Hello everybody, it's Sam and Cindy from the Financial Samurai podcast and in this episode I want to try to argue with my wife as to why we should upgrade homes at this point in our lives and She will argue against why we should upgrade homes. So Cindy I Have seen this home on the market for the past year and a month It was listed at a certain price last year to me It was my dream home because that a huge lot huge front yard huge backyard totally remodeled one more Bedroom two more bathrooms more areas to play and no stress that if we let the kids outside they won't run on the street because it's an enclosed front yard and I really wanted to buy this home.

I'm glad I didn't because you know the tech market Started collapsing and you know, San Francisco barrier was like not too hot in 2022, but things are coming back and I have another opportunity to buy this house so We're in our mid 40s. Now. Our kids are three and a half and six years old They are gonna be with us for the next 12 to 15 years and then that's it and I've written in the past that the best time to own the nicest house you can Afford is when we have the most number of heartbeats at home, which in this case are our children Afterwards, we don't need a bigger house.

We don't need a nicer house We probably will just keep our same house or downgrade because it'll just be the two of us and hopefully them visiting Multiple times a year. So please tell me and listeners. Why? Shouldn't we upgrade homes? We've been in this home for the past three years now.

It's done well for us But we have this opportunity at a lower price Well, first of all, it's just not necessary Yeah, I mean there's there's real estate opportunities all the time right and they don't have to be physical real estate properties right you talk about real estate crowdfunding opportunities all the time and there's different ways to invest in real estate and I just don't feel that it's necessary.

We have a home that's more than big enough for our family It's a great layout. It's in a location that we like it's got a nice view It's it's very comfortable and it works really well for us right now So I don't feel that we need anything more. I'm also pretty easy to please I don't need the latest fanciest construction materials and you know The fanciest faucet or whatever I actually don't like things that are too fancy because they break easier they're much harder to replace and There's different stresses that come along with it and you're giving me a look Like you're frustrated So that's you know, just my first little spiel You know, I there's just a lot of logistics that also go into moving and Yeah, we can hire people to pack our stuff and move for us.

That's just not my style and I just feel Happy with where we are. So I'm really content. So for me, I Am NOT in a rush and and yes I understand what you're saying about living in the best house that you can afford when you have kids living at home I I don't disagree with that But I feel like our current home Meets it checks all of my boxes yeah, and I feel like this particular house that you are very interested in as some boxes Sorry is missing some boxes that our current home has yeah, you know we have you know you know disagreement on some of them, but you know things that are more important to you to me than me and vice versa, but I Don't feel like this other house is significantly better than what we already have I feel like your argument because you've thrown out so many points got diluted Diluted with all these points about I'm happy.

I'm comfortable Doesn't check all the boxes Etc, etc In my maybe you just feel that I'm arguing a very good case. No like your side is So so let me let me just one point the argument of not wanting to move To me the idea of not wanting to move in pack boxes.

Yes you because I'm the one that's always done All of the packing and the logistics and hiring the movers and you know, that's my stress That's your stress. I know how stressful and how long it is. I don't like hiring people to pack Okay, that's just I just don't like to do that Some people are comfortable and more than happy to do that, but that's not how I work very well I understand that I hear your point But let me add I Contributed to the moving as well from our other house to this house I think I drove like 40 times and I filled up our car with stuff and moved myself and I was more than willing to do it and I took the attitude of We're gonna move to this new house for the betterment of our family and I'm willing to pack up the car the boxes and load them up and On low offload them as a form of exercise as well It gave me a purpose to do every single day for maybe a couple months and I felt really good about it and as The father of the household I feel it's my responsibility to provide it as best and most comfortable and safe environment as Possible.

So would you agree or disagree that moving to this house? We currently live in was the right move in 2020 Yes, and it was a different situation because we were also moving out of a construction zone and When did the house that we were living in prior to here?

It wasn't as we didn't have as much space because the construction wasn't completed. So it's not apples to apples Right. It's not apples to apples, but I made a decision in 2020 after How many months of living in our other owning our house for about a year and doing some construction that?

You know what this remodeled house that we currently live in would provide a better life for our family during an especially uncertain time and It was a very risky move to take on debt to buy this more expensive house while also having our other house under construction which cost money But three years later, I think this was one of the best lifestyle decisions we ever made To have these levels to have the view Best best lifestyle decision.

There you go. There's no need to compare to Owning the other house But that's the thing. Nobody needs to do anything You know, we can just eat cereal and water every single day Not, you know pursue promotions and raises Well, that's I'm saying you don't need anything else you just Well, some people are lactose intolerant.

Okay, let's Let's let's be thoughtful for those people. What I'm saying is that none of us need to do anything we don't need to buy one more pair of pants or another t-shirt or Get anything fancy. We can just sit static for the rest of our lives or We can identify opportunities which I have seen and identified with this home, which is now lower in price So it's more affordable yet.

The stock market has recovered by over 12% year-to-date in 2023 and it's up over 20% since October 12 2022, which means that our investments are also up so there's a double benefit financially here of increased investments a rebound at least and also a decline in the price of This forever home, but you're leaving out all the all of the rental properties, right?

if we're going to move we haven't discussed anything about Decreasing the number of rental properties that we have. Well, that's gonna happen in due time because I do agree Managing three rentals in San Francisco is my limit. So I don't want to manage for that's just it sounds disastrous Really?

Maybe I hire a property manager to manage it, but then I have to manage the manager however, I have realized that I'm actually a good landlord or Someone who underprices the rental properties because we haven't had a rental property vacancy in years I think five six years now When I was trying to figure out how to cobble together money to pay cash for this target forever home I was thinking myself.

Well, obviously we should sell one rental property and then use the proceeds to buy this house But every single rental property that I reviewed has had a tenant for one two, three five six years And I don't know when they're gonna leave but eventually one of the tenants will leave Over the next three years and we can sell one of these properties.

I Just feel like it's it's over complicating things. I mean life is complicated But you've taught you've written about how as we age We need to make our lives less complicated right but you know, I I totally agree with what I've written you should and I do believe in Minimalism and retirement they go hand in hand because if you're a parent and you have aging parents to take care of Whoo, there's a lot of complications in life.

Yeah, I'm dealing with a lot right now with with my own Yeah, I hear you but one of the responsibilities of being a thoughtful good parent Is not thinking about ourselves. It's thinking about our children. Oh, come on our children are Happy in this house. What are you talking about?

What are you trying to? what I'm saying is we as Adults have the ability to invest for our children's future today. Our kids are three and a half and six they have no idea about investing saving the struggles of life the difficulties of globalization and all that stuff Just imagine when you were three years old or six years old if you had parents Who foresaw the future and who thought about your future a little bit more carefully and invested for them?

How much better you'd be? Well, that's a whole nother Discussion that you know, we don't want to get sidetracked on right now But I think people can argue it the other way if you grow up without a lot It strikes fear in you, you know, I I grew up with a lot of fear I'm not having money as my own money as an adult because I knew I couldn't count on my parents So it motivated me to work hard if I knew that my parents were very well off and that they would take care of me I probably would have taken More risks in college and not gone a very practical route that I knew Would get me to a reliable career path that would generate enough income for me to you know be financially independent, so we For getting such no, we're not getting sidetracked because everything is a line when we Purchase property or anything we have to think about ourselves But more importantly our children you already have you already have you already have investment properties for our children We don't need we don't need anything.

This is the thing. We don't need anything Nobody needs nothing Well, here's the thing if you want to talk about decumulation The best way to decumulate income and assets is to buy an expensive home There's all these property taxes fees maintenance You know, you got to spend your money to buy that home.

The easiest way to spend money is actually to buy a home but but going back to Spoiling our children is what you're thinking It's not for them. It's an insurance policy for them. Okay, it's not like hey guys There's rental property in a stock portfolio. It's all for you.

Once you graduate high school or college Don't have to worry about your future. Nope. It's not that way at all that it's not that's not your intention No, it doesn't mean that they won't Think Oh one day when mom and dad died Let's say we die We can't prevent them from thinking but they're logical to conclude that when we're 85 years old, okay I don't want to put a number because it's kind of depressing They're gonna be you know 50s and 60s.

Are you gonna? screw your whole life for a Inheritance that may or may not come at the age of 50 55 or 60. No, of course not. I don't know We don't know the future But I think our kids are probably if if they see that we have all these different houses They're probably gonna think that they're gonna Come out with something Yeah, maybe maybe not.

I'm gonna keep on making them pull the weeds Do the landscaping, you know figure out where the mysterious fire alarm is coming from Which was within the walls within the walls. I Have an interesting analogy about buying a nice house and not regretting it So in my 20s and in my 30s, I was car obsessed But then I finally, you know came to my senses and said, you know I better invest that money instead of buy a nice car.

And so instead of buying a nice car I had used cars very inexpensive until 2016 December 2016 when we bought the Range Rover Sport for $58,000 and about $60,000 after tax and this was the most amount of money I spent on a car since I was 25 years old.

I went crazy and bought a g500 at 25 years old because Mercedes-Benz had dropped the price of the g500 by 50% because this one Distribution company in Santa Fe, New Mexico was bought out and they didn't have a monopoly anymore. Anyway My point of this story is that I bought the car in December 2016 and now it's in 2023 and I don't regret a single penny That I bought this car It's an expensive car, but I don't regret it at all for the past seven years almost seven years we've been driving a nice car that I felt has been safe and reliable and so when it comes to a home where we live and create memories and Experiences.

Why are you laughing? I'm laughing because you don't regret buying this home No, what I'm saying is we can buy this nicer home with more memories we can invite more people over we can have it Actually have a bouncy house in our front yard and have you know, just more socialization and friends I think it would be so much more fun.

And so I don't think we're gonna regret buying this home 12 years from now After our kids go away. I think we're like wow, we were able to maximize our Lifestyles with the income and wealth that we accumulated during the most important times of our lives I just don't think we'll regret it I have been to so many open houses over the past 20 years in San Francisco I've seen more expensive homes in fancier neighborhoods I have not seen a home this nice at this price point for this value Ever it almost feels like destiny that this home is still available I was so close to borrowing money from a friend to try to buy this home in May 2022 and They wouldn't accept our offer and then imagine a year later with the market Rebounding well the market you go down and then rebounding and then the price cut and then them saying hey You know what?

Maybe we will entertain your offer That just seems like we're destined to own this home I'm not saying that it's not a good opportunity From an investment point of view and a lifestyle more importantly a lifestyle. I don't think there's a significant difference in lifestyle Then why do people buy bigger nicer homes?

FOMO or just feeling like they have to keep up with the Joneses. I don't know I've to me I don't feel that there will be a significant difference in lifestyle quality at this other house Well, let me make this argument here I do believe there will be a significant increase because for me as a father I fear our children running on the streets and getting hit by cars out front We live in a big city So this home has a gated front yard where they can play for hours and hours with no fear Okay, if that's your biggest fear, then there's an alternative Moving we can Alter the front of this house Install a gate.

No, we can't remember the city like made us take down planter boxes on our property because it's public right away I know this city is You we cannot install anything in front of our house. I'm getting frustrated Well, I I hear your frustration and I'm sorry to make you frustrated.

It's really the city. We should be frustrated Because the city has nothing else better to do than to tell people to take down their planter boxes and to tell people that those free library Hutch's that they have outside their house or Yeah illegal just all kinds of ridiculous stuff.

All right. Well, we've had I think a Productive but maybe not so productive discussion. I don't seem to be able to get you to budge I'm not I'm not saying it's it's a bad house when you look at it for what it is It's a nice property. It was remodeled very well.

They used really high quality materials They obviously spent a lot of time and money doing it. And so I understand why this cellar is Stubborn, but yeah, the cellar does seem quite stubborn And it has you know a lot of emotion tied up into the property I just you know, it sounds Maybe silly to say but I don't want to lose the ocean view that we have at this house It's it means a lot to me And it's something that I really really enjoy Every day throughout the whole day that this other house doesn't have it has other things like the yard Valley view I Don't know it's just There's no perfect house.

I will say that no house checks every single box that you want unless you build it from scratch But even if you build it from scratch, there's no guarantee that there won't be things that go wrong. We've had that happen to friends Sure. I think this might this argument might be a reflection of something bigger one of Person me being a risk taker and one of you being Not a risk taker and I think over time Risk taking has enabled us to live the lifestyles that we currently have if we didn't take risks For example, if I didn't leave my job in 2012 if you didn't negotiate a service in 2015 We would have different lifestyles.

I don't know if it'd be worse or better. It would just be different I think our lifestyles currently are great and that's because we took risks now Sometimes risks don't pay off. Sometimes we lose a lot of money. Sometimes we might upgrade homes and I wrote in this article there are some things that we might not expect such as maybe bad neighbors or more traffic than expected or Really noisy dog that barks all day long, right?

You just don't really know until you actually live in the house for a while 24/7 for weeks on end and yes Maybe the economy and the stock market and the real estate market go back down again in the second half of 2023 or 2024 Because we've had 10 rate hikes and maybe there'll be another one and it takes Six months to a year for rate hikes to slow down the economy It sure seems like all the data is pointing towards lower inflation and a slowdown But we don't really know the extent of a potential downturn in the future and on the flip side things could continue to rebound as AI and corporate profits drive stock prices and the economy higher.

So let me ask you Sydney what? Would make you change your mind about us buying this new house? What is the compromise it's hard like One of the biggest things that is is like I said, I don't want to lose the ocean view and that's not something that you can Add.

Oh, yeah, you won't lose the ocean view. You know why? Because we'll keep owning this house But that's not the same. It's not the same That's true. We can always go for a walk or a drive to the other side of the hill to see the ocean Okay You're saying your argument is That if we can find a nice house with an ocean view then you'll be more amenable Potentially, but there's a lot of other things that have to have to gel like what?

Come on the layout the location, you know The cost obviously is a huge one. Yeah, the the Front yard backyard if there is one, you know, whether it's Touching the neighbor's house or if there's I forgot what it's called, you know if there's Stand-alone stand-alone, you know, there's just there's so many things I guess imagine Imagine you're in this new house Well, you mean this house right?

No new house the target new house if you were in this new house Do you think you would be unhappy? There's us I'm not saying I would be unhappy, but I'm definitely not unhappy now All right, folks, I'm sorry, but I think we've reached an impasse here If you are having this big dilemma with your significant other on whether to upgrade homes I highly suggest you read my post on the risks of upgrading homes Nobody thinks about also another post called the top 10 warning signs before buying a house or the top 10 red flags I'll put it in the show notes buying a home really is taking a leap of faith Especially if you need to take out mortgage debt Especially if you don't know for sure where you want to live five years from now or how much you're gonna be making Even the next year or two years from now many many things to consider I highly recommend you follow my 30 33 to 5 rule for home buying it's very very healthy way to look at things because the last thing you want to do is buy a home and then Not be able to sleep well at night because you're always stressed out about the payments and the future of the economy and the stock market and the real estate market based on my experience there's another metric that I like to use when buying a home and That's to try to keep the value of the home to no more than 30% of your net worth now It's gonna be hard if you're buying your first home or you're upgrading homes But once you get your primary residence to 30% or less You will feel more at peace less stressed out Thanks so much everyone for listening.

We hope you enjoyed our arguments of this back and forth I I feel I've made a little bit of a difference But maybe not please rate review subscribe share keeps us motivated We don't have any sponsors and please subscribe to our newsletter at financial samurai comm forward slash news.

Take care Bye.