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Justine’s investing journey

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Hi everyone! I am Justine and I am the Founder of Live With Plum, the homebuying guide for the modern women. I started Live With Plum after going through my own real estate journey and seeing how little resources there were for homebuyers, especially first-time home owners. Also, as a single millennial woman of color, there weren’t many wealth buildingx stories that looked like mine even though we are a substantial and growing segment of homeowners in America. In this article, I will discuss my own home buying journey of how I looked at real estate as part of my overall investment strategy.

First unit – start small and learn the process

The first apartment I bought was at 25, right after I graduated from business school and was eager to lay down some roots after moving around too much previously. I had a short timeline (since I was uncomfortably couch surfing with friends) and a small budget since I have never bought a home and was slightly risk averse. After weeks of exhaustive searching, I found a tiny 300 sqft studio in Gramercy and made a full price offer.

My thought process for this purchase was more like a primary resident though I also took note of the investment opportunity. Over the years, I’ve come to see how most people, when prioritizing the criteria of their search, purchase only with an eye to live but don’t fully consider the investment side of it. I chose my unit because I wanted to live in it and also could see the rental value. I was also particular about the sublet policies since this was an apartment building, which means it typically has a handbook for owners to follow. In NYC, many apartments are cooperatives with strict rules towards subletting so it was a rare find to find one that allowed unlimited sublets after 2 years of primary residence.

My lesson learned from this first purchase was to understand the target market for the unit, in term of who you will rent to and who you will sell to. The reason why the apartment was cheap (in NYC terms) is because the unit was barely bigger than a walk-in closet but I knew that if I wanted to live there, then someone else of my similar background would also want to live there and it would not be a problem when selling or renting. I eventually rented it out then sold it for a comfortable profit, both times to other single women seeking starter apartments, proving my hypothesis right.

Second unit – location is half the battle

I repeated many aspects of my first purchase for the second one, including making a modest purchase (by NYC standards) of a studio and again in a coop building with a liberal sublet policy. The biggest difference was that this time I decided to purchase in an upcoming neighborhood instead of an already established one. Specifically, I purchased my unit in Hudson Yards which is one of the largest private real estate development in the United States by area. Though I had to live with the downsides of constant construction, I knew that was the hallmark of an area that will appreciate rapidly.

With this purchase, I learned how to identify up and coming neighborhoods to invest in for the longer term. One way of doing this is understanding and investing where the commercial money is going. These development plans are made many years in advance and are public knowledge. For example, construction for Hudson Yards started in 2012, four years before I purchased my apartment, which still benefited from the appreciation.

Especially if investing out of state, you can also identify demographic trends of a city by looking at census data, where trends like millennials leaving urban cities will emerge.

Third unit – keep doing what works

Following on with my investment strategy of identifying up and coming neighborhoods, I decided to search for a property in Jersey City which has lower dollar per square foot than NYC but still relatively easy access via the Path train. My hypothesis was that over time, more people would seek cheaper pricing than NYC but still want access to it, thereby choosing to live in Jersey City and the gap in price per square foot would reduce.

This was the first time I purchased in a different state, which meant that I had to file taxes separately. While not a big deal in the long run, in hindsight, if you are not a full-time investor, it probably makes sense to keep everything as streamlined as possible.

Fourth unit – taking on bigger risks

After completing 3 successful transactions, I was ready to take on more risks and purchased my largest property in 2019, which was a 3-bedroom apartment in the South Bronx. Area-wise, I kept with the hypothesis of rising neighborhoods but kept diversifying on the actual neighborhood.

While I chose to live in this apartment, I decided to rent out 2 of the 3 bedrooms to creation additional sources of income. At the end, the rent (market rate) from my 2 tenants covered the mortgage and homeowner association fees for the apartment, so I ended up living for free through something commonly known as house hacking.

I probably will not continue having roommates in the longer term as I get older and want more privacy, but this is a good way of living within your means in an high cost of living city.

Reflecting back on my journey, I am proud of the work I put in and absolutely believe that a successful investor is the product of experience and the willingness to test. My biggest learnings and advice are:

  1. Start small and start early: if you are more risk averse at the start like I was, then start small but most importantly just start
  2. Keep doing what works: once you identify something that works for you, keep at it!
  3. Take risks along the way: though I advocate to start small, once you have more experience, this allows you to take more risks
  4. Enjoy the process: it will be a lot of work but remember to have fun along the way

Filed Under: Interviews, Save Money

On Saying Goodbye

By Frugaling 8 Comments


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Sam Lustgarten Thumbnail

I still remember looking at my then-partner when I said, “How about I call it ‘Frugaling’?” We both looked at each other with instant excitement — this was the perfect name for my digital home. I started with modest goals: write about debt, save some money, and make more.

After weeks and months of difficult conversations and self-doubt around the rapid amount of debt I was amassing, I decided to open up about my journey. Even more, I wanted to share the struggles of the indebted: stress, headaches, and constant worry about what might happen if I couldn’t pay it back.

Years have passed since I wrote my first article. I’ve been humbled by the millions who have clicked and shared and followed in the process. And as the readership grew, so did my bank account. Now, I will graduate my doctoral program with a positive net worth. By writing about my efforts, I was accountable to thousands of people — I couldn’t let you all down.

As graduate school has ramped up, it’s been difficult for me to write with regularity. My brain and keystrokes have been focused on research articles and the massive dissertation requirement for graduation. Shortly after the demands of school captured all my attention, Pauline, a fantastic personal finance writer, approached me with an offer for this site.

With the opportunity to sell the site, save some money, and continue to work on graduate school, I saw this as a perfect opportunity for Frugaling to live on for many more years to come. Pauline will skillfully write about personal finance and continue a wonderful legacy. But for me, I’m off to ensure I graduate on time and get a job — finally!

Thanks for being with me all these years. I couldn’t have kept up the momentum without you. I’m forever indebted to you, the reader.

Your friend,

Sam

Filed Under: Interviews Tagged With: Blog

The Future of Frugaling

By Frugaling 16 Comments


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Hi there! I’m Pauline. You may know my other site Reach Financial Independence, I’ve been in the PF world for a few years now.
pauline2

I am the new owner of Frugaling, and wanted to share my excitement with you about this new project.

What can you expect here from now on? Well, I don’t know yet to be honest. Personal finance, definitely. Random personal musings, I generally tend to publish them on my site.

So will it be me, some staff writers, a mix of both, that remains to be seen, but I wanted to give you a heads up, so you don’t wonder where Sam’s voice went. I hope you’ll like it! Cheers

Filed Under: Interviews Tagged With: Blogging

I Am Jason Vitug, Founder Of Phroogal, And This Is How I Work

By Frugaling 7 Comments


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Founder of Phroogal, Jason Vitug
Founder of Phroogal, Jason Vitug

Over the last couple months I’ve interviewed a growing number of top bloggers and writers to get their input on personal finance issues (e.g., the founders of Budgets Are Sexy, The Broke And Beautiful Life, Frugal Rules,Debt Roundup, and Modest Money). Today, I have another terrific interview!

Jason Vitug is the founder of Phroogal.com. He worked in the financial services industry for nearly a decade before he founded Phroogal. His website features a host of personal finance tools and a specialized search engine for financial knowledge. On top of starting this resource, he also maintains a popular blog, too. Jason’s definitely one of the top personal finance writers on the Internet. Thanks, Jason!

What inspired you to begin Phroogal?

I worked in financial services industry for close to a decade — most recently as an executive for a credit union in Silicon Valley. It was the years working in banking and exposure to the technology startup world in the Silicon Valley that converged to bring life to Phroogal.

At the credit union, I was responsible for raising awareness to the benefits of credit union membership and I strongly felt financial education would be a key differentiation. I traveled around the country and championed workplace financial literacy at various Fortune 500 companies.

Afterwards, I decided to take a break and clear my mind. I chose to travel. I ended up backpacking around the world for 12 months. I explored 20 countries in 12 months in 2012. It was in my sixth country on top of this 8th century temple: I thought, “I’m living my dream. Why was I the only one here?”

Eventually, as I continued to travel, I wrote down ideas. The epiphany I had on top of the temple began to make sense. It wasn’t about the amount of money one had — it was how one used money to live life rich. It boiled down to education. The more you know about personal finance the better financial decisions are made to support one’s dream. Then, I set out to change that and build Phroogal.

Phroogal Logo Graphic

How did people (friends, family, etc.) react when you first started?

My family and close friends were very supportive. They’ve seen me achieve many of my goals; such as, finishing my MBA, becoming an executive before the age of 30, and backpacking around the world.

They were excited that I wanted to finally do something on my own that had significant potential to help millions of people including them. Additionally, my old coworkers were very supportive. They cheered me on when I announced what I was doing.

What was your experience with design, code, web work prior to starting your site?

I’ve dabbled in websites before, but had limited knowledge of HTML. However, in my professional career I was part of many projects that involved application development. My job at the credit union exposed me to design elements, more HTML programming, general user experience, and interface design. Marketing and business development fell under my supervision and it was important for me to understand the full capabilities of program languages and design to get the most optimal results on marketing campaigns. I taught myself and participated in as many free webinars. At first to learn the lingo; eventually, to know what was possible.

What advice would you give to those thinking about starting their own site?

It takes a lot of time and preparation to get it right. But, getting it right doesn’t matter if you don’t start.

Have a vision. It’s also important to develop the mission and set the goals of your website. Understand the problem you are trying to fix and the solution you’re offering. Then, start thinking about how you’re going to execute on that solution and what features or tools are needed. How you go about realizing your vision will change so be open to different opportunities. You’ll discover what your target market actually wants and a better way to deliver it.

Work hard and then work harder. It’s not a “set it and forget it” or “if you build it they will come.” It’s not going to be easy, but it can be as rewarding as you want it to be.

How do you make money from your site?

Currently, we aren’t making money from the website. I have a long term vision I am working towards. I had the opportunity to monetize the website because of the traffic we have but it began to take us off our mission.

My mission is to solve financial incapability and illiteracy. I don’t want to make a quick buck and take me off course. For now, the focus is to grow the knowledge base and users.

Jason Vitug of Phroogal
Jason enjoys a beautiful white sand beach, while drinking from a coconut and eating mangos. Amazing!

What do you think you’ve learned from your readers and fans?

Our community really loves reading personal stories around money. I started out blogging by answering questions without much personal anecdotes. I thought quick, short answers would suffice but people remember stories and they can take the most important pieces and incorporate into their personal situations.

How can somebody in lower incomes best overcome financial hurdles and prosper?

Having less income has more challenges but increasing that income doesn’t change financial situations. It only grows accordingly. When I was traveling around the country I would meet production employees making less than $40,000 a year who owned their home, had savings and no debt. On the other side, I would meet senior level folks who made $250,000 a year but was in debt for $600,000. So, who is wealthy?

The best piece of advice is become more knowledgeable about money today. Don’t wait till the “when I have more money” moment. Good financial habits lead to better decisions and better opportunities.

Who are your financial role models?

I grew up listening to Suze Orman. I liked her in your face and dramatic flair for money. As I grew older, I started listening to everyday people I would meet at my retail banking job. Everyone had some sort of financial situation or advice that I learned from and carry on till this day.

I’ve kind of learned hard lessons and took in whatever people shared with me. When it comes to investing, I look up to Warren Buffet’s philosophy by investing in things I understand. With philanthropy, I look up to Bill Gates in his mission on education and giving back.

What personal finance sites do you read?

I read a bunch of personal finance blogs. I think about 20 that I actively read and at times comment. On occasion I’ll read Daily Finance, Reuters or USNews. But, I’ve found my twitter feed to be a great source of discovering what’s trending today and what my connections are buzzing about.

What else would you care to share with the readers of Frugaling?

I want to leave off with saying how important it is to seek knowledge. Knowledge never gets old. It evolves. It’s really important to make sure your constantly seeking information that can better your situation. The first step in becoming more knowledgeable is by asking questions. They don’t even have to be the right questions to begin with but the more you do the more you begin to understand.

Check out Jason’s website here.

 

Filed Under: Interviews Tagged With: Advice, Banking, Financial, Personal Finance, Phroogal, Questions

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