MogulREIT: CrowdFunded Real Estate for Non-Accredited Investors

rmlogo200While the number of real estate crowdfunding sites keeps growing, most marketplaces still require you to be an accredited investor with high income and/or net worth requirements. However, options for non-accredited investors should improve shortly due to the expanded Regulation A+ per the JOBS Act, which allows the general public to invest in private companies under certain circumstances. just announced their offering called the MogulREIT I. Instead of being able to buy part of a specific shopping center or providing a loan against a specific apartment complex, these REITs take your money and the sponsors get to pick out a diversified pool of commercial estate. The investor has much less control, but easier diversification. Instead of putting $2,500 into one building, you can spread $2,500 across 20 or 30 properties. Here are more details from their website:

  • Fund intends to be diversified across property types, investment types, and geographies.
  • The Fund expects to pay quarterly distributions starting the second full quarter of operation.
  • The Fund will provide certain redemption opportunities, quarterly.
  • MogulREIT I is audited by Cohn Reznick and administered by Opus Fund Services.
  • $2,500 Minimum Investment.

Here’s what they have to say regarding expenses:

Investors in MogulREIT I will not be charged any sales commissions and the organization and offering expenses are anticipated to be approximately 3% of the target total raise of amount. Traditional non-traded REITs typically charge an average sales commission of 7% and organization and offering expenses of up to 15%**.

There are more details in the full SEC offering circular. Please do your own due diligence.

As I’ve said before, I would tell my family to invest in a low-cost, diversified, publicly-traded REIT fund before investing in any of these non-traded REITs with limited liquidity. For example, buying shares of the Vanguard REIT Index ETF (VNQ) will give you commercial real estate exposure with rock-bottom expenses and daily liquidity. VNQ and its mutual fund equivalents are where the vast majority of my commercial real estate exposure remains.

That said, I find this area of investing to be interesting. I like the idea of focused real estate but don’t enjoy being a landlord. I have invested $2,000 of “experimental money” into the similar Fundrise Income eREIT, as I prefer high-interest loans backed by real estate as collateral. Fundrise also has a Growth REIT which focuses more on real estate equity. The MogulREIT I is supposed to target both income and growth. I currently have no plans to invest in either the Fundrise Growth REIT or the MogulREIT.

Housing Investment Returns = Price Appreciation + Rental Dividends

Professer Robert Shiller has a new NY Times article entitled Why Land and Homes Actually Tend to Be Disappointing Investments. He computes the historical, long-term inflation-adjusted returns for both farmland and housing:

Over the century from 1915 to 2015, though, the real value of American farmland (deflated by the Consumer Price Index) increased only 3.1 times, according to the Department of Agriculture. That comes to an average increase of only 1.1 percent a year — and with a growing population, that’s barely enough to keep per capita real land value unchanged.

According to my own data (relying on the S&P/Case-Shiller U.S. National Home Price Index, which I helped create), real home prices rose even more slowly over the same period — a total increase of 1.8 times, which comes to an average of only 0.6 percent a year.

Over the same time period (1915 to 2015), the total inflation-adjsuted return of the S&P 500 index including dividends is roughly 6.7% annualized. Here is a recent version of his famous Home Price chart:


Shiller is a smart guy and so I’m sure he knows this, but he always seems to leave out the fact that most people don’t just buy a chunk of land and let it sit there idle until they are ready to sell it again.

  • People use farmland to grow stuff. You know, things like apples and corn and cows. Or you could charge rent to farmers.
  • People either charge rent to others or avoid paying rent themselves on residential housing.

These are all additional sources of investment return beyond just price. Therefore, even if you assume your home’s price will only rise between 0% and 1% above inflation over time, you are still getting more “return” from it in the form of either rent or imputed rent.

Rent will rise roughly with inflation. Indeed, the biggest portion of the Consumer Price Index is housing as shown in the graphic below (source). The great majority of the Housing component is “rent of primary residence” and “Owners’ equivalent rent of primary residence”.


From FRED, here’s the rent part of CPI divided by overall CPI for as far back as the data series goes (1947). Sometimes rent grows faster than CPI, sometimes rent grows more slowly than CPI. Mostly, it evens out, as one might expect.


For most of the last 20 years, rent has increased faster than CPI inflation:


Estimating your “rental dividend” return. If you have a house that costs $200,000 that would otherwise be rented for $1,000 a month, that is a price-to-annual-rent ratio of 16.7. The inverse of that number is a rough idea of the annual “rental dividend” you could get from the house. That is, $12,000 divided by $200,000 is 6%. Now, a proper real estate investor would take out things like property taxes, insurance, repairs and maintenance. Let’s continue to be very rough and call that 3%. Now, if you assume both rent and expenses will rise roughly in step with inflation, that is an additional 3% real return.

Adding the two parts together, and you’re getting a very rough 3% to 4% real (inflation-adjusted) return. Now, most people acknowledge that housing is local and your specific return can vary widely. Your housing price return if you bought a house in Detroit in 1985 and a house in Mountain View, California is quite different. At the same time, your current housing rental dividend return is going to be a lot higher in Detroit than in Mountain View, California.

(I’m not nearly as familiar with farmland, but I do know people who rent out their property to farmers and ranchers. They seem satisfied with the arrangement. I’m also not including all the psychic rewards of owning your home like being able to remodel and customize things as you wish, nor am I including the costs of doing that remodel.)

If you look at various broad estimates of future stock and bond returns, they are not forecasting much more than 3% to 4% real returns on a diversified and balanced 60/40 stock/bond portfolio. Do housing prices only go up? No. Is every house a good investment? No. However, I also don’t agree with the broad statement that land and homes are disappointing investments.

I’ve explored my own situation and income tax effects more in the previous post Mortgages, Imputed Rent, and Early Retirement.

Real Estate Crowdfunding Experiment #2: Fundrise Income eREIT Review


Updated with Q2 2016 performance results. My second real estate crowdfunding investment is $2,000 into the Fundrise Income eREIT. (REIT = Real Estate Investment Trust.) Their investment claim is being the “first ever low-fee, diversified commercial real estate investment available directly online to anyone in the United States, no matter their net worth.”

Fundrise is one of the first real estate companies taking advantage of the recent JOBS Act that allow certain crowdfunding investments to be offered to everyone, as previously it was limited only to accredited investors. You must be a US resident and your investment cannot exceed the greater of 10% of your gross annual income or net worth.

Here’s a quick overview of the features:

  • Low investment minimum ($1,000)
  • Quarterly cash distributions
  • Quarterly liquidity (you can request to sell shares quarterly, but liquidity is not always guaranteed)
  • Low Fees (claimed to be roughly 1/10th the fees of similar non-traded REITs). Until Dec 31, 2017, you pay $0 in asset management fees unless you earn a 15% annualized return.
  • Transparency (you get to see exactly what properties are held)

Essentially, instead of investing in a single condo building, I am now putting my money into a pot of money that will invest in a basket of different commercial real estate properties.

Why not just invest in the Vanguard REIT index fund? Well, I happen to think most everyone should invest in VNQ if they want commercial real estate exposure. I own a lot more of VNQ than this Fundrise investment. VNQ invests in publicly-traded REITs, huge companies worth up to tens of billions of dollars. VNQ offers wide diversification and you have daily liquidity. But as publicly-traded REITs have grown in popularity (and price), their income yields have gone down.

As with other crowdfunding sites, Fundrise deals with specific, smaller deals with (hopefully) higher risk-adjusted returns. This eREIT diversifies your money across multiple properties, but we’re still talking examples like a $2 million townhouse complex, or a $2 million boutique hotel. An analogy might be made with “micro-cap” investing. From their FAQ:

Specifically, we believe the market for smaller real estate transactions (“small balance commercial market or SBC”) is underserved by conventional capital sources and that lending in the market is fragmented, reducing the availability and overall efficiency for real estate owners raising funds. This inefficiency and fragmentation of the SBC market has resulted in a relatively favorable pricing dynamic which the eREIT intends to capitalize on using efficiencies created through our technology platform.

A positive feature is the ability to request liquidity on a quarterly basis, but it is not guaranteed that you can withdraw all that you request (similar to some hedge funds). Here’s a comparison chart taken from the Fundrise site:


Why Fundrise? It can be hard to differentiate between the various crowdfunding websites. One way that I feel that Fundrise differs is they are more picky about the deals they choose to fund. Talk about higher standards is one thing, but I’ve been tracking them for a while and Fundrise really does offer far fewer deals than the other competitor sites I have signed up with. For about a year now, every deal that I’d been interested in filled up within 24 hours. Even this eREIT had a waitlist. Will this selectivity last? I don’t know, I hope so. Will their selectivity produce higher, safer returns? I don’t know, I hope so.

Dividend income updates.

  • 1st Quarter 2016. 4.5% annualized dividend was announced. This is the first complete quarter of activity, so the dividend size is expected to increase once funds are fully invested. The portfolio included 13 commercial real estate assets from 8 different metropolitan areas, with approximately $31.5 million committed as of March 31, 2016.
  • 2nd Quarter 2016. 10% annualized dividend announced, to be paid mid-July. Portfolio now includes 15 assets totaling roughly $47.25M in committed capital.

Screenshot from my account:


I think the Fundrise Income eREIT is an interesting concept. There may be a waitlist to join, but they do work through it. I am simply sharing my own results, not making an investment recommendation as I don’t know your situation. This is a higher-risk, speculative investment.

Real Estate Crowdfunding Experiment #3: Apartment 6-Plex in Wisconsin with RealtyShares


Here are details of my 3rd real estate crowdfunding investment, a $2,000 loan for a 6-unit apartment complex in Milwaukee, Wisconsin. This follows my $5,000 Patch of Land loan in a single-family house in California, and a $2,000 Fundrise Income eREIT investment into their diversified basket of commercial properties. Here are the quick stats:

  • Site: RealtyShares
  • Property: 6-unit, 6,490 sf multifamily in Milwaukee, WI.
  • Interest rate: 9% APR, paid monthly.
  • Amount invested: $2,000.
  • Term: 12 months, with 6-month extension option.
  • Total loan amount is $168,000. Purchase price is $220,000 (LTC 76%). Estimated after-repair value is $260,000. Broker Opinion of Value is $238,000.
  • Loan is secured by the property, in the first position. Also have personal guarantee from borrower.
  • Stated goal is to rehab, stabilize, and then either sell or refinance.

Property details. I chose this property because it is different from my other past “experiments”. I have never lived in or visited Milwaukee, Wisconsin. Where I live, parking spaces have sold for more than this apartment complex. As a result, I have never invested in an apartment complex. Also, reading through the other properties in the developer’s portfolio, I suspect the goal is to eventually refinance and then keep these as cashflow rentals. All units are 2 bed/1 bath, currently fully rented for ~$600 a month each. I don’t know the net operating income numbers, but this place earns roughly $43,000 in gross annual rents with a purchase price of $220,000. Annual property taxes are $3,000 a year. Even if half of the rent is spent on expenses, that is still a cap rate of 10%.

realtyshareslogoExperience so far. At least for this investment, it was not “pre-funded” by RealtyShares before the “crowd-funding” takes over. That means you have to wait until they secure enough committed money before the deal can go forward.

My timeline… I committed to this loan in December 2015 and $2,000 was debited from my Ally bank account on 12/29/15. However, the funding goal was not reached until 1/13, during which I earned no interest during this two-week period. I was then told the following:

We are writing to inform you that we have received all investor funds as of today, January 13, 2016, for the 135 E Keefe Avenue investment. You should expect to receive your first monthly payment by February 15th and this will cover the period from 1/13/16 to 2/10/16.

My first monthly interest payment did not arrive until another two weeks later on 3/3. My subsequent interest payments were posted on schedule on 3/17, 4/18, and 5/15. Due to the fact that there was no pre-funding to get the ball started early, there was essentially 3 month period between the time where they first took my money and I received my first interest check. Other than the interest payments, I have received no property updates since January, although I don’t necessarily expect any at this point.

As I’ve said before, this is an experiment, not necessarily a recommendation. I am learning that although I do like loans backed by hard assets, you do need a lot of patience with these sort of investments.

Some account screenshots:




Infographic: New York City Median Rent vs. Subway Stop

rh_nycsignWe all know that the longer the commute from where everyone works, the lower the rent. In many cities during the housing boom, the saying went “just keep driving until you can afford something”. But what if the relationship between commute time and rental price wasn’t steady? What if a few minutes of extra commute time would save you several hundred dollars a month?

There are indeed some great relative values in New York City, according to the results of a study by apartment listing site Renthop, via This Is New York. Here are the median rents for one-bedroom apartments nearest every subway stop in New York City:


Highlights from their analysis:

The extra few blocks from 66th St to 72nd St could save you $845 per month. Granted you might really like the Lincoln Center area, but that’s enough extra dough for a trip or two to the NY Philharmonic, the Met Opera, or even dinner at Jean-Georges.

A good rule of thumb is that each stop is about two minutes apart (except express stops and when crossing a bridge), assuming there’s no “debris on the track” or “train traffic ahead”. Consider this when calculating what your time and commute is worth to you. An extra stop on the J/M/Z train past Marcy Ave will save you about $175, and each subsequent stop saves another $100 or more. The same holds true heading into Queens.

Someone should make a similar graphic for all the of the major cities with high usage of public transportation: Washington DC, Boston, San Francisco Bay Area, Chicago, and Philadelphia. From Wikipedia:


Mortgages, Imputed Rent, and Early Retirement

mcman286In a Quora question What do economists think about buying vs renting a house?, in addition to the previously-mentioned answer by Alex Tabarrok of Marginal Revolution, there was another well-ranked answer by Erik Brynjolfsson, professor at MIT Sloan. One of his three points was about the value of imputed rent (read the other ones as well):

Second, there’s a huge tax benefit to housing which comes from the hidden “dividend” it pays. I’m not talking (just) about the (too) generous mortgage deduction, but rather the fact that you don’t have to pay taxes on the implicit rent you earn on your house since its paid to yourself. A house generates enormous rental value each month — like a dividend. If you rent it to yourself, you take the money out of one pocket and pay it to the other one, and the IRS doesn’t tax that. In contrast, if you earn money some other way and then use that money to pay rent, you probably also have to pay taxes. That can add up.

From the Wikipedia entry on imputed rent:

Consider a model: two people, A and B, each of whom owns property. If A lives in B’s property, and B lives in A’s, two financial transactions take place: each pays rent to the other. But if A and B are both owner-occupiers, no money changes hands even though the same economic relationships exists; there are still two owners and two occupiers, but the transactions between them no longer go through the market. The amount that would have changed hands had the owner and occupier been different persons is called the imputed rent.

In other words, as a homeowner you could be considered both the landlord and the renter. Let’s say you would rent your house for $1,600 a month. If you were in the 25% marginal tax bracket, you have to earn $2,133 a month pre-tax to cover that rent (and pay $533 in income tax).

As part of my “rough model” of early retirement, I recommend setting your mortgage payoff date to coincide with your retirement date (for those that choose to buy a home). Part of the reason for that is that you won’t have to generate that extra income to pay your mortgage anymore. This could lower your marginal tax bracket into the next lower bracket, and also the tax rate on your capital gains.

For example, $1,600 in monthly rent equates to nearly $20,000 a year in after-tax expense, or nearly $26,000 in gross income at the 25% tax bracket. Here are the 2016 federal income tax rates (source):


Ideally, I would target my household expenses to stay in the 15% tax bracket for married joint filers in retirement. Being able to reduce my taxable income by over $25,000 would definitely help someone stay in the 15% tax bracket range. Also, if you are the in 15% ordinary income tax bracket, your tax rate on qualified dividends and long-term capital gains becomes zero!

Now, the idea of imputed income could be extended further. When I cook at home, I save the money from eating out an Applebee’s. Let’s say a dinner out costs $40 for the family. To reach $40 after-tax, I’d have to generate $53 of income at a 25% tax rate. Same with childcare, housekeeping, laundry, yard maintenance, etc. But housing is an area with significant impact, usually the biggest item in a household budget.

Mortgage Rates at 3-Year Lows: Refinance Check Time Again?

Mortgage rates for 30-year fixed loans are at the lowest level in three years, according to this Bloomberg article:

The average rate for a 30-year fixed mortgage was 3.58 percent, down from from 3.59 percent last week and the lowest since May 2013, Freddie Mac said in a statement Thursday. The average 15-year rate slipped to 2.86 percent from 2.88 percent, the McLean, Virginia-based mortgage-finance company said.

This is visually confirmed by this historical rate chart from


Depending on your area, your home value may also have increased over this time period. Combine these two, and it may be a good time to check if a mortgage refinance can save you some big bucks over the term of your loan. You may lower your interest rate, shorten your term into a 15-year mortgage, and/or get rid of private mortgage insurance.

Comparison shopping mortgage rates. There’s average, and then there is what is actually being quoted for people in your situation. The Consumer Finance Protection Bureau (CFPB) has a nice Owning a Home resource page including a new rate data tool that takes into account your credit score, state of residence, house price, and down payment size to see what other interest rates people are getting. I like they show an actual distribution of rates and the number of lenders offering that rate:


You can try the big networks like and Quicken Loans, or you can ask around for a referral to a reputable local broker. The CFPB recommends that you get quotes from three or more lenders. You should get an standardized 3-page form called a “Loan Estimate”. That way you can compare and even negotiate one off the other.

Get quotes from three or more lenders so you can see how they compare. Rates often change from when you first talk to a lender and when you submit your mortgage application, so don’t make a final decision before comparing official Loan Estimates.

Depending on your situation, you may face a lot of paperwork during the mortgage approval process. But hopefully the money saved will be worth it.

Think mortgage rates might go even lower? I don’t recommend playing such guessing games, but you could keep an eye on 10-year Treasury rates. Here’s an interesting chart comparing the 10-year Treasury yield and 30-year mortgage rates from Calculated Risk:


Real Estate Crowdfunding Experiment #1: Patch of Land Final Update


pol_final0My first investment into real estate crowdfunding has completed. In April 2015, I invested $5,000 into a fix-and-flip loan at the site Patch of Land. There are more details in my initial update, but here’s a quick recap of the loan details:

  • Single-family home in West Sacramento, California
  • Loan secured by property, in the first position. Backed by personal guarantee from borrower.
  • 6-month expected term (roughly April 15th to October 15th). Fix-and-flip.
  • Loan-to-value is 75% per independent 3rd-party appraisal.
  • 11% APR interest, paid monthly.
  • $5,000 invested.

Here are the initial and final numbers on the property itself:

  • Developer Purchase Price: $155,000
  • Estimated Remodel Costs: $55,000
  • Developer Contribution $31,000 + closing costs + origination fee
  • Developer Loan Request: $179,000
  • Independent 3rd-party After-Repair-Value: $238,000
  • LTV based on Independent ARV: 75%
  • Developer estimated selling price: $275,000 to $300,000
  • Actual selling price: $300,000


Here are the final numbers for my partial investment:

  • 4/20/15 – $5,000 invested.
  • Proceeded to collect $45.83 of interest on the 15th of every month (pro-rated on partial months).
  • 9/23/15. Loan extension granted.
  • Kept collecting $45.83 of interest on the 15th of every month (pro-rated on partial months).
  • 3/15/16. Notified that house in under contract for $300,000.
  • 3/30/16. Loan was paid in full.

The loan term was supposed to be for 6-months (one of the main reasons I chose it) but the process took longer than expected and the total loan period ended up being nearly 12 months. My total interest payments were $517.91. I also received an additional $75 fee for the loan extension. I thus received a total of $5592.91 over 346 days, for an annualized return of 12.5%. Without the extra $75 penalty fee, my interest payments would be right at the promised 11% APR.

Takeaways from the process:

  • Be patient but decisive when selecting your investment. You should be comfortable with the local market situation as well as the numbers like loan-to-value ratio. You should know what you want, ignore anything that doesn’t fit your criteria, and act quickly when you see something that does. This is really the only part of the process where you have control, so use it wisely.
  • Understand the contract. Just because there is a “6-month expected term” doesn’t mean you’ll get your money back in 6 months. You should read the terms carefully to see what options are available to the borrower if they can’t make that date. Is an extension automatically granted? Is there an increased interest rate? How long does the extension last?
  • Liquidity and more patience. One of the defining features of this type of investment is that it is highly illiquid. If I buy a mutual fund, I can sell the entire thing and get fair market value as cash in my bank account in a few business days. With an investment like this, the borrower could pay it back early, take their sweet time, or even default entirely and they’d have to liquidate the home before I get my principal back. That could take another several months. You should not need this money any time soon.
  • Low-maintenance. The good part of having no control is that you don’t have to do anything. I just sat back and had the interest automatically swept to my bank account each month. I received a simply 1099-INT for the interest earned through this loan, and it was quite easy to deal with at tax time.
  • Updates. I did not receive constant updates on this loan, but I think the updates were adequate. I was given a couple of photos on the remodel progress and updates on loan extension, house listing, house listing changes, and house being under contract. You do not have any two-way contact with the developer.

I will admit that I was nervous for a little bit on this house. I could track the house listing on real estate sites like Zillow and I questioned some of the cosmetic choices that the developer made, including painting the house an gunmetal-grey stucco. I also questioned the high listing price of $325,000, which I thought they’d never get and would scare off potential buyers. It all ended well as the house was repainted into a neutral beige and the developer agreed to sell at a good price.

Will I invest again? Well, I can’t help but be satisfied with my 12%+ annualized return, but things could also have dragged out a lot longer. I will probably invest again, but at a different real estate site, if only to see how they might handle things differently. I’m in it to make money, but I’m also in it to learn as this is my “experimental money” fund (even Burton Malkiel and Jack Bogle have such accounts).

Account screenshot:


RealtyShares Sign-Up Bonus Promo Code


Update. RealtyShares has a referral program that offers a new customer who is referred by an existing client a $100 cash bonus after linking a bank account. I am no longer available to provide referrals as I have maxed out the limit, but you may be able to find a referral from existing client elsewhere.

Alternatively, using this link and using the code JONATHANPING25 will get you a free $25 to start.

Be sure to follow the terms and conditions and reply to your bank link confirmation e-mail with the proper promo code:

In order to receive $25 sign up bonus, user must register, connect a bank account, and use the promocode provided in the email they received about the program. Payouts to user will be within 30 days via your linked bank account. RealtyShares reserves the right to stop or modify the referral program at its discretion at any time.

Real Estate Crowdfunding 10-Month Update – Patch of Land

pol_house200Here’s an update on one of my real estate crowdfunding experiments. In mid-April 2015, I invested $5,000 into a loan for a single family fix-and-flip in West Sacramento, California. The loan was supposed to be for 6-months (one of the main reasons I chose it). (More details in my initial update.) Well, the short version is that the fix part happened, but it has now been 10 months and the house is still on the market. The borrower took the option of a month-to-month extension. The loan is still current. Here’s a screenshot and some more thoughts:


Interest received in a timely manner. So far, I’ve been receiving my $45.83 every month ($550 annualized) on my $5,000 initial investment (11% APR). I enabled the option of having my interest automatically swept to my bank account each month. So far, this investment has required zero maintenance.

Read your contract. Just because there is a “6-month expected term” doesn’t mean you’ll get your money back in 6 months. You should read the terms carefully to see what options are available to the borrower if they can’t make that date. Is an extension automatically granted? Is there an increased interest rate? How long does the extension last?

Liquidity, liquidity, liquidity. One of the defining features of this type of investment is that it is highly illiquid. If I buy a mutual fund, I can sell the entire thing and get fair market value as cash in my bank account in a few business days. With an investment like this, the borrower could pay it back early, take their sweet time, or even default entirely and they’d have to liquidate the home before I get my principal back. You must be prepared for all scenarios.

Be happy with your loan-to-value ratio. I personally believe the house is listed for too high a price, but that part is not under my control. What was under my control was choosing to invest only in a loan where I was comfortable with the collateral. For example, they may be asking ~$320,000 but the loan amount was only for $179,000. As I am (one of the folks) in first position lien on the property, the house would need to sell for under $179,000 in net proceeds for me to lose principal.

In other words, have an adequate cushion so that you don’t lose sleep about it at night. It also helps that I’ve already earned 8.6% of my initial investment back over the last 10 months, cash in hand. Finally, I will repeat that this is a speculative investment using “experimental money” that makes up a very small portion of total assets. (Even Burton Malkiel and Jack Bogle have such “funny money” accounts.)

Tax documents. I received a 1099-INT for the interest earned through this loan. The 2015 form was made available in a timely manner on January 27, 2016. As such, it should be rather easy to add this in at tax time.

Behavioral Economics on Bigger House vs. Shorter Commute

mcman286Inside a post about what economists think about buying vs. renting a house, Alex Tabarrok of Marginal Revolution ended with a nice sentence that I think applies to both buying and renting:

One final point: behavioral economics tells us that we quickly get used to big houses but we never get used to commuting. So when you have a choice, go for the smaller house closer to work.

In general, our current choice of house is aligned with this advice. We could get a bigger, newer, and/or cheaper house in exchange for a longer commute, but are happy with our size (2,000 square feet) and location (I work primarily from home and my wife’s distance to work is 3.5 miles). Our jobs are relatively stable, however, as jumping to a new job could easily change our commute.

Going for the shorter commute over the bigger house certainly feels like good advice. But what are the behavorial economics studies that support this statement?

First, let’s take the statement we get used to big houses. The overall concept of the hedonic treadmill has been found in a variety of circumstances. Brickman, Coates, and Janoff-Bulman (1978) found that lottery winners and paraplegics eventually returned to their baseline happiness levels over time. That is, both the joy of winning the lottery and the sadness from being paralyzed was not permanent. Per Wikipedia, Lucas, Clark, Georgellis, & Diener (2006) also “ultimately concluded that people completely adapt, return to their baseline level of well-being, after divorce, losing a spouse, birth of a child, and females losing their job.”

However, but I couldn’t find one that studied housing specifically. There’s probably one out there? Perhaps a bigger house can simply be lumped in with other consumer material goods.

Second, if we can get used to being paralyzed or losing a spouse, who says that we don’t get used to commuting? Perhaps this is taken from Stress That Doesn’t Pay: The Commuting Paradox (Stutzer and Frey, 2004). Abstract (emphasis mine):

People spend a lot of time commuting and often find it a burden. According to economics, the burden of commuting is chosen when compensated either on the labor or on the housing market so that individuals’ utility is equalized. However, in a direct test of this strong notion of equilibrium, we find that people with longer commuting time report systematically lower subjective well-being. Additional empirical analyses do not find institutional explanations of the empirical results that commuters systematically incur losses. We discuss several possibilities of an extended model of human behavior able to explain this ‘commuting paradox’.

If you know of more please let me know in the comments.

Big List of Free Consumer Reports (2/2): See Your Confidential Housing, Insurance, & Employment Data

magUpdated and checked for 2016. As these are available only every 12 months, it is a good idea to check them the same time each year.

Here is the second part of my big list of free consumer reports from over 50 different reporting agencies. The first part included your credit, banking, and subprime lending-related information. This part includes your housing, insurance, and employment history. Request your free copy of what these databases have stored about you and are telling prospective landlords, insurers, or employers.

Again, you may not need to check all of these, and many may not even have a file on you anyway. But for example if you are a renter then you’d want to make sure your rental history is clean and correct, because if I was a landlord I’d avoid anyone with previous blemishes on their record.

Rental History

Realpage Consumer Report. Provides tenant screening through their LeasingDesk product, including “the industry’s largest rental payment history database.”

CoreLogic SafeRent. SafeRent provides both tenant and employment screening data, including information regarding landlord tenant and criminal public court records. One free report every 12 months.

Experian RentBureau Rental History Report. “Every 24 hours, Experian RentBureau receives updated rental payment history data from property owners/managers, electronic rent payment services and collection companies and makes that information available immediately to the multifamily industry through our resident screening partners.”

First Advantage Resident History Report. Tenant and employment background checks. One free report every 12 months.

Contemporary Information Corp. CIC provides background checks on prospective tenants and/or employees and contractors for landlords and management companies. Keep records of any rental evictions.

Tenant Data. Provides tenant history reports, including any reported damages, unpaid balances, evictions, lease violations, noise complaints, or unauthorized pets.

Screening Reports, Inc. A national provider of background screening service to the multi-family housing industry.

TransUnion Rental Screening Solutions, Inc. SmartMove provides tenant credit, eviction, and background checks.

  • FAQ page
  • To verify your identity and obtain a copy of your report(s), please contact customer service at 866-775-0961.

Auto and Property Insurance

C.L.U.E. Personal Property Report. A division of LexisNexis, CLUE stands for Comprehensive Loss Underwriting Exchange, which collects information that is used to calculate your insurance premiums. This report provides a seven year history of losses associated with an individual and his/her personal property. Includes date of loss, loss type, and amount paid along with general information such as policy number, claim number and insurance company name. This also means you can find out about previous claims on the house you are currently renting or recently bought, even if they weren’t made by you.

C.L.U.E. Auto Report. This report provides a seven year history of automobile insurance losses associated with an individual. Includes date of loss, loss type, and amount paid along with general information such as policy number, claim number and insurance company name.

Verisk Analytics aka ISO aka A-PLUS Loss History Reports. ISO stands for Insurance Services Office, A-PLUS stands for Automated Property Loss Underwriting System. Auto and property loss claim history.

Insurance Information Exchange (now owned by Verisk). Provide reports including your motor vehicle records and driver history, including any traffic violations or related criminal history. May require proof of adverse action to obtain free report.


National Consumer Telecom and Utilities Exchange. NCTUE is a “membership of companies that provide services (telecommunication, pay TV, and utilities) […] to aid in risk mitigation.” Basically they track when people don’t pay their phone, cable, or utility bills. One free report every 12 months.

Medical History

MIB (previously known as Medical Information Bureau). Run by 470 insurance companies with a “primary mission of detecting and deterring fraud that may occur in the course of obtaining life, health, disability income, critical illness, and long-term care insurance.” They record information of “underwriting significance” like medical conditions or hazardous activities. If you have not applied for individually underwritten life, health, or disability income insurance during the preceding seven year period, then you probably don’t have a record.

Milliman IntelliScript. Tracks your prescription drug purchase history. “Milliman IntelliScript will have prescription information about you only if you authorized the release of your medical records to an insurance company and that company requested that we gather a report on you.”

Employment History

The following companies all offer background screening services for employers. Most will not have any information about you unless you authorized a potential employer to run a background check on you (probably during the application process). Some will not provide you information unless there was adverse action. Otherwise, you can get one free copy every 12 months.

The Work Number. (division of Equifax) They also keep historical income records.

Accurate Background, Inc.

American Databank, LLC.


General Information Services.


Info Cubic.



Professional Screening & Information, Inc.

SterlingBackcheck (formerly Sterling Infosystems)

Trak-1 Technology.

Reminder: Also see Part 1: Big List of Free Consumer Reports with Your Credit, Banking, and Payday Lending Data.

Sources:,,, Wikipedia