The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: AlanStache on November 13, 2013, 09:31:54 AM
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My aunt and uncle have come up with a plain to retire in three years. In the coming months they will buy a building in the south and over the three years remodel it to become there retirement home. When they retire they will sell there home up north and move to the new place. He is in his early 60's and she is mid-late 50's. He has a bit more savings than she does, both intend to work some part time once down south, her more than him.
Complication is that as the southern building is not a house so they cant get a traditional home mortgage until the remodel is complete and it is a house. They intend to buy the building for 50k, get a building loan-remodel it, then get a traditional mortgage when the work is done. All this nearly fell apart because they could not 'write a check for 50k' or get a bank loan, in the end a friend agreed to do a personal loan to them for the building. I cant help but see not having 50k to get this thing off the ground as a red flag that maybe they are not ready for retirement.
I know they have done the math-they are smart people and dont live beyond their means but are hardly mustashcian. I know I cant do anything about this situation and wont say anything to them but I wanted to put it out to the community, would you retire if you could not write a 50k check to buy a building? They will be paying someone else to remodel it. They are both in fine health but are not hardly or able to do much remodeling work on there own. I know they have some investments they could sell but I suspect 50k would be to large a chunk. After the remodel is done the home should be worth more than they put into it, and the contractor is giving them a good rate as he can work on it when his other work is slow over the three years.
Thoughts?
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I don't think you have enough information, and by extension neither do we...
Not having 50k to write a check is not necessarily a red flag. They could have substantial equity in their current home, a ton of money in their 401k/IRA, other investments they would rather not liquidate, a maxed out social security check only a few years away, a fat pension, inheritance money etc. etc. All of this is possible while still having lousy credit and having difficulty qualifying for a 50k loan.