A cheap residence - is it key to early retirement? (moving, state)

[Serious Conversation]

I live in the Indianapolis suburbs and there are a few struggling towns north of here where one can find a livable home for $50k-$75k. There are many homes that are below that range, but I wouldn't consider them livable without extensive rehabilitation.

If you could put down even $10k, the mortgage would probably be no more than $250/month. Even if you couldn't put down that much, your PITI would still be probably about half of rent in those towns, and you are still commutable to major job centers in Indianapolis.

I'll be 30 next year, and it seems like I could easily have that house and all other debt paid for by late 30s to 40 maximum, then continuing to sock away most of my pay for retirement.

Do you see a cheap residence as a significant key to early retirement?

[Tall Traveler]

I see wealth, investments and income streams as more important. Having a paid off house certainly helps of course.

[ReachTheBeach]

I would say that for many if not most people the answer is yes. It is all about having expenses at a level where your savings can meet them without drawing the balance down or drawing it down so slowly that you won't outlive savings. A paid off house with no savings won't enable early retirement and you really need to get the savings ramped up early so you get compounding.

[ABQ2015]

My concern is that this area might deteriorate even more and not be a safe place to live or not increase in value. Also if you marry and have children, the schools may be terrible in this sort of location. My sister bought an inexpensive condo in a so so area because it was close to work. She put about $15K in it for some remodeling. Twenty years later the condo complex was mainly rentals and was worth less than her overall investment.

[akck]

While having a paid-off house is ideal, a fixed housing cost that you can afford (mortgage), is also good. The reason why is it keeps your personal inflation rate lower. While your other expenses increase, your mortgage stays the same and acts as a buffer to higher expenses.

[luvmyhoss]

Yes, of course.

But not a potentially dangerous neighborhood

[smpliving]

I'd get an inspector before buying to see if there are any big expenses in an older home, such as plumbing issues, etc. Also are you handy or have the income/money for needed repairs with an older home? These issues can arise later on. I have an older condo (28 years old) in a very nice neighborhood. My housing expenses are very low and so I have been able to keep up with the needed repairs or replacements through the years. My salary is average for the state I live in and I've been able to keep out of debt and put away money.

[Petunia 100]

Originally Posted by Tall Traveler

I see wealth, investments and income streams as more important. Having a paid off house certainly helps of course.

I agree. But the thing that could enable you to get to the point of funneling a large percent of your income into investments is...an inexpensive house.

[Hemlock140]

Yes, however in our case cheap is more like $300,000. We prefer no mortgage, and we will have more than that in equity from our current home but could do a small loan if needed. Upon retirement we could barely manage the current payment, but as fast as property taxes are going up ($6,000/ year now) and other high costs in this area we definitely will be moving a few hours away.

[John7777]

All across the midwest, you can find older homes in small towns for not much money. $15k - $50K. Many of them need extensive renovation, though. But once in a while, you come across a hidden gem. But let's say someone gives you the house for free. Then what? There you are in some little town that only has one gas station, one grocery store, and one traffic light. You still need a decent income. That's what I'd be worried about. Establishing a decent independent income. You'll probably always be able to find a cheap little house in the middle off nowhere.