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Why (and How) You Should Live in an Absurdly Expensive City

I’m sure DesMoines is lovely, but I’ll take Paris. The question is, how do I afford it?

I love Money Magazine. They live in such a rarefied bubble. The type of bubble where people are fighting to live in places like Draper, Utah and Meridien, Ohio. In fact, in their 2019 “Best Places to Live” list, these five hot spots fought their way to the top of the list:

  • Clarksville, Tenn.
  • Round Rock, Texas
  • Fishers. Indiana
  • Fulton River District, Illinois
  • Country Club Heights, NC

(Don’t worry, Draper and Meridien were placed just below these but still in the top 10.)

I have never heard of any of these places. I am sure they’re lovely, but a nagging part of me can’t help but wonder whether the fact that a house can be had for less than $100,000 had anything to do with their status at the top of the list.

My tastes are different. In fact, if I had to name five pretty cool places to live, I think I would start with:

  • New York City
  • Paris, France (the sixth Arrondisement is especially nice)
  • Southern CA
  • Coastal Oahu (preferably the windward side)
  • San Francisco, CA

My reasons? The usual: flawless weather; world class entertainment, art and architecture; mouth watering food; energy, excitement, buzz; heart stopping natural beauty; or a combination of any of these factors. These are places where fortunes are made, spent, or both, and have long attracted those at the top of their game.

For those of you that would like a taste of this, you may wonder, “how on earth do I afford such places”? Yes, they are expensive. In fact, the average house price in Malibu tops out at at $2.29m, as per Zillow, vs. a mere $173k in Clarksville, TN. So, in this example, you’re paying about 13 times as much to live in year round sunshine adjacent to one of the world’s premier entertainment and tech hubs. That’s a lot.

But IMCO (in my contrarian opinion), it’s worth a try, even for a little while. As I said, fortunes are made in these places and living there can be an experience of a lifetime (even if it’s not a lifelong event).

So in that spirit, I thought I’d detail some of the ways that normal people can afford to live in these markets. In no particular order, here are strategies for living in a world class market without going broke:

House Hacking

Of course. If you are a FIRE adherent, I’m sure you’ve heard about this strategy. It can basically be summed up as offsetting high rent or mortgage payments with roommates, Airbnb guests, tenants (in multi-unit dwellings) or some combo thereof. Example: Buy a triplex in Brooklyn for $1.7m, pay $8000/month in mortgage, insurance and taxes. Rent two units out at $3500/month each, convert your one bedroom to two, get a roommate in the one bedroom for $1000/month. You’re now living there for free and building equity every month (By the way, I have done this successfully in Los Angeles since 2015).

No down payment? Use the same strategy with a rental unit.

Live Unconventionally

I once met an accountant who had a lovely home in the suburbs of Los Angeles. He decided to rent it out and lived instead in an RV parked on the leafy Westside of L.A. The gym and his office provided shower facilities, and he got to live in LA for less than nothing (net positive cash flow). This is extreme, but people have been known to live in houseboats (San Francisco), RV parks, and other non-conventional and much cheaper alternatives to the $4000/month downtown one bedroom.

Co-Live

I wish this alternative had been available when I first moved to NYC. As described in the New York Times, co-living involves renting a shared space in a generally high end apartment in buildings usually packed with amenities. If you don’t mind bunking with strangers, this is a great way to start in an expensive city at about ½ the price of your own apartment. Also: no brokers fee, no furnishing cost, no (or small) security deposit. And, these places are usually located in central, buzzy neighborhoods, so you’ll be right in the thick of things Day One.

Start Early

The more time you have, the less you’ll pay to live there.

If you have always dreamed of Paris, it will be at its most expensive when you hop off the plane, unprepared and desperate for a place to crash. Same with New York and other markets. Planning months, or even years in advance lets you get the lay of the land, identify the bargains and, most importantly, put the word out that you are looking for a roommate/house sitting opportunity/sublet or other such cheap rent scenario.

Be An Expat

International destinations can be expensive, but oftentimes, your employer will pick up the entire tab. This is more of a recommendation to be on the lookout for expat opportunities, vs. march into your boss’s office tomorrow and demand a promotion in London and an office with a view of Big Ben. But many expats are able to convert stints in foreign markets into significant financial windfalls by living rent free for a few years.

Get a Job

As a last resort, you can always look for an amazing position with killer pay to help you afford the rent in this uber expensive markets. For one thing, these places tend to pay a lot more than, say, Round Rock, Texas, as higher salaries are required to get people to move there. And, places like New York and San Francisco are home to some of the highest paid industries out there, like tech and finance. Just make sure you negotiate a high enough salary to cover those mortgage payments.

These markets should not be dismissed just because of the expense. Even if you are not a born city slicker, they are great (maybe the best) places to build a career, fall in love, make your fortune, meet interesting people from around the globe.

And admittedly, they are expensive – perhaps  more expensive than ever. But there are also more ways than ever to hack your way into them without deviating from your FI path.

Have you made an outrageously expensive market work? Tell me about it in the comments below!

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