Real Estate Lessons From My Sister
My sister, Liz, age 44, is a great real estate role model. She and her husband, Ray, have a combined income in the mid five figures, but they’re in better shape financially than most people.
How do they do it? It’s simple, yet many people (especially in California) wouldn’t be able to follow their lead.
1) They’re not materialistic.
2) They’re not status-conscious.
3) They live within their means.
Liz and Ray bought a 50-year-old three-bedroom, 1.5 bath, 1,400-square-foot home on a quarter-acre lot in Blue Bell, Pennsylvania, for $150,000 nine years ago. They refinanced to a 15-year loan several years later and owe around $75,000 on it now. It’s worth around $260,000. Their monthly payment, including taxes and insurance, is $1,150.
The house isn’t large, but they’ve made a lot of nice improvements, all paid for in cash: oversized sliding doors; a wood stove (which they use to heat the house; they haven’t used their furnace in two winters); and a great yard (Ray is a landscaper for the city of Philadelphia).
It’s also in a lovely, quiet suburban neighborhood with excellent schools.
While raising two boys and two German shepherds, they even managed to put aside enough money to buy seven acres in the Poconos. They’re hoping to build a small cabin there that they can use as a retreat on weekends.
They have three vehicles — a 10-year-old Honda CR-V, a 16-year-old Toyota Previa and a 20-year-old pickup — all purchased used, for cash. Other than the house, they have no debt.
In a few years they’ll have the house paid off and be ready to live off their savings, pensions and Social Security.
Liz and Ray are the perfect homeowner candidates. They bought the house to live in, not as an investment. Instead of taking money out of the house, they put money into it — while paying down the mortgage. Think of all the extra money they’ll have in retirement because they don’t have a monthly housing payment.
Anyone can do what Liz and Ray do. But most people don’t have her discipline and impulse control. She’ll never own a BMW, but she has peace of mind, which no amount of money can give you.
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