Author Topic: Relocating to lower housing costs. Am I missing something?  (Read 4124 times)

strider3700

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Relocating to lower housing costs. Am I missing something?
« on: February 19, 2012, 10:09:22 PM »
I currently owe $207,000 on a house we bought 3 years ago for $332,000.   Working hard and putting extra money at it  we're on track to pay it off in 14 years.  My wife brings in most of the money while I stay home with the kids and make a small (tiny) amount of money in the evenings  which I put at the mortgage.   She makes about $74,000 a year before lots of deductions.   We're pretty good mustachians and are quite frugal.  A large chunk of our take home pay currently 46% goes to the mortgage with roughly half of that going to interest though. 

 Recently we started thinking about moving to the far side of the continent.   It looks like she has an excellent chance of transferring her job there.  So she'd make exactly the same as she currently does.  THey would pay for the relocation or at least most of it. 

We could buy an insane over the top dream house there for less then we currently owe here.  We spoke with our realtor and he figures asking $350,000 for our house is realistic, so there is a good chance we'll have at least $100,000 in the bank to put down should we make this move.  With $100,000 it's possible to find a house in the new location that we want and be mortgage free or very close to it.    $100,000 won't buy you the worst empty lot in the worst part of town here.

So I'm thinking from a financial stand point this move is the right one.  We're in Canada so there are no tax advantages to having a mortgage.   The cost of living there is slightly higher then here  but the savings on the mortgage interest easily out weighs 50% high electricity costs, and 10% higher food costs.   The heating bill would be higher due to a harsher climate  but energy savings is something I'm good at.    There are other issues at play like my parents are really going to miss their grandkids but  ignoring that   from a purely financial stand point   am I correct  we should do this?     

jd

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #1 on: February 20, 2012, 01:13:42 AM »
From a financial standpoint, it would make sense to move.  Of course there are other factors like quality of life.  Tax rates in different provinces would be another thing to consider.  Would it be easy for your wife to get transferred back if your family doesn't like the move?

Have you considered renting a place in the new location?  That way, if things don't work out, there's way less hassle and expense to move.  Depending on the market, it could also take a long time to sell.  We're considering a move to a smaller town as well, and will likely rent for a while to make sure we like living there before potentially buying.

salmp01

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #2 on: February 21, 2012, 09:21:05 AM »
I would recommend renting for a year.   There are lots of costs associated with buying a house and if you decide to leave after a year or two renting would probably be a better option. 

chrissyo

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #3 on: February 21, 2012, 10:54:38 AM »
From a purely financial standpoint, it absolutely makes sense. As others have mentioned, you just need to consider quality of life factors, and how those suit your own personal preferences and goals. In some instances, you can not only have lower living costs, but a better quality of life, too. I am currently in the process of making a move for the very same reason. We'll be able to sell our 700ish sq ft flat in London for about 320-330k ($500-520k) and will probably buy a bigger home in our new desired location - which is not only beautiful, but has a lot of amenities, opportunity and great people - for $200-300k. Because we own our place outright, we are really excited about the opportunity to free up some of the cash we have tied up and re-purpose the funds to other investment opportunities.

In our case, we also have the 'advantage' that our families are split between England and the US. Either way, we risk being far away from one set of parents, and knowing that makes us feel less guilty of moving much further away from DH's parents. Also, we figure even if we did need to move back to help look after them, we would be in an even better financial position by planning for our current life rather than planning in anticipation of something that may or may not happen in the future (them requiring our assistance).

AlexK

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #4 on: February 21, 2012, 11:18:01 AM »
I live near my parents but my brother and sister (who both have children) moved across the country for various reasons.  I won't be having children.  My mother is devastated because she rarely gets to see her grandchildren.  When they do visit every two years or so she cries because she missed so much of their growth and stays up all night holding them while they sleep. 

Also the whole-family trips across the country to visit the parents every two years aren't cheap.

Just some things to think about.

sirspiffy

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #5 on: March 06, 2012, 06:35:42 PM »
Move man.  Change is good.

Also the company is paying for relocation, I'm pretty sure that includes some cash for the new digs to cover fees.   The conservative thing to do would be to find absurdly cheap living space for a few months then once you know the lay of the land move.  I'm more adventurous and trust my first impressions though, if you hustle you can find 90% of the good stuff in town in a week and position yourself accordingly.

Forget all that quality of life junk, sounds like you're not taking too much of a hit there.  Do your best to boost your cashflow and escape the Rat Race forever.  Once positive cashflow hits double your expenses you're free. 

You can't put a price on freedom.  It affords you a ton of opportunities and you will achieve a luxurious golden 'stache quickly.  Check that loopnet and see what businesses are for sale in your area too it might be worth buying a profitable local business in the new area with the cash you'd be taking out.

arebelspy

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #6 on: March 06, 2012, 07:07:30 PM »
I would recommend renting for a year.   

I agree.  Renting gives you two big advantages:
1) If you don't like it, you're not locked in, having already purchased.  You can move back easily.
2) You can scope out the housing market.  Housing varies and is very local, so by living there you can look for a good deal and get a feel of the market there and get a better deal, often saving more in money than you paid to rent!

Just make sure to gt a month to month place right away so you can jump on a great deal and not be locked in to a lease if you do find an amazing place quickly.
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Gerard

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #7 on: March 10, 2012, 05:22:14 PM »
If you're talking about moving to Atlantic Canada, be aware that many of the cheaper houses are in pretty bad shape -- there are things on the market out here that would have been torn down and replaced in the rest of the country. Also, it can be hard to be fully mustachian, as transit is not great. But with a good attitude and some patience, you can make it work.
I agree with previous posters that you should consider renting for a while. One option might be to see if the local university (if there is one) has somewhere that profs post their homes for rent for a year when they go on sabbatical. Or move in the spring and rent an apartment in a university residence for the summer while house shopping. Avoid the evil landlord problem.

HeidiO

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #8 on: March 12, 2012, 10:55:07 PM »
Would there be a big climate change?  This may not be all that important to you, but it is huge for me.  I have lived in several different climates (all in the US) from a town on the border of Ontario to the south of the US to California.  I'd live in British Columbia in a heartbeat (honeymooned in Vancouver and Whistler) but you'd have to pull me kicking and screaming into Ontario.
Heidi

strider3700

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Re: Relocating to lower housing costs. Am I missing something?
« Reply #9 on: March 27, 2012, 12:02:49 PM »
Thanks for the advice all.  Yes it would be atlantic canada.  I'll definitely be looking over the housing very closely before buying.   Luckily given enough time I can repair anything on my own if need be so doing repairs saves me a lot.   Having said that  I'm not looking for a close to condemned house to repair.    I'll be taking a serious look at renting to begin with.   1 I agree it will let me safely shop around for the right house at the right price.   It will also let me get a good feel for what the rental market is actually like.    Out here in BC the rental market is dumb to get into.  Housing costs way too much to make a good investment for rental purposes.  Back east the rental costs seem reasonably high and the housing is cheap that at least on the surface it appears to be a reasonable investment. 

As for quality of life changes,  I'm hoping to move from the suburbs to a hobby farm type setup.  That's an improvement for me.   Bigger is worse in my mind.  Really all that I want near me for amenities is a library and a public swimming pool.  Not needing to drive 2 hours to get to the hardware store and grocery store is also a requirement.  Beyond that everything else is a bonus at best.

Climate is a bit colder then here which means snow instead of rain in the winter.  Summer is comparable.  Precip is comparable.  It appears to be quite a bit windier then here which is fine, it just means I'll dust off my wind generator books and put away the solar ones for awhile.