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Too many stupid real estate mistakes - will this be another one?

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  • Too many stupid real estate mistakes - will this be another one?

    I'm retired, closing in on 73 years old, and financially ok if I stay in my current house. But the idea of staying here even another year is depressing. I bought this house 21 years ago when I was working here but moved out of the area in 2000 for a job. I kept the house and rented it out and it's now fully paid for. In 2006 I moved again for work -- back to my hometown, about 400 miles away from where I live now.

    Stupidly, I sold my house in my hometown (in a very HCOL area) in 2015 but lost about $200k because I had originally paid too much for it and then spent so much money on renovations. After that, I rented for my last year of work before retirement in 2016, and then rented for a year after that because of unexpected family issues - issues that kept me from moving to another state where I had thought I wanted to retire. After that year and a decision to wait things out, I decided to move back into my current house while I figured out what to do with my life after retirement. Over the previous 17-18 years though, my tenants (and time) had destroyed the house to the point where I had to gut it completely and redo everything, at a cost that exceeds what I originally paid for it. At least I live in a nice house even if I don't like the neighborhood, the city, or even the region anymore. (It was fine when I was 20+ years younger working all day, but not so great now and most of my friends who lived here before have also left the area.) I'm single, but a sister lives with me because, well, if she didn't she would be homeless. She can't help pay any housing expenses, but I am not going to throw her out on the street.

    Now, I've figured out the plan for the future but my financial planner won't share his opinion (if he has one) as to whether or not I'm going to end up house poor if I pursue it. (He is otherwise pretty good at managing my money.) I guess he thinks that since I'm reasonably intelligent, I can reach my own decision based on the results of the Monte Carlo simulation they did recently, but my real estate decisions over the past 4 years would suggest I am impetuous and should not rush headlong into anything without more input.

    Ultimately, I want to move to France, but two of my three dogs have special medical needs and I don't want to leave the state until they are no longer with me (they can get rabies waivers here because of their medical conditions and they can't go to France without current rabies vaccinations). My guess is that will be at least five years. I've decided I want to move back to my hometown until I can move to France (that's why the decision to sell my house was stupid - sometimes I just don't think things through).

    So here's where I need some input on whether this new plan is going to be stupid too.
    • I can probably clear about $600 - 650k on this house after selling costs and taxes (unless the market collapses) and a house in my hometown is going to cost me about $1.2 million. It's expensive not only because of demand in the area, but also because I need a yard for the dogs (non-negotiable), a room and bathroom for my sister, and ideally a room and bathroom for visiting friends.
    • I am approved for a loan of up to $600k and have the cash for the balance.
    • I plan to move before this house goes on the market - it's hard to show a house with three shedding dogs and a messy sister. I would pay off the purchase mortgage after this house is sold - probably 3-4 months, maybe less?
    • After purchasing a new house, I will still have cash of about $300k, and financial investments of about $2.5 million - but if the market drops, who knows what could happen to their value.
    • My RMD's plus social security will likely cover annual expenses, except for federal and state tax liabilities in this high tax state.
    • Once I'm able to move to France, I would probably again rent out the house until I decide whether or not the move will be permanent. My guess is that the rental income will more than equal the cost of life in France.

    Am I heading for another stupid decision? I will probably live to a ripe old age, and don't want to be 95 and unable to afford anything because I spent so much on a roof over my head - even if it is in my hometown. (I do suppose that once I no longer have dogs, I can get a smaller place with no yard but that's years in the future.)
    Last edited by le flaneur; 11-27-2019, 09:47 AM.

  • #2
    Why is buying the only option? You've made some bad moves in the real estate department so I'm surprised that you aren't considering renting. Do you really want to be a landlord from across the ocean?


    • #3
      First I love that you are so devoted to your dogs. That said I wouldn't count on living to 95 years old in full functioning condition and wonder if your hometown will be what you are imagining. Renting if only for ~5 years makes sense to me also. Good luck with whatever you decide.


      • #4
        I agree. Sell the house. Keep the proceeds. Rent in your hometown until you are able to move to France.


        • #5
          I'll be blunt. You're not young so planning for another 30+ years of spending isn't an issue. And you have a very good chunk of change. So you can probably afford it. But I think its a lot of money to spend to go back to your hometown just pending a move to France, then being a landlord from across the ocean.

          I'd stay put & make my current home what I wanted. But since that isn't an option, sell your current unhappy home & rent until you leave to France.
          "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓


          • #6
            I respect your dog love. Having a yard factored in my housing decisions also. I recently moved across my home town and I believe I am living in the most dog friendly place on planet Earth. Perhaps you could find a lower cola dog-friendly area in the US.


            • #7
              There is a reason your planner won’t give you an opinion.
              • How is your sister going to do in France?
              • How much better are the dogs going to do in your old home town?
              • How many will France suit your desires?
              • How can you enjoy the current location?
              Your FA can't anticipate what you want to do next year, five years, and you have PLENTY of experience with the downside of real estate.
              It's more of a question of when you actually figure out WHERE want to live and rent or own. If you rent, you can basically move where you want.
              Rent is the maximum you will pay.
              Owning is the minimum you will pay.
              Not sure a move or lease/purchase will make much difference. Without the constraints of employment, enjoy your retirement.
              One advantage of renting is that if "life events" or the "urge" strikes your fancy, it's a ton easier to pack up and go. The Monte Carlo simulation on you life satisfaction is pretty foggy. Not a criticism, just a fact.

              Last edited by Tim; 11-27-2019, 06:09 AM.


              • #8
                Another vote from a passionate dog lover for selling and renting. Renting is only a yearly commitment (if that), with little risk. I know it’s hard to find a place that allows dogs, but there are many that will do so with a reasonable pet deposit. Financially speaking, I see no reason your FA should not be able to calculate what is affordable and run “what if” scenarios. Perhaps he needs more clarity about the specifics of your options. Seeing the rent v buy scenarios side-by-side can help you decide. Assuming you’re not wanting to leave much behind after death. Very, very important to have your FA run these scenarios before you jump into this, though. You’re too old to recover from a big mistake.

                btw, almost any investment advisor investing in the stock market has been “pretty good” at managing ppl’s money over the last 10 yrs. It’s what’s ahead of you that matters most.
                Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


                • le flaneur
                  le flaneur commented
                  Editing a comment
                  You've identified exactly one of the big issues with renting - finding a landlord who will accept 3 dogs. It was doable with 2 but now that there are 3, I expect problems. But given the unanimous recommendation for renting, I'll need to give it a lot more consideration. My other big issue with renting is the cost - even the low end rent back home for a 3 bedroom house is about $50k a year. And then of course, if I rent for five years, go to France and decide I don't want to make it permanent, I've spent a lot of money that could have gone toward a purchase. But then again - with fewer, or no, dogs, I can probably get by with something that has no yard and hence, is less expensive (even in this market that has been appreciating at over 5% recently).

                  You're right - I am too old to recover from a mistake. And also that almost any investment advisor has been pretty good at managing money over the last 10 years (but there was that one...).

                  Clearly, I need to look into renting given wide support for that option - I think part of wanting to own is a security thing about owning the roof over my head, but there's not much sense in that if it means the money won't last.
                  Last edited by le flaneur; 11-27-2019, 12:18 PM.