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If I do the studio apt in the basement as originally planned then I'm at $160,000 total.
But that additional $20,000 expense c/should pay for itself in less than four years.
Even if I never rent it out to strangers it'll be a great option for family and visitors.
I have wondered about that..getting a house with a rentable space like that..
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Quote:
Originally Posted by kelly237
I have wondered about that..getting a house with a rent-able space like that..
Some beneifts...
*income.
*space for caregiver if needed.
*Long term space for a visitor or family (grandkids...)
*Can rent out for income (Single career folks and active seniors make nice LT renters)
*As your needs change... Can move into apartment and rent out the 'big-house'.
*If you travel, someone is a round to watch the place.
*Adds flexibility to your future (sometimes it is nice to be able to help someone out by providing them a place to plant their feet.)
*refuge for grandkids.
some options I have seen work well..
@Extra apartment in Basement or above garage
@on-site mobile home or cottage added as 'M-I-L / eldercare' exemption
@Lake house
@RV site with full hookups.
@Farm with caretaker qtr (common in Europe)
We're out of the landlord business now but for a long time had 4 rent houses, and yes, we did eat expenses.
Our rental rates were set at market value. When we replaced roofs, A/C units, cook tops, etc., or when we repaired plumbing and foundations, we did not raise rents to absorb those expenditures. Doing so would have priced our properties out of the market.
Markets in other asset classes have appreciated 4 to 5x more than residential real estate for more than 70 years.
The money tied up in the house and all its costs invested elsewhere can appreciate far more than any rent increases.
Don't forget most retirees who do not have a mortgage and real estate taxes rarely hit the 12k standard deductable as a couple. Many times they get to fly the empty seats and take a 12k deduction while spending but a fraction of that amount.
They actually get money back they never spent and can apply that bonus towards
Their rent.
On the other hand mr home owner actually pulled that money out of their savings to pay that mortgage interest and real estate taxes . That is over and above the cost of the house.
It is very complex to figure out what is better financially with lots of unknowns.
Forget about the money aspect as either way has the potential to work out just fine and buy a house for only the non financial reasons.
As usual, I agree with mathjak. The truth of the matter is there is NO "one size fits all" answer to this. Much just depends on your personal situation. Personally, I know for myself I did not want to go into retirement not owning my property. I know that isn't going to be the same situation as others.
I also think much just depends on your other portfolio and other assets, etc.
People can ALWAYS point out that you can do better things with the money or get a better ROI. The flip side I'd throw out there is I've also seen people in retirement do a LOT of stupid and treacherous things with their cash. From risky and speculative investments, to loaning money to family and friends (that ultimately never get paid back), to gambling it away.
For many people owning a home free and clear is just a safer bet. But absolutely I do agree that in some situations it's better to rent but it just depends on you.
I also think much just depends on your other portfolio and other assets, etc.
This is an unstated sub-text in this thread.
Having $150,000 tied up in a house vs $1M in portfolio assets...
is very different from having $300,000 tied up vs $600,000 in portfolio assets.
Quote:
For many people owning a home free and clear is just a safer bet.
I'll go farther and say it's the safer bet for most.
The real point though is that most seniors already do own a home at age 65.
Whether it's the one they want to be (or should be) in for the next 30 years however...
Glad you agree, i am going for that triple win this contest. Ha ha ha
Hey, if they keep having these contests then it looks like you can fund part of your retirement with Citydata contests. Ha, ha.
Quote:
Originally Posted by MrRational
This is an unstated sub-text in this thread.
Having $150,000 tied up in a house vs $1M in portfolio assets...
is very different from having $300,000 tied up vs $600,000 in portfolio assets.
I'll go farther and say it's the safer bet for most.
The real point though is that most seniors already do own a home at age 65.
Whether it's the one they want to be (or should be) in for the next 30 years however...
Yes, most of the people I know that are older do own free and clear. However, it seems like the past few years more and more are selling and renting. As well, today isn't the same as previous decades. There are more 'exotic' products out there now like reverse mortgages. While they can make sense for some seniors some get in over their heads on some of this stuff.
My wife and I own several rental properties and once we fully retire, we probably will live part of the year in some of them (as they are in different countries). Our principal residence we don't plan on selling. It's a very big house so once the kids are out of the house we won't need such a big house but we probably will rent it out via short-term vacation rentals and may even rent another smaller house with the proceeds as rentals in our area net a pretty tidy sum.
Just another example that just because you "own" doesn't mean you have to live in the property. In fact, during the bubble years although we owned several properties, we didn't live in any of them. We rented all of them out, took the proceeds and lived in some fabulous properties waiting for the real estate bubble to burst. Once it did, we ended up buying our primary "forever home" residence.
Like I said..no one size fits all answer. But I still would rather own a primary residence outright. But of course, part of that decision is because we are already well diversified with other investments. There are a lot of "house rich" and "cash poor" seniors out there where it might not make sense for them.
...it seems like the past few years more and more are selling and renting.
As well, today isn't the same as previous decades.
On several levels today isn't the same as previous decades.
On the point of selling and then renting (vs buying smaller or whatever else)...
look deeper to be see which get to make these moves based on choice vs need.
Too many simply don't have enough investment money to produce enough income
(beyond SS) without putting what had been home equity into their portfolio pot.
On several levels today isn't the same as previous decades.
On the point of selling and then renting (vs buying smaller or whatever else)...
look deeper to be see which get to make these moves based on choice vs need.
Too many simply don't have enough investment money to produce enough income
(beyond SS) without putting what had been home equity into their portfolio pot.
Absolutely great points. I remember many years ago growing up my next door neighbor was a senior citizen at the time. His kids were all grown and his wife just died. He sold his house and I remember my father telling him that he should buy a small house that came up for sale in our neighborhood. Well, with the death of his wife he was so shaken up and convinced his time was coming and he was going to die soon too. So he sold his house and decided to just rent.
Long story short.... the guy is 98 years old today and he is still renting. LOL. That decision to rent vs. buy a smaller house didn't work out too well for him. I read some posts where someone said they would want to live to 150 years old if they could. That is SO not me.
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