Two days ago I closed on a property in Budapest (right where districts V, VI, and VII meet, if you know the area). It’s not just my property, though. I share it with eight of my best friends. It’s the latest piece of the puzzle in my recent quest to have home bases around the world in my favorite places.
We bought an island off the coast of Halifax, now a flat in downtown Budapest (best European city in my opinion), and are buying up a neighborhood in Las Vegas, with each of us owning our own apartments.
Tonight I’ll sleep in our Budapest place. Tomorrow I’ll fly to Halifax and stay on the island for a week. Then I’ll fly back to Vegas. It is a really cool feeling to fly around the globe and always be home.
Now that I’ve done this a few times I’m going to share specifics on how it works and how we organize everything so that you can do the same. And before you dismiss the idea thinking it’s too expensive or complicated, think about this: my share of the island, share of the Budapest place, and entire place in Vegas cost me around a fourth of the median sales price for a house in the USA. So while this sounds extravagant (and feels like it), it’s actually very inexpensive compared to how most people you know live.
The prototype for all of this was a school bus that my friends and I bought in 1999. We watched the movie Old School a few too many times, drew some plans for a bus interior on graph paper, and the next day we found ourselves trying to take city corners in our fifteen-year-old school bus.
Many predicted disaster, but it worked out fantastically. Even though the bus died and was given away after a couple years, we all loved working on it and traveling on it. We had almost no conflicts (the only one I can think of was the consideration of an outward-draining urinal that would be used while in motion).
More than ten years later, my friend Elliot realized that islands in Canada were inexpensive. I had been eyeing islands for a long time, but hadn’t found a location which was both inexpensive and accessible. Within a week of him realizing this, we had an accepted offer on an island. I don’t share the exact price because I don’t want people to find the listing, but it was under $100,000.
Again, disaster was predicted, with more than a few allusions to Lord of the Flies. But it turned out better than anyone could have imagined. The island itself is fantastic, we’ve had zero conflicts, we’ve built a lot of cool stuff there, and friendships have been strengthened and formed.
One of my favorite parts of it is that it also provides me with a cool resource I can share with friends. I love being able to bring my friends there and have them share in the experience.
Lured in by the ridiculously cheap real estate prices, I bought a place in Vegas. I actually bought it sight-unseen, figuring that there wasn’t much downside on something that cost so little. It’s a decent-sized two bedroom condo that’s convenient to everything in Vegas and in a surprisingly nice complex (well landscaped, great neighbors, close to Chipotle etc). All that for under $50,000.
I then started telling my friends about it, and two of them bought units in the same complex. Two more are (hopefully) about to buy in as well.
This is a little bit different than the other projects, as we each own our own spot, but has some of the same synergistic effects. We pop in and check on each others’ properties, share an internet connection, and pick up each others’ packages. We also spend more time together than we would otherwise.
In 2014 I visited Budapest by accident. A crazy flight deal left me with a five-day stopover there on the way to Tokyo. I was a bit burnt out on visiting new cities, but within twenty-four hours I was falling in love with Budapest. I visited two more times and couldn’t help but feel that it was the best place in Europe.
And then I found out how cheap real estate was, and instincts kicked in.
I emailed friends like I had with the island, and got a group together. Most of them have never been to Budapest. Then I spent a month here, and in that time managed to find a place, come to an agreement, and close the deal. I spent a lot of mornings running between the lawyer, accountant, the bank, and the seller, but it all came together with two days to spare.
Better with Friends
When I first considered the island, I honestly would have preferred to have it to myself than to share it with friends. Tynan Island, a Kingdom I ruled alone! But I couldn’t afford the whole cost, so I invited friends to join.
It worked out much better that way. First of all, it’s nice to get a 90% discount on anything. Second, I would have invited these friends to come visit whenever they wanted anyway, and by owning it they’re more likely to come. Third, they do a lot of the work, too. I could have never gotten the island to where it is today without them. Fourth, they’re all friends with each other now.
Downsides? I can’t think of any at all. Maybe during the big summer trip we have to limit how many guests we invite because we can only sleep about 12 people right now.
While no one has come to Budapest yet besides me (one co-owner arrives tonight!), I expect the same dynamics. We may have to make some adjustments if too many people and their friends want to visit at once, but otherwise it’s great to spread the costs, visit Budapest together, and introduce more friends to each other.
The greatest force behind the success of these projects is the groups of people we have for each one. As the organizer it was my privilege to choose who was in the initial group, and I specifically chose people who I thought were easygoing, would get along with everyone, would contribute to the project, and wouldn’t have problems if the money they invested couldn’t be liquidated.
I also came up with a vision for each project and shared that with everyone so that expectations were aligned from the beginning. For the island I said that it would be like a summer camp we could build over the years where we could bring friends and family. If someone wanted tropical paradise where we’d be partying all the time, they’d realize this wasn’t the project for them. For Budapest I said that it would be a European home base, and I shared my favorite parts of Budapest to set the tone for what to expect.
Even Vegas is the same. We get tipped off when a place is about to go on sale, or once it goes on the market, and then we pick the right person for it and have them bid.
I get a lot of credit for organizing these things, but really 90% of it is just choosing the right people from the beginning. My friends who are invested in these projects are all major net-positives.
I started all of these projects. Legally (for the island and Budapest), we each own the same percentage and don’t have any special privileges, but because I’m the hub and got to choose the group, I end up having the biggest role in each one.
This has major benefits, like getting to choose the group, choose the locations, and set the defaults for a lot of decisions, but it also requires a lot of responsibility. I’m the one who is filing taxes, keeping our LLCs maintained, paying bills, and am the default person to deal with issues that arise.
I didn’t know it would work out this way, but in the end it seems that everyone gets out of it what they put in. I’ve visited the island the most, but I’ve also been there for every trip, hauling concrete and lumber and building things. Brian has been on every recent trip and has also taken a lot of responsibility. Elliot visits the next most often, and he’s started to play a big role as well. As far as I can tell, everyone feels really happy with the amount of work they put in versus what they get out of the project. But, again, our groups are also people who are positive and grateful people.
First I find the location in which I want to buy. For the island we had a specific island, but for Budapest I just gave some specs on the kind of place I’d like to buy. I shared some information about the area and why I wanted to buy it.
I ask people to indicate how interested they are and say that I’ll circle back in a few weeks with a hard deadline. This gives people time to think about it and get more information. With the island they had to agree within a week because I didn’t want to lose the property.
I then ask people for a hard commitment. My friends are generally the types who will honor those without signing anything or leaving money, so it’s good enough for me. It’s important for me to know how many people are in so that I can know how feasible the project is. If we only had five for Budapest, it probably wouldn’t have happened.
Once everyone agrees, I form a Facebook group so that we can discuss the project and so that everyone can meet each other.
Next we form a Wyoming LLC. Wyoming LLCs are very inexpensive (under $100 per year to maintain), have excellent privacy characteristics, and offer excellent liability protection. I make myself the managing member and keep myself as the sole owner until we buy the property because this makes certain steps more simple.
I open a bank account for the LLC. I usually use Chase because I have a personal account with them, but I wish I could find an option that doesn’t have monthly fees (suggestions?).
As soon as I have the bank account, I have people start wiring money. If you have international investors, use transferwise.com for a cheap solution.
When deciding how much money to ask for, I inflate my budget a little bit because I don’t want to have to change the terms later and tell everyone they have to send more money. If we end up with a surplus at the end it can be used for furnishings or to cover running costs for a while. The dust hasn’t totally settled on the Budapest place, but I think we’ll have an extra $5k when we’re done
Once we have the money, I try to buy the place as soon as possible. My primary criteria is a place that will provide a good experience to everyone in the group. For the island, that meant that we could get there in under an hour from the airport and for Budapest it meant that it was in the middle of everything and could accommodate friends.
I don’t really care about resale value, because I structure the rules such that it’s very hard to sell. I buy with the assumption that we will keep the place forever, and it takes a unanimous vote to sell it. I do try to buy places that are undervalued by the market (and think I have succeeded spectacularly in all three cases), but I think much more about the relative value to us. For example, the condos in Vegas are worth more to us than to random people because our buyers get a community.
During the buying process I come up with a draft of the rules and present them to everyone. Sometimes there are minor changes, but basically everyone just agrees. The big rule is that no one can sell without unanimous consent from other owners, and can’t ever sell for a price they didn’t offer the group first. Vegas doesn’t have rules because each unit is privately owned, but I’m sure anyone would offer our friend group the unit before putting it on the market.
This is important because it sets a long term horizon. You assume that you can never get your money out of the project, but you also assume that you will always be sharing it with good people. No one wants one owner to sell to someone who is going to ruin the experience for everyone else.
In practice, I suspect we will have few or no sales. These properties tend to be an example of the sum being greater than its parts and owners report being really happy with their involvement.
We also come up with rules governing the use of the property. On the island you can bring up to four friends at a time, or unlimited family members. Friends can’t stay there without owners being there, mostly because it takes some specialized knowledge to use the boat, woodstove, outhouse, etc. With the Budapest house we may have a few guest passes to allow friends to use it.
Different votes require different percentages. I set the bar lowest for replacing me as the managing member at 50%, others are 66%, 75%, or 100%. In practice we’ve never had to use these rules. I generally come up with a plan, present it to the group on Facebook, and we work through it in a discussion until everyone’s happy. But it’s good to have rules just in case.
Once a year I figure out how much money we’re going to have to spend and I take a yearly collection. This year the island was $600, but we didn’t spend all of it, so we won’t have to take as much next year. Budapest will be less because we have fewer improvements to make.
A big factor in deciding on these projects is keeping the ongoing cost low. For example, Hungary has no ongoing real-estate tax, unlike the US. I want people to be able to spend the money once, and then get a usable asset forever with very low costs. I consider it to be a lifestyle ratchet. You pay $10,000 once, and then you have a pied-à-terre for the rest of your life.
Just about anyone can do what I’m doing. Each of these places costs us around the cost of a used car, but gives us a whole lot of value. Ongoing costs are less than a cell phone bill.
Do you know how much rural land costs? You could buy a farm, a forest, or a chunk of desert with your friends. If you have more money than I do, you could own a place in London or New York. I personally think that now is the last chance to buy into Budapest at a great price.
One aspect I love of buying these places is that they give me centers of gravity in different cultures. I love being part of the community in a small fishing town in maritime Canada. I like having a concrete tie to Europe and having incentive to explore it more deeply. Vegas is the perfect home base for the US as it’s a fascinating city, everyone passes through, and it has the cheapest flights to just about everywhere. I feel like I get to live several lives simultaneously, each being enriched by the others.
What I like most of all, though, is the connection I get with my friends. It’s a sublime experience clearing trails and building things with my friends from across the world on the island. Six people have visited me while I’ve been house-hunting here in Budapest, and I love showing them Budapest and discovering new things with them. I love hosting friends in Vegas and showing them a different side to the city.
If this idea appeals to you, take action on it. Think of all the places you’d be interested in, and then move forward on whichever is the least expensive. Sometimes ideas that sound crazy are actually very practical. I suspect my friends and I are in the top 1% in terms of value I’m getting for each housing dollar I pay.
And last— a huge thanks to my amazing friends who have made these things possible. I’m not sure I’ve ever felt so proud as when I sent an email out and twenty-four hours later had seven people who committed to buying an island with me.
Photo is the magnificent parliament house on the Danube in Budapest. Best building in Budapest!