Last week I posted about buying our fifth group property, an apartment in Tokyo. I got more emails and messages about this post than any in recent history, and people asked a lot of good questions, so rather than address them individually I will answer them all in a blog post. It’s also worth mentioning that I go into more detail on the topic in my last book, Forever Nomad.
How is this actually better?
A few people asked questions about how this is actually better than just renting an AirBnB. I think that this is a really good question and is the hardest one to answer. I’ve tried a few times and I think I’ve done a bad job at actually getting the idea across, so I’ll try in a little more detail here.
Imagine that in your home city you randomly traded homes with neighbors every few weeks. Further just assume that your core possessions like clothes, toothbrush, car, etc. would magically follow you so that you didn’t actually have to move. Your geographic location would always be about the same and the amenities in the house would be about the same, but it wouldn’t feel quite as good as being home, right?
What happens if the bed isn’t comfortable? What if there isn’t a decent desk and chair for you to work in?
Just at a baseline, the experience of having your own place feels more comfortable. As soon as you open the front door, you are home.
Many of us also leave some things at our places. In Budapest I have a nice down + wool jacket that is warmer than my travel one. I leave transit tickets in the pocket. I also have a hat and long underwear. I can get by fine without these things, but having them encourages me to walk more, even in the winter. I have extra phone and computer chargers so that I don’t even have to unpack my bag, and if I’ve lost one during a long journey I can grab one from there. In Hawaii I have my own scuba set up, two bathing suits, and a set of tea ceremony stuff for my classes there. We also have a minivan there so we don’t have to uber or rent cars.
I also leave an electric toothbrush, beard trimmer, and tea set in each place.
Most AirBnBs these days have the cheapest possible sheets, towels, and pillows. Having our own place allows us to have nicer stuff.
Every one of our properties has appreciated significantly since we bought them (except Japan, which we’ve had for a week). By buying, we get to lock in that price forever. Japan and Budapest can get as expensive as they want to get, and we can always stay there at zero cost. Even if they all depreciated it wouldn’t really matter because the benefit is making sure each place is affordable forever and depreciation doesn’t change that.
One of the guys in the Japan group wants to go to Japan for the olympics. Getting an AirBnb during that time will be extremely annoying and expensive, but now he can just stay at his own place. It’s nice to have that consistency of always being able to go without thinking about the cost. You can also leave early or later and not change your cost. When our Budapest place was being renovated I had to stay in an AirBnb. For some reason or another I had to stay for one day longer than I had anticipated, but my AirBnb was booked that day so I had to move again.
I think that there is great value in having ties to good places. If I had to arrange for an AirBnb every time I went to Budapest or Hawaii, I would go much less frequently than I go now. In fact, my incentives may be to go to different places. Maybe I should go to Bratislava instead of Budapest since I’ve been there already? Instead I keep going back to the same places and develop deep connections with each one. In each city I have friends, restaurants and tea shops where I’m a regular and get great treatment, and a great routine. I also know the cities well enough to give friends or family members tours when they come through.
Instead of me pushing to go to places, having a place pulls me to them. I’ve visited about 80 countries and hundreds of cities, so the marginal benefit of visiting a new one is pretty small. The benefit of developing a connection with a great city is huge, though. One friend who owns a share of Budapest only goes about once per year, but told me that he likes feeling obligated to go there because he gets to know the city better by visiting every year.
No Cost to Bring Others
I really like that it doesn’t cost me anything to bring other people to these places. It simplifies the decision making process for them and makes it much easier for people to visit. There’s a reason I’ve had tons of family members come visit me in all of the home bases but very few other cities. I’ve had more friend trips to home bases in the past few years than to other destinations. Part of it is that it becomes a very cheap trip for them and it doesn’t cost me anything to have them there. You could emulate this by just renting AirBnbs for people, but I think the dynamic feels different.
How do you manage who stays there?
This is a common worry, and is one that I had before starting this. In reality it is a total non-issue. Anyone can visit whenever they want and most people are busy enough that there are almost never unintentional overlaps. At least 95% of the time you can have the place to yourself if you want to.
We also have an unofficial rule that those who visit most are the lowest on the totem pole. For example, I visit Hawaii a lot and if I was planning on going to Hawaii one week but a friend wanted to do his one annual trip with his girlfriend there and wanted it to himself, I would very happily change my trip or stay somewhere else. I don’t know if we have ever actually had to do this, but it can at least give infrequent visitors confidence that they can have it whenever they want it.
What happens in practice more often is that we know about those sorts of trips in advance and we coordinate. A friend and his mother were going to do a trip to Budapest on a date that I had planned on going. I gave them the option of me staying somewhere else or overlapping with them and showing them around. They were happy to have me there and we ended up having a great trip together— one that we would have never had without owning a place together.
Usually the tides go the other way and we are actively trying to get others to join us. It’s much more common to try to rally people to join so that you can do activities together. if I can get friends to go to Hawaii with me we can scuba dive together, if we go to Budapest together we can do escape games, and if we go to the island we can deal with the wreckage of yet another sunken boat together.
We use facebook groups to coordinate decisions and trips, and it works well. We post messages for stuff like, “Hey, the van needs an oil change. Can the next person who goes deal with it?”. And we create events to block off time. Officially you cannot prevent others from going, but everyone respects requests. In the event people specify whether they would like others to join, would prefer not, or are neutral.
How do you make decisions?
This is another one that has been much easier than expected. For each property there is a spectrum of people, from those who are really active in planning to those who just want to show up and enjoy it. Typically what happens is that the most active people talk privately about some project or improvement they want to do, and then open it up to the group on facebook for discussion, where it usually gets reshaped a little bit.
We all trust each other so sometimes stuff just happens unilaterally, especially if it’s not huge. For example those of us at the island just bought the furniture we thought would be best because it would have been too hard to make each decision in real time. One of the other members hired someone to finish painting Budapest and made a judgment call for what to have them do.
I completely see why people think this would be an issue, but in reality it isn’t. Instead of thinking of it as 6-10 people who all want to do different things, think of it as 6-10 very competent people with the same end goal all working together. That end goal is set from the very beginning because when I pitch these properties I explain exactly what I hope for it to be, so only people who share that idea sign up.
How does it work logistically?
This is another one that is just not as complicated as people think. First I find either one property or a range of properties that I think will work. I then estimate the cost based on how many people I think we’ll have, and I send out an email to friends that essentially say, “I want to buy a place in Tokyo. It will cost around $120k including taxes and furnishing budget. Depending on how many people we get, it will cost $15k-22k per person. Here’s a lot of information about the area and place. Interested?”.
Usually people are either in or out immediately. I give a lot of information in the email that will make it obvious whether it’s a good fit for them. Once I have some definite in people, I can start including them in the process. For example I might say, “We have 6 people now so the cost will be $22k each. Would you rather stay here or get two more people and have it be cheaper?”
No one sends me money up front, but I know my friends’ words are good enough for me to make moves on.
I then begin the transaction and typically send the deposit myself. I have to invest my own money anyway, so it’s not inconvenient. We then have a month or so to close, so in that time I form an LLC, open a bank account for the LLC, and then get everyone to wire the money.
The process for actually buying the property varies wildly. Budapest was actually a bit of a nightmare as I did it in the most complicated way possible (formed a local company and bought it with that), which I’m now trying to undo. The others were relatively simple.
Once we get the place, I create a stripe account for it and bill people monthly for how much I think our monthly costs will be, plus a small buffer. Once in a while we have to increase this because I didn’t estimate well, HOA fees went up, or some other reason.
I try to automate all of the bills to come from the bank account, but some expenses I have to pay for myself. I just keep track of them in a spreadsheet and reconcile them every few months.
I got many more questions about logistics that I won’t answer individually, but generally if you have a group of smart people who trust each other, dealing with obstacles as they come up just isn’t going to be that difficult. Taxes and such vary by location, but for inexpensive properties they aren’t bad. In some places we look around and find locals we can hire to help us deal with stuff.
How do you choose people?
This is now very easy since we’ve done it so many time and the core group is basically the same every time. Here are my criteria in ranked order:
1. Someone who will be a good co-guest if another guest is already there. In other words, if two groups happen to overlap it should turn it into a fun group trip.
2. Someone who can be a leader but doesn’t have to be. In other words, I don’t want people who are going to disagree with proposals just because they didn’t come up with them, but I also want people who can carry the torch if we need it.
3. Someone who can afford it without worrying about it. If someone is going to be stressed out about the expenditure and may not be able to afford it if we need to spend some money to refurbish the place, they aren’t a good candidate.
Since the selection pool is my friends, most of them qualify for this anyway. On a few occasions I’ve tried to go for friends of friends or acquaintances and in every case they flaked and I was glad to not have to deal with them. I think it would be better to not do it at all than to do it with questionable people.
I hope these answer enough of the big questions to give a good idea of why and how I do this. It has been an incredibly positive experience co-owning all of these properties, and it’s frustrating to me that I haven’t yet been able to do a good job at conveying how and why it’s so great. I hope this post helps.
Photo is a cool waterway also near our apartment.