Geographic Arbitrage – Neighborhood Selection

I’m beginning a series on Geographic Arbitrage designed to help someone considering the plunge.  I’ll try to break things down into categories like housing, psychology, finance, etc. for simplicity.  Today, I’m going to discuss housing and type of location/neighborhood (urban, rural, suburb, downtown, etc.)

When becoming an equity refugee, besides the main choice of WHERE (Read Karlgaard’s Life 2.0 book)..you’re going to relocate, you need to think about what kind of house you want and what type of surroundings you want.  Bigger, smaller, easier to maintain, more land, etc.

It’s easy to say, I’m moving to the Dallas area, but upon further review, one finds that options abound.  If you’re 1 hour from DFW, you can afford more house, and get more land and seclusion…but if you fly often..you’ve probably just changed the location of your headache.  Since I had traveled quite a bit throughout the U.S. before executing my geoarb, I knew what to expect in this area.  I recently met a consultant who’d moved to Dallas from Des Moines about 13 years ago.  He chose a more rural setting about 1 hour outside of DFW.  He travels via Dallas Fort Worth airport about 2x per week.  That means 4 trips back and forth and the traffic is horrible around there.  He was in his early 50’s and seemed to have the "I’m just gonna put up with this for now since I’m doing pretty good and my kids are in college in Texas" vibe. 

Perhaps you’re like me, a city dweller  who appreciates the idea of "The big sprawling ranch, a couple of cows, and Ford truck to explore my acreage…but would never occupy my time with such maintenance or upkeep.  We have 2 small children and an addiction to good steak restaurants so living out in the country instantly lost it’s appeal.  Of course there are some locations that are say 20 minutes from downtown or the airport…and still provide seclusion and acreage.  If you’ve visited my new home town of Clive, Iowa, you’ll see what I’m talking about.  Twenty to thirty minutes out of downtown Des Moines, you’re seeing fly over country. 

We came here believing that we wanted a huge backyard, perhaps a wooded acre like our friends had. 

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Thankfully we didn’t find one. We began looking at homes with similar lots sizes to our former home in California.  We picked a lot that was about 1/5 of an acre, only now we had a 2 story house (versus 1 in CA), we actually have a "bigger lot".  It was the perfect amount of extra yard to gain.  I can still maintain it very rapidly.  We had a gardener for nearly all 8 years of living in our CA home but moving to the Midwest rekindled my desire to be "closer to my home and to nature."  Yeah I know we’ll see how long this lasts…but cutting the grass and making the yard look pretty is something that we can do with the kids…and something that you don’t actually have to do between late November and early March.  (Since most things stop growing period).

We found ourselves looking in Clive, IA, the neighborhood that numerous websites and the book Life2.0 said was, "The best in Iowa" in so many words.  Clive is certainly more expensive that its counterparts closer to downtown but is about half the price for double the space as in CA.  For reference, I could find you 15 homes in the west end of  Clive for $225k-$275k that would be about 2500-3000sq ft. finished.  Remember, we have basements.  We just finished an additional 1300 sq. ft. in our basement bringing our total to 3700.  I now have a huge guest bedroom, kid play area, massive bathroom, and what I call, "The Man Room"…a cavernous place containing a library, granite wet bar, 300 bottle wine cellar, and smoking lounge with ventilation system for my cigar habit. 

Clive is near all of the amenities, niceties, and new shopping facilities, etc.  Again, we didn’t realize how addicted or "used to" these things we actually were.  The concept of living on a wooded acre in the "older section of town" had appeal…but it wasn’t a practical match to our lifestyle.  We thankfully acknowledged this early in the search and our focus shifted toward the west end of the Des Moines Metro where most of the growth and "new stuff" is concentrated.

Another key thing that we desired was "A sense of community".  This is a tough one to pin down considering the fact that you can’t get inside of your neighbor’s heads to see if they’re good people before you move there.  For us that meant, Lots of kids in the neighborhood, parents chatting outside in their front yards, well maintained yards, and lots of parks and activities within walking distance.  We drove through our neighborhood a few times during our search and so did our Realtor.  She reported seeing moms chatting at the community mailbox, kids riding bikes, etc.  We knew that Clive was the one.  Our community is situated around a small lake where I can fish with my kids too.  Wonderful. 

Of course like most neighborhoods, we’ve found that there are some neighbors that are rarely seen, some are very quiet, and some have the potential of becoming good friends.  Someone 2 streets down just organized a block party.  We met a ton of people from the surrounding streets, the kids had a "decorate your bike, scooter, or wagon" parade and competition…and I met some future golfing buddies.  They even got the Clive Fire Department to bring a truck down and show all of the kids the inner workings.  My sons eyes were as big as those truck wheels…and I choked backed a few tears as he shook hands with the fireman and said, "Thank you sir" (He’s three and a half) Yeah I’m sappy that way but this is IT!  This is the Midwest United States with corn fields, a big State Fair, people walking dogs, saying hi to your neighbor, lawn tractors, and pork chops man.  I’ve gotten more joy from our neighbors here in 9 months than I received in 8 years at our house in CA.  Every single day, my kids go outside and interact and play with my next door neighbor’s 3 sons. 

So, when choosing your neighborhood, consider your lifestyle.  Be realistic about what you want and what "sounds cool".  Do you like Williams Sonoma and PF Changs?  Do you like a newer home versus a 100 year old Victorian with all of it’s charm (and aging infrastructure issues)? Do you go to plays and theater and symphonies?  Do you like having no lights, neighbors, or kids around to bother you?  Do you want to drive a John Deere lawn tractor for 8 hours every Saturday (and then again Wednesday this time of year)?  Ask real questions and confront your own reality.  Some people pull off the Green Acres approach…but we didn’t take the chance.

Drive your future neighborhoods if you can.  Visit, learn, find contacts and ask questions.  Get a good Realtor….I mean one that actually helps buyers find homes more than a "listing hog".  In my case, I dealt with a bunch of old school Realtors that have NO CONCEPT of what it’s like to help someone who lives 1800 miles away understand what they’re looking at on line.  These people took their own sweet time getting back to me in email too (if they EVER responded).  The first Realtor who answered me promptly and mirrored my communication style and preferences…got the business.  Use the web and read books to make some sense of all the choices you have.  Subscribe to magazines that focus on local areas or sections of the U.S. 

Above all else, once you’ve found "home", be confident that you will make it work.  Barring an accidental home purchase in your cities "war zone", neighbors will come and go, your kids will grow, new businesses will likely spring up, etc.  You’ll be able to make a go at it and if things still don’t work, you can move again!  Just DO IT!

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