Author Topic: Buy rural family home ahead of schedule for retirement? Or keep the cash?  (Read 7355 times)

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #50 on: October 03, 2017, 08:31:51 PM »
You mention that the area has low property taxes. This is not a given fact in the future. I have learned that everything that you think will never change, can suddenly change. So keep that in mind.

I also still think you'll need to find a good caretaker renter, who wants to do some maintenance and cover your cost. This will help you to not set back your FIRE date.

About cleaning the snow. Where I live there is usually a farmer with a tractor that you can pay to clean the snow on your private road. This sum is usually divided by the house owners along the road. Isn't there anyone available in the area who offers this? Or could you get a caretaker who likes to to this himself? Some people love to drive tractor while they are not farmers.

I really don't see that as being a viable option, being on the opposite side of the country it would have to be someone I personally know and trust which is going to be extremely difficult to accomplish.

I'm sure I could find someone to clear the snow, but my concern with a renter would be they would expect it to always be clear, which would cost me a fortune.

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #51 on: October 03, 2017, 08:40:46 PM »
1. Never assume that you think you know something that millions of people don't already. I wouldn't count on the house being worth much more in the future (in other words - be prepared to hold on to it for a long time just in case). You're clearly not wanting to purchase as strictly an investment, but you seem to be somewhat justifying it as such. All I'm saying is never count on appreciation.

2. It's not technically a national park - it's a state owned preserve.

I wouldn't personally do it unless I was willing to set up a cleaner to take care of it as a vacation rental for me (or normal 12 month lease if it makes sense) in the interim between working and moving in.

It's a win-win if you're willing to rent it out - satisfies both the logical and emotional side of things. Of course that doesn't necessarily mean it will perform well as a rental and if you're willing to rent it out you should take that into consideration too.

While you have a decent sized savings and a good income (can clearly afford it), plopping down ~$35k plus ~$800/mo (taxes/insurance/maintenance/mortgage) for something you're not even going to use for years doesn't make sense.

If I bought it I wouldn't be selling it so what it is worth wouldn't matter, but I do see your point.

However the area has been depressed for decades after the Air Force Base closed, and now it has an international airport in it's place, and tech and manufacturing that is exclusive in the world, (i.e. a facility with 11 3-D titanium printers that only exist at that plant) things like that, and HUGE amounts of underutilized waterfront. Its proximity to Canada means tons of Canadian tourists visit the area, and there are unique business relationships in the area between the two countries.

Billionaires and millionaires are buying up massive plots of land, the owner of alibaba bought 23,000 acres of only 23 million dollars, several movie stars and other stars such as Bruce Springsteen have been snapping up massive properties and great camps. These areas are being discovered buy the super rich, and its only a matter of time before it trickles in just like SF and LA.  But I obviously see your point that nothing is guaranteed, but the US has 100 million more people than it did when I was born, and people are going to fill up every nook of each side of the coast before they start moving inward.

True is it a preserve, but again, it is the ONLY place in the entire united states that you can own private land inside a park like that, and has the forever wild protection guaranteed by the NYS constitution.  Nowhere else has an entity like the APA to make sure you don't have a massive housing development pop up next to your cabin, or such tight building restrictions to keep your great views from being spoiled by others.

I really don't think renting it out is a viable option, and I agree it doesn't make much sense to pay for something that I would not be using 95% of the time, I just have a really hard time not thinking that it would be the perfect place for when I'm FIRE in 5-7 years.

Thank you very much for your input, believe it or not I find the "don't do it" responses very helpful because it brings up many things that I don't think of.

Thanks again!
« Last Edit: October 03, 2017, 09:03:56 PM by Russelsage »

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #52 on: October 03, 2017, 08:43:02 PM »
I'm leaning on the side of buying it.

Can you use a vacation rental property management company?  It'd cost you 25-35% instead of a normal rental, but furnish it and rent it out to vacationers for 6-8 months out of the year.  That would help generate some income.

It means something to you, it may not be the *best* move financially, but you're only on this earth once and you don't know if the property will come up again.  You'll be okay financially based on your habits either way.

I have a feeling trying to rent it out would be a nightmare and not worth whatever small amount I may get back after a management company, all the things I have to fix/deal with having tenants.  I do agree about being here once, that's what makes it so hard, the part of me that loves money is fighting with the part of me that loves the property.

Thanks for your response!

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #53 on: October 03, 2017, 08:45:34 PM »
You said it is unlikely to be rentable, due to difficult access.  A house that is not occupied can develop many problems...leaks, animals inside, even a break in.  You are all the way across the country. I think you might be creating a burden for your parents too.  In the next 5-7 years you may well find a partner who thinks living in the Adirondacks would be a nightmare.  If you want to live there in 5-7 years you will be able to buy a place. Or you may decide that you are no longer excited about that life either.  I think the timeline is too long to make it a wise purchase.

My current girlfriend loves to do all the same outdoorsy stuff I do, and also loves working on and around property (i.e. she'd be right out there with me clearing paths, chopping wood, Green Acres style) I have no idea if we'll be together forever but it seems like it could be that way.

You are right about it being too far of a timeline, that's my biggest hurdle, if it was even just a few years from now I could make a better gauge of things, I'm just falling into the "what if I regret it" trap.

Thank you for your input

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #54 on: October 03, 2017, 08:48:38 PM »
I have more thoughts on the subject, but limited time allows me to focus on one point, for now. I did not mean for your parents to go in on it with you. I wonder specifically if they are in a position to act as the bank on this transaction.  If you're going to pay interest on a note on this property,  why not pay it to them? There aren't very many safe options that pay 5-ish percent these days. A traditional lender would not necessarily consider this a safe investment because of your lack of proximity. Your parents know you will never default on this home that you love. I'm thinking something on the lines of 50k-60k from them, and the balance you pay in cash.

I hope this clarification helps.  Also, are you an only child?

They are, but I would not want to put them in that position, since I do actually have enough to pay cash for the entire house, I don't think it would be fair for them to withdraw assets that could be making money in the stock market so I could keep mine in.  But I do see what you are saying, I just feel like my parents have done enough for me and hate to really ask them to do anything more.

I have one sister who lives in Montana, her and her boyfriend built a tiny house, but now the price of property in Montana is no longer affordable, which adds to my anxiety, places that always seemed so cheap are being purchased by people realizing they can have so much more outside of the areas that generally first come to people's minds as a desirable place to live.
« Last Edit: October 03, 2017, 09:06:16 PM by Russelsage »

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #55 on: October 03, 2017, 08:49:53 PM »
This does not sound like a great idea to me.  I am biased in the other direction because I am familiar the area and we have a family vacation home that could be described similarly (remote, wooded, unplowed and unrentable in the winter, far away, etc).   If my parents had a house next door, in your shoes, there is no way I would be considering buying the place.  First, way too much could change, including whether you can or want to live there year round (kids and a spouse, among other things, can change the game).  Second, you can go and visit your parents any time (I assume) without the headache of owning a property across the country and burdening your parents if something comes up. 

I would keep doing what you are doing, visit your parent's house, and befriend the new owners of your grandmother's old place, and let it go until you are ready.

You are right, things always seem better in your head than how they actually pan out, thanks for writing I appreciate it.

marielle

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #56 on: October 03, 2017, 08:50:30 PM »
Have you calculated the actual costs to upkeep the house for so many years? How much is a property manager, how much does electricity cost to keep pipes from freezing, how much is snow plowing so the manager can check on things, etc? Having an actual number would definitely help with the decision. Calculate how long it delays your retirement even.

What about a scenario where you regret it and sell in 1, 2, 5 etc years? How much does that set you back and is that amount worth taking the risk?

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #57 on: October 03, 2017, 08:51:08 PM »
Personally, I think I'd pass.  As a homeowner, I have no interest in owning a home far away (from a maintenance POV).  And I also feel like being single and 5+ years away from FIRE things could change for you in a lot of ways.  If you're FIRE, you'll be able to find a cool house somewhere.

You are right and I know it in the back of my head, that's probably why I'm here whining about it.  But living in LA and watching prices all over the country go up and up it's hard not to want to jump one a place I know I love that is being sold for so cheap.

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #58 on: October 03, 2017, 08:51:52 PM »
Your parents have a 30 acre property, is there any option of building a house on part of that property? By splitting it and selling you a portion of it to you in the future?

It's an option, they've offered to sell me property if I want, but I'm not interested in building my own house and the cost of doing so would far exceed what I am looking at now that is already built.

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #59 on: October 03, 2017, 08:53:33 PM »
Are you hip to NY state taxes? That may be the only place in the nation that will tax you more than suny CA in retirement.

Also there are, full stop, no job in upstate that aren't low paying tourist services.

Neither of the above has to be a deal breaker.

I sure am, compared to NY, CA property taxes are a steal thanks to Prop 13, but compared to NJ, NY taxes are great, at least in that area.  That's part of what interests me about the property, it contains lake front, but it is deeded in that no structure can be built in the lakefront part of the property, which prevents it from being taxed as lakefront which costs the taxes down by almost a third.  It will be very difficult to find a place with access to a private lake, that isn't taxed for it.

I'm aware of the job situation which is why I live in LA.  Good ones do exist, but you're either a teacher, prison guard, in the medical field, working remotely, or own your own business.  Lack of jobs is why houses are so cheap, but better jobs and coming in by the day, which is why I think it may be a good time to buy before prices go higher than they already have. 

Either way, I would be FIRE when living there so jobs would not be an issue, and if I felt like doing something for money it would all be gravy.
« Last Edit: October 03, 2017, 09:15:05 PM by Russelsage »

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #60 on: October 03, 2017, 08:56:45 PM »
Okay, I'm back with a new thoughts. I grew up in CA, but my grandfather lived in Upstate NY. He owned "Grandpa's Motel & Cottages". There were a bunch of cute cottages, plus a cute motel, plus a nice looking two-story house, on a bunch of wooded acres, not far from a medium-sized racetrack. Family legend has it that Jackie Gleason used to stay there when he visited the track. Every building was painted white with black shutters and neat as a pin. It was smack in the rust belt and this was the late eighties. The whole shebang went on the market for about $100k. We California kids were mortified. "C'mon Mom & Dad, let's go buy it!"  said we. "Hell, no, there will be no jobs for you knuckleheads there" said they, and so the family enterprise was sold for a song. Eventually.

Additional tale: I used to work at Nordstrom. I sold expensive ties. Really expensive ties. $100 a pop, back in the nineties. I literally sold thousands of them over the course of a decade. It was easy to do, because they were beautiful (and people wore ties then). Even now, the thought of paying that much squicks me out, but back then, I was totally used to Nordstrom quality and prices. Didn't phase me in the least.

1 Tale + 1 Tale = Moral of the story: It's easy to get inured to the cost of things when everything around you is expensive, more expensive and obscenely expensive. The fact that the house hasn't sold means that they're asking too much for what it is. CA prices are a dangerous thing to anchor to vs. most of the rest of the country.

I'm totally okay with you buying the house for sentimental reasons, with a couple of caveats. 1.) Don't overpay by local standards. 2.) Understand that you will need to set aside big chunks of money for upkeep. 3.) Know that your free time will be spent there, trying to stay on top of the place. Wanna go to Europe, China, Australia? Sorry, your house needs you. 4.) There are other ways to get the feeling you're after. Buying your parent's place, for one. Erecting your own place on their property, as mentioned above, for another. 5.) I wish, I wish, I wish jooniFLORispoo could be your tenant. She and LF would be perfect. Hmmm...

Thank you so much for sharing your story, there are tons of stories of people who used to frequent the area, and I think it's due for another uprising.  I would be FIRE so I'm not worries about jobs.  I do realize CA is insane compared to most of the country, however prices are skyrocketing all over the country, including upstate NY, more and more houses are going for 500k plus in the area this once is in, and much more just 45 minutes away or down the street.  It's happening all over.  But again who knows!  If I don't get it I'll regret it, if I do get it I'll regret it, what to do!  Oh well.  Thanks again for writing I really appreciate it.

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #61 on: October 03, 2017, 08:59:59 PM »
I would be careful about assuming that retirement in a remote location -- no matter how beautiful and beloved -- is an option you will want to pursue later in life.  Rural life can be hard, and inconvenient.  It seems like your parents know this well but are kind of "trapped" there.   It worries me a bit that they aren't more enthusiastic about you buying your grandmother's place.   Have you discussed with them the possibility of buying THEIR house?  Would you want to? 

If you really want to return to the area, are there any possibilities for you to use your professional skills in NYC instead of LA?   Living costs are high, granted, but if you were spending many weekends upstate it might be easier to get a cheap share situation (maybe even sublet someone's pied a terre during the week...)

I spent the first third of my life there so I know how hard it is, and I know even more how inconvenient it is.  My parents do things all the time so I wouldn't consider them trapped they love it there.  I agree I might change my mind later in life, however I'll be FIRE in 5-7 years, so just in my early 40s, so I'm not going to be ready to sit in the retirement home in florida yet.

I've told my parents if they ever decide to sell I am buying their house.  It is unbelievable. 

Jobs won't be an issue for me as I would be FIRE.

Thanks for your input!

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #62 on: October 03, 2017, 09:12:09 PM »
Have you calculated the actual costs to upkeep the house for so many years? How much is a property manager, how much does electricity cost to keep pipes from freezing, how much is snow plowing so the manager can check on things, etc? Having an actual number would definitely help with the decision. Calculate how long it delays your retirement even.

What about a scenario where you regret it and sell in 1, 2, 5 etc years? How much does that set you back and is that amount worth taking the risk?

I have.  It would add about three to four years to my achieving FIRE if I were to buy the property cash.  Buying it cash I could lower my monthly investments by a grand a month which would more than cover expenses most likely, obviously things can come up but that's always a risk.

I would not have a property manager, and in the winter the property would not be plowed out.  I would keep it like the current owner does, which is he comes in the summer, and drains the pipes and shuts it down for the winter.

jodelino

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #63 on: October 04, 2017, 06:41:11 AM »
I understand your reluctance to rent out the property and to get involved with a property manager, but, honestly, it isn't always a nightmare and a huge headache. It may not be for you, but it may be that you can craft a situation that works for you.

I have a vacation rental property that is 3,000 miles from the waterfront cabin where I am now. I manage the rentals online and I pay a local friend well to manage the on-the-ground stuff. In the high season, summer, my minimum rental period is one month, and I have repeat renters vying for July & August, and sometimes renting for 2 months. I don't look for top dollar and maximizing rent by packing the place with renters; I market to couples, and have a limit of 3 renters. In 3 years of renting I have never had any damage or theft.

Our rural, waterfront cabin is also in a place with limited jobs opportunities, but we have found wonderful local people to do care taking while we are away and the place is shut up.

I did a search for waterfront houses for rent in the Adirondacks, and there are a lot of them. You could do a search in your area to see what the market is like.

You are wise to know your limits and your inclinations, and I know what works for me might not work for you...

jodelino

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #64 on: October 04, 2017, 07:03:28 AM »
And one more thing, from an investing standpoint. You have been saving fantastically well, and investing wisely, all during a rising market. Buying real estate can be a good diversification. It's a great feeling, when the market drops, to know that you still have your piece of earth.

trollwithamustache

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #65 on: October 04, 2017, 08:08:32 AM »
Are you hip to NY state taxes? That may be the only place in the nation that will tax you more than suny CA in retirement.

Also there are, full stop, no job in upstate that aren't low paying tourist services.

Neither of the above has to be a deal breaker.

I sure am, compared to NY, CA property taxes are a steal thanks to Prop 13, but compared to NJ, NY taxes are great, at least in that area.  That's part of what interests me about the property, it contains lake front, but it is deeded in that no structure can be built in the lakefront part of the property, which prevents it from being taxed as lakefront which costs the taxes down by almost a third.  It will be very difficult to find a place with access to a private lake, that isn't taxed for it.

I'm aware of the job situation which is why I live in LA.  Good ones do exist, but you're either a teacher, prison guard, in the medical field, working remotely, or own your own business.  Lack of jobs is why houses are so cheap, but better jobs and coming in by the day, which is why I think it may be a good time to buy before prices go higher than they already have. 

Either way, I would be FIRE when living there so jobs would not be an issue, and if I felt like doing something for money it would all be gravy.

I'll cast my vote to buy it then. its a beautiful part of the country and I had a wonderful time when I lived out that way. 

gfirero

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #66 on: October 04, 2017, 09:04:40 AM »
I find it difficult to make a decision when I have emotional/sentimental/feelings and analytical/quantitative/data.  You've got to tap your head AND your heart.

An exercise for you to consider:
1. Think about worst case scenarios from a finance and logistics standpoint if you buy the property. No matter how crazy.  For example, what if your woods catches on fire?  What if your parents get a divorce?  What if you marry someone that wants to spend all their time on a cruise ship?  The more scenarios the better. This step primes and anchors you for the next one... 
2. Right after you do #1, consider scenarios that are more likely, but still less than ideal.  Examples, what if the appreciation rate of the home is less than inflation?  What if you have a child that shows tremendous passion for a sport/activity that all your vacations and plans center around that activity and you don't get up to the property at all? What if you find something in the house that needs a lot of work and expense?

Chew on these scenarios in #2 for a while. How would you feel if some or all of them happened? Would you still be happy with your decision to buy? 
If a friend was buying, what would you advise them?

I hope this is helpful. Please do keep us posted.
Thank you




Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #67 on: October 04, 2017, 05:00:25 PM »
I find it difficult to make a decision when I have emotional/sentimental/feelings and analytical/quantitative/data.  You've got to tap your head AND your heart.

An exercise for you to consider:
1. Think about worst case scenarios from a finance and logistics standpoint if you buy the property. No matter how crazy.  For example, what if your woods catches on fire?  What if your parents get a divorce?  What if you marry someone that wants to spend all their time on a cruise ship?  The more scenarios the better. This step primes and anchors you for the next one... 
2. Right after you do #1, consider scenarios that are more likely, but still less than ideal.  Examples, what if the appreciation rate of the home is less than inflation?  What if you have a child that shows tremendous passion for a sport/activity that all your vacations and plans center around that activity and you don't get up to the property at all? What if you find something in the house that needs a lot of work and expense?

Chew on these scenarios in #2 for a while. How would you feel if some or all of them happened? Would you still be happy with your decision to buy? 
If a friend was buying, what would you advise them?

I hope this is helpful. Please do keep us posted.
Thank you


The house would be properly insured so if the house burns down than all I can do is proceed from there, however the chances are extremely low in that area.  My parents aren't going to get a divorce, but if they did it would not affect my property.  I would never marry anyone who wants to spend all their time on a cruise ship.   I really do over-analyze everything to death so I do this to myself enough for sure.

I would be keeping the house forever so the value going up or down wouldn't matter.  I'm not having children so that doesn't matter.  All houses have things that require expense to fix, but being FIRE I'm going to have a pile of money I'm sitting on if this comes up.

To find something comparable to this anywhere else in the country would cost minimum 2-3x as much, so it's a great deal, it's just 5-7 years before I'm FIRE so it makes it such a difficult decision.

Thank you very much for taking the time to reply I really appreciate it.

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #68 on: October 04, 2017, 05:02:23 PM »
And one more thing, from an investing standpoint. You have been saving fantastically well, and investing wisely, all during a rising market. Buying real estate can be a good diversification. It's a great feeling, when the market drops, to know that you still have your piece of earth.

True, but after riding out 2008 to now near quadruple returns, a mark crash doesn't really scare me...and if things fall off a cliff to the point that it does, all the better a place to live where I can grow and hunt my own food, and live off the land!


Thank you for taking the time to respond!

joonifloofeefloo

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #69 on: October 04, 2017, 05:05:34 PM »
If you decided to make an offer today, and in doing so learned another buyer had acted first, what would you be telling yourself now?

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #70 on: October 04, 2017, 10:13:39 PM »
I honestly don't know.

pbkmaine

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #71 on: October 04, 2017, 10:44:47 PM »
Is there a price at which you’d say to yourself: “I’d be a fool not to buy it”?

Russelsage

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Re: Buy rural family home ahead of schedule for retirement? Or keep the cash?
« Reply #72 on: October 05, 2017, 12:54:19 PM »
Is there a price at which youd say to yourself: Id be a fool not to buy it?

Probably 100k or lower which would be absurd since before she died my Grandmother sold it for 167k in 2010 during the recession.

This is the last assessment according to the internet:

Property Tax
2016

Taxes:$4,612

Land $69,100
+
Additions $95,100
=
Total assessment= $164,200