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Old 06-23-2018, 09:19 AM
 
119 posts, read 58,496 times
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Mrs. EDJ and I are sold on a retirement-type community in the SouthEast. We currently live on the West Coast, some 2,000 miles away. We have significant equity in our current home, about 66%, in a rather perpetually hot housing market.

Our CPA / Fee-Only financial advisor stated we do not have enough income to borrow on that equity in order to purchase the forever-home, which would be about 3/4 the market value of our current home (yes, we could buy the forever-home in cash when the current home sells). The forever-home retirement-type community is a slow-growth economic area, which includes the real estate market.

When the current home sells, we will have enough cash to purchase the forever home outright and have enough left over to pocket about 25% of the forever-home's market price.

So, it appears our options are two fold, either:

1. Leverage current equity and buy a non-forever-home cash that would cost approximately 1/3 of our current equity. This would be in the community we will end up in with the forever-home when we find it. We could live in it after we sell the current home, and not be rushed finding the forever-home. Plus, it could be rented out when we move into the forever-home. Additionally, we could always move back to it and sell the forever-home should we need or wish to down-size as we age, and use the proceeds from the forever-home to further fund our future medical and age-in-place needs until we pass away. Preferably quickly in the night a long time from now;

or,

2. Rent a home there, and then find the forever-home. Renting would have to be open-ended, we do not want to be rushed into finding the forever-home. We want it to be "right." After we do find it and move in, we will have no other house as an asset or rental income stream, and we will be out the rental monies we paid.

What do you learned and insightful folks think of these options, or are there options we have yet to consider?

Thanks
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Old 06-23-2018, 09:52 AM
 
Location: midvalley Oregon and Eastside seattle area
2,952 posts, read 1,358,422 times
Reputation: 2444
We bought first using funds from Roth, IRAs, and emergency fund. Then rented out the new place at a cash flow loss, But recovered some of the loss from tax depreciation. This month, closed on our longtime home of 36 years and moved wife into new home/new state. We will put the sold home's proceeds into extinguishing the mortgage of new place. I remain in old location as a parental caregiver. Both locations are in popular areas. I made sure that we had ready funds for a purchase and wife did do her due diligence in property/home research. Once the big decisions were made, things moved fairly quickly. Prepared the downpayment money in late fall, 2016. Bought in fall 2017 after extensive search (seattle region). Waited to Spring 2018 to sell at attractive pricing, downsized for 1+ years.
No idea on "best"

Last edited by leastprime; 06-23-2018 at 10:01 AM..
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Old 06-23-2018, 10:26 AM
 
Location: The Triad (NC)
26,879 posts, read 57,977,821 times
Reputation: 29317
Quote:
Originally Posted by ElDiabloJoe View Post
Mrs. EDJ and I are sold on a retirement-type community in the SouthEast.
We currently live on the West Coast, some 2,000 miles away.
1) Don't buy anything else before the CA house is sold and you KNOW what your net is.
2) Don't volunteer to be a long distance accidental landlord.
3) Don't buy in the SE until you've been in the SE for at least two summers.
---
SELL the CA property. As soon as practical for the best price you can get...
then move on unencumbered to Florida etc... where you'll rent for a while.

Stash the net proceeds from the sale somewhere safe and out of mind (CD's; T-bills; etc).
When (if) you're sure you made the right set of choices with the cross country move...
then look into buying there (if that still seems appealing and your CPA agrees)

If not... keep renting and maybe somewhere else altogether.
And probably adding the sale proceeds money to your portfolio at this later point.
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Old 06-23-2018, 10:27 AM
 
Location: Cary, NC
31,648 posts, read 55,388,070 times
Reputation: 30194
I have done #2 twice.
I would do it again without hesitation.
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Old 06-23-2018, 12:39 PM
 
Location: The Triad (NC)
26,879 posts, read 57,977,821 times
Reputation: 29317
Quote:
Originally Posted by MikeJaquish View Post
I have done #2 twice.
I would do it again without hesitation.
Gig effin deal.


You're a real estate professional.
You know better than to equate what YOU might be able to do with anyone who isn't.
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Old 06-23-2018, 12:49 PM
 
Location: Cary, NC
31,648 posts, read 55,388,070 times
Reputation: 30194
Quote:
Originally Posted by MrRational View Post
Gig effin deal.


You're a real estate professional.
You know better than to equate what YOU might be able to do with anyone who isn't.
And, you are, or claim to be, what?

Both transactions were before I was licensed.
I made no recommendation.
And, who is to tell the OP what is "best." I wouldn't.
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Old 06-23-2018, 01:00 PM
 
2,393 posts, read 4,869,835 times
Reputation: 4519
You're moving across country anyway. Sell the house, have your stuff put into storage by the moving company, and live in an extended stay hotel while you buy your house. Very likely to cost less than the overhead of moving twice and a lease not aligned with your closing date.
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Old 06-23-2018, 03:10 PM
 
Location: Loudon, TN
4,923 posts, read 4,230,895 times
Reputation: 16370
EDJ, We sold our home in northern CA and rented a house in Tellico Village for 6 months while we shopped for a home to buy here. While we waited we stored our stuff in PODS until we bought the new home 4 months later. We asked our LL to let us out of our lease if she could re-rent the house before the 6 months was up, so we ended up paying about 3 weeks rent after we moved to the home we bought. I highly recommend renting here for at least 6 months. Anytime you move to an entirely new area buying right out of the gate is risky, especially with the somewhat slow market here. We had a neighborly lady (single) who bought and she ended up moving less than 6 months later, because she felt that it was too couples oriented for her liking. It has taken her a year to sell the house (it's got issues), so she's paying the mortgage while living elsewhere.

Rent first!
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Old 06-23-2018, 07:27 PM
 
Location: Denver CO
19,053 posts, read 10,086,762 times
Reputation: 27889
Have you talked to a mortgage broker? I'm not sure that I would rely on a CPA/financial planner as the sole source on what loans may be available to you. Now, it's possible he or she was saying it might not be a prudent financial choice, which of course would be their area of expertise, but that's different than saying you can't get a loan if you decided that was what you wanted to do.

But I still think that particularly if you have never lived in the Southeast, it makes more sense to plan on renting for a year or two, to make sure you really do like living there. Even if you've visited, that's not the same as living there full time. Just budget that you may have to pay a couple of months for an early termination fee on a lease and make sure to have a clause allowing for that in any lease you sign. You may be able to time things to work out but that gives you the flexibility that once you've decided for sure that's the right location, you can go ahead and buy at any time you find the right house.
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Old 06-24-2018, 07:19 AM
 
Location: Raleigh
7,036 posts, read 5,215,367 times
Reputation: 9503
Quote:
Originally Posted by MrRational View Post
Gig effin deal.


You're a real estate professional.
You know better than to equate what YOU might be able to do with anyone who isn't.
Itís hardly risky advice and it has a lot going for it.
While they are out the rent, that money paid in rent allows them to negotiate the sale of their old home without being under the gun to close the deal, and allows them to search for a new home at their leisure and allows less them to be picky at the new place.
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