New Year’s Housing Resolutions From A Gen X-er – 2019

[Editor’s note: as we strive to make personal finance more relatable this year, you’ll see more joint commentaries offering different takes on hot topics. We kick off 2019 with Millennial and Gen X takes on real estate. Below is my Gen X take, and here’s Spencer’s Millennial take.]

I’m a Gen X-er and on the surface, I’m a poster child for building wealth through real estate. But it’s like George Costanza said (obv I’m using a Gen X ref):

If you take everything I’ve accomplished in my entire life and condense it down to one day … it looks decent.

It’s taken decades. This picture of my family was taken last summer near our second home/rental property in poster-perfect Colorado. It’s the fourth property my wife and I bought, as follows:

– Our first was about 19 years ago when we each pitched in $25,000 we’d saved and bought our modest Chicago condo together 4 years before we got married. I still had more than that in student loans at the time, which took me 7 more years after than to pay off (I decided to use savings to get into housing market rather than lump-sum pay off student debt).

– We sold our Chicago place near break even and bought a modest condo when we moved to San Francisco almost 16 years ago—and we still live in the same SF place.

– Then four years later, we bought a rental condo in our neighborhood using some savings but mostly the equity we’d gained in our primary residence. It was profitable monthly for the last 2 of 7 years we owned it, and ran a monthly loss for the first 5 years. We were ok with this because those losses could accrue (under tax law at the time) as an offset to capital gains when selling.

– We sold the SF rental in 2014 and did a 1031 Exchange into our Colorado place. A 1031 Exchange lets you defer capital gains taxes if you reinvest all proceeds from a rental you’re selling into a new rental of equal or greater value you’re buying at the same time.

Over the past 20-ish years, we almost made a few property decisions that would’ve ruined us, and it’s a fight everyday to keep the discipline that makes any good investor, in housing or anything else. So as 2019 kicks off, here are my New Year’s housing resolutions:

1. Mix business with real estate. Everything this year is about building The Basis Point’s Consulting and Media businesses, which have team members in multiple cities. As it plays out, there are a couple cities I’m particularly interested in for space. San Francisco is low on the wish list due to cost. My dream scenario is to own mixed use property with retail, office, and residential so the property is a self-sustaining business that can support the core business.

2. Decide on locations. My top wish list city is Detroit for a 3 reasons: lots of relevant talent, affordable business and residential space options relative to other major cities, and cool factor—most Detroiters are chilled out but hungry at the same time, which are my kind of people. Back in April, I said downtown Detroit is like SOMA in San Francisco 15 years ago, and now that I’ve gotten deeper into space options in downtown and surrounding areas, the latter is a better fit for how I see the world.

3. Watch, study, and wait. Team members come first when building a new business, so buying property for the business is a fun, relevant goal, but comes after core team priorities. Every real estate win to date was by watching under-appreciated sections of cities, and waiting for when the timing is right. I hope we can be be fortunate enough to do it again in Detroit (and other possible locations to be revealed later), even if it’s not in 2019.

It’s tough to reveal this much personal and professional info, but hopefully a few of you out there will find it useful. Even though my story started with $25,000 in savings, you can start with less—happy to field any questions. Lots more to come. And don’t miss Spencer’s Millennial take on the same topic below.
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Also See:

New Year’s Housing Resolutions From A Millennial (Spencer White) – 2019