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Last year we began saving for a down payment for more real estate, with the intention of turning our current primary residence into our first rental. Last fall I met with a real estate agent and I discussed with her what we were looking for either here in our neighborhood, or elsewhere. The conversation stalled after I realized that, ultimately (after reading several books on real estate investing), we aren't interested in "elsewhere" (or becoming serious real estate investors). Then the issue became that our current neighborhood is expensive and I didn't want us to take on a ridiculous size mortgage, even if we could qualify for one.
We are still steadily increasing our down payment each month and in addition, my father-in-law is once again gifting us a substantial amount of cash (early inheritance) to go towards our next real estate purchase. Combined with a couple more years of savings (CDs and high yield savings accounts), we could manage a reasonable mortgage in our neighborhood by 2021-2022. At that time one kid will be going into high school and another one will be about to leave it.
Alternatively we could lock everything into CDs until after the second one graduates in 2025 and we could buy a nice water front condo in a smaller city that my husband and I greatly enjoy visiting. We've been talking about the possibility for years and are further incentivized by the fact that there is a decent university there too... our kids could transfer from community college to there and continue to live at home... It would be more expensive, but we would have 5-6 years to save for it. In the end the mortgage would probably be the same amount, we'd just have a huge down payment....
It's really hard to determine which route to take and I know we don't have to decide right now, but determining that would help us know which savings vehicle is most appropriate.
I'm sort of leaning to buying a condo here in 2021. It feels like the "right" path, and I think my hesitancy comes from the fact that 2021 is not that far away. My hesitancy comes from change and doing something new and living somewhere new. And having new debt.
But I'm not sure I'll feel any better in 2025 because in general I'm not comfortable with change.
For those of you that have transitioned to empty-nester/middle age.. what sort of clues helped you figure out your next phase?
lol, I think it's always going to be very fluid flying.
So my last "minion" graduated this year from college and he and my middle son are looking for apartments.
Now some things are easy. right now I live in a 4 story townhome with a ton of stairs. I've already had my left knee replaced and my right is going. bottom line this is not a house I can age in. but I love my neck of the woods. I'm a city gal, I live where I can walk to just about every thing I need. the only constant in my plans is owning a beach house.
right now I've got about 1 year until I retire fully, so I'm at the end of my 'savings" phase of life.
I too am considering purchasing a rental investment property. unfortunately it's just me so I've got to live with any decision.
I don't view "hesitancy" as a bad thing, these are major transitions we are trying to wade through, so my only advice is to take your time in making them.
lol, sorry I know that wasn't very helpful, just wanted you to know I'm right there with you in that 'boat"
Test the rental market where you are buying. See what is advertised in the area and if you could make a profit with those rents. See how long properties have been vacant. Maybe place and add and see how many responses you get.
It seems like housing shifts often coincide with life's stages: "starter home, family home, empty nest, retirement home, later-life downsizing, etc.." Beyond the first two, I don't recall financially planning for any of them (since the latter generally involve reducing one's financial commitment to housing anyway).
Having said that, we did move to the oceanfront condos in our empty nest/retirement phase, which entailed a greater financial commitment. But, even then, we hadn't really saved or planned for upscale condo life. It became more a matter of working to pay-off whatever housing we had (which we have done for about the last 15-years.
Test the rental market where you are buying. See what is advertised in the area and if you could make a profit with those rents. See how long properties have been vacant. Maybe place and add and see how many responses you get.
It's a very healthy rental market.. highly rated schools, great amenities, reasonable commute to big employers (Microsoft, Amazon, Boeing, Starbucks, Costco). I've had people approach me, having heard from rumors that we *might* move and ask when and how much. One time we were planning on moving overseas and I had only told clients and a few other neighbors since it was still a precarious situation but I had three families ask to rent our condo anyway.
Also we were fortunate to buy low and pay off the mortgage really quickly. Now the condo is worth twice as much as we paid. Our profit, after taxes and HOA, stands to be at least $1000 a month. This is a conservative estimation.
I don't think we'll get as lucky with this second property, but we have other reasons for purchasing it (small business operating on the first floor... the units were specifically built for this purpose...). Eventually it will become a 2nd rental, but I can imagine having 7-10 years using it as a primary residence. At that point the mortgage will have been paid off as well.
We want to get to our 50's with several streams of income in addition to what we have in our investment portfolio.
..with the intention of turning our current primary residence into our first rental.
There are VERY FEW homeowners who will do well putting the property chosen and bought to be their own home into service as a rental. Maybe your property is the exception and for your sake I hope it is but look hard at the numbers before committing.
There are VERY FEW homeowners who will do well putting the property chosen and bought to be their own home into service as a rental. Maybe your property is the exception and for your sake I hope it is but look hard at the numbers before committing.
The neighborhood and exurb are exceptional, not any one particular condo. Condominiums are, by nature, standardized and unexceptional.
It's amazing what people (including ourselves) will pay to be walking distance to top rated schools.
Also, we don't love any of these properties... What we really want is an oceanfront condo or a cabin in the woods. I would take a remodeled early 20th century Tudor or Arts and Crafts bungalow in the city.
My DH is retired from the NPS as LE - early retirement - after getting his Real Estate Licence he figured out that is more profitable to own properties then selling them. With a move for me 1 1/2 hours away to Flagstaff AZ in 2016 we bought a small 1 bedroom Condo near the University (and my office). Our daughter was in the dorm at first, but 2nd year she moved in with me into the Condo. 2nd daughter said she was moving out as soon as she turned 18 - DH said - why am I sitting here in this 2000 sq'ft house by myself? In 2017 we bought a 1399 Sq' ft Townhome with 2 car garage in Flagstaff and turned it into our Primary residence using my VA benefits. We immediately turned the Condo into a rental and are bringing in $300 above the Mortgage. In December 2017 when 2nd Dau moved out - we placed our prior Primary home as a Rental bringing $300 above the Mortgage. In June of 2018 I moved to SE TX - for a job promotion. College daughter graduated from NAU (in 3 years) with a degree in Microbiology and recently moved to WA for work. DH turned our Townhome into a Rental bringing in $300 above the Mortgage on August 1. He is now splitting his time between his Mother in Phx and a Church Camp in Prescott where he is President of the Board of Directors and instrumental in getting a new Septic system in. We are selling the prior Primary house in the Spring - the tenants will be out in January - we have a lots of equity in that house. We are buying a home in SE TX (hopefully closing 8/27) - and he is U-Hauling out all our possessions between then and the next month or two or 3.
The two Flagstaff properties are under a Property Management Company, charging us 8% as we have multiple properties with them. DH will manage another Prescott Valley rental we have (shared with his mother) - that our 18 YO daughter is now living in with roommates. He is keeping his RE license in AZ - put 2 rentals in Phx under Property Management (I think). Once the Septic is done, and PV house is sold - DH will move to SE TX with me. Empty Nesters - He will get his TX Brokers license and will continue traveling every 6-8 weeks back to AZ to check on rentals and see his Mom (in her 80's) we have found that renting out our homes (we lived in PV house 5 years) to be lucrative.
My DH is retired from the NPS as LE - early retirement - after getting his Real Estate Licence he figured out that is more profitable to own properties then selling them. With a move for me 1 1/2 hours away to Flagstaff AZ in 2016 we bought a small 1 bedroom Condo near the University (and my office). Our daughter was in the dorm at first, but 2nd year she moved in with me into the Condo. 2nd daughter said she was moving out as soon as she turned 18 - DH said - why am I sitting here in this 2000 sq'ft house by myself? In 2017 we bought a 1399 Sq' ft Townhome with 2 car garage in Flagstaff and turned it into our Primary residence using my VA benefits. We immediately turned the Condo into a rental and are bringing in $300 above the Mortgage. In December 2017 when 2nd Dau moved out - we placed our prior Primary home as a Rental bringing $300 above the Mortgage. In June of 2018 I moved to SE TX - for a job promotion. College daughter graduated from NAU (in 3 years) with a degree in Microbiology and recently moved to WA for work. DH turned our Townhome into a Rental bringing in $300 above the Mortgage on August 1. He is now splitting his time between his Mother in Phx and a Church Camp in Prescott where he is President of the Board of Directors and instrumental in getting a new Septic system in. We are selling the prior Primary house in the Spring - the tenants will be out in January - we have a lots of equity in that house. We are buying a home in SE TX (hopefully closing 8/27) - and he is U-Hauling out all our possessions between then and the next month or two or 3.
The two Flagstaff properties are under a Property Management Company, charging us 8% as we have multiple properties with them. DH will manage another Prescott Valley rental we have (shared with his mother) - that our 18 YO daughter is now living in with roommates. He is keeping his RE license in AZ - put 2 rentals in Phx under Property Management (I think). Once the Septic is done, and PV house is sold - DH will move to SE TX with me. Empty Nesters - He will get his TX Brokers license and will continue traveling every 6-8 weeks back to AZ to check on rentals and see his Mom (in her 80's) we have found that renting out our homes (we lived in PV house 5 years) to be lucrative.
This is exactly the sort of plan I'd like to follow.
I think the difference is how you view real estate. I'm not hearing you gush about how much you have loved your condos or everything you've done to make each condo your home. Not that, that wouldn't be okay... eventually I'd like to do that... but the less amount of emotion and sentiment the better for using real estate as a financial vehicle.
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