Suze w/ Girlfriend - Weren't You Dying to See What Her Partner Looks Like?
For all the rich kids out there who are avid readers of my blog, you know that I am obsessed with Suze Orman. Maybe it’s her highlighted wedge cut, those oh so stylish “jackets” that she wears each week, or maybe it’s the satisfied feeling I get when she shrilly shouts “DENIED” to someone who wants to purchase something that they simply can’t afford. At the end of the day, I find there is something oddly comforting about her. At least to me, her financial information is easy to understand and entertaining at the same time (which is my goal when I write each of my blog entries).
As Suze would say in a very loud voice, “listen up boyfriends and girlfriends (she is saying this as in a “you go girlfriend or boyfriend” manner vs. literally meaning partner - just wanted to clarify that), because it is time for a Suze smack down”. Today’s topic is how to rank the debt that you have accumulated in order of payoff and then we are going to spin that to make it applicable to the home buying process.
- IRS Debt - I would say the bulk of my clients either have traditional salaried jobs or are still students/just getting out of school and their parents are helping them with their new home purchase. If you are an independent contractor (1099) or business owner like myself, you are responsible to pay your own taxes. As someone who has experienced this first hand in my early days, it is easy to not set money aside reserves for your taxes and find yourself with a huge bill from the IRS come April 15th. One word of advice that will serve you well in life: Don’t F%$# with the IRS. They will stay after you until you pay, can garnish your wages, and literally empty your bank account to retrieve the money owed to them. This is debt that needs to be paid ahead of everything else. Side Note: for those of you who are salaried employees, I know the fat refund after the new year is something you look forward to, but you have just given the government an interest free loan for the year. Your goal (per Suze which I wholeheartedly agree with) is to basically break even each year without owing nor getting a refund. Put the money you would get as a refund from each check into an interest bearing account and make a little money on the side!
- Student Loans: For the rich kid who has a hard earned degree from USC and the $150,000 bill to prove it, make your student loans a priority the moment you graduate. Student loans are one of the easiest things to ignore because unlike the IRS, they are not quite as hard core about their means of collections although they can still garnish wages and make your life miserable. Like a bad case of herpes, student loans will stay with you forever until you pay them off (I guess the same thing cannot be said about herpes - just ask half of Hollywood). Even if you are forced to claim bankruptcy (in which case now is probably not the best time to buy a home), the student loan will not be pardoned. Like the IRS, the US Department of Education should be pretty easy to work with and can come up with payments that are budget friendly while still allowing you to continue to save for that house with a drop dead view in The Bird Streets.
- Credit Cards - From High to Low: OK - so you bought or leased a condo from me at The Rob Clark and did so while salivating at the fact that you were mere moments away from LA’s shopping district mecca. Did you go caca for Chanel? Does D&G make you pee pee (that was bad - I just wanted something that rhymed)? Trust me, I get it! Well, it’s time to pay off those credit cards starting with the one with the highest interest rate and then working your way down the ranks. Once you’ve paid down the card with the highest interest, then compound the payment you were paying on that card on top of the payment you are making on the next card you are tackling. Keep doing this until you are debt free and learn your lesson. No more spending money on these items if you can’t afford it!
- Home Loans -If you are a rich kid who pays for your home with cash, then “girlfriend/boyfriend” you’ve just scored a home run when it comes to the game of life (Suze often likes to use clever little puns - what did think of that one - it’s all me) because cash is king in this current market. If you’re like most, you will need to obtain a loan. This is why the above mentioned pay off strategies are key to keeping your FICO or credit score high so that you are eligible for the best interest rates. With that said, once you lock in a low interest rate and get a killer deal on a hot prop that I have negotiated for you (which is why now really is the time to buy), there is no rush to pay it off ASAP. An affordable home loan is considered good debt and just making the monthly payments on time is often the best strategy for most first time home buyer
- Eight Month Emergency Fund:Don’t even flatter yourself to think you are clever enough to slip something as simple as $50/month gym membership past Suze for approval if you don’t have eight months of emergency funds saved up. Your are going to be greeting with a large “DENIED” stamp across your forehead. I have mentioned this many times in a bunch of posts as well as my Rich Kids Guide to Buying a Home. In this economy, you absolutely must have this cash in reserves or your parents must be a reliable back up plan that never fails. Either way, do not proceed to buying until you have this in tact.
When you go through the pre approval process, your chosen lender is going to go through your finances with a fine
The Amazing Kristen Wiig as Suze Orman
tooth come. They want to see a consistent salary history (which is making it harder for those of us in commission based businesses no matter how well we are doing), they want to see where your money is being spent, and they will ask you for every last check stub/debit purchase before they approve you. A client I have in escrow who is absolutely the perfect loan candidate on every level still had to go through this process. Having all your ducks in a row really helps!
One last little bit of Suze advice. We agents often say why pay xyz amount to lease when you can get a mortgage at that price. I myself am also a firm believer in this. HOWEVER, I always have my buyer’s sit down at length with a lender to see what additional fees are incurred on top of your basic payment (principle) and interest: monthly codo fees, money for home repairs if needed, condo assessments if applicable, insurance, closing costs, etc. What Suze and I (don’t we make a great team, but in all fairness, this came straight for her lips) advise is to get a pretty detailed budget of what your monthly costs are for a purchase price you are comfortable with. When you pay your monthly rent, add those additional costs that you’d incur paying a mortgage/ownership fees and put it into a savings account. If for six months you can comfortably make that payment, not only do you know that are good to go purchase wise, you have a nice little “kitty” (Suze often refers to a savings as a “kitty” which is comically ironic coming from her) saved up for your down payment.
I will leave you with the amazing Kristen Wiig doing her impersonation of Suze: it takes a few seconds to load but worth the wait! Enjoy!!!!
Start Slide Show with PicLens Lite
If you ask any real estate agent, they will tell you that you literally learn something new from every escrow that you close. In this case, I have learned about an amazing little pocket of properties just south of Wilshire and just east of Fairfax. I had driven through the area many times and thought it to be quite nice, but had never thoroughly explored it. When my client had given me his list of must haves for his next home: bright, airy, safe/pleasant neighborhood, AFFORDABLE, well laid out, and walkable, we found a town house that met all of his criteria right off the bat. What I love about this pocket of 8thStreet is that it feels completely residential with beautiful tree lined streets dotted with lovely Spanish style homes, town houses, and condominiums. What takes it over the edge of fantastic is that you are literally within walking distance to everything. Although I am not going to pretend to be a major art enthusiast(I like art and all, but you are not going to typically see me strolling through a museum on a weekend unless there’s an event happening with an open bar), I love the idea that you are just steps to LACMA. In addition, there are a ton of places to dine, grab a cup of coffee, or pick up groceries all within a five minute walk.
For all you rich kids, bears, twinks, leather daddies, dominants, submissives, masc jock bros (I hate when people advertise themselves as such in their online profiles), otters, trannies on rollerskates, lesbian nuns, owls, and gals that love gays - Cobalt is back!!! Back in the 90’s, Cobalt was the place to be on Friday nights in Silverlake. No matter what segment of the gay community you identified with, Cobalt welcomed everyone with open arms to partake in their legendary Friday night happy hours. Whether you were just getting off work in need of a few drinks or were looking for someone simply to get you off, there was no better place to begin or end your evening. Their signature drink/creation was the Blue Margarita (I wonder if this is along the lines of the Blue Pacifico Margarita I enjoy so much at Chili’s - I plan to find out) and the tunes were cranked out by DJ Matt Cromwell. Colbalt eventually made it’s way west to WeHo, where it was ultimately shut in 2003. It’s real hay day was the mid 90’s and I unfortunately was a little too young to get to experience it.
Park Wellington has always been a favorite building of mine for both investors and first time buyers alike. You can get a well priced unit in a full service building that includes: 24 hour security/front desk concierge, a huge swimming pool w/ cabanas and large spa, tennis court, and full fitness center surrounded by tropical gardens in the middle of the best part of West Hollywood. Alta Loma is barricaded from Sunset so that people cannot use it as a through street, which keeps traffic to a minimum. For any of my readers who are more rich grannies than rich kids or who are fans of Bob Newhart, you can thank the late Suzanne Pleshette for this. An agent who specializes in Empire West across the street where she formally resided told me in passing that it was one of Suzanne’s missions in life to stop the traffic and have those barricades installed. Suzanne, I look up towards the heavens in thanks to you for making this a safer and more desirable street due to all your hard work lobbying against the city of West Hollywood.
1br/1.5ba at Park Wellington. After seeing everything in both Hollywood and West Hollywood, what kept drawing us back to this unit was how pristine it was. One it’s most special features is that it has a massive patio off of the living room in the midst of this lush, private courtyard offering the calming sounds of water treatments and ample landscaping for the perfect amount of privacy. There are very few units in the building that are situated in such a special spot.
After making you sit through my mold lecture on Thursday, I promised you a little fantasy property action. There is actually a fairly amusing story to this listing. I was sitting with a friend of mine in the sauna at the gym (get your mind out of the gutter, it was nothing like that) and he had mentioned thatan acquaintance of his was considering listing a property in Holmby for some astronomical figure of $50,000,000 (keep in mind that this was a few years ago when the market was a lot hotter for sellers). Obviously like any eager young agent I said, “who is this friend and how can I get his contact info?” The owner had purchased another beautiful mansion in the most prime section of Beverly Hills and couldn’t decide which property to reside in. What a terrible dilemma to have! Anyways, I decided what the hell, I’ll find his email and see if I can get this listing. I knew it was pie in the sky, but I am dreamer and I always believe in thinking big. He got back to me promptly all right, but CC’d his very powerful agent of many years. ZOIKS! Anyway, she was totally cool about it and is someone I very much admire. I always appreciate loyalty in my clients and it was nice to see how much he valued his agent.
neighboring lot. You can even add a third lot which will bring the price to $34,000,000 (200 Baroda, 240 Baroda, and 301 North Carolwood). This is where my friend got the $50,000,000 figure from, which they might have come close to 4 years ago. The home itself was designed by uber famous architect Quincy Jones (no, he isn’t also the producer of The Fresh Prince of Bel Air). For the price, the house isn’t massive at about 5800 sq ft. What you are paying for is the impeccable architecture, the sprawling park like lots in probably the most expensive section of Los Angeles. Holmby Hills is nestled between Westwood and Bel Air, featuring such landmark properties as The Spelling Manor and The Playboy Mansion.
Rich kids new to LA - when it rains here, it’s not like your average run of the mill rain you get back east or in the Midwest. A week of substantial rain in Los Angeles is equal to a blizzard or other severe inclimate weather elsewhere. The city (and people for that matter) are simply not equipped to handle vast amounts of rain. At the very worst, this is when mud slides can occur, flooding, etc. More likely however, you are going to have to deal with horrific drivers on the road. Because rain is so unusual in our sun drenched playground, oil and other slippery substances build up on the roads/freeways making driving extra treacherous. A friend of mine once said that if you spill a coke on the freeway, it’s enough to cause an accident - he wasn’t far off. In other words, be safe, drive carefully, and be mindful of people with out of state tags. They often think you can drive in the rain here like you can any other place, which is not the case.
It’s pretty rare to find a home in LA that has been updated (or mostly updated), done well, and has a pool for under 1 million that is actually in an area that you’d want to live. When I saw this house hit the market, my first question was, “what’s wrong with it.” It turns out that a good friend of mine was the listing agent to the previous owners and he said to me that this house is absolutely one of the best deals on the market right now. Once I took a look, I had to agree with him.
Since our price reduction in mid December, 
