Back to the basics

Solano Real Estate Scene: Jim Porter

Article By: Jim Porter – April 5, 2014

I have heard this statement thousands of times in my 30-year career: “Buying my residence was one of the smartest things I have ever done.”

This is another very common theme from so many of my friends, family and clients: “I have made tons of financial mistakes in my life but buying my house wasn’t one of them.”

I love this one: “If I had not bought this house, I would be in big trouble today.”

I am keeping the expletives out of this quote for the family newspaper audience but many very good people are frustrated, scared, angry or depressed when they turn 60 and realize how fast time flies in life. Retirement comes quickly and even if you are a terrible money manager and investor or even if you were a victim of bad luck with money or serious health issues, buying a house and getting it paid off in 30 to 35 years can be a financial life saver for many people.

Let’s go back 35 years from today and look at the rents in Solano County and compare renting versus buying. The rent for a decent three-bedroom, two-bath house was around $300 per month and the cost of the home was around $60,000. The rent today for that exact same home would be a minimum of $1,500 per month, five times the original rate.

The bottom line is this, if you purchased your home and paid it off in 35 years, you would have a home today worth $300,000 and only have to pay for taxes, insurance and maintenance, maybe $550 per month. You would also have no landlord and the freedom to move to a retirement home community, pay cash for the home and even add to your reserves.

If you were lucky, cautious and smart about money and about maximizing your IRA-401(k), you could retire as a millionaire. If you did 35 years working for a government pension, you can retire with dignity and options. If you had bad luck or handled nearly everything poorly over your financial lifetime, then at least you have Social Security and a free-and-clear $300,000 house that today you could sell tax-free and then move down in price or even in with family with a very decent bankroll to invest.

We all know senior citizens who are in great shape financially and many of these folks never made more than $18 per hour when they worked for the city, the state, the military or the blue-collar private sector, union and nonunion. One thing they all have in common is they own their home and many own a rental property or two. Some have great pensions vested plus hundreds of thousands in savings, mutual funds and bonds.

The financially independent senior citizen does not seem to be a growing population in California today and I believe the rich are getting richer and the poor are getting poorer. I am on a mission to make the middle class richer and the poor less poor.

I need your help on this mission, so call me or your favorite mortgage banker and a great local Realtor today, buy a house and get it paid off in 30 to 35 years while investing as much as you can in your deferred compensation plan as well as regular investments. Get financial advice from your parents and grandparents if they are financially independent while getting modern professional advice from reputable local professionals.

Good luck on your mission. Let’s get back to the basics like the last post-Depression generation.

Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.