Back in the late fall of 2012, we learned we would become parents of boy/girl twins. Exhilarating days for us. Absolutely magical. Life in our small house would never be the same.
Soon, the crazy days and weeks of preparing to double our family in size unfolded. So much to plan and prepare for, and nine months goes by pretty quickly if you procrastinate. Granted, with twins, we didn’t get nine months. We didn’t get eight months. We got seven and a half.
During that autumn of anticipation four years ago, we evaluated our housing situation. We live in a home that some would consider “small” by today’s U.S. standards: 1,400 finished square feet in a 40’s one-story rambler.
So of course, when we learned we’d be having twins, we FREAKED OUT on our housing situation.
“We need at least three bedrooms” said loving wife.
“Well, what if we have parents staying with us? Shouldn’t we have four bedrooms?” I offered back.
“In that case, it has to have an en suite bathroom for the master bedroom” she replied.
“Agree. So that way, the kids can have their very own dedicated bathroom” I said, imagining a world of convenience.
“You’re so smart, Honey” I thought I heard her respond, but she often reminds me of my selective hearing…
And so it went. We had formed our wish list, and it effectively amounted to a McMansion of two stories, with a finished basement, four bedrooms, three bathrooms, and a grand kitchen (non-negotiable). Square footage? Well certainly it’d have to be at least 75% more than what we had. After all, you’ve gotta have space to hide all the new baby stuff, and then the kid stuff, and the parent’s stuff they don’t the kids to play with stuff.
We found the perfect house, meeting all of this criteria, and within our current neighborhood to boot. At the open-house, the living room fireplace was burning and the smell of cinnamon rolls wafted from expertly placed Glad Plug-ins. The best part was the super cushy carpeting in the finished basement, which we were told has special Nike padding under it. Who knew Nike made carpet padding? Perfect for a sports viewing room. After our walk-through, we took our agent’s advice and wrote a heartfelt letter to the owners, sincerely asking them to pick our offer. Letters are powerful, by the way fine readers. Ours seemingly did the trick…
Oh, how badly our real estate agent wanted us to own this shiny big house. Her good friend the mortgage broker was equally gunning for this sale. The meeting between the four of us (me, wife, agent, broker) sure started out fun and full of rainbows and unicorns. We had an offer that was likely to be accepted, we just had to get the financing locked down. Sadly, because yours truly had just months prior secured a loan on our first rental house, we didn’t qualify for this half-million dollar dwelling. Some silly rule about rental income not counting towards total income for the first twelve months of a rental start-up… Jerks.
Disappointed, we continued to search and scour the market for something, anything that would fit our soon-to-be-doubling family. Within a few months, we had slowly backed out of the process altogether. Nothing could match the perfectness of that first house. Plus, you can’t have babies delivered by the stork in the middle of a closing, now can you? We hunkered down. We figured, let’s just stay put, and maybe a year after the twins are born, we can start looking again. Fast forward three years and we’re still here in our reasonably-sized, fancy little house.
So, what makes a smaller house a smarter investment than a large one?
The Money Factor:
- Lower up-front cost. Shocker! The money you’re not putting into a down payment and mortgage payments can instead go towards paying off student loans, silly new car payments, or long term investments (like stocks or real estate)
- Lower taxes and insurance. Novice home buyers tend to focus on the list price of the home, but fail to account for the sorta-hidden costs such as higher property taxes, higher hazard insurance costs, and higher mortgage insurance.
- Lower maintenance and repair costs. Things break, and things wear-out. On bigger houses, you can easily double your repair and up-keep budget. Replacing the roof on a 4,000 square foot home can be double or triple the cost for a 1,500 square foot home. You also can expect the effect of “they can afford it”-ness. When the plumber or electrician steps into a glitzy place, they might charge you for “gold package” service. D’oh!
- Lower pressure to keep up with the Joneses. More a psychological aspect, but if you’re surrounded by McMansions, you might feel obligated to keep a shiny Lexus parked in the garage, or put in a fancy pool in the backyard. If you don’t believe in this phenomenon, consider how much of our economy relies on coveting thy neighbor’s schtuff.
- Lower cost to furnish. Fewer rooms means fewer trips to Ikea (and fewer calories from Swedish Meatballs. I miss those…)
- Lower cost to heat, cool, and power. Especially when you compare single story homes with two stories and up. You can easily double the monthly utility bills when jumping from 1,500 to 4,000 square feet. OUCH.
- Trade-offs are nice. You can free up a few bucks to enjoy travel or other meaningful experiences. You can donate a little more to a favorite charity. Sky is the limit, once you pay off your debts first, of course!
The Time Factor:
- Less house to clean and maintain = More time to play with toddler blocks and write blog posts (and THEN do dishes, take out the garbage, etc.)
- Less house to pay for = Less pressure to work crazy hours and play politics to rise in the ranks in order to afford your mortgage
- Smaller yard to maintain.
- Fewer windows to wash. If you’re like us and do this every three years or so, let me know so I won’t feel like such a slouch.
The Bonding Factor:
- A smaller house helps strengthen family bonds. Because there’s no place to escape! But seriously, families are under enough duress with all the activities and technology clamoring for our attention. At least we can all text, browse, and play solitaire in the same living room, right?
- A smaller house means less space to fill with crap. The less we focus on things, the more we are free to focus on relationships and experiences. See Joshua Becker’s fantastic blog for inspiration.
- With baby twins, a single story house has been GOLDEN. I could not imagine running up and down stairs, to and from the nursery. With one baby, sure. With twins, whole different ballgame. And I like stairs. Take them all the time at the office. But at home, with demanding little ones, stairs are the pits.
- Better parties! It’s fun to cram all your friends into a small space and let the evening unfold. Less real estate to damage as well…
All that said, there are some benefits to a larger house:
- More room for a larger family! If you have a lot of kids, or a combined family.
- Potential for some huge investment returns. If you were smart enough and wealthy enough to purchase a blue-chip property at rock-bottom prices soon after the mortgage-finance crisis of 2008, yields could be super impressive. That $1 million house might fetch $1.8 million today. See Financial Samurai for how this can be done. This applies only if you plan to sell at market peak and find somewhere else to live.
- More room to work from home. I often wonder what it’d be like to have a nice, dedicated work space for the days I work from home, or for blogging and working on the budget. The dining room table isn’t so bad though, and I do get to keep an eye on the kids from this perch!
One thing is for sure. At some point, we’ll have to figure out an arrangement for the twins before they reach age 10 or so. By then, I’ll be spending a lot of my time on bigger house projects, including adding a third bedroom. Another advantage of early retirement is that it can free you up to take on renovations you’d otherwise have to pay a contractor for.
So, tell me what you think about those little houses? Did I miss any obvious pros or cons?
This article from the New York Times inspired the post. If you think tiny houses are crazy-small, check out this guy’s living arrangement!