Sunday, March 25, 2007

House Hunting

I was house sitting last week at my parents' house. This means I need to update everyone on both last week's and this week's housing search.

Well, last week, I went out with my agent, Carrie, and my mother.

We found [1385397 - 5347 Gleason Rd - $307,000], which I really liked. I even had a feeling of wanting to make an offer. It has a pretty good basement, which makes up for the deck taking up most of the backyard. It's a bit west, and a bit north, but the location is manageable. Overall, I think it was my favorite.

My mom and JD liked [1375753 - 14116 W 53rd Tr - $288,500] the best. It was the end of the day, though, so Carrie and I weren't terribly thrilled. It seemed like just another nice house. The backyard is also small, and the basement is finished, but not all that homey.

On the value side, we found [1360857 - 5703 Noland Rd - $249,900]. It was built in 1987, but had the feel of a 1970s house. There was a tiny bit of wood rot in the back of the house, only had a 2-car garage and only 2 full baths. But, it was still a lot of house for $250,000. The master bedroom suite was simply amazing, but not always in a good way. It was a bit gaudy.

Sunday's open house search yielded [1382477 - 9930 W 128 Tr - $299,900]. This had a very nice first floor, an amazing basement (though not suited for ping pong), and decent size rooms. The main drawback is the cut up basement and the single shared bathroom for three bedrooms on the top floor.

This Saturday, JD, Carrie and I went back out to a few houses. Revisiting [1385397 - 5347 Gleason Rd - $307,000], I noticed some layout issues. When you walk in the front door, you see quite a few different stairs and not much of any given room. The bedrooms on the top floor are slightly weird shaped and aren't always practical when positioning a bed, desk, and TV.

When we went back to [1375753 - 14116 W 53rd Tr - $288,500], the basement looked more usable, the kitchen looked nicer, and the great room seemed more pleasant. The backyard seemed a bit more usable, but still not big enough for volleyball. Overall, though, it has started to beat out the Gleason house. I just wish it weren't so far north.

We also went back to [1382477 - 9930 W 128 Tr - $299,900], which was still nice, but not as good as the 53rd Tr house, so I've eliminated it. [1360857 - 5703 Noland Rd - $249,900] has changed to backup offers status, so that's out, too. [1356306 - 8136 Lingle Ln - $289,950] from a few weeks ago has also changed to backup offers status. I'm not terribly upset by either of these, though. The California front/back split ([1358668 - 7901 W 155th Pl - $294,500]) is still listed as active, but that was for sale by owner, so it may take a bit of time for that to update. Besides, it only had 3 bedrooms on the top floor, which could hurt resale.

Today, I couldn't find any promising houses online to tour. So, I drove around randomly looking for open house signs. It was kind of fun, but not all that productive, so we quickly lost interest. Everyone else liked a for sale by owner house for $339,950, but the basement wasn't great, in my opinion, and the for sale by owner part means I would need to pay JD's commission. The location was better than the 53rd Tr house, but the house wasn't nearly $50k better.

I've told my agent to show me some more houses in the Lenexa area, so I'm closer to coworkers, family, and social functions. We are going out again on Tuesday. I will then do another tour on Saturday. If I'm up for it, I will then do another open house search on Sunday. I then plan on making an offer during the week on my favorite house. I'm ready for this hunt to be over.

Monday, March 19, 2007

File Server Aggravation

I left my server up over the weekend. It was booted into Windows. It was frozen this morning. This is quite annoying, but does have one positive piece. Basically, it is unlikely to be software-related at this point. Since the computer freezes when using either or both sticks of RAM, I'm betting it's not the RAM. The chances of both sticks having slight errors at the same time seems small. I'm going to swap out a different PCI express graphics card and see if that helps things. If it doesn't, I'll be pretty much out of ideas, and almost certainly out of cheaply tested ideas.

I'm house-sitting for my parents, though, so I won't have a whole lot of opportunity to test things, anyway. Damned inconvenient, really.

Wednesday, March 14, 2007

Stock Options

I've been thinking about writing some covered calls, lately. I've been trying to figure out the general strategy I'd like to take, running a few numbers, and asking a few questions of the Internet.

Let's take AMD, for instance. AMD's closing price today was 14.13.
The two main choices I was considering were monthly calls, or yearly. If I wrote a covered call every month, I could make about 1.4% per month in premiums. For instance, April $16.00 calls are $0.23/share. 0.23/14.13 = 1.63%. Then take off a bit for the fact that there are 37 days left instead of 30 and that I'd have to pay a commission. But, 1.4% per month is not a bad return. That ends up at 17% for the year. This is in addition to any stock appreciation!

A January 2008 $17.50 call is 1.29/share. 1.29/14.13 = 9.13%. This looks substantially lower than 17%. There are still other things to consider, though. Let's say AMD releases their Barcelona CPUs and R600 graphics cards early, and Intel doesn't immediately have an answer. AMD could shoot up in price and my option contract may be exercised. In the monthly case, I will make the 0.23/share premium, plus 1.87 in stock appreciation. A nice round $2.10/share. In the yearly case, I'll make the 1.29/share premium, plus 3.37 in stock appreciation. We now have a $4.66/share profit. Still, this is only a fair comparison if AMD surpasses $17.50 in the first month. If it doesn't, the monthly option writing catches up pretty quickly, depending on stock price movement.

It's far less likely that an AMD option will be in the money within a month than it is that it will be in the money within a year. So, writing monthly call options makes me more likely to hold on to my underlying shares. I also have more flexibility to adjust to changing market conditions. Some of the links below also mention that covered calls are more conservative than outright stock ownership.

The premium received does offer some downside protection. With AMD, I see a company that will eventually have a higher stock price. I feel comfortable owning AMD shares long term. I view it as making shares appreciate more. Instead of just getting stock appreciation, I also get option premiums. And I risk the loss of huge profits should AMD skyrocket. I don't see that happening, though. Practically speaking, I'm gaining income, gaining downside protection, and at the worst, only making a significant profit on stock appreciation, rather than a huge profit. I have made it more likely that AMD will be a moneymaker for me. I don't have access to many probabilities, but intuitively, I see my expected return going up at the expense of potentially missing an unlikely surge in stock price.

I'm think I'm going to do it, once I figure out what my AMD target purchase price is.


E-trade options tutorial
Options and Leverage (old and short)
Options and Leverage (new and long)
Covered Calls

Housing Update, Again

[1335619 - 15312 S Blackfoot Dr - $244,000] is now my favorite house in the <$260,000 range. I'm unlikely to find anything much better for the price, so that's encouraging. I'm sure if I had started looking at three bedroom houses, or houses under $200,000, this would seem huge. But, since I pretty much started looking at $300,000 homes, this house looks a bit small. It's not very open on the main floor, and the rooms upstairs are fairly small and blocked off. It's nice to know that I have a viable option that leaves me money in my pocket, and that I can more comfortably afford without roommates.

Still, my ideal house right now is a bit more north, and a bit larger. So, for the next few days, I will be picking out more houses to go see. They will be on the more expensive side, almost certainly. I will also plan my Sunday open house marathon, since I don't want to waste my time with the agent getting me into houses that will be open the next day. I must maximize my time.

Monday, March 12, 2007

Housing Search Update

I'm a bit discouraged on my search for the perfect house under $340,000. So far, I've really liked [1356306 - 8136 Lingle Ln - $289,950], but my brother pointed out a few major practicality issues with the upstairs, and I never have really cared for the basement. [1376694 - 5323 W 132nd St - $328,900] is by far my favorite, but is on the upper end of my price range, and is in pending status (even if this falls through, I'd have to offer almost full price, too). It really is a beautiful home, and I feel like it wasn't nearly so cookie-cutter as most I've seen. While the floor plan has been reused, this house seems to have the best version, too. I vowed against a split level, but this California Front/Back split is pretty amazing [1358668 - 7901 W 155th Pl - $294,500]. Sadly, it got an offer on it last Friday for $289,000, and he's countering at $290,000. Basically, it's almost certainly going to sell.

[1376880 - 17488 W 158th Pl - $224,900] is the cheapest one I'm interested in. It seems to be quite a bit of house for the money, and has a big back yard. There wasn't anything obviously wrong with it when walking through briefly. Only 2.1 baths and only a two-car garage may be a problem for my prospective roommates, however. Plus, it's just nothing terribly special. Basically, it's cheap.

[1357598 - 15996 W 159 Tr - $264,950] is decent, though a bit smaller than what I'd ultimately like. The main problem is the unfinished basement. The remarks sections states "motivated seller," so if I can get it for $250,000, say, then I could finish off the basement for a final cost of about $270,000. This has the added bonus of having a basement as perfect as possible for the house.

[1335619 - 15312 S Blackfoot Dr - $244,000] is next up, but with only a two-car garage. The three full bathrooms is nice. After I refinished the basement, it would have 4 bathrooms, and a wet bar. I wouldn't have to redo every wall, but quite a few would have to move to fully utilize the space. It had a little nook that would be ideally suited for a dartboard, plus the foundation is poured for a basement fireplace already. It's been on the market for over 250 days, so something may be wrong with it, or it may have just been taken off the market for a bit. I'll bet the ceiling could be raised in the basement a bit, most places, too. Overall, I think this is probably the best value I've seen, since I can get the basement refinished how I like it for a total cost of about $255,000 - $260,000. I'll have to take another look, I guess.

I'm going out tomorrow with my mom and agent to see 3 more houses. I haven't picked out which ones, yet - or I could leave it up to him. If any of my readers care to join the house search, I would appreciate additional opinions.

Friday, March 9, 2007

Linux, Ubuntu, and My File Server

My file server has been ill recently. It's been freezing. It has other problems, too, like a loud northbridge fan, but these seem minor in comparison to failing to function at all.

Well, after having it freeze on the login screen, without the screen saver on, I noticed some screen corruption. This says to me that it's graphics related. It's hard to tell if it's drivers or hardware, or a combination. I'm not a fan of manufacturers overclocking their boards by default. Instability is the result. One explanation for the suddenness of the increase in freezing frequency is miscellaneous updates to Ubuntu. Or, perhaps my GPU is just gradually melting and becoming less stable. The problem here is that when booting in Windows, things remained unfrozen for three days before I tried Ubuntu again.

Either way, I figured a good way to test the graphics card problem would be to run in command line mode for awhile, and see if things freeze. Getting Ubuntu to run in command line mode isn't terribly easy, though. Most linux distros have runlevel 2 mapped to command line mode. Ubuntu has levels 2-5 all mapped to the same standard experience. So, I had to do an "apt-get install rcconf" and "sudo rcconf" and then find a site that talked about what each service does.

It makes me feel inadequate and a bit sad that I'm such a linux newbie. I think I'd be embarrassed if I ever had to have conversations about linux with a real techie. Luckily, at work, I have the excuse "I work on .NET, which is Windows only. So, I need an answer for Windows. Oh, I have a linux file server at home, though." I am simply ashamed.

Also, I've had this damn thing for many months, now, and I still haven't even installed apache. I meant to have this thing functioning as an FTP server, website, and collaboration tool for family software projects. I need to get on this, and soon. Once I buy a house, anyway.

Thursday, March 8, 2007

Financial Benefits to Homeownership

I've been compiling a list of benefits to owning my own home. The list is a bit longer than I expected, actually.
  • Interest paid is tax deductible. Based on a $300,000 home value, this will be about a $13,500 deduction, which is about $3375 in saved taxes. Of course, this benefit diminishes over time.
  • PMI premiums are deductible. This will not apply to my house purchase, as I plan on putting a full 20% down, but it's an added bonus, if you have to pay for PMI.
  • Home appreciation. When I first buy my house, I will own 20% of it. However, any increase in value becomes my profit as though I owned the entire house.
  • Immune to inflation. My mortgage payments will end up being rather large, given $240,000 in debt. But, this payment will not change. As time progresses and money becomes less valuable, my mortgage payment just gets easier.
  • Rental income. Being single, I have the flexibility to rent out rooms in my house. While this probably isn't as financially secure as having a wife with a second income, it certainly doesn't hurt anything.
  • Credit building. Due to my parents including me on their credit cars for the past 8 years or more, I have an excellent credit score of around 794. I can claim virtually no credit in this achievement, but it's kind of cool. The point, though, is that making regular payments on time helps your credit score.
  • As opposed to paying rent. When you pay rent, your money goes to the landlord (which I will be!). When you make your mortgage payments, you build equity. You become a little more your own landlord every month.
  • Tax deductible property taxes. Yep, property taxes are tax deductible, too. Of course, you still have to pay them.
  • Points are tax deductible. If you improve your interest rate, points are tax deductible. Which is kind of like getting 25% off the cost of points. Not bad.
Did I forget anything? I feel like I did. Leave a comment and notify me!

House Shopping

So far, I've seen about 25 houses through real estate agents and open houses. I've found a few I like, too. My favorite is almost certainly about to be sold. My third favorite is also in the process of the final paperwork. My second favorite, so far, is available, as far as I can tell, but it's not my ideal house right now.

I suppose I should start with the basics. I am looking for a 4-bedroom house for myself and two roommates I have lined up. I would like it to be somewhat close to work, or at least within easy access of the highway (and then preferably against rush-hour traffic). I require a fireplace, but I don't think I've seen a house without one, ever. Wood-burning fireplaces are becoming rare, however. My final hard requirement is a big basement. I'd like to be able to play ping pong (and also pool?) while having a TV area. A wet bar would be an added bonus.

I've recently decided that a finished basement is not needed if it knocks the price of the house down by $30k. I can finish a basement for less than that, plus it would be done exactly how I want it. Of course, that cost to finish the basement is out of pocket, as opposed to financed. I used to also want a large backyard in which to play volleyball at gatherings. My brother brings up a good point, though: you have to mow it.

Now, given all these requirements (4-bedroom being the main one), I am definitely spending over $200,000, and most likely around $300,000. I've run through the numbers a few times, now. If I purchase a $340,000 house, I can make the monthly payments on my own, but money would be very tight. I have a few built-in cushions, though. First, I don't plan on spending the full $340,000. Second, roommates paying rent should help considerably. Third, performance bonuses and raises should happen at least a bit - that is, my income should rise with inflation, while my mortgage payment should not. Finally, if I end up having to dip in to savings just to keep my house, I can always reduce my 401(k) contributions down to the matching percentage.

So, given that I can afford a house, I now just need to pick one out. I am going to see more houses on Saturday with my agent. I sent him a list of houses I found online, and he looked them over for any major problems (such as one that backs to US-69 highway). I have 18 from this list left to see. We'll probably get through 6-10 houses on Saturday, depending on how close together they are. Then I'll hit up the open houses, as usual, unless my agent says we should continue the concentrated search that day. It's just such a long process.

Wednesday, March 7, 2007


I'm not sure, yet, what the scope of this blog will be. I'll probably end up talking about financial stuff, mostly. This will probably include my search for a house and all that entails. Basically, I think I want separate places for my rational thoughts and emotional feelings. For the record, this is supposed to be the rational one.