Author Topic: Unique Housing Situation - Need Long Term Advice  (Read 1810 times)

BYD

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Unique Housing Situation - Need Long Term Advice
« on: June 30, 2018, 08:26:05 PM »
Hey All,

*Very* long time lurker, first-time poster, who has been practicing off-brand Mustachianism for several years. We have a unique housing situation where your crowdsourced analysis could be very helpful!

First, my wife has a job (a pastor of a small community church) on the island where we live, which comes with a house, utilities, internet, and cable included; as well as an island car and a parking spot on the mainland. If we wished, all those benefits could be converted into a housing allowance of about $1100/month. We pay social security tax on the housing benefit either way, which comes to about $2500/year.

Secondly, we live in a highly desirable location, both for year-round residents and vacationers, which means that housing stock of any variety (to sell, to rent, year-round, seasonal) are in high demand.

At this juncture, it looks like my wife will hold the job for a *very* long while, so we're trying to figure our best strategy as if we're planning on being here perhaps until near retirement-age, if not well past then.

With that in mind, we've been mulling our options, especially since we've saved about 40k especially for a downpayment that could perhaps be put to better use if we don't need that money for real estate.

I can think of three options, and I'd love your feedback, questions, and additional ideas!

First, we could stay in our current house and save everything else (we otherwise make somewhere between 33-37k a year.)

Secondly, we could buy a property where we could both live and have a second unit to rent. This would cost 250k-300k all told; and I'm confident that could produce a 100% occupied year-round rental that would go for 800-900 a month.

Finally, we could take the nest egg we saved towards a downpayment to buy a piece of land, put up a couple cabins or tiny houses to start generating income, and plan on building there later on.

What option sounds the most early retirement friendly? What questions might we need to consider as we look at our path forward?

Thank you!


Chrissy

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #1 on: July 01, 2018, 04:48:45 PM »
The way I see it, you get housing, utilities and transport for $208/mo, which is the monthly amount of the taxes you pay on these benefits.  That's KILLER, and I wouldn't give that up for anything.  Shit, my internet alone is $63/mo!

Buy a duplex, but rent both sides.  If, at some point, you want to move in, you can make that happen.

BTDretire

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #2 on: July 01, 2018, 06:11:39 PM »
Receiving $10,200 rent on a $275,000 house is not good.
And it gets worse if you have to pay $2000 in property taxes
and maybe $1500 in yearly maintenance.
 You would be down to $6,700 on a $275,000 investment, cash on cash.
 And, if you rent to vacationers, you would also have job every turnover.

Dicey

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #3 on: July 01, 2018, 06:55:53 PM »
I don't know of a pastor worth their salt who isn't busy all the time. Forget home ownership for now and maybe forever. You have a sweet, sweet deal. Invest your cash the Mustachian way and you will come out so far ahead you'll be astounded. FWIW, I'm pro-RE, own multiple properties, am doing a major remodel/reno/flip as we speak, and wouldn't be FIRE without real estate. It would have been a lot easier to have just dumped my money in the market.

startingsmall

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #4 on: July 01, 2018, 07:10:14 PM »
Finances aside, how do you guys feel about living in the parsonage? My husband is a pastor and we would never, ever want to live in his church's parsonage... it's nasty & run down (seriously, I feel like it should probably be condemned), it's on a busy road, and there's no way that his congregation would ever leave us alone. So we take the housing allowance. If our parsonage was a better situation, though, I would absolutely favor living in the parsonage for free over the headaches of homeownership.

Have you heard about the fact that they may be closing the loophole that lets pastors not pay income tax on their housing allowance? Hopefully that won't happen, but our denomination is making it sound like it is quite possible. If it happens, that would definitely be another strike against leaving the parsonage and taking the housing allowance.



« Last Edit: July 01, 2018, 07:12:29 PM by startingsmall »

frugaliknowit

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #5 on: July 02, 2018, 04:35:40 AM »
Emotions aside, option 1!

Don't buy any land of buildings on the possibility you will move there or to "lock in the cost of housing".

If you want:  Stay current on what a down payment would be on something you want to buy.  Keep that sum of money in separate lower risk fund (like a balanced fund).  That way, if/when you want to buy a property when the stock market is unfavorable, you won't "get whacked" as badly and the fund should appreciate over time, though a bit less than if you keep it 100% in stocks.
« Last Edit: July 02, 2018, 04:37:44 AM by frugaliknowit »

Zamboni

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #6 on: July 02, 2018, 04:45:20 AM »
You don't say, but it sounds like you like on a volcanic island.

I have spent considerable time pondering RE choice in that situation (was born on a volcanic island). My conclusion: I personally would be a lifetime renter . . . but you get the bonus of living rent free! As long as your wife is happy, sock the money way in other investments. Happy wife, happy life!

BYD

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #7 on: July 02, 2018, 06:48:59 AM »
Thank you all - this is very clarifying as we figure out what to do with this housing situation and the nest egg we've built up!

To answer a couple of your questions and comments:

startingsmall - We are *okay* living in the parsonage. It's not a dump, although it's not what we would have chosen either. Thankfully, the church is *very* invested in having us stay, and so they're planning to do some work to upgrade our drop ceiling/linoleum floor/chipped cabinets kitchen and to put in a fenced-in backyard. While it's smaller than we would like, with plans for a growing family, and we don't like the layout, it's perfectly acceptable.

Dicey and frugaliknowit - Your feedback is super helpful - especially knowing that investing money in the market may be just as effective (with less work) than using money to buy and flip/rent. I am worried about the potential opportunity cost of turning our downpayment into a long-term retirement fund; but I like the idea of saving enough for a potential downpayment if the right opportunity emerges, and then just plowing the rest into long-term savings.

Because so much of our island real estate is relational transactions, there is a significantly higher-than-zero chance that we could be offered a sweetheart deal on a property that would make sense to move on. (We're actually talking with a couple right now who have a 3.5 acres waterview with a fixer-upper that's larger than our current place, with a loft in a barn that could be converted into an apartment, that may actually come in at an affordable place.) My sense is that we need to have developed *really* concrete figures at which moving would make sense, and numbers at which it would not.

The other thing I realized is that we're pretty much living our early retirement lifestyle right now. We both work part-time, have flexible schedules, and do things that we both enjoy and make our community a substantially better place. Whatever else happens, we need to make sure to preserve that, even if it means living in a house that's slightly sub-optimal (even as we look forward to the day when we can have more financial and lifestyle independence than we do now!)




begood

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #8 on: July 02, 2018, 07:56:28 AM »
I am in a somewhat similar situation, so I feel it's appropriate to weigh in.

My husband works at a boarding school, and we live on the campus in a provided house. We pay for our utilities. When we first moved in, I didn't love the house or the location. The house is 1/3 the size of our old house, it has some idiosyncrasies, and the location is quite isolated, with no other homes in view, off the main road. As someone who had only lived in average suburban neighborhoods up to that point, it was quite the culture shock.

The housing allowance offered instead would not begin to cover living expenses in our HCOL area, so I sucked it up and tried to make the best of it, all the while still looking at what we could buy if we wanted to (at a huge premium because of location).

Well. Nine years later almost to the day, I LOVE my little house. I LOVE my location with the birds and deer and rabbits and view of farm fields. I LOVE that if my toilet stops working, the maintenance department comes out to fix it. I LOVE that I have so few bills to pay.

We keep more of our stash in CD/money market than most - 7% of our total assets - because IF my husband lost his job, we would also lose our housing and have to either buy or rent immediately. We still keep up with what comes on the market in our (inflated) price range, but in those nine years, what we desire or need has evolved, so I'm glad we have not yet locked in to one piece of real estate.

I say embrace what you have today. As others have said, provided housing is a pretty sweet deal, with the pluses usually outweighing the minuses. That has certainly been true in our case. What began as a lesson in stoicism has become a lesson in gratitude.
« Last Edit: July 02, 2018, 09:43:14 AM by begood »

lhamo

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #9 on: July 02, 2018, 09:00:21 AM »
Do you already have or are you interested in developing contracting/property management skills?  I could see those being in high demand in the context you describe, and you can apply them toward building your own real estate empire.  You could start by offering to manage the improvements on the church property.  Not a difficult job if you have the time, and it will help you see where the gaps are that might need filling in the local trades business.  If you can reduce the overhead cost of the improvements you might be able to get higher-grade materials and finishes, too. 

I would not jump into purchasing a home for your own use at this time with such a sweet housing deal -- focus on buying properties that have good development/rental potential.  I like the idea of tiny houses on a larger property that you can develop over time. 

Sounds like a pretty sweet setup....

JoJo

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #10 on: July 02, 2018, 11:20:09 AM »
Is there any chance something happens and the congregation "turns" on your wife and your plan blows up?  I've seen that happen to a couple pastors at my childhood church. 

BYD

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #11 on: July 02, 2018, 12:14:52 PM »
lhamo - I thought about your suggestion and realized that even if I had property skills to offer (I fall in the "just started picking up a hammer three years ago" class of property expert) that right now we're actually in such good shape that I don't need to find extra work, even for such an obvious financial opportunity like this one!

begood - I think you're right; you do adapt (I like this house a lot better now than when we moved here) and JoJo - no chance that would happen in this particular setting and denomination, I'm relatively positive we're here for as long as we want!

Thanks all - this was very clarifying, both for me, and for my wife, who read this thread and went "Oh yeah, this *is* a pretty good deal isn't it?"

I think we'll be pretty content to stay here for as long as we can, bank our money, and let the church continue to improve the property, unless a sweetheart deal pops up, or until our family substantially outgrows this place!

lhamo

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #12 on: July 02, 2018, 01:14:59 PM »
While you may not need the income yourself at the moment (or down the road), there is a lot to be said for developing a business that can help provide employment opportunities/a positive work environment for others in the island community.  The upside of capitalism, so to speak.  Obviously it wouldn't be great to undercut existing businesses (unless you know the people who run them are evil/cruel to their employees), but if there are niches that aren't being filled they might be worth exploring.

Another thing to consider is trying to get involved with starting a land trust or similar organization that can provide lower-cost, stable housing to people who want to reside in your community permanently.  There are a few of these in the San Juans already that could be good models. 

startingsmall

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #13 on: July 02, 2018, 01:46:12 PM »
- no chance that would happen in this particular setting and denomination, I'm relatively positive we're here for as long as we want!

Totally jealous! Every few months, my husband says "I may get fired for this sermon." Yesterday, he preached about love for immigrants and we're just waiting for the hate mail to start.  What denomination? We're UCC.
« Last Edit: July 02, 2018, 07:17:55 PM by startingsmall »

BYD

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #14 on: July 02, 2018, 06:37:30 PM »
lhamo - I would love a link, if you have one, to those organizations in San Juan. There's a similar one here on the island, but it's inactive currently, and is looking for some new ways of organizing itself!

startingsmall - United Methodist (in a very unique position where my wife is unlikely to ever be moved by the hierarchy.) My wife preached on immigrants on Sunday as well, and I'm thankful that she has a *very* supportive congregation (there may have been enthusiastic, sustained applause after she finished!)

lhamo

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #15 on: July 02, 2018, 06:50:23 PM »
Orcas Island:   https://www.opalclt.org/
San Juan Island:  https://hometrust.org/
Lopez Island:  https://www.lopezclt.org/

Hope you can get yours reactivated!

startingsmall

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Re: Unique Housing Situation - Need Long Term Advice
« Reply #16 on: July 02, 2018, 07:24:12 PM »
startingsmall - United Methodist (in a very unique position where my wife is unlikely to ever be moved by the hierarchy.) My wife preached on immigrants on Sunday as well, and I'm thankful that she has a *very* supportive congregation (there may have been enthusiastic, sustained applause after she finished!)

My sole knowledge of Methodists is that they get shuffled around randomly. LOL. Glad to hear your wife isn't in that group!

He actually did get a couple of Amens at the end of his sermon (and ours isn't an Amen-out-loud sort of church!), but there were also a lot of people who left out the side door and/or didn't speak to him as they left. Our choir director, who had replaced any hint of a worshipful anthem with a patriotic ode to American Flag Idolatry, was basically dressed in head-to-toe American flag paraphernalia and probably didn't like his repeatedly mentioning that God has no favorites. Hopefully his supporters will outvote anyone that tries to run him off... but if not, then that would be a pretty clear call for us that it's time to move on!!

There was recently a UCC job on St. Croix and he came really close to applying to, but I'm not quite sure if we're adventurous enough to move our 5-year-old daughter there!