Posted by Dave on August 17, 2010
I had a very odd week last week – two people asked me to become involved in real estate deals. I don’t know if I had given the impression that I had a bunch of cash laying around, or I just look like someone who would like to own Real Estate but on the weekend, my step-brother asked if I was interested in getting involved in flipping a house with him – he had located a property that required some work, but thought it could be bought for approximately $150,000 and sold for $250,000+ as soon as the work was complete.
On Wednesday night, my dad called telling me about this great property next door to his house that was a steal and I should think of buying. This property was 50 acres, with a large pond, woodlot and about 8 acres of “workable” land and would cost me $135,000. My dad thought that within around 5 years this place may double in value as there are very few small plots of land like this in the area (Most are either only 1 acre lots, or significantly larger farms).
I turned down both “opportunities” politely, for the following reasons:
1.) I don’t have any money sitting around – all available income is going towards paying down my mortgage and saving for a new car that needs to be purchased at some point in the next 8 to 10 months (my wife would like to learn to drive but will not drive my 5-speed manual transmission).
2.) At this point in my financial plan I’m more interested in reducing my fixed monthly expenses than I am in making significant cash gains in Real Estate.
3.) I barely have time to look after my own house right now, let alone another property. My current house is a condominium which allows me to basically come and go and not have to worry about cutting grass, shovelling snow, or looking after the exterior. Taking on a new property would mean I would have to give up some of my weekend activities, which is something I’m not all that interested in doing.
My wife and I are not adverse to making money – we just thought we’d get more enjoyment in five years having no mortgage than we would making the investments in real estate right now.
What my money decision basically came down to was that I have a plan that I am comfortable with and getting away from this plan, although not catastrophic, could lead to a delay in my goal of financial independence. I am willing to forgo what could perhaps be significant gains in order to stay on my original (and somewhat boring) path to early retirement.
In the end, saying no might be the wrong decision, but I’m comfortable not taking the risk at this point in my “plan”. I may be missing out on great opportunities. Both deals have the potential of leading to significant profits, the house flip within a year or so, and the other property within about 3-5 years. I could be missing out on money that would lead to being several years closer to financial independence.
What do you think – by turning down these investment opportunities, am I missing out? Would you do it, given the opportunity?
Posted by Robert on August 16, 2010
Until the end of June, I lived near my office. When my wife and I moved to Calgary, we chose a home that would be convenient to shopping, schools and public transit. But the first priority was that it be close to my office. I was able to walk to work in 15-20 minutes. We were able to save quite a bit of money by having only one car and not driving very far.
Almost six years later, as we were planning for my oldest to enter grade one, an old idea resurfaced. It would be great if the kids could go to the Mandarin bilingual school. There is a single public school with this program in Calgary, it could be very beneficial in the future and their grandmother, who is Chinese, would be very pleased. This had never seemed realistic in the past, since the school is located at the other end of the city from where we lived and worked. But with the idea that I could retire in a couple years, and the fact that kids can only enter the program in kindergarten or grade 1, we decided to enroll.
With the school located so far from our house, we were faced with three choices. If we stayed in our house, our son would have a long bus ride, around an hour and a half, each way every day, sometimes arriving very late if there is snow or an accident; or my wife could drive both ways every day in traffic with three kids. The other option was to move much closer to the school (and my wife’s mother) and I would have a long commute every day.
To me, this underscores the fact that we don’t make all our decisions using financial reasoning. It would be least costly to stay in our house and send our son on the bus every day. But that wouldn’t be best for our family. I don’t think it would be right to put a six year old on a bus for three hours a day, especially when he can’t read yet to pass the time. We decided to move, and I chose to commute, because I felt it would be most beneficial for our family.
The LRT in Calgary is relatively quick and cost-effective when a single person is traveling from one end of the city to the other. My office is at one end of the line, and we chose a house at the other end. I save between one and two dollars each day (depending on gas prices), as well as the maintenance and depreciation of the car, by traveling on the LRT. Better than that, when I’m not driving, I can spend my time in ways that I choose. I bring a book, or my netbook, with a cell phone so I can do work or connect to the internet.
My final idea for making the commute more bearable may have been inspired by Tim. Who wouldn’t want to have an extra day off each week? I need to work 40 hours, but I’ve arranged to only come into the office for four, ten-hour days a week. I have to remain available by cell phone on the other day (Wednesday), but I save at least two hours by not commuting every day. It makes for four long days, but it also gives me an extra day that I can spend with my family and do things around the house.
We decided to move for our kids’ future, not for financial reasons. However, it meant that I would need to commute at least an hour every day. I found that taking public transit reduces the cost, but more importantly it gives me more time to read and write. I also reduced the time I spend commuting by working 40 hours over four days and remaining available by cell phone on the fifth weekday. It’s important to me to feel good about my lifestyle now, not postponing all my enjoyment until I’m retired.
How do you deal with commuting? How have you made a difficult situation easier? Are there things you do before retirement, just to make life enjoyable?
Posted by Canadian Dream on August 13, 2010
Welcome to another Wander Reading which is a series of links to material I found interesting in the last week or two.
A great post over at Million Dollar Journey on Why the Economy is Not Relevant to Investors.
JD talks about Life After Debt, which involves a fair bit of spending along with all that saving.
Larry McDonald warns people about his Spam Filter Woes. I deal with this a bit more easily, I never check my spam filtered comments unless someone emails me saying they had an issue. Life is too short to even look at spam.
Want to eat more cheaply? Eat what you already have and check out More on Reducing Food Waste.
BMO is calling on the government to spend, while Kevin Page tells them they might not even spend what they previously planned. The joys of confusion, are you glad your not the government?
In case you saving didn’t turn out as planned here is How to Retire Comfortably on Under $1500/month.
Trent show us How Not to Fail at Frugality.
This post has some surprising stats on the number of people that go back to school, apparently Back to School Isn’t Just for Kids anymore.
The Financial Blogger wonders about the Next Bubble to Collapse; The Canadian Housing Market. My personal opinion on will we collapse? No. Market correction? Hell YES! How big? Damn good question and it will heavily depend on where you live.
Retired Syd asked How Much Money Do You Need to Feel Rich? About $1000/year. Why? Because about half the world lives on less than that.
