A "big life step" dilemma

[klejst]

I am in my mid-20's and I have been playing bass for years and I absolutely love it, anytime I can I pick up my bass and jam. I have been in a four piece (drums, bass, guitar player/singer, and another guitar player/singer, we all do some gang vocals and some singing parts together too) original rock band since late 2008. Our first CD we released was a full length back in mid-late 2009 (which I know may seem weird because most bands first is a demo or EP). Anyways with those specifics out there now the band and I are just about to wrap up our next CD, which this time is a three song EP. However our production of this one is of a more superior quality and also in quality of the songs we wrote. We worked with a producer out in Chicago who has worked with some well known bands as well as a producer here locally who has also worked with some great talents and bands as well. We have spent a lot of time and not breaking the bank, but a good chunk of money to get this CD to be our best production we can and we all feel this is some of our best work. Our music and sound at least here locally stands out from the many either way poppy-punk bands or the metal bands. We are pretty well known locally and have been featured on local radio stations. Anyways with those specifics now out there, let me jump to now as in what my possible dilemma is.

If all goes as planned we expect to be done with our new EP all together (recorded, mixed, and mastered) by the end of this month and hope to distribute it for sale via iTunes and other online gateways. Also of course we will feature it on MySpace, etc. We will also get some physical copies/CD's made, but mostly to be used to be sent along with a press kit package to promoters, venues, and yes even record labels (unless they prefer the online digital way of doing things in which obviously we will create a electronic version of our press kit, etc.) So with that said here is what is bothering me. Now by no means are any of us in the band well off, we work Monday-Friday jobs like normal people do and we have commitments to other things as well. We do what we can basically. However for me personally I am very passionate about this band (as are the rest of the members), playing bass, and about music in general. On the other side of things I am about to start taking the big life steps of possibly buying a house. With the interest rates so low right now it's a good decision to look into it. Here is what is scaring me though...I know it is a long shot, but when we start sending out press kits and our new EP to record labels I worry a little about what could happen if we do happen to get picked up by one of the labels. If I do have a house I worry how I will be able to afford to pay a mortgage more or less any possible bills or other expenses I may have at that time as well like cell phone bill, etc. I know labels offer some sort of advance to new artists, however I wonder would it be enough? Also who would cut my grass when I am gone possibly touring eight months out of the year. Also obviously if I am a full-time musician pretty much all money I would make would be from being a musician (which I know can be little to nothing) and I would have to quit the job I have now. I know it is not easy and hard work, I know some labels really do screw and have screwed many artists and I know I cannot expect to become a millionaire from this, but it is all about the music to me, but I also want to make sure I am covered financially to at least get by and live somewhat comfortably and also I can have a nice future if/when I quit music.

Now I know I may be thinking into the future, but it is something I feel is at least worth thinking about a little. Again I know the shots of getting picked up by a good label may be slim, however it could happen to anyone. I currently live in a apartment, which is nice for me now because I have no girlfriend or wife and no kids, just me and a dog. But I pay $600 a month which is like throwing away my money at a apartment. Where as a house I own and is a investment and would cost me about $250 more to have over the apartment and this is a house. It is a very nice house. I am turning to my fellow musicians and TB posters like I have so many times in the past for advice on my dilemma. Please no bashing, I am looking for some advice, guidance, or "what would you do." Oh and sorry about this long book of a post THANKS fellow TB'er's!

[Bozendoka]

I don't have any specific advice, but one thing I'd point out is that the house will cost (possibly much) more than another $250/month - utilities may be higher, you'll need to purchase and maintain equipment to keep up your property (or pay someone else to do it), and you'll be responsible for all repairs. I found that out the hard way when I bought a house a few years ago; we needed more room and thought that it was a better use of our money, not realizing just how much it was going to cost. Now, we bought a pretty old place that needed more work than we realized going in, and that may not be your situation, but you should be aware of the incidental costs of owning a home.

[dvh]

To have a house is nice and a sound investment at your age. The down side is that it is a possession that requires attention and maintenance and can be a source of frustration and anxiety.

In your circumstances, why not consider a condominium or something similar? You can still get the financial benefits of property investment but have something less demanding in terms of maintenance…

[klejst]

When I mentioned $250 I meant that was $250 more a month for a house over the apartment I am currently living at, sure utilities may be more. I understand it is a greater responsibility. And again I know the record deal is a very long shot, however I do not want to get too deep with a house and then happen to be lucky enough to have my band offered a deal, but then I also don't want to really worry on a "what if" and 1 in a 1,000,000 chance and miss out on a house when the housing market and interest rates are pretty cheap right now where I live. I am basically sitting on the middle of the balance looking at both sides.

[father of fires]

Well. I think it's a valid question. The odds of needing a house are bigger than the odds of getting signed.

So I would bet on the house. Then again I have a wife and a baby to worry about. You can always get a family member or a friend to live with you and maintain the house while you're gone. Plus, you can charge them rent.

[klejst]

Yes that is true, and I do understand better that a house is a more logical choice, however because we have not submitted anything yet, It's really frustrating to be honest.

[Neon Scribe]

Owning your home can be great. There are lots of reasons why it is better than renting an apartment. However, financially speaking it is not necessarily the sensible investment it was for your parents or grandparents. I know you are concerned about the possibility of choosing to take your musical career to the next level, but let's put that aside for now. How stable is your day job? Do you have a reasonable expectation and a desire to stay in your current location for the next five to ten years? What are the chances that a job opportunity or change in your personal life would make you want to move to another location during that time? If so, it will be very inconvenient to own your home and might even discourage you from taking a positive step in your life. The biggest change caused by the housing bubble bursting is that it takes much longer to sell property than it did previously. You could end up with a mortgage and maintenance costs and a long-distance selling effort for an extended period if your life takes you elsewhere.

It is possible that housing prices have actually hit bottom in your area, but the conventional wisdom is that housing prices are still dropping, so even though it seems like a great opportunity to pick up a bargain compared to a few years ago, you could end up with an investment under water. Even if prices don't drop, they might stay low for a long time. If it is your home, you are in it for the long haul, and it fits in your budget then that is not such a big deal, but if you decide it is time to sell you could be in a very uncomfortable position. A foreclosure or a short sale can put a big hit in your credit rating.

Regarding "getting picked up by a label", don't worry at all about that. That time has passed. You might get offered a deal with a major label, but not based on one or two recordings you made, even great ones. If you start touring full-time and build an audience, you might reach that level in a few years, but even then you will probably decide there are other avenues to success. I highly recommend reading the article "David Byrne's Survival Strategies for Emerging Artists". It was in Wired Magazine in 2007 but it is even more relevant today. Unfortunately, I can't find it on their site, but you can find a cached copy via a Google search.

[Ewo]

I can help a bit with the real estate part of the question, I guess. I've owned four different residences, over the years, and about 15-20 years ago I owned a half-dozen rental units for a few years. (Decided I didn't want to be in that business, so I sold off the properties.) I'm not a real estate professional, no--but I've been in more than one rodeo, IOW.

It's a buyer's market, and likely to stay that way for several more years at a minimum. The rash of foreclosures is the result of an overheated market (i.e., a seller's market) fueled by mortgage funding that was too easy. (That's the Fannie/Freddie part of the bubble.) People got in over their heads, borrowing, and now the banks have a bunch of foreclosures and "under water" situations on their books. Housing prices have declined considerably in the last two years, and the analysts I trust are saying the backlog of unsold houses will persist for some time.

That makes it a good time to buy a house, as you can negotiate a very good price concession from the seller--and foreclosures are houses the banks really want to dispose of.

This past January my SO and I bought a new place, kind of a fixer-upper version of a dream house. We got it for a good price, because it's a buyer's market. But I needed to unload my old residence to make the move, and had to mark it down to get it to sell--again, because it's a buyer's market.

Here's how all this applies to your decision:

If you decide to buy, you'll get good value. But don't expect you'll be able to unload the property quickly, if you need to sell in the next couple years, unless you're prepared to make a price concession. IOW, look at a residence as your place to live, and not as a money-maker.

Hope that helps. This is just my .02, YMMV, and all the usual disclaimers apply!


Edit: my thoughts are very similar to Neon Scribe's.

[klejst]

Thanks for the advice and 2 cents guys, and I looked for that "David Byrne's Survival Strategies for Emerging Artists," however all Google search links lead back to the Wired website where it says it cannot find it, oh well. Yeah I am starting to lean more towards the house at this point, but still it's a big choice right now even with not knowing what the future may bring, that is why it is the future. I normally living in the now and not the future or past, but for something like this I could not help but think into the future. God forbid it is hard to say whether this band will even last another year or more or it could last 20+ years...just never know also If I do buy this house I could end up living in this house for 3 years or 20 years...who knows. I guess there other thing I have thought about too is I am not married and have no kids so my apartment is technically good enough for me now, however I feel like I am just throwing my money away there. Still frustrated, maybe not so much on the whole record label thing anymore because I should just worry when that time comes if ever and just enjoy playing the bass and music which I love. I guess it's like a risk at this point. I am all about taking risks and have in the past, some working out, but a lot of them blowing up in my face...

[gttim]

It is a renters market right now. You can get very low rent in most places. Not a bad thing.

If you buy now, you will be tossing away a lot of money towards interest. Do not think that $650 a month will be going to equity. It won't. On top of the mortgage, you will now be paying property taxes and home owners insurance. You will also become responsible for maintenance and repairs. You will be cutting grass, maintaining the yard and other stuff. If something comes up, you are tethered.

After living in apartments for a while, I bought a condo. I love where I live and enjoy owning my place. However, my monthly output increased. I do not have yard work or anything, but I do have maintenance on the interior. When the water heater started spewing water, I had to pay a plumber. If the windows fog, I have to replace them.

The biggest thing, is it would be hard for me to take a job in another city. This may become an issue. The market is very depressed and it is very hard to sell anything. Yes, you can get a low price, but you may not be able to sell if something comes up. If you value being un-tethered, renting is usually best.

In hindsight, I probably would have kept renting. It would have saved me money. I would not be tied to my city if a job opening comes up. I love my place, but I would not have bought it if I knew then what I know now.

[Neon Scribe]

Regarding "David Byrne's Survival Strategies for Emerging Artists", do the Google search, but use the Cached link instead of the main link.

[Munjibunga]

I'd buy the house. When my wife and I bought our first house, we were paying $550 a month to rent an 1,100-square-foot condo. The mortgage on our house was $1,100 a month (at 12 percent interest - it was the early '80s). However, with the drop in our income taxes (you deduct the interest on your mortgage), the net outcome was the equivalent of $850 a month on the mortgage. In your case, it may come close to a wash, depending on your income.

I wouldn't even worry about what happens if you get picked up by a label. The eggs for the chickens you're counting haven't even been laid yet. Just have faith that you'll be able to work it out if it happens.

[Ortus]

+1 on Neon Scribe's advice re: label deals. Even in the heyday of the record industry when deals and large advances were plentiful, signing with a label was less like getting a job and more like securing a large loan. While there certainly are good situations out there, 99.9% of the time signing a label deal usually means losing money, not making money.

I applaud you for seriously considering your financial future at a young age. That said, you need to ask yourself one simple question: what is more important for you, playing music full-time or feeling financially secure?

Making a living from music is one of the hardest things you can do. If you can feed yourself and avoid homelessness while being a full-time professional musician, you are officially living the dream. If you can feel happy eating instant cup-o-noodles three meals a day for months at a time because you get to pick up your bass every day and not report to an office, then the life of a professional musician is for you.

If not, I say buy the house, and see where the band takes you, but keep in mind what is deep down most important to you: financial security.

On the other hand, I know nothing about Nebraska real estate conditions, but is it possible to buy a house or condo that you could then easily rent out if you need to?

Keep in mind that there are many ways to save money and be frugal. To put your situation in a little perspective, I live in NYC and $600 rent for your own place is unheard of. Most average people pay two or three times that much to live with a roommate (or several). In a situation like that, people are forced to hustle every day and use their ingenuity just to survive. Perhaps if you buy a place there is some way you can generate income from it? In other words, maybe it's not an either or situation--maybe you CAN have it all, but just need to think outside the box a little....

[bryanonbass]

while I am totally for believing in your dreams and following through, do not expect to get much if any money from getting "signed".
Especially with the way the music business is nowadays you will be lucky if a label pays the full amount to record an album. Tour support is very rarely included, so you will be paying all the expenses when you are on the road. A signing bonus may be included in a record deal, but it rarely is enough to pay bills for any length of time, especially if you split it evenly amongst the members.
I have been in a major label band basically ended up being in debt to the record label for about 150K and our record didn't even get released.
I have also worked as a tour manager for 2 major label bands and I made more money per week than every member of the band combined.

Not trying to put a damper on your dreams, just don't count on making money from
a label deal. In this day and age you would make way more money doing it all yourselves than having a label.

On the house front, maybe look into a 2 family home. These are pretty good investments. You live in 1 side and rent out the other. Sometimes the rent will cover your mortgage payment or close to it. Plus when you are on the road, there is someone in the building that could maintain it and watch over it for security reason (maybe for a discount on the rent)

[Stumbo]

Originally Posted by klejst

If all goes as planned we expect to be done with our new EP all together (recorded, mixed, and mastered) by the end of this month .....

That's only a couple of weeks away. I suggest waiting a few months before pulling the trigger on a house. Then you can see what happens with the band.

Problem is that if you buy a house in awhile and still continue with the band and something hits for you next year or the next year. You'll still be in the same position.

Don't forget with the house you'll need to pay property taxes, insurance and save for future major repairs (roof, broken pipes, gutter repair, replace air conditioner, replace cracked drive way, replace windows, etc.) Also, when something minor breaks you'll need to fix it yourself (buy tools) or take time off work to wait for a repair person. Especially if it breaks in the evening.

Then there's more furniture/TV's to buy and another other improvements you want to make(on top of the repairs).

If you do go on tour, where's your health insurance? YOu can get COBRA but that may cost a few hundred more per month (I'm going through that now).

What if you get hurt on tour? How will you get home. Will your health insurance cover you out-of-state?

What if a water pipe breaks while on tour? Even if you have someone available to shut off the water, who will hire the repair person and how will the bill get paid(thousands?)

Maybe you can buy a couple of cheaper homes and rent them out for a profit? While your gone hire a property management company.

Just a few thoughts.

Good luck.

[klejst]

Here is currently where I am at. I had a very deep conversation with my parents yesterday about everything going on. I brought up a lot of points to consider and so did they. They both came to the conclusion of and feel the house to be a wise choice because it is a investment for the future and also because the interest rates are low and it is just a buyers market right now. They also brought up the fact that getting signed to a label and becoming a rockstar is a thing of the past not to mention the odds are about as good as winning the lottery. Also they stated I should not base my life off this band and this "what if" getting signed stuff because the band could always break up, the label could sign and then drop us, could screw us, could not be what it is all chalked up to be, not make enough money to be able to support myself or pay the bills I have, or getting signed just could up and not happen and then I am back to square one. They also mentioned living in the apartment I am living in now is like throwing my money away each month because I have nothing of my own to own or show for. The idea of buying multiple properties like the above poster mentioned would be out, because I would be renting them out, good source of income yes, however I do not have the loan amount to do that, also I still have to repair anything that breaks in those houses...hence the "landlord" title.

Again my side of thinking is what if I do buy this house and then something does happen? I am trying not to base my whole life off this band and this possible "what if," however I love music and playing a lot. A house is indeed more money and can be higher utilities, even though most utilities are energy efficient and under two years old. Also I do have to up keep stuff on my own and would have a driveway and a lawn. How can I be away for months or even weeks for that matter without having to worry about that stuff in the Summer or Winter right?

I just had the house inspection done and there are some pretty big items I have requested the seller fix so I am waiting to hear back from him. Determining what the possible costs will determine if he will pay for them and have them fixed or if I would have to and in that case if they are too costly I will just walk away from the whole thing and the most I am out is the $320 inspection fee and this whole situation is gone.

I guess I am still sitting in the middle of balance on this whole thing. On one side It would be nice to have a house and have something in my life I own and a good investment especially if nothing major does happen with my music. But on the other side I know it would be a headache to try to maintain a house both mentally and financially when trying to do the musicians life if something does happen. Obviously I would have to quit my full-time job then, but it would be living a dream of mine. Again I do not expect to become this millionaire, just enough to be able to pay bills and eat you know.

I have heard both good and bad things about being a professional musician. Without a label you get to keep all monies you make, however have to arrange for everything yourself. A label gives you support, however I know can also screw you over as well.

It is just me, no wife or kids and I am only 25, I want to live life, but also want to be secure for the future. Gah it sucks not having a crystal ball and being able to see what could happen and will happen in the next five years!

(Again sorry for the book of a post)

[Stumbo]

Originally Posted by klejst

I want to live life, but also want to be secure for the future. Gah it sucks not having a crystal ball and being able to see what could happen and will happen in the next five years!

I understand what your parents are saying but buying a house will take more cash monthly (everything included) than renting an apartment. Sure you'll get increases in equity but that's not cash in hand. Loan requirements are a lot tougher today than yesterday. Have you qualified for a loan yet? Lots of work to do before you sign on the bottom line.

Yep, there's no manual for life. Risk is in everything. Look at all the current home owners who have lost everything. They thought they were secure!

Mistakes are part of life. You make the best decision with the information you have and what you see happening in the future. There's no guarantee of anything.

Bad things happen that are not under your control (Los Angeles earthquake 1987 - lost my house, fortunately I had equake insurance to rebuild).

Good things happen too!

If you buy a house and your band makes a lot of money, rent out your house and then hire a property management company to look after it.

There are always options. We get to choose one. See how it works out and then make adjustments. 75 million other home owners do it all the time.

Good luck!

[klejst]

I have qualified for a loan and it was approved for a decent amount. I also got a very low interest rate. I just had a inspection of the home and everything that was found wrong the seller has agreed to repair. So basically I am preceding forward with the house idea at least right now I just seems like the best option, IF and when my band does get signed then I can go from there, but who knows if that will even happen. Just going to do what I can right now and worry about that stuff later when and if the time comes. I think this house thing has blinded me from having fun in the band the last couple weeks, so I need to get back to just having fun and doing what I love in playing music and living in the now and not the past or future. There is still a lot of time and things to do before I close on the house and I have other opportunities to back out of the deal as well. The FHA inspection and what they find could be one of them. With that option known we'll see what happens based of that. Thanks to everyone who has helped me by leaving comments.

[P. Aaron]

If your music means you must do road trips for the sake of the band, the road money may not make the house payment.

Keeping your day job will also limit your road ability with the band.

Since you are not too rooted now, ask yourself if you want to pursue a music career and see if...if you can make your music work for you, or buy the house and only wade in the regional touring waters.

If the road ain't paying you too much, it's wise to not have too many obligations. You buy a house, you are committed to the payments & maintenance.

Most successful acts are always on the move until they get established. Not an easy choice but...it's to tough to keep both.

[klejst]

Music is important to me and I would love to just go travel and play, however money to do so has always been a issue for me and the other three guys in my band because we are working class and in our early-mid 20's. Taking risks usually is never been a problem for me before, however now that I am a bit older and a little wiser from past things in life I still have to be smart about stuff. Also it never hurts to have a padded future you know. I have not closed on a house yet so I still have time, but I have learned I have to put a lot into music to get something if anything out of it, however I cannot base my life and put it on hold based of a "what if" with the music side of things. Just trying to be smart and still trying to do what I love.