Most difficult decision of my life (in a positive way)

Hi Guys,

I think I need some good vibes, thoughts and encouragement. And also criticism, if what I'm about to do sounds terrible stupid. I consider many of you friends, even if we might not have met in person (and some of you I was fortunate to have met, after all).

Sorry, this is going to be long and kinda complicated, thanks for anyone who makes it trough to the end. And while it might sound like bragging or "high quality problems" in some places, it's really not... it's indeed the most difficult decision I've had to take in my forty years of age.

Two things are converging right now, and while it's the most awesome development in my life, it's also the bloody scariest:

First, I've been offered a chance to buy the rental apartment I've lived in for the last ten years. I love this place, we have a weird but interesting history going back 20 years total, and because the apartment is currently "occupied with a non-time-limited lease" (yes, by me), it's being sold about 15% or 20% under currrent market value. I.e., I'm going to pay 280K, and the two others flats on my floor, slightly fewer square meters and two bedrooms instead of three, but both unoccupied - are advertised for 340K each. The bank agrees on that assessment. Basically, whoever buys this place gets a huge discount for dealing with the non-removable tenant. Well, I'm getting along pretty well with him. .

Honestly, I'd be a total idiot not to do it. Everyone around me tells me so. However, the credit rate and assorted stuff is going to drive my monthly minimum spending up by a few hundred bucks, to about 1700EUR. By "minimum" I mean food, public transport, heating, electricity, internet and all the apartment costs itself, but no new clothes, no beers with friends, no money for hobbies, no saving reserve. I.e., for 1700EUR, I'm scraping along while paying the place off.

But then, it's been a financially very comfortable year. I'm working 32 hours in my day job (Datacenter IT) making about 2600EURx12 with three additional payments (Christmas, Summer and Bonus). From that alone, I would have plenty of reserve even with my credit payments.

Meanwhile, my self-employment as a psychological counselor has taken off too. I've grossed about 13K this year, which after costs and taxes comes to around an additional 400EUR extra each month on top of my employed salary.

And that's exactly the problem. That's item #2 on the list.

I love my own business, I love the way I help people to improve their lifes, find their mission and values, have better relationships, better careers. This stuff really reasonates with the world around me, I get additional clients refered to me frequently now, people really appreciate what I'm doing, want to cooperate, want to network. And I like what I'm doing, to the point where it really feels like I found my purpose of being on this planet. Besides, being my own boss is simply awesome fun. Sometimes it's hard to believe I get paid for doing these cool things.

On the other hand, every day more in IT feels more like a drag. I'm tired of big corporate politics, I'm tired of a boss who should see one of my colleagues to get his head screwed on straight. The purpose of my company is saving tax for very rich people who waste a lot of money on status items no one really needs. I fully disagree with that purpose.

But it's a very secure income. In fact, I'm on the company's worker council (some kind of union thing) which means they can't even fire me until April 2024. With a very likely option to extend this another five years.

Thing is really, I'm starting to hit the ceiling of developing my own business because my "day job" tires me out so much and occupies so much space (emotionally, time spent, not being free to shedule my clients during the day...). The minimum next step to nurture my counseling business is to drop another 8 hours from my day job, i.e. go to 24 hours a week.

But then, that would reduce my "safe" income from my employeer to only 2100EUR. Just 400 above the minimum of what I need to keep warm and fed if I buy the apartment. Hell, I know there's whole families making do with much less. But for all my past misfortunes in my love life, one thing I've never had to learn is to be frugal with cash. I've always had plenty (not inherited or gifted, just from working good, skilled jobs) and I've never had to contemplate if I should buy a new washing machine, replace some worn out clothes, or if I can instead afford a few beers with some friends at the pub. I don't want my beloved apartment to turn into an anchor weighing down on my neck where all money I spend is only "functional, keeping the lights on" and none left for fun things.

Obviously, the idea would be to at least double the counseling income. That seems absolutley doable if I had more time to advertise, plan, innovate.Then that would nicely balance out the reduction of employment hours. But I can't guarantee that. October was my best month ever, but as with all self-employment, I might face some months next year with no clients. No guarantees.

As I write this down (thanks for anyone still reading), I realize that's what it boils down to, really. I can keep playing the useful corporate cog wheel, make a safe and comfortable income, do a bit of saving the world on the side if I feel like it, knowing that I'm killing a very necessary thing. Or I can decide that I have a mission to do, a certain kind of value to bring into my society, and ramp up my business to a point where I will be fully self-employed in two or three years. At the risk of money being really tight occasionally.

I do have some fail-safe options. I can move in with my parents for free if worse comes to worst. I would get a few months of unemployment money and some separation pay if I get somehow removed from my day job. As of yet, I have no wife and children relying on me. I might have, in a few years time (currently two months into dating the Red-Head that Dart always warned me about. She might be the one.)

Everything seems to scream: Go for it! Do what feels right, not what feels safe.

But #%&*$# - taking up the biggest financial commitment of my whole life (I've never before bought anything on credit, ever) while at the same time setting a basically irreversable step towards self-employment (asking for 24h will definitley make my boss understand I'm on my way out) just feels mad. I guess the only logical solution is start enjoying being mad...

Thanks for reading. It really makes a difference to me to be able and share this here.

Helmut

That is a dilemma. Safe or greater potential.

I have found that it isn’t the things I’ve done that I regret; it is the things I didn’t do.

I say go for it. But that easy to say when it is someone else.

Do what your heart says.

You can do the flip a coin thing. When you do it see if one or the other gives you a better feeling. Oddly it can clarify which you really want.

Colonel.The only advice I can offer is life doesn't boil down to money matters.I was making $2400 a month and at age 62 I fell off a ladder cutting tree limbs.and was laid up for awhile.In that time started thinking about the twists and turns in my life.Working as a laborer in textile mills and finally worked my way up to being the department manager .But my body and soul were tired and I was 62 the minimum retirement age here and made a decision it was time to get out of the game and took $1400 in social security.At first it was rough but as all humans.I adapted to a different lifestyle and now 10 years later it was the best decision I ever made.I live a simple life and am content with what I have and no worries.It was a leap of faith and I adjusted.
I can't offer any real suggestions about your financial situation but perhaps talking to a financial advisor of some sort might help you to get some solid input from someone who can help.
Good luck my friend and hope things work out well for you

Thanks OG. You hit it on the head. It helps to hear it from someone else. Especially someone with a storied life like yours, who certainly took his share of risk.

BTW, I know a lot of you guys here have a spiritual side, so you might enjoy this little anecdote:

I don't really consider myself religious in a classical sense (sorry Bill ), but I believe something higher than just my own brain has a plan for me and set me on this path to doing my share of helping people have better lifes.

And when I comitted to doing this at the start of last year, I asked two conditions of this higher being: #1 That I "do not become a priest" (i.e., helping others have happy relationships while staying unhappy single myself) and #2 that I do not lose this apartment (i.e. that I would always be able to pay my rent).

Now, at pretty much exactly the same time, an awesome woman has stepped into my life, and I get a chance to actually own this place. Looking at it from this angle, I guess it'd kinda be breaking an oath if I don't get going with my mission and keep it strangled by my thirst for a false sense of security . And yeah, I didn't ask for always having beer money. Maybe that was a mistake



Thanks. That is a very, very empowering thought because it reminds me that I too had times where I adapted to higher costs, less financial freedom... and made it work, and it was worth it. Thanks for bringing that back into my awareness.

If I were in your position, I would:

1) Buy the place
2) Continue the safe route. Grind with your current job until you can get the debt level down significantly.
3) The self-employment route will still be there a few years from now.

Your emergency plans such as living with your parents are always there. Once you own the place, you can also rent it out for emergency income and live with your folks, but that might be for a dire situation.

I am a pessismist and always (overly?) concerned about the bad things that can happen and try to prepare for the worst. Sadly, that is usually what happens (to me, at least. )

Good luck to you, regardless of your decision.

I understand that the apartment situation in Vienna is rather special, with heavy regulation.
Also, remember the old adage that owning an apartment means to combine the disadvantages of tenancy with the disadvantages of ownership. (This it where it ties back to the local regulation of the housing market; You need to understand the regulations that will apply to your building and your apartment because it'll influence what kind of follow-on costs you can expect from owning a share in the building, and what limits may be imposed on you to monetize the apartment if you were forced to do so.)

Financially, the cost of housing will be the biggest single sector cost of your life. Whether you buy the place or keep paying rent, one way or the other a significant portion of your income will be spent there.
Buying the apartment will tie you down to that place, to a degree. Right now you love the place, but will start still be the case in ten years, in twenty (what if you meet the love of your life, but she's from Graz and won't move to Vienna, ever)?
Nobody knows. The point I'm trying to make is, you're talking not just about financial security and job satisfaction, but also you'll trade in your independence and flexibility as a tenant. People tend to brush it off, but it's important if you take seriously the often said but rarely fully appreciated adage that the future is unknown. It sounds as if you're not very happy with your IT job. Buy the apartment, and chances are you'll commit yourself to a job for financial security that will never satisfy your heart. That's a considerable price.
OTOH, what are you losing if you stay a tenant?
As I understood you, your contract is without limit, so dislodging you from the place you love will at least be difficult (if not impossible for all practical matters) for the new landlord. You can keep living there in rather carefree mode (not having to worry about repairs, and did I tell you about those wonderful annual owners meetings), you can decide to leave anytime, you can switch towards the job that you love if you don't buy.

I don't think I have understood what you're hoping to gain from buying the apartment, aside from the potential windfall profit if one day you decided to sell on a 280K mortgage for 340K. Assuming that the value of the property still goes up (and the future is unknown).

I have no "real answer" because I don't know (and could never know) nearly enough regarding "important details" of your situation. So, in the following, I'm not saying what you should do -- rather I'm saying what I would do. I do have work experience in figuring out complex "cost/benefit" situations -- and then acting on them.

FWIW: Were I doing it, I would consider the "total cost" in time, money, and dwell on identifying "the unexpected costs" in time and money and other currently unknown costs (e.g. possible psychological stress). And, I'd assume my first assessment would have significant errors -- so, I'd check my work over and over -- talk to some people who have relevant experience (e.g. in apartment owning).

I'd personally consider things like, interest cost on the loan. How easy would it be to sell (if necessary) and would it be profit or loss (selling has costs). How easy is it to rent out the other units at what price. What if I get a "bad tenant" -- time, money. legal costs. What are the chances I'll have to make repairs to the place to meet "government obligations" (e.g. new heating/cooling methods that meet "climate change" requirements). How much does normal upkeep using paid help cost -- assuming I couldn't do it myself (no time or maybe unexpected health issue). Insurance costs. How much extra time will just being a landlord require -- that takes away from my other goals -- including being married. Etc. Then add a significant percentage of time and money to allow for what I have not thought of.

What unites us all here from different backgrounds, societies and nations here is that we have all been through a most strange and (hopefully unique!) difficult year or so in our lives.
The employment and property sectors are very unsettled and turbulent at the moment; if I was in your situation, I would endure a distasteful but secure employment whilst continuing to grow the self-employed side of things until life reaches an equilibrium. If there are enough hours in the week that is!
I'm thinking of my eldest daughter's similar situation, working as a dog behaviourist for a re-homing charity, but building up her private client list with a view to self-employment once she had a substantial clientelle and a proven track record of sustainable income. At a stroke, Coronavirus put a stop to that growth, and had she made the decision to go full time sole trader, she would of been in dire straits now.

As to property; she, once again was looking to buy her first home, which has been a nightmare here in England with prices rocketing and demand such that over-valued offers were made within minutes of properties being listed. An unforeseen impact of the Pandemic, as urban dwellers seek to leave cities here, finding, as four of my commuting neighbours have, that they can work from home. But from what you write, maybe it is time for you to purchase with stated advantages, or would it be prudent to wait until prices perhaps inevitably come down?
My eldest son bought a small apartment some years ago to the maximum he could mortgage. Unable to afford a social life or buy things for hobbies and interest, he soon felt a prisoner there and got very depressed.

Ssnake sighting!

I don't have any advice Colonel, but I wish you luck and hope it all works out well for you.

IMHO, I think a fellow Viennese would be best suited to give advice in this situation. Why? There are just too many major differences with how housing works and the economics behind it between countries and even within different cities/regions of the same country.

Thanks for the varied input and perspective, guys.

Was at the bank today - turns out the rate is better than expected, so I'm looking at about 500EUR "available" income per month (for things like new clothes, furniture, free time activities), after cutting hours at my day job. Also, there will still be the three additional payments each year (vacation money and christmas money per Austrian law, and bonus payment per my performance on my goals). The bank did confirm the actual value of the place, and that it's being sold at least 20% under market price.

I'm a bit short on time right now, and frankly a tad exhausted from today's events, so apologies if I don't reply to each individual input. The one question that really hit me is Ssnakes "what's the benefit of buying instead of continuing to rent". Because initially I had no good answer from the top of my mind, and that gave me pause.

Obviously, there's a bunch of capitalistic ways to answer that... that the apartment is already worth 20% more than I'm paying and for the forseeable future will increase further, that inflation will decrese the effect of the credit rate (while rent would rise), that this is my retirement fund... but I if I search deep down, it's not these thoughts that have been guiding me. It's not about being a rich real estate owner.

What's been the prime reason to consider buying is twofold: Firstly, I love this place - more today than ten years ago. And secondly, when it was announced it might be sold to a new landlord, I really felt like someone hit me in the guts. While it's true that tenants have a lot of protection here, there are ways to get rid if them, even with an unlimited lease agreement. Even more so when ownership changes from a big commercial firm to a private individual, which could have been the case here.

And if I look back to that moment and how I felt about the idea of getting a new landlord and potentially being evicted trough some funky games, I realize it's about being my own boss. Yes, managing property will be more work than renting. Yes, it bears more risks. But then, I'm the master of this ship. I'm never again going to have to beg and grovel for the favors of a landlord. Some people looking for a new lease these days, they are made to show up like for a beauty contest by the brokers, with "motivational letter" in hand and extolling their virtues as the most unproblematic potential candidate for a tenancy. I never again in my life want to deal with that crap.

I want a place I can do with as a please. Rearrange stuff, make permanent changes. Make it mine.

Ironically enough, this is the very same thing driving me into self-employment. And as I realized that, the whole situation started to make a lot more sense.

The way I saw it, too. Think of your (potentially) new home as a first or starter step in a new enterprise/business. Most businesses start by finding a site for operations. If you can handle a new building, you are more prepared to step into a new business.

Remember: Location, Location, Location!

Good luck, RS!

My wife and I went through the same thing almost 20 years ago with our first house. In the U.S., if you know you're going to stay in the house for 7 years or more, it's financially a better decision to buy in most cases. (Of course, I say that as the housing market in the U.S. is collapsing again like in 2008. Heh.)

The only rules that we had were that the total housing cost would not exceed 30% of our combined take-home income for the mortgage note...and that we'd double the maintenance estimate from the previous owner.

If you expect your income to keep up with inflation, then buying now is a very sensible choice. Interest rates are unlikely to be this low again (i.e., below inflation) for quite a while. A potential issue with your long term ownership plans is if your girlfriend does not like the place and/or if it isn't large enough for raising children.

It's good that you already have built-in equity in the property due to the discount on the price. You may still want to look at how the value was affected during the housing collapse of 2008.

Overall, I'm seconding OG's opinion. Opportunities that you miss are the absolute worst in regrets.

I'm with Herman. Buy the joint, stay in the current job until you can roll into your other one without struggling too much money wise. Best success in your future Colonel!

Food for thought:

Real estate, while can be considered an investment, comes with costs and expenses and upkeep.


Stocks, mutual funds, ETFs, bonds, etc., come with no upkeep at all. You buy, forget, and hope they appreciate.


Both you can lose money on. The difference being with real estate if you lose money, you may end up owing a lot to the bank to get out of the investment, where with a stock or mutual fund you simply have less left after the dust settles, if you decide to sell. There's not a constant monthly mortgage payment nagging on you to sell if things grow tight and you have trouble making the payments.

Thing is, there's never going to be a time when it's easy to switch over into the new profession without taking some pay gap.

To give you an idea, this year I was handling six active clients simultanously at the most (meaning, people who regulary book sessions), and that was quite packed and long hours occasionally (next to the 32h regular employment). To make a good living of it comparable to my IT income, I'd need four times that amount. Also, the mortgage is going to run for at least 20 years.



I did a quick "exit terms" calculation: If I want to drop out of the deal and find another place in 10 years, I could price it at 10% discount compared to market value (which should sell the place in under three months given how Vienna is thriving), with that I'm going to get at least a 100K profit.

The cost of living is a tad higher meanwhile (50-100 bucks per month if you average it out). But if I keep renting for those ten years and pay a bit less, when I leave the place... I'll still have spent at least 60.000K into someone else's pocket and get nothing for it.

Obviously there's a problem if a "2008 rehappens" but the problem was quite a bit less pronounced here to begin with. The city is always growing and flats have been at a premium for years. Also, they are building a new subway which eventually should have a station right in front of my house. This area specifically is going to increase in real estate value.



That's sensible advice, yet if I were to invest into these things, I'd still need to pay for a place to sleep.

It seems to me that you have made both your decisions and are just gathering up the courage to pull the pin.

Your idea for self-employment may give you great personal satisfaction and fulfillment, but if you must work four times the hours to equal your current IT job, then it really does not sound economically feasible to leave your job. Your counselling gig may be better suited as a second-job, volunteer position, or retirement supplementary income. I loved coaching youth sports, but knew that there was no way I would be able to make a living in the field. My passion was relegated to my hobby and past-time.

Anna Kendrick's character in The Accountant loved art and wanted to learn about it into college, but elected to study accounting because, "Art doesn't pay the mortgage."

I'd buy now.

Then I'd stay at the IT job one year with same hours to think the next step.

If next step is still self employment after one year, I'd negociate a full one year off with my boss to test my self employment long run possibility.

After two years, if unable to self employ and unable to bear being an employee again in the same firm, I'd sell if needed and think new plans.

20% under market in a place you like can't be missed, unless any local law prevents you to sell again or makes it too costly.

Sounds like "buy the apartment" and "go all in on your business" to me.

My fiance got laid off for covid last year, instead of looking for another IT job she decided to start a consulting company. delivering for door dash and grubhub, and teaching shooting lessons on the weekends helped cover some of the gap from income until business spooled up.

A year later, she is working from home with 5 clients, making double what she would have made in her last corporate job, and has never been happier.

i've seen variations on this story line over and over.

so if you want my opinion, invest in yourself and trust in yourself

RS: By now you might have made your decision, (Seems like you were leaning that way anyway.).

By remaining as a renter part of your life is dependent on someone else's whim.
As the owner, you might have more control of the situation and can almost always sell it if you find yourself in trouble. -Apparently a much less risky position.

You will always be in charge of your self-owned business either way.

I am agreeing with oldgronard's last statement.
You have probably made up your mind and are just peering into the muck to see as much as you can.

Good luck. I think you are making the right decision.

Time for an update I guess.

There was a lot of great input here, which lead to a lot more questions I had to clarify for myself. But then, as OG guessed, it was more a matter of pulling the pin.

I signed the pre-contract yesterday for the purchase, so if the current owner picks me (likely the only prospect so far) it's going ahead. I did some math, and some more math, and then some more... and even if I have to get out of the place in five years, have to sell 10% under current value, I'll break at least even.

Basically it comes down to either continue paying nearly 1000EUR a month (inflation.adjusted each year) to someone else, or paying an additional 200EUR a month (which is of course a bigger financial risk, but not inflation-adjusted) of which about half goes towards my own account.

These are the two major things I regretted and which bothered me the last years... that I'm sending a lot of money to someone else, and that someone else can theoretically get me out of the apartment if they play dirty.

An additional point is that the apartment house has a common shared room and terrace which I've been using for my business (saving me a lot of rent for a workspace). I can do this much more officially as an owner.


Also, on Friday my boss asked me if we need to hire an additional employee into our team, since there's a small chance we might get the budget from higher up. I took the opportunity to introduce him to my 24h/week plans, since that might work as an argument for the team why we need that additional headcount.

The job reduction bothers me more / worries me more than the purchase. But then, yesterday I already had two unexpected additional clients to schedule for this week, and I'm definitely at the ceiling of what I can do with my own business next to my 32h employment. It would be a shame to throttle it's growth because of my role in the corporate clockwork.


I hope most of us will still be here in ten years to learn how it went

Again, I can't emphasize enough how useful all your feedback here was. Over the weekend I went from panic to comfort to not caring either way a few times, but now it just feels right.

I'm late to the party, but I wholeheartedly agree with your decision to buy your place.

I don't know how it works there, but here in the USA, one can put a little bit more onto the mortgage payment each month and it all goes to the principle of the loan, not the interest. One can really shave down the time for payment that way, and save a bunch of cash.

While I just said to put more onto your monthly payment, I'm now going to tell you that you should put some money away in the Repair Account. If it comes down to a choice, put some away (maybe 30-50 Euro) each month for a repair fund. When the hot water heater goes teats up it's no time to wonder where the money to fix or replace it comes from, or when the AC unit dies (er, I guess furnace for you). The big benefit is to use it to pay the property taxes, which here in the USA is a huge deal. The state will sell your house in a heartbeat if you fail to pay the tax (and sell it for not much more than the tax owed), and one is then forced to re-buy it at an outrageous sum.

As to employment, you've crunched the numbers and hopefully found the solution I was going to suggest - cut the hours on the "regular job" and expand the freelance gig.

Oh, and it seems to have been missed by everyone else:



This is awesome, and I hope it works out well. Having the right partner in life makes everything much, much better.

A.k.a. Money-pit #2

Maybe not. I've heard that in general European women are much more independent and hence not as high maintenance when it comes to financial expenditures!

Resurrecting an old thread.

RSC, I’m interested to see how things have turned out.

I hope RSColonel is doing well. It's been a long time since I've seen him post.