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Old 01-22-2012, 04:06 PM
 
Location: New England
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Anyone? A really bad idea to tie up cash assets in real estate before selling the house lived in now?
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Old 01-22-2012, 04:17 PM
 
Location: Sierra Vista, AZ
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I've done it. Investments these days don't make anything without being risky, The first house is not going below construction cost. I'd rather not be paying interest on a new mortgage
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Old 01-22-2012, 04:22 PM
 
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Quote:
Originally Posted by newenglandgirl View Post
Anyone? A really bad idea to tie up cash assets in real estate before selling the house lived in now?
In addition to tying up cash assets, you also have to consider how long it might take to sell the first house. You'll be paying taxes and maintenance costs (and possibly a mortage) on 2 houses instead of 1. If they're far apart, are you paying someone to mow grass, etc. In a lousy real estate market where it could take a long time to sell, these costs could really add up.
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Old 01-22-2012, 04:30 PM
 
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I would do such if money were not an issue. If buying before selling could possibly create financial problems, then no. Upon retirement, the priority is enjoying the rest of one's life, without depleting financial stability.
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Old 01-22-2012, 04:33 PM
 
Location: New England
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Quote:
Originally Posted by fay111 View Post
In addition to tying up cash assets, you also have to consider how long it might take to sell the first house. You'll be paying taxes and maintenance costs (and possibly a mortage) on 2 houses instead of 1. If they're far apart, are you paying someone to mow grass, etc. In a lousy real estate market where it could take a long time to sell, these costs could really add up.
The retired persons in question (my sis and her husband) have no mortgage on their current house and would be buying their retirement house fairly cheap, in cash. They're solid but not wealthy. So....no mortgage involved. The idea is that they are fearful of selling their current home without knowing where they are going, without having secured their final home first. This would take, I think, about half their cash assets to buy without a mortgage. The hope is that their cash assets would be replaced after selling their current home. I don't know....these days....
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Old 01-22-2012, 04:45 PM
 
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Quote:
Originally Posted by newenglandgirl View Post
The retired persons in question (my sis and her husband) have no mortgage on their current house and would be buying their retirement house fairly cheap, in cash. They're solid but not wealthy. So....no mortgage involved. The idea is that they are fearful of selling their current home without knowing where they are going, without having secured their final home first. This would take, I think, about half their cash assets to buy without a mortgage. The hope is that their cash assets would be replaced after selling their current home. I don't know....these days....
Are they looking for a new area to live in or just a new house in the same area? If a new area, and they're not sure where, I definitely wouldn't sell until they at least figure that out. If they know where they want to be, they could start looking at houses to get an idea of what they want and how readily available it would be. We did that starting a year or two before we moved. Once we picked out the where, we went to a lot of open houses and worked with a realtor (who knew we weren't ready to move yet), so we had a good idea of pricing and what we liked in the area.
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Old 01-22-2012, 06:48 PM
 
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Quote:
Originally Posted by newenglandgirl View Post
The retired persons in question (my sis and her husband) have no mortgage on their current house and would be buying their retirement house fairly cheap, in cash. They're solid but not wealthy. So....no mortgage involved. The idea is that they are fearful of selling their current home without knowing where they are going, without having secured their final home first. This would take, I think, about half their cash assets to buy without a mortgage. The hope is that their cash assets would be replaced after selling their current home. I don't know....these days....
If the second home was going to be a vacation home would there be any question? They would still be living in one at a time maintaining both without a mortgage on either. If they can financially live with both homes and it makes them more at ease with the transition, why not? In fact it gives them the option to move back to the original house if the relocate isn't what they expected. Most folks with 2nd homes retired or not at max can only spend 50% of the time at each house.
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Old 01-22-2012, 07:11 PM
 
Location: New England
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Quote:
Originally Posted by fay111 View Post
Are they looking for a new area to live in or just a new house in the same area? If a new area, and they're not sure where, I definitely wouldn't sell until they at least figure that out. If they know where they want to be, they could start looking at houses to get an idea of what they want and how readily available it would be. We did that starting a year or two before we moved. Once we picked out the where, we went to a lot of open houses and worked with a realtor (who knew we weren't ready to move yet), so we had a good idea of pricing and what we liked in the area.
They do know where they want to move. They want to acquire the place before they sell the current home, so they can lessen their anxiety about moving. They've lived in the same place since they got married (40+ years) so I can understand their anxiety (I myself have moved enough where I wouldn't have it).
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Old 01-22-2012, 07:15 PM
 
Location: New England
12,245 posts, read 8,376,960 times
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Quote:
Originally Posted by TuborgP View Post
If the second home was going to be a vacation home would there be any question? They would still be living in one at a time maintaining both without a mortgage on either. If they can financially live with both homes and it makes them more at ease with the transition, why not? In fact it gives them the option to move back to the original house if the relocate isn't what they expected. Most folks with 2nd homes retired or not at max can only spend 50% of the time at each house.
Well the purchase of the retirement home (not a vacation home) would take up a lot of their cash assets. That's why I'm saying to exercise caution, b/c they could be stuck with the current home sitting on the market a long time. Also if they don't wind up liking the new retirement location (they've never lived anywhere else!), they would suffer capital gains tax on the house if they try to sell before the end of two years there.
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Old 01-22-2012, 07:29 PM
 
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I did this very thing earlier this yr.

My situation was such that I wanted to make a move to the coast asap, after a painful divorce.
Luckily, I owned said home, so I visited the coast, found a place and bought it with cash. Then moved, had the other place cleaned and up on the market.

Yes I had to pay for someone to mow the other home, and for utilities etc. But I had always felt, even in this economy, that it would sell as it was an unusual property with 3 acres.

It sold in 5 months, I now have the money back and looking for a good place for this cash for my future.

So many issues depend on the couple.... oh, I was "told" not to do the above, but I did it anyway and it worked out perfectly. Just a tiny bit risky.






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Originally Posted by newenglandgirl View Post
Anyone? A really bad idea to tie up cash assets in real estate before selling the house lived in now?
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