Episode one, six Tips for first time home buyers. Welcome to the Brugal Friends Podcast, where you'll learn to save money, embrace simplicity, rice and liver with your life. Here your host Jen and Jill Do Do do Bad. Welcome to the Singing Friends podcast. My name is Jen, my name is Jill, and we have quite the show. I hope that you have a long drive, or you have buckled up for a really long house clean or whatever. Give us your time today. You won't regret it. It is worth every excited for Scott A. Mended to be on there from Bigger Pockets. We just wrapped up the interview, which is why we can know that you can be excited about it and that we just covered a lot of really great content. So yeah, if you are looking to buy for the first time, buy home for the first time, this is great. Even if you own a home and you are looking to buy again, this is really great information and you will get a lot out of it. So before we get into the episode, let's hear word from our sponsors. We've got the Frugal Friends Workbook and we're doing a flash sale. It's back. The Frugal Friends Workbook is a digital workbook with six weeklong challenges that turn improving your finances into kind of like a game. You'll get sixty pages of teaching, implementation guidance on topics ranging from decluttering and increasing your income to having healthy conversations about money. I love it because I feel like it's a really phenomenal blend of Jen and I. You've got a lot of the personal finance background blended in with some of my counseling and therapy and social work backgrounds, so you're getting a good flavor of us. So while it can be completed on your own, it's also created to be gone through in pairs or small groups. So that's why every purchase comes with two downloads. So had to fical Friends Podcast dot com slash Workbook to learn more. And this week only you can get the workbook for off so no code needed, just Fecal Friends podcast dot com slash workbook sales going on right now. Do it? Yes? And this episode is also brought to you by Surprise not really Surprises, the sponsor of today's episode. The surprise that comes with a call from your landlord telling you you have six weeks to get out of his duplex or the surprise that comes with being outbid on every single house you put an offer in on, and the surprise that your wife has gone under contract with the house you haven't seen yet. Surprise. It's the spice of life. So they say, this is such a good sponsor, thank you. Surprise. We talk a little bit about this in the Lightning Round today, except you didn't mention in the Lightning Round that you put an offer in on the house without Travis knowing. You just came home one day and said, we have a house, which I I mean, I went under contract. That's a different that's that's further so we said, but it all worked out in the end, and that is a that is a recurring theme that you will get from today's podcast. So first, if you want to queue up a few episodes to play after this. If this one wasn't enough, maybe you want a road trip, definitely head back to episode sixty seven. Episode sixty seven, when buying a house is the frugal move. We have so many episodes. Episode eighty how to get other people to pay your mortgage with Craig cure Lap that on was about house hacking, and then episode one, how to save money when buying a house or refinancing, so really great ones to que up to play after this. But for today we are talking to people who definitely want to buy a house, and we have If you are familiar with real estate at all, you may have heard of Bigger Pockets. So we have Scott Trench, the CEO of Bigger Pockets, and Mindy Jensen, his co host on the Bigger Pockets Money podcast. It's one of the top personal finance podcasts consistently in the top one hundred on Apple's iTunes. Lots of great information, lots of very wise guests, and gosh, Scott and Mindy themselves have so much wisdom, especially when it comes to real estate. Mindy is an accomplished real estate agent. Scott Trench, author of Set for Life, is seasoned house hacker and real estate investor. It's just there's so much goodness in the hot seat today, super fun and relatable. I know that you'll get a lot out of this today, So really pleased to offer this to you. Scott, Mindy, Hey, Mindy and Scott, thanks so much for coming to the Frugal Friends podcast and sitting down with us. And we have four people. That's this is a full podcast. I'm so excited to be here right, Thank you for having us. Yes, so many faces on this call, so many voices, and we fund for the listeners to get it all straight. Glad to have you all. At least they'll be able to tell which one is Scott at hopefully. Yes, we've never been mistaken. Yeah, we get switched all the time. Nobody knows which one is Jen or Jill. But we are so excited to talk about home buying, especially specifically first time home buying, because I know at Bigger Pockets they talk a lot about like real estate investing, but you guys over at Bigger Pockets Money are talking about the money and the finances to get you prepared for investing. In a lot of times that comes with buying your own home. For so we're super excited to just like pick your brains. You guys have so much knowledge and it will anybody listening will be really benefited, whether you have your own home now or you're looking to buy in the future. We want to talk today a little bit about first time home buying. We've done a few episodes on this topic before, and so this is who we want to talk to specifically, today and curious to hear from both Humanity and Scott what what is a good strategy behind purchasing a first home. You should know that it is not a jump right into it with both feet. Oh I think I'm going to buy a home today and tomorrow you're signing papers on an offer. You need to do some research because this is a multi hundreds of thousands of dollars decision. And to make that decision because you really love the carpet in this one house or the mantle place in that other house, that's not the best way to make a financial decision that is hundreds of thousands of dollars that you can have an impact on your ability to grow your wealth for decades to come. You need to do research. You need to make a calm decision, and you need to know that. I mean, I'm and I'm assuming that you have already gone through the is it a better choice to rent or is it a better choice to buy? Thought? So starting from the yes, it's a better choice for me to buy my home now is when you start making your start doing your research. Because not all homes are created equally, not all purchases are created equally, and making the wrong purchase choice can have lasting impact on your financial future. Yeah, and all outt on. They're one of the biggest things that come into the buyer's rent decision and the strategy around home buying, which is obviously very heavily interwoven with that is the closing costs associated with buying property. You have one or two they of the closing costs that you pay on the buy side with inspection, araised, old title insurance UM and all that, all the kind of goodies that go along with that. And when you sell the property, you're gonna probably pay seven or eight percent of the properties value in closing costs when you when the seller typically pays both the buyer and the listing agent and that kind of stuff. And so that is the root of the strategy of home buying is which how do I make it less expensive than the renting alternative as quickly as possible? And for that you have there's like three exit options that you should think through when you're buying your home, right and those three exit options what that's what you're gonna do with the home that when you exit, like at the end state after a certain number of years go by, and those three exit options for most people are going to be one of the following three. One, I'm going to uh live in the property happily ever after. This is what most people overweight when buying a home. They think that this is much more higher probability than it actually is. The second is, I'm going to rent the property out and place a tenant in there after I move out, and I'm either gonna and I'm to rent it and I'm either going to cash flow it or I'm gonna subsidize my tenants lifestyle because I'm gonna bring in less rent than it costs to maintain the property. And the third option is to sell the property, ideally at a gain. And so the strategy comes down boils down to how do I buy a home? And your there's puts and takes in all of this, but how do I buy a home that gives me the most satisfactory blend of all three of those exit options? Right? So, to buy for renting or for buying to be better than renting, I have to generally speaking live there for a long period of time. But I don't really have to live there. I can just own the property for a long period of time. So again, if I can set up a place that I'll be happy with, that would rent for a positive cash flow, and that I could add a lot of value to very quickly to sell the profit, that's going to be the best option. Obviously, there's trade offs, and you've got like a three pronged ven diagram if you will, about all of this to get to that sweet spot. But generally speaking, that's how we can frame the strategy. And just by zooming out and thinking through those three options, I think you can make save yourself tens or hundreds of thousands of dollars over a ten or twenty year period by thinking through those in a really sophisticated way. By the way, that short term or that rental can be short term or long term um by the way, so there's lots of different avenues we can go down. Yeah. I love how you break down the exit options in your book. It makes it really easy to understand because sometimes we're when we buy a house, we're just thinking about living in it. We're not thinking about selling it. We're just thinking about the mantle and the carpet in the hardwoods. But when I saw those exit strategies, I was like, yes, that's exactly how you should be thinking when you buy something, and it was so helpful. I to appreciate this conversation. And I'll be honest, I got this question a lot when I first When my husband and I first purchased our home, so many people were asking us, so, what are you gonna do with it? And what's next? And how long will you live there? And I'm just like, I literally just signed the documents and you want to talk to me about when am I going to move out and where am I moving to next. I don't have kids, but I imagine it would feel similar to that I just gave birth to a baby and people ask, what are you gonna have your second? I didn't make any kind of sense to me, but I appreciate the way that you're framing this, Scott, that this is something we need to be thinking about when we purchase of What is the long term plan? Doesn't mean that we have to rush ourselves out of it, but is this going to set me up well to be able to make money off of this have a return on that investment? Is a good decision in that regard as well as for the short term. Yeah, I think there's a lot of people who buy a house and just think to themselves, Oh, when I'm done with it, I'll just rent it out. Well, not every property will rent out for even what you're paying for it, let alone making a profit or you know, accounting for these uh, all the numbers that you run when you run a property to see if it's a good rental vacancy. You have to plan that you're going to have some vacancy sometimes and capex or capital expenditures. You have to plan for replacing the roof. Even if it's got a brand new roof, in ten to twenty years, you're going to need a new one, and that's fifteen or twenty dollars. If you have a giant pile of Scrooge McDuck cash, then that's great. But if you don't, then you need to start saving for that every month. So when you get the bill for fifteen thou dollars, it's not a shock. And the same with your furnace, your air conditioning unit, your water heater, your kitchen appliances, updating the house in general. There's a lot of things you have to think about, but you also have to think about those as a homeowner. You still have to replace your roof as the homeowner at some point in time, make sure you have the money for that. Make sure that you're not paying every dime of your paycheck goes to your housing and then you have no money to save for the roof, the air conditioner, the furnace, all of which break at the most inopportune times. The air conditioner only goes out on the hottest day of the year. The furnace only goes out on the hold this day in the last decade. UM ask me how I know. I had a party at my house was and my air conditioner went out, and I'm like, it's degrees and there's twenty people at my house and it's so hot in here. I'm so embarrassed. That is awful. That's every party in Florida. I don't feel bade. I have like a personal question which I think people will find helpful. So we are hoping to rent out our home when we eventually move, But like, one of my big concerns is saving for the next down payment. What is like a reasonable down payment that I should be trying to save for the next house I live in. Do you qualify for the v A loan? No, okay um. There is a lesser known plan called the U s D A loan. It is a geographic specific loan. It's basically rural loans, but the maps don't get updated super frequently, so the plot of land that's currently a farmhouse and a bunch of just farmland right now, in ten years might get all built up, but the U s d A map hasn't been updated yet, so it's still qualifies for the U s D A loan, which is a zero percent down payment loan. The f H A loan can have three five as little as three percent down, and this is all of course, assuming that you have good credit. UM. The conventional loan I think is as low as three percent or five percent down. If you put down, then you don't pay p m I. But in some cases playing p m I is a better choice than waiting five more years to save up to because then you can you know you're then you're getting into a home and making the payments UM. In some cases p M I is really really expensive. If this this is usually in the case of you don't have a lot of credit history, you don't have a good credit score, you don't have like your self employed there's a lot of things that make it difficult for you to get a lower p m I payment, But in some cases p m I is almost nothing. So I would say, uh, if you're not looking in a rural or formerly rural area, then three and a half to five percent is the minimum what you'll need to get into a loan. Okay. So similarly to when like we purchased our first house anywhere, there wouldn't be like a big difference. Yeah, I would say, like, like, what what down payment should you have? I mean, it's gonna be a function of what is realistic for you to humulate, right, Like when I bought my first place, it was a two dollar duplex and I'm making fifty grand a year, So to put down or sixty dollars is out of the question. It's just simply not an option. So what from there? What is a responsible position? Like, in an ideal world, you might want to put down, but no, I think I think a responsible position to buy a home is to put down the down payment, whether that's three and a half percent or five percent, then have money set aside for closing costs if there are any expected repairs you expect to make, right after purchase closing on the property, to have those in place, maybe that's five thousand, and then to have end to fifteen dollars on top of that, um more if you're buying a much more expensive property on a coastal city like in California. Um but but to cover emergency reserves and expenses, so that I think is a really responsible position to buy it from, buy a property from, even if that down payment amount is zero. I'm hearing from both of you so many pieces already, and I know we've not even gotten through all of the questions that we hope to ask you both, but just some of the logical things that should be considered and thought through. And Mindy, you said something at the top of the episode that I've kind of latched onto of making a calm decision. I'm curious if you have more to say about that, because we're we are talking about a lot of money, we are talking about first time home buying, considering a lot of pieces. Any tips for people on how to engage in this in a logical manner and be able to kind of move through it calmly. I like what you just said, logic, this is not the time to be emotional because when you do walk into a house and you fall in love with it, it's perfect. That's not the only house that's going to be perfect for you. And when you get so caught up and I have to have this, there's fear of missing out. There's like, right now, the markets super hot. You get caught up in a bidding war, you end up over paying or over offering for a property just to win. Like, there's this competitive thing that I think a lot of buyers are having right now, especially if you've made a couple of offers and lost them. Now you're really tempted to go big. There's another house for you. Don't get so emotionally invested in the property. Yeah, that carpets really beautiful. Those hardwoods are gorgeous. I was showing houses this weekend. I walked in and this house had Akasha flooring. Oh my god, that's the most beautiful floor on the planet. And it just looked amazing in the house. But the layout was super weird. And as we're walking through the house, I said to my partner, where is the dining room. You can put the dining room table over here, but then you have no living room in this whole house. This is so weird. I could have very easily fallen in love with those floors. I could have let my clients fall in love with those floors. But the layout is still weird. And you can always put in those Akasha floors into a house that has good layout. So this goes back to the whole you know, make a calm decision, make a do your research first, go into all the open houses and fall in love with every single one of them while you're still figuring out how much you want to spend, what you need, what you want, what's an absolute deal breaker, and what's a just nice to have? And don't don't fall in love with the house. And I can't. I have said this like nine times in the last minute, but like, I can't overstress that there is another house. I don't know what the statistics are. What are they like fifty million houses in America or something like that, Scott, I'm just making that up. But there's three hundred million Americans, So let's million units of housing stock across the country. Not that I know that off the top of my head. From various million of rich our rented residences eighty million or owner occupied Okay, that is my nerd co host. Welcome to the Frigal Stats Podcast. So there's in a hundred and fifty what do you say, five million units of property. You can't find more than one that you like? I mean that right there is you know you can't argue with numbers. That right, there's a really great number. Scott. Thank you for doing that research so quickly, having its stored away and your guard catalog of your mind. Yeah. I think it's unrealistic to think we're going to take all emotion out of it, especially if it's the first home and you're investing a ton of money that you worked really hard to save up. But having this reminder in the back of our heads of if this doesn't work out, there are other options, kind of holding it with an in hand until it finally happens, knowing that it's possible to get really wrapped up in a home and taking steps to protect ourselves in that way to make an informed, logical decision. Yeah. Yeah, and informed, that's a really great way to phrase it. And you need to make it informed decision. Just because you walk into a house that's listed, it doesn't mean that that's worth three You can list your house at anything, like I could list your house for you today for fourteen million dollars. Is it worth it? I don't know because I've never been inside it, but I'm guessing not. In case to the roof, Mandy, Yeah, yeah, you know, you get it. But you can list a house at anything, it doesn't make it worth that much money. So when you walk in and you fall in love with it and it's three five but it really should be to seventy five, you get all excited about it. Oh this is great. No, make it informed decision that that goes with, you know, go onto Zillo and Redfin and truly and have your real estate agents send you listings and look at everything. Click through all the pictures. Hu, that's listened to three. Interesting. Then you go to the next one. Oh, that one's also listened at three, but it is way better. This one is definitely something I would want to see versus that one. This is a better value. Uh. You know, just know what what the market is and be prepared to act quickly when what you want comes up at a decent price. But the only way that you can be prepared to act quickly is when you're doing your research. In advance instead of deciding today that you're gonna buy in siding into contract tomorrow. That's super wise. I love that. So is there anything else you should do before you download the Zillo app and glue yourself to it indefinitely? Yeah, well, well, I think I think it calms down to, like, like I boiled down mind, and I boil the approach down in like three general Rold buckets. Right, one is the strategy which we've just went over of understand your exit options. Understand this is probably not going to be your forever home. If if it isn forever home, then you know, and you can make decisions accordingly, and you you don't have to consider the rent or the the improving the value as as strongly if you're truly sure, but just make sure you're not ever waiting that do the rent first buy analysis. And that's the several hundred thousand dollar decision. The second decision is am I getting a good deal, like am I buying at the right value and removing that emotion from the process, which and then the third is, you know, am I getting the cellular to replace the water heater for you know, out of that and that and and so if you go down these three buckets, you know, the one is several hundred thousand dollars of in terms of its decision making relevance, the second is fifty thousand dollars getting a good deal versus a bad deal, and the third one is two to ten thousand dollars. And everyone overweights these and kind of I think the reverse order. But moving down into the getting a good deal phase, um kind of you know, mindy hit all of those things. But you know, if you want to boil it down to a practical approach, like what can I actually do to act on this information? First? Don't? You can pull up Zilo or any other listing portal or redfin or ask your agent to to pull that up. But you look at the sold listings in the last nine days. You don't look at the active listings. When you look at the active listings, you're usually looking at one of three types of properties. One the properties that have just come to the market today and are gonna be gone tomorrow because they're good deals. The second is the properties that are way overpriced, and the third is the properties that have something horribly horribly wrong with them that's why they're sitting on the market for more than a few weeks in today's market. So if what happens is you get terrified by looking at the active listings, so don't look at them. Look at the stuff that's actually sold. That is what is trans transacting in your market. And you say, great, I'm gonna get with my my, my spouse or partner, or if I'm buying them as a as a single individual, I'm gonna but look, just make a set of criteria, two paragraphs on a piece of paper. I want a three bed to bath, two thousands square foot home with a yard for the dog, two car garage in this part of the neighborhood. I'm going to pay a little bit more for this edge of the neighborhood. I'm gonna pay a little less for that edge of the neighborhood. I don't want that neighborhood. Here are three areas that you know, stuff like that. If you can boil it down to two paragraphs, you're probably in pretty good shape. And then you look at the active list or the sold listings, and you see what is actually transacted that meet my criteria. That is your price range. That gets you out of fantasy land. Real quick um, and it only takes like a few hours to compile this buying your first home, by the way, is it's not two hours of effort, but it's hours of effort I think to do it right given the magnitude the decision. So this is a few hours you spend looking for what I want? What does that exists? Is it actually selling? And then what you'll find typically is like, hey, I'm gonna put all this down, so I'll get to like ten properties in the last hundred eighty days or five in the last ninety days that have sold met my criteria. That means one property is coming on the market every eighteen days. That means that on average and so so time is gonna be longer or shorter gaps there. So the next thing you have to do is get yourself out of this artificial time constraint that most home buyers have, or many home home buyers have when they're buying a home. My lease is expiring on June. Therefore I must buy a property by the by the end of May, otherwise my lease will you know, I I'll be stuck. You know, no, go month to month with your landlord, pay the extra hundred and fifty or two hundred bucks a month, so you can make a four hundred thousand dollar decision and a really um you know, back going fishing and waiting for that property that's going to hit every two and a half weeks to come on the market, rather than chasing the one you have to buy at the end of your artificial time constraint. Go live in a short term rental for a little bit while you make this decision. This is a this is uh tens of thousands or maybe hundreds of thousands of dollars stake decision. Don't rush it by an artificial timeline. And then you set up your You just get your ducks and row, make sure you're pre approved with your lender. Make sure your agent is sending you. This is a very easy task for you, for any agent to do that. You just ask them to send you an auto email whenever a property that meets your criteria comes on the market, and then boom, one of these days, that property is gonna come on the market, and you're gonna be it's gonna come on the market at to thirty in the afternoon on Thursday, and you're not leaving work earlier, but you're canceling your evening plans, going to tour it, and submitting an offer, and you're gonna lose two, three, four of these things over a few months, but finally you're gonna hit your winner on average within a three or six month timeline. And that's that's kind of a I'm rushing through this, but that would be a framework for potentially making a making that cold blooded, um ruthless decision that that removes emotion from the home buying process and allows you to compete in this kind of like heavy seller's market. So many knowledge bombs, Like my my heart just keeps like racing faster, and it's like it takes I think that's everything. Like if you get nothing else out of the episode, which I know you will, but like that little monologue right there is going to be so valuable because like, hey, it takes out the arbitrary budget that so many homeowners have. It's like this is you know, my budget is whatever I get approved for. No, like this is a way to set a realistic budget to get everything you want, but then also like get it at the price that's right. It's just so much like thank you, I like what you just said I love going on rants like that, so anytime, I'm glad you liked it. I love what you just said. Oh my budget is whatever I'm approved for. No, it isn't. Your budget is whatever you want to make your payment act. So you call up your lender and you say how much am I approved for? And he says five thousand dollars and then you run that through the mortgage calculator and you're like, that's going to be a a month payment. I only want to make an eighteen hundred dollar a month payment, then don't borrow five hundred thousand dollars. And I'm making these number is up. I don't know what FIVED is, and rates change all the time anyway, But the if you only want to make an eighteen hundred dollar a month payment, don't look for houses that will give you more than an eighteen hundred a month payment. And that's principal, interest, taxes, insurance, all those things combine to make your payment. It's not just principal and interest. Make sure you account for everything because it'll all be due anyway. I also want to highlight the arbitrary timeline piece. I think that's another big one for people of when I need to be in a home by and certainly there can be an ideal timeline, but figuring it out to be able to get the best possible home and the best possible price range, to be able to make yourself some flexibility, Uh, even if you are about to give birth or about to be kicked out of your current living situation, getting creative about what you can do in the meantime if you haven't found the home, and not be pushed or rushed into something that is not right for your budget, not right for your family. Thanks for highlighting that, Scott, Yeah, I think I think that's just a huge component of this that again is a sacred cow in the homebuying process that needs to be slaughtered. And I think that the the you're guaranteeing your agents income. Um, if you're buying on that kind of timeline, Um, you're you're putting yourself susceptible to Hey, that one property that came on the market today, that's the one that even though it's a bad it's a it's a slightly bad deal maybe, but it's better than what's currently what else is currently on the market. That's how you fall into the traps um if you have that artificial timeline. Yeah, And we say that in frugality, like if you if you plan, you save money. If you don't plan, you will pay for it. You will pay for that emergency and that convenience. The best way to save money is to plan and be patient. And then I also love, like, what's an extra hundred hundred fifty dollars a month if you're going month to month in your least, if it's going to save you like tens of thousands of dollars later on in this home buying decision purchase. In reality, we tend to nickel and dime ourselves to death without realizing the bigger things at stake. And so I think that's another like mindset to get over to save like more significant amounts of money. Speaking of real estate agents, and then we talked about that a little bit already. I know we've recently heard that there's more real estate agents out there than homes for sale, which I can speak to, even at least anecdotally. I feel like every other person I'm meaning is a real estate agent. What are some of the secrets you guys have or even tips for choosing a good real estate agent? When there are so many trying to give you their business cards. Step one, pick up your phone and call them. If they don't answer, and if they don't call you back that same day at the latest, don't do business with them. They don't have any interest in courting your business. How much interest are they going to have keeping you once you are a client? UM? I tell agents all the time. Your number one, my number one tip for being a good agent, answer your phone. When people call you, answer your phone. And obviously, if you're at the client, you know, wait until you're driving to the next property and then call them back. But don't sit there and oh, I'll call them back next week. I'll call them back, you know, another time they've already moved on. And if your agent isn't answering the phone right away and isn't responding to in a timely manner, you should move on and you should interview multiple agents. While you can have success driving by a sign in somebody's yard and calling up that agent to represent you, you're probably not going to find the best agent for you driving by a sign. So call up that person, especially if you see their name all over the city that you're looking in. But also ask your friends, ask your coworkers, ask, um, you know, who did you use? Did you like them? Did you not like them? Just as easily or just as important as to find somebody that you like is to like. Don't even bother interviewing somebody that your your friends said. Oh yeah, we used Bob and he was horrible. He never called us back, we almost missed a deadline, like blah blah blah. Don't interview Bob. He's not a good agent. He's not an agent. He's not an agent for you. But when you're asking the agent, when you're interviewing the agent, asked them what is their preferred method of communication. I personally like email and text because it's then it's in writing. Other people like to talk on the phone. Great, if you want to talk on the phone, we can talk on the phone. But I prefer email and text because then I can go back and review what I said, you know, and make sure that I'm not misremembering something. Ask them how much experience they have. If you have a brand new agent, is that the best choice for you when you're a first time HomeBuyer. It could be because maybe they just recently got licensed, but they've been in the business forever because their mom's an agent forever. But it might be a better choice to work with somebody who's been in the agent in the market for a while and been been an agent for a while, because then they know more about what to do, Like you're not learning together. Well, I just want to shime in and say, yeah, Mindy is, like, I think, the real expert on this kind of stuff. I just wanted to add that we have like an agent interview questionnaire that's like one of the giveaways with the book. But if you're listening, um, we could just make it available to everyone, if you guys, it's like a three page list of the questions that Mindy has outlined here that we could just make available for anyone listening. Um, if you'd like it. Yeah, that'd be great. Yeah, we can include that in the show notes for sure. Yeah. Other things to ask them is this your full time job? Maybe you want an agent who is a full time agent, or maybe your full time agent is so busy they won't have time to talk to you all the time, and maybe a part time agent would be better for you. There's no right answer. It's really a feeling. Do you do you feel like they respect you or do you feel like they're talking down to you all the time. There are agents. Hopefully your agent knows more than you do when you're buying a house for the first time, but that doesn't mean that they should, you know, make you feel stupid for even asking a question. You should absolutely feel comfortable asking every single question because if you've never done it before, you should absolutely ask all the questions. And who cares at the agent thinks you're an idiot for asking the question, get the answers that you need to make an informed decision. It all comes back to that informed decision thing. So good, such good opportunities to practice self advocacy. Yeah, who cares if it's a dumb question. You're like making one of the biggest decisions of your life. You better understand what you're doing. So yeah, someone who's going to answer those questions not be condescending I want agree. Yeah, and ultimately like they need you for their paycheck, like because that's how they get paid, So ask the questions. Yeah. I want to just add in on that that you know, the thing to understand about how agents should be representing your best interests and and they do. But they're in. They should they should be if they're good. But there um, their incentives are they get paid the bigger house you buy, because usually the commission is tied to a percentage of the home's value, and they get paid sooner the faster you transact. So when you hear what a top agent is, any brokerage is top agent is their best selling agent, the one who does the most volume, not the one who produces the best outcomes for clients necessarily, Um, it's the one who processes the most commissions checks the fastest, the biggest commission checks the fastest, right, and and the most of them, right and so and so that's what a top agent means in your local area, which is not necessarily what you want to represent your interests. So that can that they can certainly be a top agent and represent your your best interests, but just understand that nuance and how they get paid. They're looking for someone who will transact quickly on the largest home, but the limits of their purchasing power. Typically that's the best in a condensed timeline because they know you have to buy because your least expires on June. Right. That makes the agent very very happy and guarantees income for them. I don't think that's necessarily what you want, um, And you need to understand that's how the incentives are structured and be able to get yourself into relationship with the expectations that are gonna be on your timeline buying what you want over those time periods. And there's plenty of agents. There are more agents than listings out there who will be more than happy to take you up on on your timeline and what you want out there. Um. It is a buyer's market for real estate agents right now. That's so good to know because we look at the big you know, the big people I guess on advertisements and and stuff and say, oh, they're they're the best, they're selling the most, but they're probably just selling the biggest houses. There's on the biggest houses at the fastest pace. We're buying the most advertising. Yeah, yeah, Okay, So we're at the point where we've done the research, we've got the agent, we've got preproval from lender, all this stuff, and we are we found a house. So, like, what are some things about the actual home buying process that maybe first time home buyers aren't aware of? That you think that they should be the actual process. I think a lot of people don't realize that it isn't just oh I bought, I put an offer in for three thou therefore I need to get a loan for three and that's the end. And you have closing costs, which we've mentioned before two to four percent of the purchase price, depending on you know, the purchase price and what city you're in, and you know, there's a variety of things that go into that, but a good ballpark is two to four percent. So on a hundred thousand dollars, that's two to four thousand dollars. On three hundred thousand dollars, now you're at six to twelve thousand dollars. That's a lot of money. Do you have that much money and that's not your down payment, that's your closing costs. Then you've got down payment on top of that. So it is I don't want to say it's expensive to buy a home, but it definitely costs money to buy a house, so be prepared for that. You need to have a home inspection, and you need a good home inspector to walk through the house and tell you the state of the house, not gloss over things so that the deal goes through. I have a really great home inspector. Shout out to Rick. He comes through and he's actually, he could be pretty abrasive. Uh look at this right here, this is this is horrible. I don't know why they wouldn't have taken care of this. You know, he's but he's telling me, he's like my dad walking through the house and pointing out all the things that aren't great. Now am I going to ask for repairs from the seller? Maybe? Maybe not in this market right now, you know, in March April, May of two one, it's really not. You could ask for all you want, but the seller is going to be like, no, I've got fifty seven other offers. I'm not going to give you any repair at all. So do you want thouse or not? But I still need to know about it. I need to know that the furnace is twenty five years old. I don't know that by looking at it. And I'm in a lot of houses, I can look at the furnace and it's all shiny pretty. I'm like, oh, that's new. And then Rick comes in He's like, this vertus was manufactured in Oh, that's a little bit older than new, so you know, you can make things look really pretty and they're actually really outdated. You can cover up a lot, and then your inspector comes in and he's like, oh, do you see how it's like tilting to hear that's gonna be an eight dollar repair. Great, I want to know that. So having a good home inspector is really, really, really valuable. I had a home inspector come through and on one property and tell me that there might be fake stucco or on the front of the property. I go and do some research that has been shown to cause mold, and if it's not installed correctly and mold in such a way that the whole house may have to be torn down because it's so infested it can't be fixed. Kind of like, that's a huge thing. I want to know that, and I don't want to buy that house. So there's a lot of people who will buy a house. You know, as is does not mean you can't have a home in spe action. As is means the seller might not be willing to fix anything or give a price reduction. But if you walk in and you discover that it used to be a meth lab, maybe that's not something you want to live in, you know. So you absolutely need a home inspection, you need an appraisal, and you can't choose your appraiser, and that's kind of a whatever, that's just how it goes. That's that's the price you're gonna pay, and you can't choose them, and they come back with I could go on a rant um I'm not going to, but some appraisers right now the market is what happens if your appraisal it comes into low, Like, what's the what's the outcome there? Well, oh, so that is an interesting scenario. So right now the market is hot, hot, hot, hot hot, and prices are just hopping over past sales and the appraiser can come in. Some appraisers, i know, like don't want the market to go up so fast, so they're they're looking at recently sold houses that you know, maybe aren't maybe they're picking the lower ones. And I'm not trying to throw appraisers under the bus. The markets insane. But if your appraisal comes in low, you have three options. You can bring cash to closing, which is what the seller would love. You can ask the seller to reduce the price to the appraisal, which the seller will hate. You can cancel the contract, and I mean you can split the difference to you, but that's one of the others. But yeah, the appraisal. Your lender will only lend on the appraisal amount. So you offered three fifty on this house. It only appraised at three twenty five. Your loan is three twenty five minus your closing costs and down payments and all of that, I'm sorry, minus your down payment. So now you've got a difference between three twenty five and three fifty. Do you have to in cash just sitting there waiting to be thrown at a house? Maybe? Maybe not, But is that your smartest decision right now? Because you're essentially paying more than the house is worth. And there's this line that, oh, a house is worth anything whatever people will pay for it. But yes and no, if everybody is paying three twenty five and you I'm gonna pay three fifty, it's still only worth three. I remember that being a nail biting moment for our purchase of our home, was this is kind of the final piece of the puzzle will it be appraising? I remember thinking why does this happen last? Why why don't the appraisals happen? And then the next things it's like all these hoops have been jumped through, and now maybe or maybe not, the appraiser is going to think it's worth what you think it's worth. Anyhow, for us, it went through. But yes, that's that was that was an unexpected part of the process for my first time home buying experience. So I'm glad that you mentioned it and are making people aware of that factor. It's very real factor. Yeah, I I just been him in that. There's a whole bunch of things inside of this closing process. Once you offer on the property, there's an earnest money deadline. There's an inspection deadline where you have to complete your inspection by There's an inspection objection deadline where you review the results of the inspection and decide if you're gonna beat the seller up and ask them to pay for the roof replacement or the furnace replacement or not um and that's an art right. Then there's the appraisal deadline, there's the loan funding, and so there's a timetable on this. The good news is that all of those questions I think can be answered what one you can just like read up on what that process looks like. Um, so that's where all shamelessly promote our third part of our book. You can just so you can get some of those those ideas. But really, if you just have a good agent, I mean, I told you like, these are their top agents out there, These are people. One thing that is good about a top agent is their masters of coordinating that schedule so there's no disruptions to the commission check which which is paid out at the closing timeline. Right. So agents are heavily incentivized to make sure that these things go smoothly. They should in most cases, I think be able to provide you with an inspector with loan referrals with if if in Colorado, the inspector says, hey, you really should do a sewer scoping and a radar test. And that could be completely different depending on where you are. It might be termites in one part of the country, or it might be like those old oil uh furnaces in the Northeast that they've got for for the or whatever it is to heat to heat their properties up there. Right, So, your your agent should be able to handle most of this stuff if you've done a good job selecting that. But it's your job to just understand that in general, there's gonna be a lot of nuanced this closing process. It's gonna terrify you. The inspection report. Rick is not coming with a pleasant list of things there. He's telling you about all the things about your new your four hundred thousand dollar asset or eight hundred thousand dollar asset, whatever it is you're buying that are wrong with it and that need to be replaced, and they don't tell you like, oh, this is two thousand or whatever and the official report, so you can you know, one of Mindy's pro tips is to be there when the inspector is going through it so you can ask them with that. Sorry, that's one of your tips, um, but but yeah, that that's the like. Just know that that's all going on, and that at the end of the day, if you've made a good choice with your real estate agent, they should be able to professionally and pre empt a lot out of your questions and walk you through that closing process. If you're being surprised by every part of that closing process is a sign that you didn't do your homework and choosing the right agent. I think, yeah, thank you. We don't have to be experts on all of us, especially if we've got a good agent. But speaking of non terrorizing moments and non nail biting moments, it's a moment that I look forward to every week. I feel so good about it. The bill of the week. That's right, it's time for the best minute of your entire week. Maybe a baby was born and his name is William. Maybe you've paid off your mortgage, maybe your car died and you're happy to not have to pay that bill anymore. That build Buffalo bills, Bill Clinton, this is the bill of the week, all right, Scott and Mindy. Every week we invite our listeners or our guests to share with us their favorite bill. And we've actually recently been sharing two bills every week because we've had a backlog. So it just makes sense that we keep going on. Here. We've got two guests, So Mindy, I know you have a bill. I would love to hear that one. First. I have Bills of the week. What I have in my hand is a millionaires scratch pad. If I scroll through the bills that are in here, they have a date of either or nine. It's too small for me to read. But these are ten two dollar bills stuck together like a notebook style, and it says on the bank of Leah County in New Mexico, and it is ten two dollar bills. And apparently millionaires use these to write notes on, which is dumb because they're all covered in printing. But this is this is actually ten reel two dollar bills. So I have twenty dollars in my hand in my millionaire scratch pad, and I will send pictures to you so you can put them in the show notes because this thing is really fun. And I was just I've been unpacking boxes because we moved two years ago, um and life, and I found like six of these, and I'm like torn, Do I use these? Because they're two dollar bills? They're fun, but also they're laminated and they're like sequential order bills, so it's just kind of cool to have, So I probably not spend them on this stickam in my box again? Do you think it could be a play on the words like scratch like money? Like is that a thing? Oh? I didn't even think of that. I bet it is. It's just but it is such an interesting concept, Like it's like a notebook. It looks like a notebook of money, but it's real money. It is a notepad of real money. The frugal part of me knows that even if I was a millionaire, I would not be writing on money. I'd be saving it. Last people I think to write on money. Yes, that's why the billionaires. That's a great approach becoming a millionaire. Start with two million and then right on and you'll soon be a millionaire. So wise, so wise? What about you, Scott? What do you got for us? Mine is much more boring. We just discovered recently that um, because my wife works from home, that her internet is reimbursable. So my favorite bill recently is our internet bill, which will be paid for it by her company. So that's great. Yoh, that's awesome. Can they backtrack for all the months that they didn't reimburse your for internet? Yes, guys, well done. There we go. That's that's the real bill. Is all that all that money that's coming back in one'll buy a couple of Mindy's notepads. Amazing, Thanks so much, Scott, Mindy for sharing your bills of the week. If all of you listening on share your bill of the week, whether it's money that could be written on or an internet bill that got reimbursed, or anything else, literally, anything else you know that's true. Visit Frugal Friends podcast dot com slash bill, leave us your bill now it's time for I didn't see that one come in either, did you, guys? I didn't. We get towards the end of the episode and I just got to start. Okay, hit me guess wild. So our lightning round today is where we get real and vulnerable and honest. That's Jen's version. She's moving us into authentic vulnerability. And I'm a little bit undecided about it. It's it's not something that was announced in any of our business meetings. I just announced updates live on air. Tell us about your deepest, darkest failures go or if you don't want to share that you could share. Are your memory of your first home? Buying your first home and if you have lovely memory or if it was a nightmare and why how mindy? Tell us? My first home was a condo that I bought because I had taken over a friend's lease. Her lease came up and I moved out and I said I am not going to be throwing money away on rent anymore. So I found a condo that I could barely afford. Because I wasn't making very much money, I didn't do any sort of research into anything. I'm just like, Oh, it's fifty dollars, I'm going to buy that. So I did, and I moved in, and then the next month they doubled the h o A fee because they had to have a special assessment to replace all the boilers which were broken, and they had no money in the reserve fund because they were terrible with money. So for the next four years I had to pay a double assessment, which was not in my original plans. It was like two hundred dollars a month, so I'm paying four d a month, and when you're making twenty thousand dollars a year, and extra two a month is actually a big chunk of your regular spending. So it was a good experience in that I sold it after I got married for seventy five thousand dollars, and since it was my primary residence for two years, I paid no capital gains taxes, so all of that extra dollars went right into my pocket. And I said to myself and my husband. I'm going to do that again. I'm going to take this ugly house and make it beautiful and let's see what we can get for it. And that started our live in flipping career. So it was a good experience in that now I'm a real estate investor. If I hadn't bought that first property, I might not have bought any more and I wouldn't be working at bigger pockets today. It was a bad experience because I had to pay two hundred dollars a month extra that was not in my budget, and that was a bit of a pinch. M hmm. I'm so thrilled for this long term, amazing effect of this, but yeah, that short term piece, and I think it's just another takeaway for all of us to anticipate the unexpected. Definitely have more money than you think set aside for some of these unanticipated costs. Uh. And but congratulations on making more money than what you bought that for significantly. That's with that, Yes, what about for you, Scott? Yeah, my first property was a duplex in northeast Denver. I bought it for two thousand, but twelve thousand dollars down and during the process. Um. The property was listened through home Path, which meant that it was a duplex only available to people who were attempting to live in the duplex. So I had very limited competition at the time, and I would say it was terrifying. It was almost all I was like putting all your chips in the table. Um. You know, it was one year of my career, so it wasn't that many chips, but it was a lot to me. It was lifetime of accumulated wealth to me. And um, yeah, the the biggest part of it was the inspection report was again terrifying. But I had an investor friendly real estate agent and I had an investor friend who walked through the property with me, and they were both kind of like, yeah, this this is a winner. Like you're you don't have any competition with this. There's some problems that roof is going to cost you, but it's overall still a really good deal, and so I ended up buying it. Um. I did have to pay shell out a lot to repair the roof a few years later, but otherwise it's been a really great investment for me. You still have it, yep. I rented it out while I lived in it and now it's just a straight up rental. Nice. Yeah, that they that they required you to live in it. I would imagine that that takes away some of the people who are only interested in it being an investment property. That's that's neat. Yeah, usually those are going to be available through foreclosure, and there's fewer foreclosures nowadays because the property values are rising so fast. So it's a little bit rarer right now. Well, well done, duplex as the dream for sure, Jill. So, I am currently in my first home and we've not even been here for a year yet. August we moved in and you guys, it went as flawlessly as could be expected, given the way that the market has shifted so much in this past year and how many people I'm hearing are getting out bid and so many things. We moved from out a state. We moved from outside Philly to St. Petersburg, Florida, and it went so so well. We had a fantastic real estate agent. It was not on the MLS. It was only on Zillo. My husband actually found it. The real estate agent hadn't heard of it. We just found it and then connected with the real estate agent to help us out. And it's right next to the water, and it is just a magical dreamland. So I'm thrilled with it. Although there were a lot more unanticipated costs and fees than I imagined in the home buying process. I know that we've already talked about that, but for us, I don't. I mean, of course there's nuances in every situation. I anticipated closing costs being about five or six thousand dollars. I thought that I was being very like conservative or liberal in that estimate. I think we ended up paying closer to seven or eight thousand dollars just in the random fees that happened throughout, not including the down payment. So that was a bummer. Thankfully we had it. But yeah, it was even more than what I anticipated. Either way, I'm thrilled to be here and I think it went fantastic. So yeah, it's a lovely memory for me. Jen. Yeah I was. Actually I walked around and saw it for Jill, and yeah, we bought it in sight unseen. Um just did a video walk through with Jen on the phone showing it to me. I mean in the inspection period we could have backed out. We flew down, saw it we made an informed decision, but I was worried to get her down here. So so you made an offer site unseen, but you did see it. I think that's we signed the We did sign the contract, but we were able to get out of it within that ten day inspection period if for whatever reason. Yeah, and during that ten days you came down and saw the house. Correct. So there are a lot of people who want to buy a house site unseen and then just go and moved there, like move in after they close. And I am going to say that if you cannot afford to fly down to see the house, then you cannot afford to buy that house. You need to walk through it because Jen might think it's a great house and showed you the video and you're like, yeah, that looks pretty cool, But then you get there and you're like, what angle were you holding that camera? I thought there was another bedroom TheRoom. How do you make that that four square inch bathroom looks so big in the pictures? Like, there's a lot of value in walking through a house, especially if you're a first time HomeBuyer. Um, so I am very glad to hear that you walked through the house before you bought it when you could still get out of it, so we could still get out of it. I'm an agent and i have a client who's in San Diego. I'm doing the video walkthroughs for him, and then once we get a property out of contract, he'll come out and walk through it, and that is perfectly fine. Yeah, it actually was the opposite for us. I walked through and I was like, this is a dumpster fire. And Jill Jen walked through, but she's like, yeah, I don't know, guys. I mean the location is awesome, but they used to I mean they used to own a home renovation business. So I'm like, I guess you guys can do something with this. That was what it was. That's what it was like. Um to be a fly on the wall there, but now it's looking great. They were really doing what I thought that they could do, but I know I could not. So it's a little oasis. What about for you? Jen? So I had one of those whirlwind home buying experiences, like when your landlord calls you and says I want to turn my duplex into an airbnb, so you have six weeks to get out and so yeah, that's that was the start of our home buying journey, and it somehow, by the grace of God, all worked out and we were actually out in like I think it took. It was less than a month. It was less than a month from that call, but we got one. It was we had this arbitrary, like really low budget and we kept getting out bid and it was so low because we were paying off our debts, so we had no money saved. Everything was going towards the debt. But we were saving so much that we just stopped putting it towards the debt and we were like, Okay, well now we can just put it towards a home, and so we were. We were like three weeks stockpiling cash instead of like the three plus months people normally do it. And um, some how we found this house. It was not on the MLS. I don't I guess that's maybe common in Florida. But it was flipped, and normally the flips in St. Pete are horrible. They're just they're brown. They're very brown, and at least in two thousand seventeen they were I don't know now, but fast. They look good in pictures and then you get up close and yeah, job this one was gray. It was light gray everything, and I was like, gray, I can do so and it has it has this great courts, and so obviously I fell in love with the courts and I said, this is it. It was um like thirty grand above our arbitrary budget. But now when I look back and I look at real estate in St. Petersburg, Florida, I'm like, we should have bought three houses at this price. This is insane, Like you can't get you can't get a two one for this price. Now, yeah, it has gone insane in this area. Yeah, it's a it's insane. So we were really pleased with our first time home purchase. It was just so rushed and I wouldn't recommend anybody do it the way we did it. It was unreal. You didn't listen to Scott's arbitrary timeline thing, Jen I didn't. I had a hard and fast timeline. There was no going month to month, and we were already month to month. And that's why he was able to say I'm going to kick you out in six weeks. So it sounds it sounds like it was worked out for all of us with this first time home. I know, none of us have a nightmare experience. Wow, well done everyone, But it gives everybody encouragement who's about to embark on this that it can be done. And now you know more than at least the three of us. Scott knew some stuff going into his first home purchase, but you know more than we did, and you can go into your first home purchase a little bit wiser. And if you want to know even more, Scott and Mindy their book is amazing. So Scott, Mindy, how can people hear more from you and get your book? Yeah, you can find Mindy and I on the Bigger Pockets Money Show podcast Bigger Pockets Money Anywhere podcasts are hosted. You can also buy the book first Time HomeBuyer anywhere books are sold, or you've got a Bigger Pockets dot com slash fthb to buy it from Bigger Pockets and get a couple of extra goodies there. Yes, and if you're interested in anything real estate investing, house hacking, whatever, Bigger Pockets is definitely the place to go. So thanks so much for coming on. This was a really really good chat. Thank you, Thank you guys for having us who that was a lot and I hope that you were able to maybe pause and write some things down if you were not driving. I've got my own notes. I know that much for sure. Yeah, there were, while there's also so much just discussion, rich discussion, really amazing tangible tips about exit options and strategy and what we should be looking out for and how we can be prepared. Wish I would have listened to this podcast before I bought a home. I don't know that it would have changed much, but I think it definitely could have set my expectations more realistically. And I'm glad I didn't because then I would have been kicking myself. You might not have put pressure to buy a house. We sign yourself, but you know you've worked out and you've got a great home. Yeah, and in the end, it does work out. If buying a home is something you want to do, and I would strongly encourage you to get Scott Mindy's new book, First Time Home Buyer if this is something that you're looking to on the horizon, or get it for somebody else if you know somebody about to buy a house that may not have listened to this podcast. So thank you so much for listening, and also thank you for your kind reviews on iTunes and Stitcher, kind of like this one from z J khalid Uh. They say, fun frugal facts. It just happens to be five stars. This podcast showed up on my Discover page two weeks ago, and I'm so glad it did. It has it walked me through so many questions and curiosities I have in a fun and casual manner. I'm binging my way through the episodes, starting from the most recent to the oldest, and haven't found an episode I couldn't relate to. Thank you, ladies for the research you put into this to help others who are trying to live more affordable lives. Ah, such a great review. I'm so glad you found us. We've been on more than just the discovered page lately. On Apple podcast we were on the front page of Apple Podcasts, which, for I learned a month is a big deal. Also, I'm excited about that. So, if you recently found us, or if you're a long time person, we just want to thank you so much for tuning in weekly or whenever it is that you tune in, and for sharing these episodes on social media. So when you share the latest episode and tag us on Facebook or Instagram. Certainly it helps other people find us, but for you who do it, we add you to our monthly drawing. For every five tags and reviews we get each month, we give away a copy of the Frugal Friends workbook. Yes, so keep leaving us those reviews on iTunes or Stitcher. Send the screenshot to Frugal Friends podcast at gmail dot com before you submit it, and don't forget to tag us on social. See you Next Week by Frugal Friends is produced by Eric syrian Um. I've got one minute, So this is the lighting round of the lightning rounds. What's one thing you wish that you would have known before you bought your house? I god, a lot of things like I should have. I wish I would have known I could choose my lender. I went with the lender from the broker that was recommended from the realtor, and it was Wells Fargo, and I don't like big banks, and so I wish I would have been prepared to know that I could go to my local credit union to get pre approved there, that it's just something I could do on my own. Jill, Yeah, I mean it's probably the same thing as what I said earlier in the podcast, just how much money it actually is going to cost beyond a down payment. I mean, we figured it out in the process, and but to have known even more so ahead of time, to have just a better estimate on how much it's going to cost outside of the down payment, I think would have been helpful. One way did get around that, and in my thirty second cap is that we actually negotiated with the seller to cover closing costs and that we would pay five grand more for the house. So that was something that we were able to work out. You can put it into the mortgage, yes, that can. That can be a workaround. So it's not the cheapest option, but and I don't recommend it, but it is an option. That's what we did, Oh kay, right,