Midwest home search update: we bought a house!
It's a bit of a wild story that includes offering on a house we had only seen virtually and having never actually visited the city it's in. But we are thrilled to share that we've closed on a second home in the lovely Midwest city of...
I wore my new Wisconsin shirt for our closing and afterwards we celebrated with iced coffees
Eau Claire, Wisconsin! We are excited about the house, the city, and the time we'll spend there as a family.
I'd love to share all the details with you. But first let me remind anyone who is new of the quick backstory. Last August I shared that Chris and I had decided to speed up our timeline for buying a property in the Midwest. Our three motivations for this big purchase are that: we are genuinely concerned about the future livability of Arizona because of the effects of climate change (example one, two, and three of many); we'd love to escape the oppressive Arizona summers while taking advantage of Chris's flexible work schedule; and we hope that a second home will also be a good financial investment if we can rent it out short-term when we are not there.
So here's the story of how our Midwest home purchase came to be. After sharing my blog post about our home search and mentioning it on The Girl Next Door Podcast I received so! many! wonderful and helpful comments and emails from readers and listeners. I truly appreciate all the thoughts and suggestions. Initially we focused our search on Michigan around Grand Rapids and also closer to Lake Michigan around the Holland area. But as we looked into the possibility of renting out a home short-term we found that most Michigan municipalities have restrictions on short-term rentals. That could make it challenging for us to rent out the house which we need to do to be able to afford a second home.
We started to shift our search to look at areas in Minnesota (around Minneapolis) and in Wisconsin (around Madison up through La Crosse and to Eau Claire). I had already received a great email from reader Britt (thank you, Britt!) with a glowing recommendation for La Crosse, Wisconsin which had us looking closer at that area. Chris was eager to get more serious about our search but we couldn't really move forward until we had actually visited. So Chris booked a trip in December to visit Eau Claire and La Crosse to get a feel for both cities. Right around that time I got another great email from Janessa who lives in Eau Claire (thank you, Janessa!). She also wrote glowingly about Eau Claire which made us feel like we were on the right track. We were excited to have Chris visit and report back.
And then...Chris and I came down with bad colds and Chris postponed his trip until March. In the meantime we contacted a realtor in Eau Claire and began keeping an eye on Zillow listings to get a feel for the types of homes in our price range. After the holidays we started noticing house prices increasing, along with the rest of the country. We had concerns that we could get priced out of the market for a good condition, 3+ bedroom home close in to the city for under $300,000.
So we were not really ready when a cute ranch home in a great area of Eau Claire in our price range came on the market. I sent the listing to Chris as soon as I saw it pop up. Chris texted back, "Wow. That's a nice house at a nice price in a good spot." Chris asked our realtor about the house and learned that houses were going under contract within days. Our realtor said that if we were really interested we should schedule a virtual showing with him and be ready to make an offer. Figuring we had nothing to lose from a virtual tour we said okay and planned to meet via FaceTime two days later.
We toured the house virtually with our realtor and saw a well-maintained home with good character, a finished basement, and even some modern updates. So we decided to put in an offer! It felt WILD to offer on a house in a city we had never even visited. It IS wild. And yet we had been doing our diligent research and felt that Eau Claire and this house in particular matched what we were looking for. The house had been on the market for two days and already had at least four offers. The sellers would be reviewing offers that night. So with our realtor's guidance we put together what we hoped would be a competitive offer at significantly over asking price but still within our budget. And then we waited. Around dinner time our realtor called us to ask a clarifying question about our financing passed on from the sellers. He said that was a good sign that we were a front-runner offer. We weren't sure we would hear anything that day but just as we were getting into bed Chris got a call. It was our realtor who said, "Congratulations, you're under contract!" Getting that call was very surreal. We laid in bed together and looked again at the photos of the house we were now buying a snowy city far away.
A bit more about why we chose Eau Claire
Just a couple weeks later Chris finally took his delayed trip to Eau Claire – and fell in love! That was definitely a relief! Based on the research we did and Chris's visit, which included getting to meet a few people who live in Eau Claire, here are the great things about the city that make us excited to own a home there:
+ Eau Claire sits at the confluence of two rivers with a larger bluff to the east and rolling hills to the south making the natural geography and setting of the city beautiful (and so different from Gilbert!).
+ The city seems very bike-friendly and has lots of green spaces. There are lots of bike trails, including one near our house, as well as pedestrian-only bridges, and several parks throughout the city.
+ At just under 70,000 people Eau Claire is a small city but has a lot going on. The city has been investing in the development of its downtown which features local restaurants, coffee shops, and breweries plus shops and beautiful wall murals. Chris said he saw lots of new construction happening in downtown and elsewhere as well.
+ It seems like there's a lot to do in and around Eau Claire including great activities for families from the bike trails and parks to farmers markets and nearby farms, plus there are annual music festivals and regular live music in the city, a children's theater, and a beautiful arts center. I'm enjoying following the Instagram accounts for Visit Eau Claire and Downtown Eau Claire to get a peek at what's happening and I'm bookmarking things to do.
+ There is a location of the Mayo Clinic plus the University of Wisconsin-Eau Claire near downtown which are indicators to us of a good economic foundation for the city plus long-term economic growth. Plus Eau Claire is an hour and a half east of Minneapolis which seems great too in terms of the foundation of the economy and things to do. In short, Eau Claire seems like a city with a strong economy that will continue to thrive.
+ The neighborhoods closest in to the city where we were looking for homes have well-maintained homes with character on tree-lined streets and sidewalks. These areas are just minutes from downtown, the university, and the Mayo Clinic but there are homes listed within our price range of less than $300,000.
There are a few things that Eau Claire doesn't have but they definitely aren't deal-breakers. Currently there aren't any direct flights from Phoenix to Eau Claire, which is not surprising. The best way to fly there seems to be to fly direct to Minneapolis and then drive the hour and a half to Eau Claire. Chris reports that it's a pleasant and easy drive. But I'll just put out to the universe that I wish a regional airline would add a direct flight from the nearby Mesa-Gateway airport to Eau Claire. Additionally, Eau Claire does not have a Trader Joe's or an Orange Theory. But of course there are plenty of alternatives and I'm looking forward to finding new Eau Claire favorites for groceries and the gym.
What Eau Claire does have a lot of is snow and cold. A friend pointed out to me how funny it is that we now own homes in one of the hottest and one of the coldest areas of the country. It's true, and one is definitely related to the other! I now have the weather in Eau Claire on my phone app and it's fun to check in. We will definitely have to learn about home maintenance through snowy winters and our wardrobes will need lots of warm additions if we spend time in the winter there.
How we're making this work financially
Buying a second home is a big financial commitment. One that took a lot of time looking at numbers in spreadsheets. A big factor in being able to afford a second home is that we did a cash-out refinance in 2020 when the interest rates were really low. Since we purchased our home in 2009 we've gained a lot of equity as we've made payments but also as the housing market has roared back. The low interest rates combined with our accumulated home equity allowed us to refinance our home, get $90,000 of our home equity out in cash, and keep our monthly house payments affordable on a 20-year mortgage. In addition to the cash from our refinance we have additional savings that we've been socking away in our Vanguard investment account (which is separate from our retirement savings).
We used a chunk of cash to build our backyard studio. We're using about $12,000 to redo the floors throughout our Gilbert home this summer which is a much needed upate. And then we used another big chunk to make a 20% down payment on our Eau Claire house so that we can avoid PMI (the insurance you have to pay on top of your mortgage if you put less than 20% down). We also have money set aside for the Eau Claire house for some small home improvements and short-term rental furnishings.
Spending large amounts of money like this is really new for us and done with a lot of intention. Being in the position to do so reflects our privilege, our careful financial planning over the past 13 years, and our sheer luck of buying a home at the bottom of a housing market that is now at an unprecedented high.
Being able to afford to purchase a home is different from being able to make the monthly mortgage payments. To afford our second home long-term we will need to rent it out on a short-term basis while we aren't there. We ran lots of numbers in a spreadsheet to estimate how often we could rent the home and how much it will cost to maintain (utilities and upkeep, etc.). AirDNA was a helpful resource to understand what the short-term rental market is like in Eau Claire. With the university and Mayo Clinic nearby plus the different events throughout the year in Eau Claire we feel confident that we'll be able to connect with visiting faculty, traveling nurses, and families wanting to visit.
Our plans for the house
Now that we've closed on a second home and have two mortgages, what now? For now, the sellers of the home are continuing to live there and rent back from us until they move to their new home in late May. That worked out really well for us. Then! Team Wharton will be trekking north and spending the month of June at our house! We are really excited. Chris will drive with the boys and I'll fly out with Maeve.
We'll spend the month getting to know our house and Eau Claire and delighting in being able to actually go outside in the middle of the day. For our month-long stay we'll furnish the house minimally with used furniture. I'm having fun itemizing everything we'll need for the month in a big spreadsheet and figuring out how to be as frugal as possible.
After our June stay we plan to rent the house out for the next year to a long-term tenant. That will help us get used to managing a second mortgage while having it covered by a rent payment. During the year we'll also work on planning the house updates and furniture we'll need to get the house ready to be a short-term rental.
During the year after that there is the fortuitous potential that we could spend a longer stretch of time in Eau Claire with our family. Chris is eligible for a sabbatical for the 2023-2024 school year and has already made some great connections at UW-Eau Claire. So we are thinking that we might spend six months or a whole year at our Eau Claire house – it would be a big adventure! During that half or full year we'd have to enroll the boys in the local neighborhood school and find a part-time preschool program for Maeve. Those would be big changes for the kids but we'd have a lot of lead time to prepare. During our time there we'd work to improve the house and furnish and decorate it such that when we left we'd have a great home to offer to short-term renters.
Whew! That is a lot. But now you're caught up on our Midwest second home endeavor. For now, I won't be sharing photos of the house since the sellers are still living there and we haven't taken photos ourselves. But I'll share more while we are there, hopefully here and on Instagram. So stay tuned!
It still feels quite unbelievable that we own a second home. But I continue to have a peaceful, calm feeling about our decision which has been reassuring. Now I can't wait to actually see the house and Eau Claire in June!