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retirement home purchase strategy
Posted on 6/10/19 at 2:22 pm
Posted on 6/10/19 at 2:22 pm
I am planning on retiring in florida in approximately 30 years. My current home will be paid off in approximately 14 years. I am currently wrestling with 3 options for the retirement home purchase:
1) purchase it today and lock in a low interest rate
- I am confident i could rent it out or vrbo it in order to pay mortgage/taxes/insurance/maintenance and come out with positive cash flow
- my wife currently stays at home with children and could manage it online and hire an outfit for maintenance
2) wait until my current home is paid off then purchase the florida home
-I am making more money at this time and can afford more house & can still rent out until I retire. probably not as good cashflow from renting out more expensive home
3) wait until I retire to purchase
I am struggling to find a reason not to purchase it now. what do y'all think?
1) purchase it today and lock in a low interest rate
- I am confident i could rent it out or vrbo it in order to pay mortgage/taxes/insurance/maintenance and come out with positive cash flow
- my wife currently stays at home with children and could manage it online and hire an outfit for maintenance
2) wait until my current home is paid off then purchase the florida home
-I am making more money at this time and can afford more house & can still rent out until I retire. probably not as good cashflow from renting out more expensive home
3) wait until I retire to purchase
I am struggling to find a reason not to purchase it now. what do y'all think?
This post was edited on 6/10/19 at 2:24 pm
10
Posted on 6/10/19 at 2:27 pm to 3morereps
A lot can happen in 30 years.
If you buy it now, how do you know you will still want that exact house when you retire.
Trying to manage a home/rental/repairs from out of state is a PITA.
If you buy it now, how do you know you will still want that exact house when you retire.
Trying to manage a home/rental/repairs from out of state is a PITA.
Posted on 6/10/19 at 2:51 pm to 3morereps
(no message)
This post was edited on 12/21/21 at 1:14 pm
Posted on 6/10/19 at 2:53 pm to 3morereps
quote:
I am planning on retiring in florida in approximately 30 years.
The best laid plans of mice and men...
Posted on 6/10/19 at 2:56 pm to XanderCrews
quote:
I feel like you are playing interest rate games when you would probably just pay cash.
to be honest, even if i could stroke a check for a house, I would still finance it- especially at sub 4% rates. i just wouldn't be comfortable missing out on that opportunity cost.
Posted on 6/10/19 at 2:56 pm to slinger1317
I'm planning to buy a condo at the beach soon, then a house at the beach. I can use both for rental income if I don't use them
This post was edited on 6/11/19 at 9:09 pm
Posted on 6/10/19 at 3:39 pm to MontyFranklyn
Baller
Posted on 6/10/19 at 3:44 pm to jimbeam
frick no. As I grow my business I will bring home more money. The plan is to net $20k/mo., by 2024. All debts will be paid off so we are willing to allocate $10k three mortgages
This post was edited on 6/10/19 at 3:49 pm
Posted on 6/10/19 at 4:02 pm to 3morereps
So the house will, at a minimum, be 30 years old when you move in? No thanks.
Buying your retirement house 30 years in advance is a horrible idea.
Buying your retirement house 30 years in advance is a horrible idea.
Posted on 6/10/19 at 4:23 pm to Disgeaux Bob
One could always sell original retirement home and purchase another or keep it for cash flow and buy another one
Posted on 6/10/19 at 4:45 pm to 3morereps
Op do you have a specific area in mind? If its somewhere that you are from or your wife is from or you have experience with, sure this isn't a bad idea. Its not a great idea though either.
Neighborhoods and areas change for one.
Also, you need to consider that just because you can buy a house with low interest the chances of buying a house you want to live in in 20 years is pretty slim. Furthermore, are you buying at the market rate or below market somehow like a foreclosure? Because even with the low interest rates good luck paying your mortgage and not losing money by renting out a house bought at full retail value right now.
Neighborhoods and areas change for one.
Also, you need to consider that just because you can buy a house with low interest the chances of buying a house you want to live in in 20 years is pretty slim. Furthermore, are you buying at the market rate or below market somehow like a foreclosure? Because even with the low interest rates good luck paying your mortgage and not losing money by renting out a house bought at full retail value right now.
Posted on 6/11/19 at 5:45 am to 3morereps
I retire in just over five but gonna hold off and see where I actually end up retiring. Always planned on Texas but lately been looking at East Tennessee.
30 years is a long dam time.
30 years is a long dam time.
Posted on 6/11/19 at 6:37 am to 3morereps
I wouldn't do it now just because you never know what life will be like in 30 years, might not want to live in Florida at all. I think that's too far out to make that kind of decision.
Posted on 6/11/19 at 8:31 am to XanderCrews
quote:
I would:
retire
sell house
take house sale money
buy retirement house
I feel like you are playing interest rate games when you would probably just pay cash.
All of this. I have been looking at fractional options (see my other thread), but even that is a big gamble and likely not worth the time or investment. I *plan* to retire at 55, at which point we will probably have already sold our current home and moved into my in-laws' place and will then sell it. With the money from both homes, we shouldn't have an issue buying a nice place at the beach. The only question then is how much of those proceeds do we put into the "view" and how much do we keep liquid.
Posted on 6/11/19 at 11:20 am to 3morereps
30 years is a long time, and I promise you that life will happen and the best laid plans will change. If you want to buy it now, evaluate the purchase as an investment, not a retirement home. If it looks good as an investment, go for it. If it works out for you, it will be more than paid for, and you can decide to retire there or sell it and move on.
Posted on 6/11/19 at 11:42 am to 3morereps
quote:
I am struggling to find a reason not to purchase it now. what do y'all think?
This is the worst choice, IMHO. 30 years is an eternity in the life cycle of FL towns. Some go boom and bust in a mere 20 years. Once thriving areas can be decimated by a population shift due to economic downturn, changes in area industry/employment, because of hurricane/natural disaster impact, shifts in transportation infrastructure....just to mention a few.
30 years ago, Perdido Key, FL had barely any high-rise buildings....today, there are dozens. Some of the Tampa-area suburbs still haven't recovered from the housing bubble, with vacant houses scattered among occupied ones.
Unless you have a crystal ball, I wouldn't be buying a retirement home today for use in 30 years:
1)you or spouse may need special accommodations by then, whether a single story house or wheelchair access. (yes, aging related decline happens, whether we pretend that it won't or not.)
2)you may have grandchildren or other family interests that live far, far from FL & you'll want to be nearer to them
3)you may experience any of thousands of life circumstances that lead to NOT retiring in FL.
4)you realize that renting might be a better choice for you than owning in retirement (maintenance, flexibility, etc)
Seriously, trying to plan a RE purchase 30 years in advance strikes me as tempting fate. There will still be plenty of houses in 30 years. Why not just start an investment account & squirrel away the cash you'd be spending on a mortgage so that you can buy a retirement place in 30 years?
Posted on 6/11/19 at 6:04 pm to 3morereps
Damn , not to be disrespectful, but I can’t imagine attempting to have that much CONTROL over something 30 years down the road. That sounds absolutely oppressive. I get stressed if I think I know what’s for lunch tomorrow. Ya gotta leave room for life to happen, for freedom and chance, for just a little serendipity. But hey, you do you.
Posted on 6/11/19 at 6:09 pm to 3morereps
quote:
One could always sell original retirement home and purchase another or keep it for cash flow and buy another one
Then just call it an investment property, not a 30 year out retirement home.
Posted on 6/11/19 at 6:14 pm to 3morereps
quote:
to be honest, even if i could stroke a check for a house, I would still finance it- especially at sub 4% rates.
One thing to keep in mind that it can be hard to get a mortgage in retirement. Unless you have several years of social security payments/pension and RMD withdrawals that are high enough you won't get a mortgage. It doesn't matter if you have assets to buy 10 houses in cash.
This happened to my parents when they moved to be closer to me a couple years ago. My parents wanted a mortgage so they could be more flexible with their money and choose when to pay it off. However, since they were only taking out minimum RMDs they didn't qualify. So they had to buy the house in cash.
This post was edited on 6/11/19 at 6:15 pm
Posted on 6/14/19 at 11:08 pm to 3morereps
1) wait to buy your retirement home.
Or
2) buy land in florida. No depreciation of the asset (homes depreciate. Land doesnt). Sell the land to buy the retirement home.
Or
2) buy land in florida. No depreciation of the asset (homes depreciate. Land doesnt). Sell the land to buy the retirement home.
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