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Choosing our frustrations
An update on the Spain property, plus my past and future property investment goals
This September, I was unusually disciplined with my client work. It was the end of the month, all major deliverables were out the door, and I still had a full week left before October 1, when everything would reset and my consulting business would again become top of mind.
Crucially, I was also stuck at my place in Bethesda, so no big mountains to go hike, cliffs to climb, or oceans to surf. There was only rumination. So, after the daily walks, the cooking of healthy meals, the reading for pleasure, and the parenting responsibilities, my mind turned to life stuff.
Big, bold life strategy stuff.
I grabbed the seldom-used notebook and a pen from the corner of my desk and started jotting down notes. In particular, I’d been thinking about properties, especially how to prioritize financial resources when I had a few different goals in mind. By the end, I’d settled on a plan. I tallied the money I’d need to invest and current funds available.
This post is about that plan.
Update on the Cornudella property
The last few months, I’ve chronicled some of my thinking on property investment, first with the purchase of land near my home in New Hampshire, and next in Spain, where I looked at an old fixer-upper in Cornudella de Montsant.
A week ago, I went to the Spanish embassy in Washington D.C. to apply for an NIE, or Número de Identificación de Extranjero. This is the number needed (for tax purposes) to purchase property in Spain. Normally, you would get this number at the local police station in Spain. But it requires an appointment, and I was pressed for time at the end of my trip last month.
Besides, the embassy experience is very easy. Information on the NIE is on the embassy’s website here. When I got home from Spain, I emailed the address at the top of the page—the first appointment was two weeks out (be aware if you’re on a deadline!), and it takes approximately three weeks for the embassy to process the application.
Meanwhile, I’ve told my friend’s dad, a real estate agent in the area, to go ahead and make an offer on the property. There are still a lot of steps, but things are moving.
A recap: my 1st, 2nd, and 3rd property purchases
The first property I ever purchased was in Santa Fe, NM in 2006 when I was 24. It’s a two-bedroom townhome that I still own, and which has been rented out to long-term tenants for the past decade and a half. In November 2021, I flew back to Santa Fe to do some deferred maintenance on the property between tenants, a nostalgic week that I wrote about here.
I purchased another townhome in 2013 in Silver Spring, Maryland, with my partner at the time. We owned it for five years and raised our family there. In 2018, a real estate agent called us and asked if we’d be willing to sell. We knew we didn’t want to stay in the area forever, so we named our price, and the buyers accepted.
Sometimes I question whether that was the exact right time to sell, but then I remember that I used the cash from that sale to buy my third property, what is now the homestead in New Hampshire. I signed those papers on February 1, 2019—and the timing couldn’t have been better.
That purchase had a very clear goal: I wanted to own property next to a climbing area, and also in a climate haven insulated from forest fires, heat waves, drought, hurricanes, rising seas, and the rest of it. Little did I know that roughly a year later, the property would become a haven not from the effects of climate change, but from a global pandemic.
I’ve written a lot about the New Hampshire home, so I won’t belabor it. What I will add is that I never thought of the property as a financial investment. It was an investment in the future for me and my family, and especially for my son. This is why I put 30% down, why I took a 15-year mortgage rather than a 30-year, and why I immediately installed solar panels on the roof, the payback for which I knew could only be measured in the long term.
I made those decisions knowing that I wanted to own the house for many decades. The effects of climate change (not to mention the pandemic-related exodus to the country) have made the purchase seem more prescient each year, and when my son is all grown up and wondering what I actually did in response to a slow-burning, completely obvious global catastrophe, at least I will be able to say: I had the foresight to buy that property, and here it is. The well works, there is water. Here are the fruit trees and the garden, they are more than sufficient. No flood or forest fire will come to destroy it. If you are frugal in your power consumption, energy will be free. And oh—there’s the mountains and the cliffs and the swimming hole across the street.
Future property goals
I really don’t want to be a landlord.
For the first few years after I moved away from Santa Fe, my dad helped me find and screen tenants for the house I still owned there. Eventually, a close family friend asked to rent it. When he moved out, I self-managed. Recently, however, I’ve hired a management company to handle everything. They take 15 percent, but I am happy to be washed of all those responsibilities.
I’ve considered selling the place. With the recent runup in prices, I’d likely pocket, let’s say conservatively, $150k. But I don’t have a particular use for the money, nor do I much care to pay capital gains on it. (Yes, I know about 1031 exchanges; I don’t actually want to buy another property of equal or more value just now). It rents for around $1,650, so after the management fee, I will get around $1,400/month, minus the monthly mortgage and expenses.
Meanwhile, my mom is living full-time in my New Hampshire house. She contributes to the expenses, keeps the garden, and in general looks after the property while away. It’s not cheap to maintain, and the property taxes in New Hampshire are pretty egregious, a compensation for having no state income tax. Still, once the mortgage is paid off and I’ve managed to wean the heating system off propane, the cost of owning that house will drop.
The question now is, what more?
In the notebook on my desk, I wrote down three goals:
Pay off the mortgage on the Santa Fe property
Buy a vacant piece of land in New Hampshire
Buy a European property
Increase cash flow
There’s about $46,000 left on the mortgage of my rental in Santa Fe. If I pay that off, I’ll have some actual, significant cash flow.
Pocketing around $1,400/month from a rental may not seem like much, but—to take an example I’m familiar with—in Mérida, Mexico, where I lived for two months just before the pandemic, the average income is around $1,200/month, which is enough to live quite lavishly. In Prague, where I’ve visited half a dozen times, median income is about $1,800/month.
This is how I think about these things.
Anyway, both rents and property values continue to rise pretty steeply in Santa Fe, so it’s an investment I want to hold on to a while longer.
Double down on New Hampshire
Before buying the land, I’d been looking for another property in New Hampshire for a while. At first, I thought I wanted a fixer-upper to renovate and flip. But prices on those have been rising sharply, along with everything else. As I wrote in October, after going under contract on the land:
Buying a fixer-upper would’ve tied up a lot of my cash reserves and available credit, sucked up a heap more, and would have given me timeline pressure to finish the renovations quickly in order to recoup the investment.
Buying a vacant piece of land, on the other hand, will require less upfront capital, and let me go at my own pace as I have the time.
Another goal of that purchase is simply to learn the building process, everything from site planning and permitting to septic design and sustainable building practices.
I still don’t know when I’m going to start that project, but until I do, I feel good about owning more property in New Hampshire. It’s not just a learning opportunity for me, but it’s a doubling-down on my bet that climate havens like Central New Hampshire are only going to become more valuable and sought after.
Own a European home base
Finally, I turn to the least-practical goal: owning a home in Europe.
I suppose the main question is, why buy when I could just rent? I have a digital nomad friend who is doing exactly that, moving through Southern Europe a few weeks or months at a time, looking for the place that feels most comfortable for her.
I think it comes down to wanting another project. The fixer-upper properties in New Hampshire might have become too rich for my blood, but the old stone fixers in Europe are still right in my wheelhouse. The Cornudella property is listed for €43,000. In the grand scheme of things, that’s just not that much money. There will be more to spend, of course, but I can do that as I go.
There are a lot of things that could go wrong—a lot of frustrations and headaches. Just peruse a few of the Facebook groups where expats trade information about the old stone ruins they’re trying to renovate and you’ll see how difficult their projects often turn out to be. I’m well aware that a lot of people have very romantic notions about doing what I’m trying to do. I have romantic notions as well.
But as an old friend recently told me, there will always be frustrations in life; so choose the frustrations you want.
I could be frustrated on some renovation project in the U.S., or I could be frustrated I never invested in a project at all. Or I could be frustrated that I never lived outside the U.S., or that I was too cautious or too intimidated to buy a 250-year-old old stone townhome in Spain.
But no—I don’t think that will be me.
More to come.