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Old 06-26-2018, 05:45 PM
 
Location: SLC
912 posts, read 602,537 times
Reputation: 2157

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Indeed. For now, we will wait until we are retired/close to retiring when the move becomes feasible. But - we are indeed keen to keep an eye on it if a buying opportunity arises earlier. The challenge is how to keep ourselves sufficiently informed to be able to find out about a market dip when we are not actively searching in the market.

In a recent discussion, someone questioned why buy. Why not simply rent? It is counter intuitive for someone to stay in a (rather expensive) rental in their retirement, but the counter arguments were:
  • The property in something like SM would obviously be quite expensive. Rent, over something like 20 years, would not add up to the cost of buying and ownership (taxes, insurance, etc.). For someone not needing to leave a legacy (our situation), what’s the point of tying up all that money in the property. Renting might turn out to be cheaper.
  • Given that the property tax could be low for the continuing owner and very substantial jump for the new owner on buying, would one not be able to rent cheaper (comparative to the opportunity cost of money).

Not sure if we’d feel comfortable with that approach but I did think there was an interesting logic to it that I could not refute. It has other advantages- one can move if one is tired of it or things such as rise in the oceanic level etc. becomes a threat, etc. That said, I have little knowledge of the rents - let alone what it might look like over a long period.
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Old 06-26-2018, 06:08 PM
 
Location: San Francisco, CA 94122
247 posts, read 123,462 times
Reputation: 261
Quote:
Originally Posted by kavm View Post
Indeed. For now, we will wait until we are retired/close to retiring when the move becomes feasible. But - we are indeed keen to keep an eye on it if a buying opportunity arises earlier. The challenge is how to keep ourselves sufficiently informed to be able to find out about a market dip when we are not actively searching in the market.

In a recent discussion, someone questioned why buy. Why not simply rent? It is counter intuitive for someone to stay in a (rather expensive) rental in their retirement, but the counter arguments were:
  • The property in something like SM would obviously be quite expensive. Rent, over something like 20 years, would not add up to the cost of buying and ownership (taxes, insurance, etc.). For someone not needing to leave a legacy (our situation), what’s the point of tying up all that money in the property. Renting might turn out to be cheaper.
  • Given that the property tax could be low for the continuing owner and very substantial jump for the new owner on buying, would one not be able to rent cheaper (comparative to the opportunity cost of money).

Not sure if we’d feel comfortable with that approach but I did think there was an interesting logic to it that I could not refute. It has other advantages- one can move if one is tired of it or things such as rise in the oceanic level etc. becomes a threat, etc. That said, I have little knowledge of the rents - let alone what it might look like over a long period.
SM is a very popular place to retire, IF you have the financial means. Coming from somewhere else, buying in today's market, is something only the very top of the income curve are going to be able to manage. Renting in SM is also extremely expensive, unless you can get into the rare rent control units, but their numbers are dwindling, esp. beachside, with long waiting lists.

If you are over 55, prop 60 and 90 allows you to keep your prior tax rate if you "swap" properties within a 2 year period of time.
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Old 06-26-2018, 10:04 PM
 
Location: SLC
912 posts, read 602,537 times
Reputation: 2157
Thank you! We are definitely over 55 but not residents of CA. So, we don’t have a prior CA/SM rate to keep...
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Old 06-26-2018, 11:19 PM
 
Location: San Francisco, CA 94122
247 posts, read 123,462 times
Reputation: 261
Quote:
Originally Posted by kavm View Post
Thank you! We are definitely over 55 but not residents of CA. So, we don’t have a prior CA/SM rate to keep...
Oh silly me, I didn't take enough time to review this topic nor your location out of state You've got tons of very helpful and insightful comments already, so not sure what else I can add. But, AFAIK there is no better climate in the USA than coastal CA. I've lived in this zone most of my life, except for some on/off time in Hawaii, and just about every other place I've been in the country is either too hot, too cold, too wet, or too dry, too stormy, etc. Coming back to coastal CA always pleases.

While there's many nice areas along the SoCal coast, I think SM/Malibu beats them all. Its the cleanest air in the basin, due to the westerly winds off the ocean, and closest and most convenient driving to all the culture of LA, in downtown, Hollywood, Beverly Hills, Westwood, etc. SM itself has a lot of neat places within walking distance of Ocean Ave. While any part of SM is nice, the Ocean Ave condos are the best, since they provide unobstructed sunset/water views.

Healthcare is unbeatable. Top hospitals and Dr's in the country, just steps away at St. John's or the UCLA-SM clinic. The main UCLA Med Ctr in Westwood, or the Cedars-Sinai "Hospital of the moviestars" in Beverly Hills are nearby too.

Your in an enviable position - enough funds, time to shop around for your ideal purchase or rental, and with 7 years, a fair chance the economy will cycle into the next recession, providing even better opportunities
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Old 06-27-2018, 01:17 AM
 
628 posts, read 648,605 times
Reputation: 1163
I wouldn’t count on much of a drop in Santa Monica prices, even during a recession. And inventory may be even tighter, with homeowners holding on to their properties unless they absolutely have to sell.

75% of SM residents are renters, and it is a strong rental market with heavy demand and high prices. You would have no problem renting out pretty much anything. If I were in your position, I’d take my time, but I’d seriously start looking now for a property to purchase and rent out with a view to living in/exchanging it in 7-10 years (I can’t quite remember your timeframe).

You have the luxury of time to look and you might still be able to lock-in the long term low interest rates. You may also find that there are areas adjacent that provide similar amenities but (ever so) slightly more cost effectively. Once it’s established as a rental, you can also start to write off many of the costs involved in maintenance and upkeep.
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Old 06-27-2018, 06:01 AM
 
Location: So Ca
17,722 posts, read 16,472,643 times
Reputation: 15489
This article is two years old, but I would imagine that today, even more Santa Monica renters are "rent burdened," i.e. paying more than 30% of their income in rent.

Sixty Percent of Downtown Santa Monica Residents Are “Rent Burdened,” City Report Shows:
http://www.santamonicanext.org/2016/...-report-shows/
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Old 06-27-2018, 04:38 PM
 
Location: SLC
912 posts, read 602,537 times
Reputation: 2157
Thank you so much for all these helpful responses! Gives us quite a lot of things to consider and explore.
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