The downsizing plan

[Ronstar]

I've finally talked DW into downsizing 10-15 years from now, when it will become even harder for me to maintain our oversized house and property. I'm thinking of a small house or half of a duplex (about $250k). I have the area picked out. I have this idea where I could buy it now and have my 80 y.o. MIL rent it from me. I'd put 20% down and mortgage the rest. It might come close to cash flowing if I can get a steal. Me and DW would move in in 10 -15 years and sell our house (about $700k). I just don't think I'll be able to get as good a deal 10-15 years from now as I could get now. I'm still working (for about 3 more years), and would probably have enough $ saved in 3 years to pay it off. Am I missing something, or could this work?

 

[chris2008]

We have often thought about doing a similar thing but in 10-15 years we might prefer a different location or the area might deteriorate or our overall situation (health, family) might have changed or... or... or...
So we have decided not to plan so far in advance other than to save the funds to keep us flexible.
If your home is oversized and hard to maintain now, you might need a solution for this sooner than in 10-15 years, when it gets "even harder".

 

[Texarkandy]

Seems to me 10-15 years out is a bit far to be picking out a particular house now. (I hope MIL knows about this plan to be her landlord till she's 90 or 95 )

Since you are only working 3 more years - why not downsize now (or in 3 years)?

 

[nun]

I've finally talked DW into downsizing 10-15 years from now, when it will become even harder for me to maintain our oversized house and property. I'm thinking of a small house or half of a duplex (about $250k). I have the area picked out. I have this idea where I could buy it now and have my 80 y.o. MIL rent it from me. I'd put 20% down and mortgage the rest. It might come close to cash flowing if I can get a steal. Me and DW would move in in 10 -15 years and sell our house (about $700k). I just don't think I'll be able to get as good a deal 10-15 years from now as I could get now. I'm still working (for about 3 more years), and would probably have enough $ saved in 3 years to pay it off. Am I missing something, or could this work?

Sounds like a good idea, rental property is a great way to go. My one criticism would be to ask why you plan to keep living in a house that's "oversized". Why not sell the big house and buy a duplex and live in it with your MIL. Sounds good financially, I don't know how you'd manage with the MIL living so closely

I bought a two family 10 years ago. I live on the top 2 floors and rent out the ground floor apartment for $1500 a month. I live close to a couple of universities so there's a good pool of renters. The rent covers my escrow and mortgage interest payments so I'll living in the place free of charge and paying off the principal quickly.

 

[2B]

Downsizing is the way to go. That's in my plan and I have almost convinced DW. She is still stressing over the fate of all her stuff like family [-]junk[/-] heirlooms. She also thinks we need to have an attached hotel facility in case anyone wants to visit us. I keep telling her to get used to it or get a real j*b. Mega-house isn't in my retirement budget.

 

[Bimmerbill]

I'm downsized now and can't keep up with the yardwork and maintenance! I only have a 1400 sq foot ranch.

 

[W2R]

It is very difficult to predict what you might want, including location, 10-15 years down the road.

I would do it as an investment. You would probably have to do a lot of the upkeep on whatever house your MIL lives in anyway, right? So, it probably wouldn't be much more trouble or work than any other investment. You have a ready-made tenant who wouldn't trash the place or leave in the middle of the night without paying the rent, definitely a big advantage for your venture into the landlord business. You could guarantee her that the rent wouldn't increase, and that would be great for her, too.

If you decide to buy it, I would also suggest keeping your mind open to the possibility that you may prefer to live elsewhere later on. If that turns out to be the case, eventually you will have two houses to sell.

 

[Jay_Gatsby]

Downsizing is the way to go. That's in my plan and I have almost convinced DW. She is still stressing over the fate of all her stuff like family [-]junk[/-] heirlooms. She also thinks we need to have an attached hotel facility in case anyone wants to visit us. I keep telling her to get used to it or get a real j*b. Mega-house isn't in my retirement budget.

I'd be careful of that attitude, but then again, I don't know your wife. Seriously though, I agree about downsizing and now is probably the time to consider purchasing your retirement home (and renting it out to your MIL). As for moving from your current mega-house, now is probably NOT the time due to falling home prices. There's nothing wrong with staying where you are for the next few years, particularly when your time horizon for moving to your retirement home is at least 10 years in the future.

 

[haha]

I keep telling her to get used to it or get a real j*b. Mega-house isn't in my retirement budget.

I am very slow learner, but one thing I have learned is that women do not often like the implication that whatever way they spend their time is not a "real job".

Ha

 

[2B]

I am very slow learner, but one thing I have learned is that women do not often like the implication that whatever way they spend their time is not a "real job".

Ha

She hates me saying that she doesn't have a real job but here is the basic fact. So far, her YTD gross income is just under $2,500. She works part time with a very limited demand for her time. If she got a "real job," I'd think she could get around $40 - 50,000 per year.

 

[Jay_Gatsby]

She hates me saying that she doesn't have a real job but here is the basic fact. So far, her YTD gross income is just under $2,500. She works part time with a very limited demand for her time. If she got a "real job," I'd think she could get around $40 - 50,000 per year.

Not to derail the thread, but why doesn't she get a job paying that kind of money?

 

[haha]

She hates me saying that she doesn't have a real job but here is the basic fact. So far, her YTD gross income is just under $2,500. She works part time with a very limited demand for her time. If she got a "real job," I'd think she could get around $40 - 50,000 per year.

I definitely do not disagree. If she is your GF, tell her to get a real job or hit the road. If on the other hand you are married to her, tell her how wonderful and hard working she is.

Not recognizing power doesn't make power disappear.

 

[samclem]

Downsizing is the way to go. That's in my plan and I have almost convinced DW. She is still stressing over the fate of all her stuff like family [-]junk[/-] heirlooms. She also thinks we need to have an attached hotel facility in case anyone wants to visit us. I keep telling her to get used to it or get a real j*b. Mega-house isn't in my retirement budget.

I sense a larger problem. But, different couples handle things in different ways. What I might say (tempered by having spent some time in the doghose over the years) :

"Downsizing is the way to go. That's in [-]my[/-] our plan [-]and I have almost convinced DW[/-] that we've agreed on. She is still stressing over the fate of all [-]her stuff[/-] the things like family [-]junk[/-] heirlooms. She also thinks we need to have an attached hotel facility in case anyone wants to visit us. I [-]keep telling her to[/-] have suggested that she try to see the advantages of downsizing [-]get used to it[/-] or [-]get a real j*b. [/-] or that she consider ways she could use her talents to increase our income. Mega-house isn't in [-]my[/-] our retirement budget."

 

[Jay_Gatsby]

I sense a larger problem. But, different couples handle things in different ways. What I might say (tempered by having spent some time in the doghose over the years) :

"Downsizing is the way to go. That's in [-]my[/-] our plan [-]and I have almost convinced DW[/-] that we've agreed on. She is still stressing over the fate of all [-]her stuff[/-] the things like family [-]junk[/-] heirlooms. She also thinks we need to have an attached hotel facility in case anyone wants to visit us. I [-]keep telling her to[/-] have suggested that she try to see the advantages of downsizing [-]get used to it[/-] or [-]get a real j*b. [/-] or that she consider ways she could use her talents to increase our income. Mega-house isn't in [-]my[/-] our retirement budget."

We have a winner!

 

[Dawg52]

Is this downsizing or what? A $1.75 house sold on Ebay. With my portfolio going down the toilet, might be what I have to downsize to.

Bid of $1.75 on eBay gets abandoned Saginaw home - Yahoo! News

 

[Marquette]

Living in a 250 sq ft room, I can't comment on downsizing. I am going to suggest to my wife that she get a real job, though. Likely downsizing will be even easier at that point.

 

[Jay_Gatsby]

Living in a 250 sq ft room, I can't comment on downsizing. I am going to suggest to my wife that she get a real job, though. Likely downsizing will be even easier at that point.

What's left of your portfolio will be downsized in the process.

 

[Bimmerbill]

Living in a 250 sq ft room, I can't comment on downsizing. I am going to suggest to my wife that she get a real job, though. Likely downsizing will be even easier at that point.

Haha, thanks that made me laugh!

 

[Ronstar]

Thanks for all of the great advice. Downsizing now does make some sense, but I now have a woodworking shop (outbuilding) that I wont have when I downsize to a duplex. I would like to enjoy the shop for several years after retirement. I'm thinking of a way to downsize, but bring my toys with me. I also dont want to move until I sell my house and now is not a good time to do that.

My maintenance problem is not the physical demands (yet), but the time demands. Full retirement will fix the time problem. But I cant see myself at 70 y.o. shoveling mulch and snow, trimming trees, cleaning gutters, staining overhangs.

Maybe 10-15 years is a bit far out to pick out a house and location. The DW would make me remodel it when we moved because everything would be 15 years old. It also presents an inflexible situation as opposed to saving and buying the place we want when we are ready to downsize.

Maybe I can buy the duplex as an investment with the MIL as the tenant and see what happens.

 

[Marquette]

Full retirement will fix the time problem. But I cant see myself at 70 y.o. shoveling mulch and snow, trimming trees, cleaning gutters, staining overhangs.

fwiw, my wife's grandparents are in their mid-70's with a backyard that would bring a tear to your eye. Grandpa spends most of his free time working the yard and also squeezes in a 10 mile bike ride every day. They have more health and vitality than many 60 year olds I've met.

All I'm saying is, don't discount the benefits of that drudgery.

 

[Nords]

I have this idea where I could buy it now and have my 80 y.o. MIL rent it from me. I'd put 20% down and mortgage the rest. It might come close to cash flowing if I can get a steal.
Am I missing something, or could this work?

Spouse and I spent six years having her parents as our tenants. I have three comments about renting to family, no matter how well you get along now:
1. Don't go there.
2. If you disregard #1, good luck with ever being able to ram through a rent increase. There will not be any cashflow... at least not INTO your checking account.
3. If you still disregard #1 and you're told that the house & yard are being taken care of, they're not. The only way to make this happen is by regular visits and by doing it yourself.

And finally, what makes you guys think that she'll be ready to move out when you're ready to move in?

What Marquette said about the benefits of home care & yardwork. One of my calabash uncles fell off his roof at the age of 86-- while he was re-shingling it. He broke his arm and contussed just about everything, but when he hired a crew to finish the job he insisted on getting back up on the roof with them to make sure that they did it right.

A $1.75 house sold on Ebay.

Yeah, but what's the shipping charge?

 

[Ronstar]

Spouse and I spent six years having her parents as our tenants. I have three comments about renting to family, no matter how well you get along now:
1. Don't go there.
2. If you disregard #1, good luck with ever being able to ram through a rent increase. There will not be any cashflow... at least not INTO your checking account.

I thought about the rent increase issue. MIL complains about every rent increase she gets in her apartment. If I increased her rent, the MIL and DW would both be p*ssed at me.

3. If you still disregard #1 and you're told that the house & yard are being taken care of, they're not. The only way to make this happen is by regular visits and by doing it yourself.

I've already considered doing her house and yard work. Hey - I just thought of something - if I dont have time to maintain my house, how am I going to have time to maintain 2?

And finally, what makes you guys think that she'll be ready to move out when you're ready to move in?

I never thought of that. I did think of the other side of it - where she wouldnt be able to live there long enough until we planned to move there.

Maybe this idea has more problems than benefits. I certainly dont need to maintain a 2nd house for 10-15 years.

 

[2B]

DW quit her job when demands for her parents care overwhelmed both of us. Now with her mother dead and her father in memory care she has more time available. She has effectively FIREd and sees no reason to resume gainful employment. The problem with the whole arrangement is that our expenses are such that if I retired our SWR would barely cover the living expenses of the big house. There'd be little left over for travel, etc. I view downsizing as my path to retirement. She sees no benefit because "what would I do all day?" She sees no disconnect with her having to fill up her day because "she's busy all the time."

 

[Achiever51]

.... She has effectively FIREd and sees no reason to resume gainful employment. The problem with the whole arrangement is that our expenses are such that if I retired our SWR would barely cover the living expenses of the big house. There'd be little left over for travel, etc. I view downsizing as my path to retirement. She sees no benefit because "what would I do all day?" She sees no disconnect with her having to fill up her day because "she's busy all the time."

oh, oh. Doesn't sound like the two of you are using the same playbook. A successful retirement for a couple requires that both parties share some basic goals, dreams and priorities. Without it, you might find yourself miserable and together -- or divorced and likely poorer. Good luck.

 

[cute fuzzy bunny]

It all sounds like a great plan, but you're going to get "I dont want to live in the house my mother passed away in".

Presuming you wont be moving in with the still living MIL at some point...