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What is a Box and One?

No, it’s not a small home with one bathroom. I have a passion for two things: basketball and real estate. As regards basketball, friends occasionally ask “What is a “box and one” defense? Or, how does a team best attack a 1-3-1 zone? To understand basketball, it is important to understand the terms and flow, the process. The same holds for real estate.

Gen X and Y are living in an economy that makes it difficult to get ahead. Income stagflation, student debt, high rents and their history with real estate since 2007 all cause concern for first time homebuyers. Many, fearful of real estate, don’t know where to begin.

My favorite basketball coach was Al McGuire. Coach McGuire used to tell a tale of meeting with one of his players in the player’s dorm room. The player, lying in bed, asked Coach McGuire, “Coach, what’s the secret to success?” McGuire replied, “The first thing you need to do is get out of bed.” “You need to get out of bed” – simple and accurate.

Most home buyers aren’t proactive. They don’t get out of bed, they fall out of bed. They don’t have a plan. They attend open houses, watch television shows about home buying or renovation, work with an aunt who’s “in real estate” and consult Zillow. In short they are sold a home based on emotion and inadequate or inaccurate information.

I suggest buyers develop a plan. It is the reason Homebuyer Associates will not work with a potential client until we have coffee and an opportunity to discuss their goals and objectives.

A good start is to understand the terms and process of the biggest financial decision most people make in their lifetime. In basketball it’s called a scouting report and it increases the potential for success. In this and my May newsletters, we’ll review the real estate scouting report for home buying.

1. Should I rent or own?

Easy. If you are going to stay in the area for 5 or more years and are able to find a home that meets your needs at a cost close to what you are spending on rent, purchase a home. If it is an affordable stretch beyond what you are paying in rent I’d still recommend a purchase to lock in low interest rates.

2. What can I afford?

Be careful. A lender may say you can afford more than you are comfortable affording. If you are paying $1,500 a month in rent and are able to live comfortably, then you know you can afford a $1,500 a month mortgage payment. (Actually a bit more after allowing for the tax deduction you get for owning.)

I suggest potential clients ask the question, “What can I afford to pay monthly for housing and still live a normal life?” The answer to that question dictates what you buy and where you live.

To determine that number, it is best to detail your monthly expenses for food, shelter, clothing, transportation and entertainment. This allows you to see where you are spending money and if there are areas for saving. In basketball terms it’s a “two for one drill” in that you get a better understanding of your expenses and help determine what you are able to afford in a home.

Need a housing scouting report? Will provide answers for coffee. Thanks for reading.

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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129