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Old 01-28-2008, 09:40 PM   #21
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1) Do you rent or own? We own

2) If you own, have you paid off your mortgage?
Yep, we paid off a 20 year mortgage in 13 years. The last payment was made 18 years ago. (Mortgage payments were $198/month)

3) Do you count your home into your net worth equation?
Only when I want to see the big numbers and round the net worth to the nearest million.

4) Does your home figure into your financial plans during retirement?
Sure does. It's the least expensive place we can live. Taxes and insurance run about $300/month. Upkeep, about $100/month if you diy.
(Current house value ~$300K)

I'm a firm believer in home ownership as I think it adds greatly to the value of a community. Home owners make for a more stable neighborhood as they tend to take much better care of their homes than renters and landlords. Owners also have a vested interest in local schools and government, something not always shared by renters.

I'm also a firm believer that home ownership is not for everyone. Many don't want the responsibility or have the interest in maintaining a home.
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Old 01-28-2008, 09:41 PM   #22
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1. Own
2. Paid off mortgage 9 years ago.
3. No
4 No mortgage, no payment. This has allowed me to put
additional funds into stocks/bonds, so, guess my house
did figure into my retirement financial plans. I have
been retired for two years. Renting would not be a
consideration for me, but, whatever floats your boat.
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Old 01-28-2008, 10:48 PM   #23
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1) currently own two, inherited one is for sale.
2) one for sale is free & clear; mine has small mortgage not paid because (see 4)
3) yes, the houses are a diminishing part of my net worth
4) yes, somewhat pending tomorrow's vote on florida's amendment 1 (vote yes on one, thank you for your support).

if portability passes i might sell when some semblance of market returns & transfer $160k of "save our home" value to a new homestead elsewhere in florida, pay off the mortgage and invest the rest. i will not be terribly dissappointed if it does not pass because i really want to vagabond for the next five to 15 years and i'm not crazy about keeping a house in florida while i'm off on long term travel. after that venture i'd like to spend another 10 years cruising waterways of n. america & the bahamas.

so i guess my plan is either a partial sell-down with small condo or boat or just put all the proceeds into the market renting 6 months here and a year there as i travel the world and try figure out just where it is i am.

at 75 if alzheimer's hasn't gotten me, i was thinking of getting a small apartment but i also like the idea of renting then so as to not be bothered with repairs. i've been trying for two weeks to get someone to help me fix up the inherited house and what a pain. i'm pretty sure i won't want to deal with this type of thing when i'm older.
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Own outright in retirement
Old 01-28-2008, 11:21 PM   #24
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Own outright in retirement

While certainly part of my net worth, it is mostly for the rental equivalent that it provides. I am not planning on cashing out, though I may consider a reverse mortgage many years from now. I am sure renting would be much cheaper, it was cheaper when I bought it, but renting now would be more expensive than my original mortgage. The problem is, rents here increase 5-6% per year long term, more than inflation and more than incomes, and since they have to be paid after tax, it would be impossible to obtain an investment sufficient to reliably pay the rent since equities only offer a 4% safe withdrawal rate. It also allows me to limit property taxes since they are capped and would double if I purchased again.

Now may not be the best time to buy, but with so many foreclosures and repos out there it won't be long until it is.
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Old 01-28-2008, 11:26 PM   #25
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1. Own.
2. No. I'm in the process of refinancing to a somewhat larger amount, shorter term, lower rate. See the PenFed refi thread for details.
3. Yes, at a conservative estimate of FMV. Current mortgage balance listed as a liability. I think this is typical. But I use an adjusted net worth statement for retirement purposes.
4. If you mean am I counting on the equity in the house for part of my retirement funds, no. I do have a sort of simplistic assumption that I will pay off my mortgage the day I retire, so I make an adjustment for the lump sum that will take, as well as reducing my monthly expenses by the interest expense. In reality I may pay it off sooner, or I may carry the mortgage into retirement; haven't decided yet.

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Old 01-29-2008, 12:35 AM   #26
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1) Do you rent or own? Own
2) If you own, have you paid off your mortgage? Yes
3) Do you count your home into your net worth equation? Yes
4) Does your home figure into your financial plans during retirement? Yes
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Old 01-29-2008, 12:53 AM   #27
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1) Do you rent or own? OWN
2) If you own, have you paid off your mortgage? NO
3) Do you count your home into your net worth equation? YES
4) Does your home figure into your financial plans during retirement? ONLY FOR EXPENSES

I thought the article did a fairly decent job of presenting both sides. Like so many things this question is very much a question of locality and timing, so it's no surprise personal experiences vary. Personal preference is a major factor also.......I enjoy the yardwork, but I budget for an increasing level of hired help going forward.

In our market (Wash DC Suburbs) I found a home listed at 400K and identical home available for rent at $2450/mo. The dinkytown rent vs. buy calculator breakeven point is only 1.2 to 1.7 yrs (favoring purchase) for this pair of homes.
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Old 01-29-2008, 07:17 AM   #28
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I’m going to add another factor to consider in the “rent vs. buy” decision. First, I will answer the questions posed by MMND:

1) Do you rent or own? Own two homes, one is a rental w/positive cash flow
2) If you own, have you paid off your mortgage? One mortgage paid off
3) Do you count your home into your net worth equation? Yes
4) Does your home figure into your financial plans during retirement? Yes

This point came to mind from another thread regarding long term care insurance. It is particularly applicable to those who can’t or decide not to purchase this insurance. I know, from personal experience, how high the cost of LTC is. In fact, the cost of this care has left many couples bankrupt. As you may be aware, Medicaid will pay for nursing home care only after most of your assets are depleted. You are permitted to retain your home, one automobile, and a modest amount of other assets and income.

Therefore, those who don’t have LTC insurance may have some protection from financial ruin brought on by the cost of nursing home care by owing their home instead of renting.

Here is a brief description of how Medicaid works for nursing home care. I got it from: http://www.fool.com/retirement/retireeport/2000/retireeport000207.htm

While each state determines eligibility for Medicaid under its own rules, in general the person receiving such services may retain just a very modest amount of personal assets (less than $2,000) and only about $30 per month in income for personal needs. Certain assets such as a home, its contents, and one car are exempt. Everything else goes to the state to pay for the care provided, and that includes any pension and/or Social Security income. A spouse of someone who is in a Medicaid-approved nursing facility may keep the house, its contents, one car, up to about $82,000 in other assets, and a monthly income of some $2,000. All else goes to help pay for the nursing home care of the other spouse. And by the way, Medicaid authorities, not the family, will select the nursing home facility.
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Old 01-29-2008, 07:38 AM   #29
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1) Do you rent or own? Own
2) If you own, have you paid off your mortgage? No, owe about $40K @4.5%
3) Do you count your home into your net worth equation? No
4) Does your home figure into your financial plans during retirement? Only to the extent that it fills the cost-of-housing need

I struggle with this whole discussion because, for me, a home is so much more than a place to eat and sleep. I live on 1.5
partially wooded acres with a pond and stream. Wildlife abounds, especially birds. I have put a lot of myself into this house and property. Everything is exactly the way I like it. I don't have to ask a landlord's permission to change anything and, for me, that is priceless. As a long time member of the community, people know me and I have a sense of respect and belonging.

So, for me, it would be like trying to decide whether it is cheaper to eat at McDonald's or your own home cooked meal - not a clean comparison.
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Old 01-29-2008, 08:06 AM   #30
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Originally Posted by travelover View Post
So, for me, it would be like trying to decide whether it is cheaper to eat at McDonald's or your own home cooked meal - not a clean comparison.
Sounds about right. Additionally, with dogs, cat, kids, etc., most landlords would not be interested in me as a tenant.

So I'm unlikely to ever be a renter again by choice, but for the record:

1) Own.
2) Mortgage
3) Yes
4) No

Another thing missing from all of this is tax considerations. If you are in a high bracket, the tax deductions afforded by home ownership become a lot more valuable.
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Old 01-29-2008, 08:16 AM   #31
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1) Do you rent or own? Own, residence and weekend place.

2) If you own, have you paid off your mortgage?

Yes - recently paid off on the residence. No on the weekend home (still using the deduction) but plan to pay off when DW retires next year. The calculation here was that the SWR on the amount owed on the mortgages does not come close to the amount of the mortgage (which is based on the higher amount originally mortgaged - about 10 years to go on each when paid off). I would rather do away with the mortgages than trust the equivalent lump sum to a potential short term bear immediately after retirement.

3) Do you count your home into your net worth equation?

We argued this one before and I am sticking with my answer - yes, of course, if I am trying to answer the technical question what is your net worth (dead). No, if I am answering the question, how much do I have to live on. Then I count them both as expenses.

4) Does your home figure into your financial plans during retirement?

Hell yes, I plan to leave them to my kids. Or, if everything goes to hell I will sell the weekend place. Even in a lousy RE market the reduction in costs will allow a substantial cutback and whatever cash it delivers will enable some extravagances.

None of this answers the question, is it better to rent or own. If I sold my home I could rent a nice place for less than I would expect to earn on the payoff plus the cost of maintenance. But I like my house and location so I choose to stay. The weekend place is even more of a bad deal if I just tote up what it costs per weekend spent there. But that is not the equation that counts -- I LIKE having the place. Having an extra pile of money at Vanguard wouldn't return as much enjoyment.
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Old 01-29-2008, 08:23 AM   #32
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1) Do you rent or own? Own

2) If you own, have you paid off your mortgage? Yes

3) Do you count your home into your net worth equation?

Yes, and my car too. I suppose that is how it's done? I consider my home to be an asset. Here's the net worth calculator on CNN/Money, which does include the house as an asset. Calculators - Net Worth Calculator

Whether or not the value of my home is included in my net worth doesn't substantially affect it, one way or another. I guess that's one of the advantages of not living in California.

4) Does your home figure into your financial plans during retirement?

Yes, and so does my cell phone, for example. Both affect my estimated expenses during retirement, as they would for many. Or

No, the equity in my home is not part of my portfolio and I do not plan to use it to fund my retirement. I will probably downsize by about $50K, but haven't yet planned what to do with that (probable) equity.

Quote:
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Having an extra pile of money at Vanguard wouldn't return as much enjoyment.
Why, shame on you! I love having my own home, too. There isn't a white wall anywhere in it. It's fun looking at the progress of my investments online, but it's more fun doing so from my own home.
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Old 01-29-2008, 08:47 AM   #33
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1) Do you rent or own? Both. We own but currently are renting out our residence while on assignment for DH's job. We have been renting the past ~ 2 yrs and have enjoyed it more than we thought we would.
2) If you own, have you paid off your mortgage? No
3) Do you count your home into your net worth equation? Yes, if we decide to sell and rent after FIRE. No, if we decide to continue to own and live in our home. FIRE plans very undecided right now as we are undecided whether we'd like to be PT's (perpetual travelers) for a while; if so, we may sell, or might not...:confused: It's too far off to know right now.
4) Does your home figure into your financial plans for retirement? See above
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(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
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Old 01-29-2008, 08:53 AM   #34
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I for one have NO IDEA why we are re-hashing this topic for the umpteenth time...........

One of the things mentioned in the "Millionaire Next Door" is that the "average" millonaire profiled in the book was a HOMEOWNER, had lived there MANY YEARS, and paid off their mortgage early in most cases.

There's always more complex ways to do things, and it looked like it worked out for MMND...........but like some people I like simple over complex, so I own my home, and not any rental properties because I want to avoid the headaches..........

I suppose a "hybrid" would be living in the lower half of a duplex you own, and renting out the rest or something........
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Old 01-29-2008, 08:59 AM   #35
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1) Do you rent or own? own
2) If you own, have you paid off your mortgage? no
3) Do you count your home into your net worth equation? yes
4) Does your home figure into your financial plans during retirement? only as a place to live

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Old 01-29-2008, 09:02 AM   #36
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I for one have NO IDEA why we are re-hashing this topic for the umpteenth time...........

One of the things mentioned in the "Millionaire Next Door" is that the "average" millonaire profiled in the book was a HOMEOWNER, had lived there MANY YEARS, and paid off their mortgage early in most cases.

There's always more complex ways to do things, and it looked like it worked out for MMND...........but like some people I like simple over complex, so I own my home, and not any rental properties because I want to avoid the headaches..........

I suppose a "hybrid" would be living in the lower half of a duplex you own, and renting out the rest or something........
Hear, hear!! What he said. Wish I had posted this. I love the simplicity of owning my own, paid off home and not having to be concerned about the relative merits of rent vs mortgage.

I wouldn't want to live in the lower half of a duplex that I own, and rent out the rest. Yuck. For me, being a landlord would be w*rk. My objective is to ER, not to w*rk.
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Old 01-29-2008, 09:04 AM   #37
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1) Do you rent or own? Own
2) If you own, have you paid off your mortgage? No
3) Do you count your home into your net worth equation? Yes of course
4) Does your home figure into your financial plans during retirement? Yes - I'll either have very low housing costs or an extra amount of funds in my portfolio.
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Old 01-29-2008, 09:05 AM   #38
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It also allows me to limit property taxes since they are capped and would double if I purchased again.
Quote:
Originally Posted by donheff View Post
None of this answers the question, is it better to rent or own. ...I LIKE having the place. Having an extra pile of money at Vanguard wouldn't return as much enjoyment.
my answer above also does not answer the rent or own question quite as expected.

in my situation, it would cost about three times in rent as i pay to live here and without florida's "save our home" homestead my taxes would increase fivefold. but that situation is particular to me because i bought the year soh came into play.

the only reason i'd consider purchasing a smaller place in florida is because if i took all my soh value with me my taxes would drop to zero plus i could pocket the change. even though i don't now want to live in florida anymore, that would give me an option to hold off on making such a decision until the future if i so desired & by when my feelings might change.

while my home is very comfortable, incredibly convenient and cheap to keep--really an excellent place to retire--i find the idea of owning now an incumberance when i just want to be free to wonder.

so really i have no idea why i answered this question because it might not relate well to me after all.
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Old 01-29-2008, 09:13 AM   #39
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1) Do you rent or own?

We own.

2) If you own, have you paid off your mortgage?

Yes.

3) Do you count your home into your net worth equation?

Yes, but only as a "last resort".

4) Does your home figure into your financial plans during retirement?

Yes/No/Maybe. In desperate times it is a source of cash once almost all others are exhausted. But a lot of others would be far worse off than us.
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Old 01-29-2008, 09:13 AM   #40
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If I was in CA, NYC or other high cost area, I'd probably rent instead of own. Where I currently live, it is approximately the same cost to rent or own a place. Maybe a little more expensive to own if I bought today instead of 5 years ago. But the transaction costs of selling a house and buying a house later don't make sense (realtor fees, redecorating/painting/fixing up, moving expenses, utility connection fees, disruptions to life, etc). If my house were an ETF and buying/selling only cost me $10.95/trade, I'd probably sell it now.

In my mind, the financial decision is driven by the market value of houses vs. the market rental rates of a similar dwelling. The emotional decision is multi-faceted and driven by too many factors to list. Ultimately, own vs rent is a personal decision and a location-specific decision.
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