Author Topic: instead of renting out a past home...renting out a future home  (Read 2011 times)

shamelessHedon

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instead of renting out a past home...renting out a future home
« on: December 18, 2013, 04:48:57 PM »
Seems one of the norms is to rent out your old house when you move on. As we know where we are ending up when we retire, we are going to buy our place there now and rent it out till we are ready to inhabit it.

Anyone else doing this "backwards"?. Any disadvantages I don't see?

golfer44

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Re: instead of renting out a past home...renting out a future home
« Reply #1 on: December 18, 2013, 04:55:05 PM »
If you're financing, owner occupant financing might be dicey.

arebelspy

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Re: instead of renting out a past home...renting out a future home
« Reply #2 on: December 18, 2013, 05:07:32 PM »
Golfer44 nailed it.

You get a better interest rate as an owner occupant, so turning an old one into a rental is at the better rate.  Buying a future one will be at a higher investment rate, and then you may be able to refi as an owner occupant when you move in, but there's no guarantee the rate will be as low then.

If you are paying in cash, you may not care.
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KingCoin

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Re: instead of renting out a past home...renting out a future home
« Reply #3 on: December 18, 2013, 05:23:17 PM »
Also, this presumes that you know both where and in what type of house you'd like to live in in the future. Both are usually pretty variable as life circumstances change.

Cooperd0g

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Re: instead of renting out a past home...renting out a future home
« Reply #4 on: December 18, 2013, 06:46:55 PM »
Also, this presumes that you know both where and in what type of house you'd like to live in in the future. Both are usually pretty variable as life circumstances change.

True things can change, but he says they know where they want to end up. Some people actually do know what they plan to do in life.

OP, I have thought about this as well. If you run the numbers and it works for you then great. I'm not convinced on a decent rental market in places I want to retire so paying interest versus earning interest/returns on investing didn't seem smart to me.

KingCoin

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Re: instead of renting out a past home...renting out a future home
« Reply #5 on: December 18, 2013, 07:46:34 PM »
Also, this presumes that you know both where and in what type of house you'd like to live in in the future. Both are usually pretty variable as life circumstances change.

True things can change, but he says they know where they want to end up. Some people actually do know what they plan to do in life.

Fair enough, but life has a funny way of throwing curve balls.  Family circumstances change, jobs change, attitudes change, finances change, the housing market changes.  It would be no fun to end up with two houses you don't want.

The most important question is, does the other house constitute a good investment in its own right? If the numbers work, it could be a reasonable plan. If not, there's no reason to saddle yourself with a dubious investment and the attendant mental and financial pain.

Slight variation of this idea has come up three times in the forum recently. I think rising prices have caused people to start thinking multiple steps ahead. However, buying for fear of getting priced out is usually a poor strategy.