Save $600 a Month with 10 Simple Steps and Afford $100,000 More on Your Next House

Save Big Money with a Few Simple Ideas

A few phone calls, and an hour of planning could save you $7000 a year

No, this is not another article about clipping coupons or going without things you like to have or do. The following are tested methods that won’t change your lifestyle in any significant way, and that only take a few moments.

There are many, many options available for using the $600 a month after you’ve achieved the savings. We are going to suggest using these funds to afford $100,000 more on your next home. Right now, with 4.15% 30-year interest rates, each $100,000 you spend on a home will result in about $600 in monthly payments.

1. Call your cable TV provider. Tell them you are considering going off grid or switching to satellite. If you have satellite, call the provider and tell them you are thinking of switching to cable. Watch the dance begin. You are very likely to end up with at least $20 or more in savings. Now call the competition with your new rate and see what they will do. You are likely to end up with the same or better rate and some kind of promotional money or free stuff for switching.
2. Go off the grid on cable. Between Apple TV, Hulu, Netflix, RedBox, Amazon Prime, and other TV offers, it is hard to justify any upgrades to basic service on cable or satellite. The savings for getting off of cable could easily be $50 or more.
3. On to your cell phone, internet, and land line providers. This gets a bit more complicated, but the cost of all of this is dropping fast. By changing providers, bundling, unbundling, and just shopping, you are very likely to end up saving another $30 a month and improving MBPS. Recently I tried to end my land line service, but the bundle cost less with it that without. 
4. Saving on your utilities. The water company (at least in California) will be happy to help you cut down your water use. Check with your supplier to find out how to get free or reduced costs products to reduce use in bathrooms and irrigation. Then check to see what the recommended water needs are for your yard. The electric company will help you with lighting and other ways to save on electricity. LED lights are fantastic and save a huge amount of money. Switch appliances to natural gas to save even more. Saving $50 a month for these changes should be a cinch.
5. Budget. Keep a penny by penny ledger of all expenses for three months. There are many online tools that can help with this process. Once you see where the money is going, you will almost certainly be able to find ways to cut that won't hurt even a little bit. We’ll put this down as $25.
6. Shop your car insurance. We have 4 drivers on the policy, so your results may vary. Don’t forget to check Costco or AAA. It is not unusual to save $100 or more. You should also review your other insurance policies annually to make sure you have the coverage you need, and to see about savings on rates. Life insurance is another very likely savings point.
7. Speaking of Costco. The savings by purchasing your groceries and other items at Costco are real and significant. Costco marks up all items by 15%. What they buy for $10.00, you pay only $11.50.  Most discount department stores mark up 50% to $100.  So you would pay $15.00 - $20.00. I know you have to buy huge quantities. Find nooks all over the house for storing commodities. Buy and extra freezer. A one time small cost for huge savings. Multiple online sources report Costco as cheaper than Walmart, Sam’s, and Amazon Prime. Imagine the savings compared to your local chain market. Potential savings of at least $25 per month per person.
8. Amazon Prime. When it isn't a Costco item, why not buy on Amazon Prime?!? Pricey toothpaste, supplements, household items and more are almost always cheaper on Amazon than at Target or CVS. And there is no freight and no auto expense. When you need more, you have a record of what you bought. Savings of another $10 per person per month.
9. Get rid of any high interest credit card. Use the savings from these other suggestions to first pay off all credit cards with interest rates higher than your mortgage interest rate. The only good use for a credit card is to build credit. Pay them off every month. Or get an interest free credit card and transfer all balances into the interest free card. Most families will save at least $25 per month.
10. Get rid of one expensive, useless or worse, habits. Smoking, buying booze in bars, fast food, gambling (including lotto.)  This could be the biggest savings of all. An expense of just $10 per day is $300 a month.

There is potentially a lot more than $600 a month in savings in this list.

If you are now ready to go buy that bigger house in a nicer school district, call Belle Tsai, and she’ll help you to get the most bang for your buck on that purchase, too.

Don’t Believe the Scare Headlines – Buying a Home in Los Angeles Still Beats Renting – It Isn’t Even Close

Buying a Home Beats Renting - Even in West Los Angeles 2017

This isn’t a scientific study, but the math is the math. Since 2013, we’ve been watching the value of one West LA home that today is worth just under $1 Million. Each year we compared Zillo.com’s Zestimates for purchase and for rent. We then looked at current mortgage rates using a 20% down, 30-year fixed-rate mortgage. We assumed $500 per month of maintenance on the home. We assumed about 1% closing costs if the home were purchased in that year. We spread those closing costs over 3 years. We also assumed that someone who could afford this home was probably in the 25% income tax bracket, so we used 25% of interest and property taxes as a savings. 

We recognize that home prices have been rising rapidly in this period, so it is not representative of all real estate situations, and may be a terrible predictive tool for the next 4-year period. But even if values drop, the out of pocket costs will not be effected, as rents have not dropped in the previous two real estate recessions. 

The results that follow give the out of pocket expense for renting versus buying, and also show the wealth building for each. For wealth building, we assume the home would be sold with real estate commissions at 5%. The renter invested the down payment and made 6%, compounded on the investment. Results are approximate and rounded for ease of viewing.

2013 – Purchase Price $650,000 - Rent  $3150

Year one – Out of pocket cost to buy $3066 vs Rent $3150

2014 – Purchase Price $795,000 – Rent $3125

Year one – Out of pocket cost to buy $3550 vs Rent 3125

If purchased in 2013 – Out of pocket still $3066 

Wealth Increase -  $98,000 buy vs $7800 rent

2015 – Purchase Price $840,000 – Rent $4000

Year one – Out of pocket cost to buy $3900 vs Rent $4000
Year three if purchased in 2013 – Out of pocket for purchase still $3066 vs $4000 to rent
Year two if purchased in 2014 – Out of pocket for purchase still $3550 vs $4000 to rent

Wealth increase if purchased in 2013 - $148,000 buy vs $16,000 rent
Wealth increase if purchased in 2014 - $3000 buy vs $10,000 rent

2016 – Purchase Price $930,000 – Rent $4000

Year one – Out of pocket cost to buy $4300 vs Rent $4000
Year four if purchased in 2013 – Out of pocket for purchase still $3066 vs $4000 to rent
Year three if purchased in 2014 – Out of pocket for purchase still $3550 vs $4000 to rent
Year two if purchased in 2015 – Out of pocket still $3900 vs $4000

Wealth increase if purchased in 2013 - $233,000 buy vs $26,000 rent
Wealth increase if purchased in 2014 - $90,000 buy vs $20,000 rent
Wealth increase if purchased in 2105 – 44,000 buy vs $11,000 rent

2017 – Purchase price $970,000 – Rent $4000

(Caveat – The big jump in rent 2015 after a slight decrease in 2014 and the subsequent flat rents in 2016 and 2017 could be smoothed out and still be good for comparisons)

Year one – Out of pocket cost to buy $4300 vs Rent $4000
Year five if purchased in 2013 – Out of pocket for purchase still $2766 vs $4000 to rent
Year four if purchased in 2014 – Out of pocket for purchase still $3550 vs $4000 to rent
Year three if purchased in 2015 – Out of pocket still $3900 vs $4000
Year two if purchased in 2016 – Out of pocket still $4200 vs $4000

Wealth increase if purchased in 2013 - $270,000 buy vs $34,000 rent
Wealth increase if purchased in 2014 - $125,000 buy vs $30,000 rent
Wealth increase if purchased in 2105 – 80,000 buy vs $23,000 rent
Wealth increase if purchased in 2016 - <$10,000> vs $11,500 rent

After four years of running this experiment, and even with a supposedly overheated seller’s market in Los Angeles, it seems that buying just makes way more sense than renting. We can imagine scenarios where this would not be the case. The housing market is subject to downturns just like any market. It is possible to imagine this home dropping by $300,000 if there were a typical drop in market values.

Even then, these markets correct, and over time the likelihood is that the home will continue its upward valuation curve. On the other hand the market may continue strong and deliver another $100,000 or so in appreciation over the next three years.

A major issue in the current market is whether you can even find a home to buy in Los Angeles. Inventories of Los Angeles homes are the lowest ever recorded.

We can help you with that.  Belle Tsai has the experience, the focus, and the backing of real estate powerhouse, Sotheby’s International Realty to help you. Call Belle now to get the ball rolling at 310.738.7118

Belle Tsai - Sotheby's International Realty
15308 Sunset Blvd.
Pacific Palisades CA. 90272

310.738.7118

When to Buy a New Home - SoCal Home Buyers Get Most Choice in March-June

For those who are looking to buy a home in Los Angeles, the story for 2017 is pretty much a repeat of 2016 and 2015. Inventories are at historic lows (Only about 100 homes for sale in Santa Monica), and there is serious competition for the best homes that come on the market. So when is your best chance to score the home of your dreams?

In general, the best time is immediately.  Your first step should be to concentrate on selecting an excellent, hard working realtor, and be prepared to spend six months to a year in your search. You can dramatically shorten the time to locate and buy a home if you are flexible about the home, the neighborhood, or the price. But the more you care about each of those elements, the longer your search is going to take.

The high season of real estate starts in March. More product comes on the market in the Spring as sellers are interested in using the Summer to move. This has generally been related to school and moving the kids to a new district during the Summer. While this is still an issue, even families with no children are generally hoping to move during the Summer months.

As a result, substantially more inventory will be available during March-May. The converse is also true - the shoppers are also out in droves. And yes, prices go up due to the number of shoppers in the market competing for the best properties.

What steps can you take to make the process as smooth as possible? Start by calling Belle Tsai. She has many years of experience helping buyers find a great property in the Los Angeles Market. She is also associated with Sotheby’s International Realty, and that relationship provides you with massive additional resources.

Belle will help you to get set up with an outstanding mortgage broker where you can be preapproved for a loan. Unless you are an all cash buyer, home sellers are going to give preference to offers that have proof of ability to borrow. In this market, you are hugely handicapped if you don’t have your lender preapproval letter.

Next, Belle will listen carefully to your dreams and expectations and then provide professional recommendations for homes that will best fit what you are looking for.

Once the plan is in place, you will receive suggested homes to go visit. Belle will accompany you on these visits to help evaluate each property.  When you find a property that you like, she will help you prepare an offer that will be designed to the right price for that house in that market, and that will appeal to the seller.

If you are ready to start looking for your new home, call Belle today @ 310.738.7118