Real Estate Switching Costs

Real estate has had a good run since 2010.

It can be tempting to cash in profits.

Financial Case Study

My neighbor is just about at the point where he can net $1,000,000 dollars on the sale of his house. He’s retired and this represents a very substantial sum for him. One million dollars is also kind of a magic number emotionally as he never expected to be a millionaire.

For him to net $1,000,000 he will need to sell his place for about $1,067,500 gross.

He bought the house many years ago so, even after his primary residence exclusion, he’s going to have a tax bill of $70,000.

There will be other costs (moving, cleaning, etc…) adding up to $2,500.

So his certain costs today are $67,500 + $70,000 + $2,500 => $140,000

Putting this into his personal context…

Having paid off his mortgage by the time he retired, he has the ability to live on $1,500 per month. So he’s looking at a certain bill that’s worth 7 3/4 years’ living expenses.

He’s also a young retiree, with parents still alive.

So he might be living another 30+ years.

Key Questions

How might the switch make things better? Whatever they are… they are uncertain benefits to be weighed against certain financial costs.

How will surplus cash be invested? Given the choice between prime residential real estate and an investment account… most retirees prefer the hidden volatility of real estate.

Do I want to leave my community? When I left Christchurch (NZ), I left behind a fantastic group of people. Community has a far stronger association with a meaningful life than cash in a bank account.

Certain types of people make new friends easily. I’m not one of those people! What type of person are you?

What Can Go Wrong

Bull Markets — Assume that you can only “move out of town” once. In our case, we lack the financial resources to repurchase our existing real estate at current market prices. If we sell, and prices rise, then we will be priced out of the market.

Neutral Markets — Real estate is expensive to transact. In the example above, the vendor is paying 13% of gross proceeds in commissions, taxes and expenses. In any new purchase I assume that I “lose” (on paper) 10% of the gross purchase value at completion. In other words, I am going to need a 10% market increase to get my money back.

Bear Markets — Can I afford to be locked into this market for many years? Vacation markets, cities reliant on a single industry (oil and gas) and secondary locations… buyers can be locked in for five plus years. Am I OK with that risk?

The Good Enough Portfolio

There’s a lot to be said for an attitude that an existing position is “good enough.”

Each time I make a choice, change or modification it’s an opportunity for expense and error.

 

Default Emotions – parents dancing with anger

A mother shares a story about her struggle with hate. Specifically, she is troubled by the thought that she hates parenting and, possibly, her preschooler.

She’s not alone.

Living with someone from birth to high-school graduation, I expect to feel every emotional state.

Hate, anger and rage are powerful, and unpredictable, emotions. In Boulder County, they are socially taboo when directed at children.

Therefore, as a parent, you’re likely to remember when you feel these emotions around children.

You are feeling everything.

You are remembering hate.

What’s your default emotional state?

Thinking about the five people closest to me. We default to…

  • Tears (flight)
  • Confrontation (fight)
  • Fear (flight)
  • Emotional shutdown (flight)
  • Anger (fight)

Within a preschooler, I can see all of the above within a ten-minute span!

Combine a rainbow of powerful emotions… with a lack of sleep… it’s easy to drop into my default emotional state.

In my case, I tend to pause and address later, when the energy has left the situation.

Take stock of your consumption of external emotions.

  • Media
  • Situations
  • Peers

How do the above make me feel?

Replace the negative with self-care.

  • Are you sure?
  • Are you sure you are feeling hate?
  • Are you sure your child is the reason for the emotion?

Frustration at my lack of skill can feel like anger.

How do skilled teachers feel about my child?

Negative emotions (hate, anger, rage) indicate a need to up-skill for the essential and out-source the non-essential.

Your mommy-guilt might be leaving you tapped out.

Being tapped out means your children, and your marriage, never see your best self.

Tapped out is a tough way to spend a decade.

 

Expectations

2017-04-07 18.43.38One year from now, the preschool years will be over.

I’m grateful.

+++

A favorite quote about racing comes from Scott Molina…

You don’t have to feel good to do good.

Another from John Hellemans…

When I want to quit, I know I’m going at appropriate race pace.

Both these gentleman have won a lot of races. They know their subject matter well!

Part of what they were seeking to teach me was performing at a high level feels a certain way, and it isn’t pleasurable.

2017-03-31 20.01.54So if you find yourself feeling overwhelmed, with your ears ringing and a headache starting… it might be how parenting feels (and the capacity to endure and not retaliate is what parenting well entails.)

That’s how I manage my expectations…

…to reduce the sensation of panic at the first whiff of misery!

2017-03-31 16.54.18.jpgAs the preschool years end, I’m going to find myself with…

Young people who are genetically programmed to want to spend time with me. Kids like us by default — our main role is not to screw up the relationship.

Young people with skills to share an active outdoor lifestyle with me. The skills were taught by outside experts. My role is to keep-it-fun.

+++

I wanted you to know what worked…

  1. Be willing to ask for help.
  2. Up-skill myself.
  3. Up-skill everyone towards shared activities.

It gets better.

2017-03-19 09.49.21.jpg

It wasn’t enough

When I follow my own advice, life is better.

At the back of my mind, especially with kids, I have a desire for life to be “easy.”

My desire makes me chuckle because my “easy days” are often boring.

Based on eight years of parenting… easy is not going to happen so focusing on “better” is a smarter option.

From time to time my appetites come up with ideas to make my life _even_ better.

  • These ideas might be small — five beers, two burgers, large fries and couple desserts
  • They might be large — a vacation property with a cost of ownership that doubles my core cost of living
  • Many fall in between — clothes, vacations, sports equipment, alcoholic beverages, risk-seeking friends

These desires pop up as an emotion associated with pleasure, excitement or release.

Certain choices, situations and people are associated with bad outcomes.

Despite an association with pleasure, excitement or release… many of my desires are highly-likely to lead me to bad outcomes.

To tame my appetites, I pause and consider the last time I gave into that specific appetite…

I ask myself…

Was it enough?

It was never enough. Not even close!

I remember always wanting more, even while I was getting what I wanted.

My desires are frequent, but my specific desires are fleeting.

They come and they go.

If it wasn’t enough then maybe I should find a better way to live….

…and that’s the system that I’ve been sharing.

=====

What’s your system?

Is it working?

Small Acts of Kindness

Another tactic within my current system for living is small acts of kindness. Kindness has the greatest return of any choice I make.

+++

Think back to the last time you were disappointed after helping someone.

What was the nature of this disappointment?

If you are seeking external rewards then you might benefit from a change of mindset.

Here’s what works for me.

Each day, all sorts of thoughts run through my head.

When I’m under stress, I think about retribution, anger and violence.

This sort of thinking is particularly toxic when directed towards my kids. Not-acting on my thoughts exhausts me…

…especially when my negative experience appears to be caused by situations, and people, outside of myself.

But is it?

Who created the habits of my mind?

Regardless of the source of my habits (maybe it really is everyone else’s fault…), there’s only one person who’s going to be able to improve my inner experience.

Positive, and kind, actions despite the noise of daily living.

Sometimes the best I can offer is not giving voice to the negativity I am experiencing.

Anyhow, if you’re giving and expecting reward // or // not giving because you don’t see the benefit…

…then consider a change of approach.

I help in small ways to prove that I’m a good person despite my mental habits.

 

Too Tired To Change

2017-02-07-08-11-04Picking up from last year

What one thing, if it happened, would change everything?

  • Keep it simple
  • Do it daily
  • Set a low bar for success
  • Stretch your limits when overall stress is low

As a coach, I used the above with regards to athletics => better nutrition, sleep and emotional control. Sort those components THEN crank specific stress.

The challenges facing a new parent

  • life stress never feels low
  • we start with no skills
  • we have unreasonable expectations

If you’re facing challenges in your family life then I’d encourage you to acknowledge the above.

Being honest about my limits makes it easier to improve and cope with the inevitable errors.

If I pay attention to my errors, they are most often associated with being tired. You may find this in all areas of your life (emotional control, food choice, substance abuse). You might also have other triggers (hunger, anger, loneliness).

I really like being tired. Fatigue settles my mind and helps me fall asleep.

The trouble comes when I make a big unforced parenting error before bed!

Errors can haunt my consciousness for days.

So this post is about fatigue and change. However, if you look deeper, it is about how I am choosing to invest my emotional energy towards success.

Our values are reflected in where we are willing to make an effort. My values are greatly influenced by peers, environment and media inputs.

So doing a better job at home meant letting go of areas, peers and situations where I used to compete.

Who sees my best self?

2016-12-12-15-26-09Another component of the price I pay is to whom I direct my best self.

The answer cuts through all the BS I tell myself.

What do my kids actually see?

What does my spouse actually experience?

2016-12-14-10-43-23When I was trying to win an Ironman, my coaches and training partners saw my best self. These people were essential to my success and we had a great time doing what it took to improve.

Not coincidentally, I met my wife while training. During the summer of 2004, the only place you could find my best self was training for triathlon.

With the birth of my first child, success was frustrating remote. My internal life was frazzled, angry and exhausted. If I opted out then I would strain my marriage.

So I asked for help and studied experienced preschool teachers.

I paid attention to what was required to present my best self to my kids, and my spouse. [the list I shared]

I paid attention to the conditions present when I fell short (noise, conflict, hunger, fatigue).

Noise and conflict are inevitable with young kids. However, there are many opportunities to get support and stretch my emotional limits gradually.

2016-12-07-06-56-12Like the rest of this series – it makes more sense when we invert the advice.

Good people won’t stick around in the face of our worst selves.