Giving up early retirement to buy 'dream home'? Have I gone nuts??

[Metalcat]

The current owners lived at this property for 40 years, and are only selling because of age and health issues.  So clearly there are people out there that find such a lifestyle rewarding and not overly burdensome.  But then again, perhaps they were much wealthier than us and hired everything out.

Nono, some people really do love it. Watch the Netflix show "Win The Wilderness" for a great example of a couple who just adore their property. 

My ridiculous parents really do just love it. They can't afford it at all and they shouldn't still be trying to manage it, especially since we're in an area with extremely harsh winter conditions for nearly half the year, oh, and my mom is literally disabled.

I tried to move them to a lovely townhouse in the city where I would subsidize their rent and where they could actually have access to services like better healthcare for my mom's MS, and they acted like I was trying to ruin their lives.

Some people love that life, and you might be one of them...or you might not.

Contrary to the tone of my posts, I'm not actually trying to dissuade you. I just personally, deeply dislike that lifestyle. However, I of all people understand the utterly crazy love people can have for these types of properties. I *personally* would rather have my fingernails pulled out, but that's just me.

[WackyWanderers]

Dicey: We spent quite a bit on the ADU.  We hired an architect and general contractor, and built it as an Earth Advantage certified building.  Actual total cost was $277k.  We've netted $142k so far from it after renting it on AirBnB for 3.5 years (which is where I get the $40k net/year).  That doesn't include the income tax we pay on that net income.  Of the 3.5 years, for 1 year of it we hired out all the cleaning while we traveled... I expect when we don't live here the net income could be closer to $35-37k/year with the added cleaning costs.

When we built the ADU I ran some numbers that included income tax and opportunity cost and came up with a 10 year total ROI, and that was assuming that it only net $30k/year but also was only assuming a 5% opportunity cost (market return if we didn't spend the money on building the ADU).

During the pandemic our AirBnB income has been about 50% of normal... and part of that is that we've been selective and only renting to people that have reasons to travel to Portland during a global pandemic beside just "to visit"... so we've had folks here for medical reasons, folks here to quarantine with us for 2 weeks before moving in with their parents, etc..

And yes.. you're spot on about the rugs on the hardwood floors of the farm house-- the floors are quite faded under the rugs.  Would we refinished them?  No.  Is it a good bargaining chip?  For sure.

[WackyWanderers]

Malcat: Thanks for your thoughts.  Yes, I'm starting to realize that rural living is something people either love or despise ... Here's to hoping that we're in the former group rather than the latter!

Marbles4: So great to hear from somebody else that went down this same path.  You say that you love it and are on a great financial footing now, yet still wouldn't make the same choice again.  Can you elaborate?  Have there been opportunities that you felt would have made you happier that you missed out on because of the decision to buy your current home?  Or more that you would have preferred to cut your working career shorter?

Working longer is a definite trade off .. but I've also now experienced 2 years of what not working looks like for me, and learned that the structure, routine and sense of accomplishment that I get from work is really valuable (I also get that sense of accomplishment from home projects).  I'm a person that needs external motivation, so I find the more free time I have the more time I waste and I end up in a downward spiral of feeling lazy and guilty.  I've realized the freedom I need is simply to not be locked in to a 40-hour-a-week job with limited vacation time.  Working 20-30 hours a week with some flexibility is my sweet spot, which is why I'm working as an hourly worker now.

[Cpa Cat]

We built a house on 10 acres and have been here for a little over a year. It’s 3 acres maintained, 5 in hay, 2 in brush/trees.

We have no out buildings. I’d say it’s about one hour per day of maintenance work. Outdoor chores can’t be neglected for any period of time. We have already had some big cash outlays in things like grading, gravel, mulch, equipment in order to do the basic maintenance. When it snowed, we just stayed home until it melted enough for us to leave.

Hiring out anything is harder than expected, because no one wants to drive 20 minutes out of town to do work here.

I think your house to be is beautiful. Don’t rush to farm or have livestock. Just get used to it first. Sell your Portland house to unlock your equity. You are way too heavy in real estate.

Living in the country takes some getting used to. It took me until Covid stay at home orders to really feel at home here. But now it’s hard to imagine going back to town.

[WackyWanderers]

Thanks Cpa Cat.  This property is about 2.5 acres maintained, 4 in hay, and 2 in trees.  So very very similar.  Thanks for re-iterating the advice about livestock.  We have now been hearing this advice consistently enough that we're going to take it seriously!

Marbles4: Yes, I suspect I am like you in that my marginal happiness doesn't change much based on my life circumstances (after giving time for hedonic adaptation).  However, I think my wife would be much happier on more land, and the happiness of my wife definitely impacts my marginal happiness!! :)

[waltworks]

Well, I guess you get to find out if you're #cottagecore or not!

-W

[bacchi]

One thing that isn't mentioned is your age and field.

You're 40. That's getting long in the teeth for software. Your career may be over, or at least sidelined, by the time you're 50. Will you have saved enough for the farm and for retirement by then?

[Metalcat]

The question is not so much about whether or not you would  enjoy living on a high maintenance rural property, but if you would enjoy living there more than you would enjoy *any other option* that you could choose for the money and time it will cost you.

Look at literally every other dream you can have before paying a huge premium for this particular one, because a purchase like this closes a lot of doors, so it better be "the one" before making that commitment.

[ender]

Something else to consider is whether you will regret buying this, hating the lifestyle, and potentially losing $100k or more vs not buying it and wondering.

It certainly sounds like you will regret NOT doing this far more than if you regretted doing so.

[Goldielocks]

On your comment about future resale, and potentially limited number of buyers that would be attracted to it.

Given your experience with AirBNB and this specific property's attributes, I would think you could be successful building it up as a business around B&B, etc.   (possibly with small petting animals / animals just to look at / mini farm experience/ something to attract people to it over another place closer to town).

That way you would expand your pool of buyers to those interested in taking over a profitable business and those that want it just for their own use... or you could hire a manager and keep the business yourselves after you move on.

[Goldielocks]

You asked about our experience with property / maintenance.   DH and I rebuilt our home from studs out 10 years ago, mostly ourselves.   As others have said, interest in the maintenance work waxes and wanes over the years, particularly if one of you ends up with health issues.   Sometimes it is nice not to HAVE to spend the weekend doing never ending maintenance, or have to use up a week of vacation each year to do some of the larger projects.

Letting that 2.5 acres of maintained property revert to 0.25 acres of maintained property would be a huge help.

[KBecks]

Or, you could make a nice wedding venue for small garden weddings.  But you know, just having some options in your back pocket is good.

[Gronnie]

How long have you been out of SE? I assume you don't have a job already lined up?

How good is the internet in this rural location?

Oops I completely missed the line in the OP where you stated you have already gone back to work!

My question about the quality of internet would still be an important consideration though.

[WackyWanderers]

Gronie: Before we went into contract, we added a contingency that allowed us to back out of the sale if internet bandwidth wasn't high enough (since the property had never been hooked up to internet before).  During our inspection period I actually purchased and installed CenturyLink internet... clocked 30mbps down and 6mbps up, which is plenty for my remote work.

Goldielocks: I think we will see if we can plant some saplings on parts of the property so we can let it become unmaintained treed area over time .. The zoning allows running a Bed & Breakfast, but does not allow other kinds of businesses that cause more than a couple of car trips per day to/from the property ..

bachi: We saved our current nest egg over a period of 5 years working at the job that I'm now back working at... however, much of that was luck on the company stock really taking off.  It likely won't be as fast this time, but I feel that 10 years is a decent amount of time to rebuild our retirement savings, especially if we can continue having all our living expenses covered by our rentals and invest nearly 100% of what comes in from my job.

Thanks everyone for all your feedback and ideas.  This was a super hard and stressful decision for me, but we are going through with it and close on the property on July 29th.  It will be an experience, one way or another ... and hopefully we find out that we're the type of people that really do enjoy maintaining our property.  If not, we'll have to cut our losses at some point and move on to the next adventure.

[iris lily]

Good luck OP on this new adventure! I think it will be fun and that property is  cool and I love the house.

[Dicey]

Gronie: Before we went into contract, we added a contingency that allowed us to back out of the sale if internet bandwidth wasn't high enough (since the property had never been hooked up to internet before).  During our inspection period I actually purchased and installed CenturyLink internet... clocked 30mbps down and 6mbps up, which is plenty for my remote work.

Goldielocks: I think we will see if we can plant some saplings on parts of the property so we can let it become unmaintained treed area over time .. The zoning allows running a Bed & Breakfast, but does not allow other kinds of businesses that cause more than a couple of car trips per day to/from the property ..

bachi: We saved our current nest egg over a period of 5 years working at the job that I'm now back working at... however, much of that was luck on the company stock really taking off.  It likely won't be as fast this time, but I feel that 10 years is a decent amount of time to rebuild our retirement savings, especially if we can continue having all our living expenses covered by our rentals and invest nearly 100% of what comes in from my job.

Thanks everyone for all your feedback and ideas.  This was a super hard and stressful decision for me, but we are going through with it and close on the property on July 29th.  It will be an experience, one way or another ... and hopefully we find out that we're the type of people that really do enjoy maintaining our property.  If not, we'll have to cut our losses at some point and move on to the next adventure.

Wow! A five day close in this business climate?

[GoCubsGo]

Wow, what a bold move.  It's hard to shoot down your plan when I look at pictures of the hobby farm.  Truly amazing and the extra house combined with your Air BnB acumen will definitely help.  I always look at worst case scenarios when making a big move.  In this case it sounds like you have multiple exit strategies between the city and country property that would minimize massive losses.  I personally would hedge the real estate portfolio with more equities but that's your personal preference.

You may end up taking the farm ADU rental proceeds and have to put them towards extra maintenance help because I think that is going to be an eye opener in regards to time and money spent.  Again, getting that ADU up and running will definitely help the situation.  Keep your finger on the pulse of your kids as they approach teenage years as that would be the only thing that could cause you to move off the farm (or maybe not if they love it).  Your house is only as happy as your least happy family member.

If you can live in an RV with little kids, I'm not going to bet against you in this farm endeavor.  Best of luck and please keep us posted.  This would be a super interesting journey to follow!

[WackyWanderers]

Wow! A five day close in this business climate?

Closing consists of signing a Docusign and then wiring the money to escrow, so there's not much to do.  The only reason it's even taking 5 days is because the seller has to move their stuff out.

[Dicey]

Wow! A five day close in this business climate?

Closing consists of signing a Docusign and then wiring the money to escrow, so there's not much to do.  The only reason it's even taking 5 days is because the seller has to move their stuff out.

Title insurance and all that can be done that quickly? Not here. Impressive.

[WackyWanderers]

Title insurance and all that can be done that quickly? Not here. Impressive.

We've been in contract since July 7th, so they've had time to do title insurance.  July 23rd was the last day of our inspection period where we could still pull out of the deal penalty free, and it was during that period inspection period that I started freaking out and started this thread :)

[Goldielocks]

Title insurance and all that can be done that quickly? Not here. Impressive.

We've been in contract since July 7th, so they've had time to do title insurance.  July 23rd was the last day of our inspection period where we could still pull out of the deal penalty free, and it was during that period inspection period that I started freaking out and started this thread :)

Most of the caution / negative comments are simply because you are definitely not the only one who bit off a large project.   I have regrets about my large passion project, and caution people away, but I am not sure that I wouldn't do it again, if I was 10 years younger me.

[WackyWanderers]

Most of the caution / negative comments are simply because you are definitely not the only one who bit off a large project.   I have regrets about my large passion project, and caution people away, but I am not sure that I wouldn't do it again, if I was 10 years younger me.

I appreciate all the cautious advice ... although in retrospect it might not have been wise to solicit the advice, given that there was probably nothing anyone could say to talk us out of the decision, and now I'm going into this scared out of my mind rather than naive and blissful! :)

If it's a mistake, I think it's a mistake we'll just need to make for ourselves to really believe it unfortunately.  Given that the current owners lived there for 40 years, I know there are at-least 2 people in the world that felt all the cost and effort were worth it!

My latest scare: I contacted the electric company to switch the power over to our names and they let me know that the average electric bill at this property has been $240/mo!  I don't even know how that's possible considering that the heat is oil/wood/propane and there's no AC.  There are 2 electric water heaters, an electric stove/oven, and a few electric baseboard heaters in a couple of the outbuildings ...

[KBecks]

Looks like you have a project to figure that out!

[waltworks]

And so it begins...

-W

[MissPeach]

OP - Have you heard of the Frugalwoods blog? They moved to a rural homestead from a city life and blog quite honestly about it from what I can tell as a city dweller. I would highly recommend looking at it to see if there's anything you're idealizing or not considering.

[marbles4]

Most of the caution / negative comments are simply because you are definitely not the only one who bit off a large project.   I have regrets about my large passion project, and caution people away, but I am not sure that I wouldn't do it again, if I was 10 years younger me.

I appreciate all the cautious advice ... although in retrospect it might not have been wise to solicit the advice, given that there was probably nothing anyone could say to talk us out of the decision, and now I'm going into this scared out of my mind rather than naive and blissful! :)

Congratulations! It sounds like an exciting adventure to me anyway.

I think being scared out of your mind is normal. I remember I stayed up all hours of the night after our official "backing-out" period ended. Also had a newborn at the time, so that didn't help with the sleeping either.

[cchrissyy]

a few electric baseboard heaters in a couple of the outbuildings

probably that!

the most expensive electric bills I've ever had were when i rented a house with that kind of heating.  it was only a 2 bedroom place and was recently remodeled for energy efficiency and the owners were super proud of it. it had solar panels so i expected low bills but omg it was impossible to keep up with those baseboard heaters.

[Vertical Mode]

a few electric baseboard heaters in a couple of the outbuildings

probably that!

the most expensive electric bills I've ever had were when i rented a house with that kind of heating.  it was only a 2 bedroom place and was recently remodeled for energy efficiency and the owners were super proud of it. it had solar panels so i expected low bills but omg it was impossible to keep up with those baseboard heaters.

@cchrissyy is probably right about this being the culprit. We have one room with electric baseboards, and before we had quite figured out how this house was zoned, we closed off that room thinking we'd just heat the core of the house and save money...almost fell over when we got an $800 electric bill that month. We are looking hard at taking those out and replacing with forced hot water cast iron baseboards this year.

My parents have a vacation cottage in New Hampshire that has electric baseboards to supplement the woodstove. During the winter, it is typically just the baseboards about 4/7ths of the time (when the house ins't occupied with the woodstove cranking) and that runs $200-$300 per month for a small house.