Hey everyone,
Sorry for the wall of text in advance. Me and my SO are currently in the 'stashing' stage of FI, and we are trying to figure out how it would be best to make a nest. Let me share some details of us so that you can have a better insight and maybe you can give an advice/idea on building up a master plan for us.
Me and my finace are a Hungarian 28 years old couple currently living in the capital of Hungary, Budapest (population ~2 million ppl), renting an apartment. Our long term vision would be to move back and live in (or near) to our hometown (population ~120k ppl). So why don't we move right now?
In Budapest we are currently earning $3500 per month and being on a SR of 55-60%. The rental is $500 per month for our aparment.
Compared to our hometown, real estate costs~70-80% more in Budapest (both rental, buying price of a flat/house) but so as our salaries. Also, we have much better career opportunities here (I'm working in IT and my SO as an engineer).
So our plan would be to stay and stash money here then in 5-10 years FI(RE) and move near to hometown, to live closer to family.
For the time while we live in Budapest we would rather have my own property then paying a rent. Our hearts' desire is living in a house, having a dog do some gardning. But a house ofcourse costs like 30-40% percent more than an aparment. Let me share you briefly what assets we have right now and what scenarios I can imagine.
What we have:- 1 (inhereted) flat in hometown (worth $49000) - very good city apartment, currently rented out for $250/ months.
- 1 (inhereted) house in hometown (worth $63000) - my childhood home, currently on sale, houses are unpopular for renting.
- $70000 savings in different assets
A house in Budapest costs ~$116k and a flat like $84000. (Of course you can find more expensive ones depending on the neighbourhood.)
Long term plan (when FI(RE)) to get a cheap house in the neighbourging villages of my hometown for $35000 (price today, I'm not considering future prices and inflation). Reason being for cheapness is that people are moving to cities for work.
Scenario #1 - buy a flat in BudapestSell house in hometown
Buy flat in Budapest (complete buying price from our savings
OR get a loan?)
Keep flat in hometown (as an investment)
When FI(RE):
Buy a cheap house close to hometown.
Keep flat in Budapest for a decent income
Benefit: Cheaper cost of housing while in BP, less real estate transaction.
Drawback: We have to live in a flat in Budapest for another x years.
Scenario #2 - buy a house in BudapestSell house in hometown
Sell flat in hometown
OR use most of our savings
AND/OR get a loan?
Buy house in Budapest
When FI(RE):
Sell house in Budapest
Buy flat in Budapest/or more flats in hometown (for investment)
Buy a cheap house close to hometown.
Benefit: We can finally live in a house after living in rented apartments for 10 years.
Drawback:
- Affordable houses are out in the suburbs of Budapest (more commute time), with some research could be able to find one within 40-60minutes of bicycle ride from city center (workplaces).
- More cost on monthly utilities
- More hassle with buying and selling properties
Scenario #3 keep house in hometownSell flat in hometown
Rent out house in hometown (It might be rented out for like 500 a month, with varying success)
Buy flat in Budapest (complete buying price from savings / loan)
When FI(RE):
Just move back home.
Rent out the apartment in Budapest.
Benefit: It's easier and faster to sell a flat than a house.
Drawback:
- It's harder to rent out a house. Considering that people want to rent cheaper they tend to move to flats, only lower income people are the target audience.
- I'm not sure if I want to live in my childhood home rather than filling a new one with memories
I hope you understood what I wanted to describe here and please point out the good parts or the flaws of my master plan and also my scenarios for execution. Also, if you have any other/better ideas just let me know.
Update:Converted amounts to USD