look through the house, even if you love it, remain calm and indifferent.”
“Isn’t that dishonest?”
“Amber, in investing, information is money. The more you know, the better you do. They’ve priced their house based on the best information they have, and you’re bidding based on the best information you have. I assure you, no one in this business puts all their cards on the table.”
“So if the owners knew there was toxic waste seeping into the property, they wouldn’t have to tell me? It’s just caveat emptor, let the buyer beware?”
“Of course they’d have to tell you. There’s no way you could know what’s going on inside their house. But disclosure isn’t a two-way street. The light rail plans are part of the public record. Besides, we’re just making our best guess as to what’s going to be in the future. We could be wrong. The city could cancel the plans next week, or the neighborhood might never catch on the way I expect.”
“But you don’t think so?”
“Amber, if I wasn’t showing it to you right now, I’d be showing it to another one of my clients. There’s a reason I’ve spent so much time tracking the light rail plans.”
“Come in, come in,” a short, dark woman called from the door. “I’m Susanna,” she said with a thick Cuban accent. “My husband Pedro is out, but he should be back soon. Unfortunately, our tenants are away, so we won’t be able to show you the other apartments today.”
“You don’t have a key?” Phil asked.
“We do, but our arrangement with them is that we give them at least 24 hours’ notice before showing their place. I know I certainly wouldn’t want people traipsing through my home if I hadn’t had a chance to clean. That’s why I suggested coming to see the house tomorrow.”
“I completely understand,” Phil said as we stepped into the house. “But today worked much better for us. We appreciate you making the time.”
“Real estate is so funny. Either you’re not interested, or you want it yesterday. When we first put the house up, we only got a smattering of interest, and then a little bit more each time we dropped the price. Then today, we’ve already had three calls. My next showing is in an hour.”
Not if Phil had his way. I smiled at Susanna as I stepped inside. “You have a lovely home.”
“It’s in the historic register, you know. It’s over a hundred years old, but, of course, it’s been redone several times since then. And we’ve brought the plumbing and electricity up to date.”
“Are these moldings original?”
“Oh yes, all the woodwork is.”
“It smells like chocolate chip cookies.” I couldn’t help but think of the contrast between the scent of this house and The Death Trap on Haber.
The woman giggled. “My mother used to say, ‘Always warm up the engine when selling your car, and always have something baking when selling your house.’”
“I do hope you aren’t just trying to entice me with the smell.”
“Well, it never hurts to present a house well.”
“I mean, I hope I’ll at least get to enjoy a cookie.”
“Dearie, I’ve been trying to sell this house for three months. You make an offer, and I’ll bake you an entire cake.” She guided us towards the kitchen, where she pulled out a fresh tray of cookies from the oven (oatmeal raisin with giant chocolate chunks). Most of the newer kitchens I’d seen were larger than this one but also looked like they were planned by interior designers who couldn’t separate an egg. In Susanna’s kitchen, the spatulas and ladles hung within easy reach of the stove, a mixer as old as I was stood neatly tucked into the corner, and a needlepoint on the wall read ‘La Cocina es el Corazón de la Casa,’ which Susanna told me translated to ‘The Kitchen is the Heart of the Home.’ There was no question I could work my magic in here.
“Why are you selling?” I kept my voice unenthusiastic, yet sweet as Susanna’s cookies. She wasn’t the only one who could warm up an engine. “It’s clear you’ve put a lot of love into this place.”
“Pedro retired last month, and we’re going to live near our daughter and grandkids in Arizona.”
“How long did you live here?”
“38 years. Raised all three of my kids right here.”
“What can you tell me about the neighborhood?”
“Oh, we love it here, though it’s been through its ups and downs. When we first came here from Cuba, it was mostly young families like ourselves. Then things started getting a bit run down. I won’t lie to you, it wasn’t always the safest area, but in recent years that turned around. More and more young people like yourself seem to be moving in. There are even whispers of the new light rail line possibly coming this way.”
At least she knew about that. As she showed me the upstairs, I considered this whole situation with the light rail. I was sure she hadn’t heard the announcement with the finalized plans. If I didn’t share what I knew, wouldn’t that be taking advantage of her? As I bit into the last chunk of cookie, I realized that if I didn’t use that information, one of the other two buyers who called today no doubt would.
What if I told her about the new line and allowed her to raise her asking price? Of course, that would screw over Phil, who put tons of time and maybe money into tracking major city works so he’d be able to give his clients the inside track. My insides twisted like a pretzel.
We were heading down the stairs when the front door opened, and a gray-haired man wearing a cap came in. “Hello there.”
Susanna helped him remove his coat and hang it on one of the wooden hooks by the door. “Pedro, this is Amber. Just showing her around the house.”
“Too bad you couldn’t come tomorrow.” He took off his cap and hung it on the hook. “I’d love to show you the other side.”
“I saw the pictures you posted online. The two sides are a mirror image, right?”
“That’s right.” Pedro patted the wall as if it were a beloved pet.
“Then I don’t need to see it in person. Can you tell me about the tenants?”
“Lovely family.” He offered a simple smile, one that told me he had nothing to hide. “Three kids and a dog. Been here five years already.”
“Any reason to believe they’ll leave any time soon?”
“I’d guess they’ll be here until their kids are all grown, which is at least a decade away. The guy’s an electrician, works for the power company, so he’s got good, steady work. Sometimes fixes things around the house when we need a hand. Wife’s a bookkeeper part-time. Never had a moment of difficulty with them.”
Wow. I loved the idea of not having to search for tenants or deal with problematic ones. The house had the charm I was looking for. It was a ten-minute walk from my favorite part of town, an even shorter drive to work, and according to Phil, this was bound to become a hot neighborhood. This was it. But what the hell did I do now?
Fortunately, Susanna’s timer went off, and she went to fetch a second batch of cookies. Pedro excused himself and stepped into the bathroom. I gave Phil a jerk of the head. “I want it. What do I do?”
“Make them an offer.”
Being the diligent little student that I am, I had read dozens of blog posts about how to negotiate a real estate purchase. One piece of advice that kept coming up was that real estate agents get paid on commission and therefore have no strong incentive to get you the best price. Still, Phil wasn’t a Cynthia who helped clients once then never saw them again. He dealt with investors, some of whom bought multiple properties per year. I couldn’t imagine him screwing over a client to pad his commission by a few hundred dollars. It wasn’t in his personality, and it wouldn’t be good for return business. I decided to trust him. “Can you handle the negotiation?”
“Do you have a price in mind?”
“You seem to think it’s worth the asking. So I’m happy with whatever you can get.”
“Will do. Just know, a ‘for sale by owner’ property is not as straightforward as one sold by an agent. One of you will have to pay my commission.”
“I thought commissions are paid by the sellers.”
“Normally, they would have paid their agent 6%, and the agent would have split that commission with me. But now they have no agent in place, which is probably why they dropped the price. They figured they’d pass the savings onto the buyer and have a better chance of making the sale.”
I wasn’t about to let a few thousand dollars dissuade me from the deal. “You get the best price you can. If I have to pay the fee, I will.”
Five minutes later, the four of us sat down. Susanna placed the plate of steaming chocolate chunk cookies right in front of me, as if hoping they’d sweeten the deal. I guess she knew a sucker when she saw one. Fortunately, I had Phil negotiating for me, and he didn’t look twice at the cookies.
“Amber and I have other homes we were planning on seeing, and I know you have others coming to see yours. But the fact is, Amber quite likes your house…”
“It really is beautiful.” I grabbed another cookie. “And these are delicious!”
“While Amber may find a house she likes better if she keeps looking, and you may find a buyer willing to offer more if you keep showing it, my experience is that it’s best for everyone to get a deal done right now if possible.”
“We’d love that,” Susanna said.
“Here’s what I propose. Your latest price was $190,000. We are willing to offer $175,000 now. There’s also the matter of my fee. Normally, when you list with an agent, the seller’s agent splits the fee with the buyer’s agent. Now that you’re selling it yourselves, it’s less straightforward. Sometimes the seller picks up the 3% fee for the buyer’s agent, and sometimes the buyer does. In this case, I suggest the two of you split it, 1.5% each.” Phil finally grabbed himself a cookie and leaned back in his chair. “Take a moment to discuss if you like.”
Susanna turned to Pedro and nodded. Pedro said, “We listed it at $190,000, knowing we’d need a little wiggle room. Our absolute lowest price was $180,000. If you’re willing to do that, Amber, we’ve got a deal. And we’ll be willing to split Phil’s fee, as suggested.”
“Amber,” Phil said, “is that acceptable to you?”
I pretended to think it over rather than leap across the table and crush Susanna and Pedro into a bear hug. “Yes. There’s just one thing we need to add.”
“Oh right, Amber wanted her father to approve before committing. Is it OK with you if we put that as a condition in the contract?”
I’d forgotten all about that condition about my father. “I just meant that Susanna promised me a cake.”
It only took fifteen minutes for Phil to complete all the paperwork around the offer, but I was restless the entire time. Three phone calls came in before we signed. Two more interested buyers called Pedro to view the house, and I got a call from Anthony. I told him about the house and forwarded him the listing so he could see the pictures himself. He hadn’t been thrilled a few weeks earlier when I told him I was looking to buy a property. He didn’t understand why I’d been looking to buy when things were going so well between us, but then he seemed mollified when I explained that it was for investment. Now he listened silently as I went on and on about how excited I was about the house.
After the contract signing, Phil left, and Susanna walked me through the house again. She told me which rooms each of her kids grew up in. She shared about the time they’d been robbed and had the back door broken in, but quickly added that they’d replaced it with a high-security door, so I shouldn’t worry about that. She seemed to want to download the house’s memories, to make sure I knew just how special a place I’d be getting. Or, at least, how special it had been to her.
About half an hour into this tour, the doorbell rang. I thought nothing of it until Pedro came in trailing Anthony. He held a bottle of champagne. “I hear congratulations are in order.”
He popped the cork, and the four of us drank our champagne out of clay mugs that Susanna had made herself. This felt so different from buying The Death Trap on Haber. This place felt like a home. If not forever, at least for now. I’d even left off the provision about my father needing to see it. I didn’t need anyone to tell me this was the right house for me.
I continued to see Anthony just about every weekend he was in town, though he didn’t always know when that would be. I learned not to be bothered by canceled dates. He sent me flowers at least once a week and bought me small gifts: a box of Godiva chocolates, a cashmere scarf for the night we went to an outdoor concert, a pair of pearl drop earrings, which were not at all my style, but which I wore anyway to please him.
Other than the weekends, though, Anthony was never around. He worked crazy hours, and he’d call me from different cities around the world, wherever he happened to zip off to for work. He called me more when he was in some exotic location, as if wanting to impress upon me how important his work was. Or, more likely, how important he was.
Dating a traveling workaholic left me plenty of free time. As smoothly as the house purchase was going, I wanted to make sure I didn’t make any major blunders. I listened to podcasts while cooking for myself (I did think once or twice about inviting Anthony over for dinner, but never actually did) and read books in the evening before bed.
I started by learning about real estate, but there was less to know than I feared. OK, there was actually a ton to know, but since most of the strategies concerned identifying and selling properties, neither of which I needed, it made the subject more manageable. Plus, my property needed little renovation, and I had long-term tenants, so those were two more subjects I didn’t have to worry about.
My biggest debate was whether to go with a 15 or 30-year mortgage. Had someone asked me the difference between the two, I would have guessed the 15-year had a monthly payment almost twice as high as the 30-year loan. But of course, that’s because I, like most people, underestimated the power of compounding growth. My mortgage payment for the 15-year would be $1331 a month versus $912 for the 30-year. As the monthly payments were only 45% more on the 15-year, it seemed a no-brainer to cut the payment period in half if I had the money. And for the first time in my life, I fully expected to have more than enough money available at the end of each month. Why was I suddenly feeling so flush? It was simple. I would be collecting at least $850 a month from my tenants (that second apartment was worth $1000 or more a month in the current market, but Pedro and Susanna had only raised the rent once since the tenants moved in), and I would be saving more than $1000 a month on my own rent. Together, that would give me more than enough to pay the $1331 monthly mortgage payment on the 15 year-mortgage.
But it turned out that my no-brainer wasn’t as simple as I thought. I was making myself a zucchini frittata when I heard one podcaster explain that a 30-year mortgage is better because you can always pay it down faster if you want to, even to the point of keeping it on a 15-year payment schedule. So any month when you have extra cash, you pay down a bit extra. But if there’s ever a month when you find yourself tight on cash, you just make the minimum 30-year payment. Whereas, with the 15-year mortgage, you’d have to come up with the higher sum each month or else find yourself in default.
Another night, I was watching a video by a woman who pointed out that interest rates on the 15-year mortgage were lower, usually by about a half a percent. At first, I didn’t understand why it would have lower interest until she explained that banks need to hedge their bets. There’s less predictability over a 30-year period than there is over a 15-year period. Since no one knows what interest rates are going to look like in the future, and the banks are tying themselves to a rate now, they need to charge more for the longer loan.
But what ultimately got me to go with the 15-year term had less to do with math than with psychology. Dylan had shown me how I, like most people, tended to spend nearly every dollar I made each month. If I had the option to pay the bank $400 less, I’d probably wind up just blowing an additional $400 each month on clothes, nights out, and other non-necessities. So I liked that the 15-year gave me less flexibility on my payments.
Emboldened by my mortgage decision, I decided to dig deeper into the psychology of money. Not everyone had Dylan’s discipline, but I discovered numerous tricks us mortals could employ to get the same results. Once I started reading up on these, I was able to implement several of them with just a phone call and a few clicks of the mouse.
First off, I set up a Vanguard ROTH IRA, a retirement account that was the exact opposite of my 401(k). The 401(k) was funded with pre-tax money, and I’d have to pay full income tax on anything I pulled out. The ROTH IRA was funded with post-tax money and grew tax free. I was allowed to deposit $6000 a year into the ROTH, but knew there wasn’t a chance that I’d save up that much on my own. So I set it up to take money out of my account automatically each week. It came out to be just over $115 a week to make my maximum IRA contribution. With my lowered housing costs (plus Anthony picking up the bill on so many of my nights out), I’d probably never miss that money, provided that I never got used to having it.
On one of Anthony’s long trips to Germany, I spent yet another Saturday night alone. To feel some of that German spirit, I settled down on the couch with a beer and chocolate covered pretzels while I read one of my new investment blogs about a program called Save More Tomorrow. The concept was simple. Since most people have a hard time cutting back on expenses, it’s difficult persuading them to save any of their current earnings. So why not convince them to start a savings plan that only kicks in once they get a raise? Some companies offer this as a service. They have employees agree to give a portion of each raise put into a long-term investment plan. Since it’s taken out of the paycheck before it ever reaches their greedy little pockets, there’s little temptation to spend it.
My school didn’t offer such a plan, but I found it easy enough to set up for myself. The raise I received when I completed my Masters in Education came out to $80 a week. I decided to devote all this to savings. So I opened up a Vanguard investment account that drew that $80 out of my account each week.
I had both Vanguard accounts, plus my 401(k), going into index funds. None of this was a huge amount of money, of course. The sums were so small that six months earlier I wouldn’t have bothered. It didn’t seem like it was enough to add up. But now that I was wrapping my head around the power of compounding, I knew it would.
A new guy and a new multi-unit house. My parents had heard that story before, and they were more than a little nervous to hear it again. Another visit was planned, but this one caused me little stress.
Susanna was more than happy to let me bring my parents by the house before closing. “It will give me an opportunity to bake that cake I owe you.” Anthony was thrilled to be introduced to the family as my boyfriend. Given that he was a good looking Italian boy on a killer career path, I had little fear of facing parental disapproval.
My parents drove in on a warm Saturday afternoon in early June. Anthony and I met them for lunch, and we all easily fell into a familiar Italian-American banter. Anthony spent ten minutes singing the praises of his late Grandma Regina, who I’d never heard of, but who clearly impressed my mother.
Then we headed over to the house. My father drove, since my parents would hardly have fit in the back of Anthony’s Porsche (though my mother seemed eager to try). It was a week before closing, and I was starting to have sleepless nights thinking about all that could go wrong. But other than Susanna’s unfortunate choice to make vanilla pound cake, the viewing of the house went off without a hitch.
“That really is a great house, Amber,” my father said over dinner. “Sorry if I questioned your judgment.”
I didn’t tell him that my judgment on the last house was begging to be questioned.
“Are the two of you planning on living there together?” my mother asked.
Anthony almost choked on his bruschetta. Eager as Anthony was to move our relationship forward, he’d have to fall on some mighty hard times before he’d consider moving into that house. My mother saw his discomfort with the question but failed to understand the reason behind it. I decided that wasn’t such a bad thing. “Ma, please. We haven’t been dating all that long.”
Anthony sent me a quizzical look, which my mother also missed.
“Of course,” my mother said. “I’m glad to hear the two of you are taking your time.”
