First some background...
DW and I are mid to late 40's and have been planning for FIRE by age 55 (lately it feels like 53 is a better plan). I'd like to say we've lived pretty modestly over the years to be able to put away lots of money for retirement. The home we currently own is below our means with a current value of around $375,000. Yet, with one DS in college and another about one year away from college, we've been talking more about housing in retirement. We certainly won't need a 2,600 sq ft home with just two of us. It’s just more maintenance and cleaning. Yet, we like where we live and there's really no rush to move... our target for selling was as close to retirement as possible. And when we do move, our thought was that it would likely be lateral in cost or maybe even a slight step up even though the space would be smaller. This is because we were hoping to find a location with a bit more land (and privacy) and a few additional amenities (like a 3 season porch). currently, we’re on 1/2 an acre with close neighbors and not enough trees. The subdivision was developed from a farm field. We’ve planted many trees but there’s only so much you can do when you’re starting with nothing.
There's a community about 30 minutes from us that we really like and we've thought a lot about how it would be a good fit for us in retirement if we could find the right spot. It's a small community with a really nice downtown, filled with restaurants and shops, etc. It's pedestrian-friendly with great bike and running paths, and minutes off the freeway if we need a bigger city, which is only 20 minutes away. The problem has been there's very little available close to downtown that has more than 1/4 acre. Once you get further out, the only land to be had is farmland that's being developed and we don’t want the same thing we currently have. No trees, no character and too far from the downtown area. Also, if you find something in the ballpark, there's a house that's way too big (and/or pricey). So with only one eye open, we kind of put the idea on hold unless something falls in our lap.
So fast forward to a couple days ago when DW is poking around on her laptop looking at new listings in the area we like and she stumbles across a lot that was just made available just 24 hours before. Was that the sound of something falling into my lap
It’s a 2.6 acre wooded lot that backs up to the creek that runs through town and it appears to have the close proximity to town that we were looking for. We decided to jump in the car and go check it out. As we pull up, we see the realtor talking to a couple people and exchanging contact information. We knew already based on location that this lot wasn’t going to last long… hours or days, certainly not weeks or months.
The realtor gave us the background on the owner/history and gave us a tour. The owner lives in the house next door and their family has owned the lot for many years. They are looking to build somewhere else and have no reason to keep the adjacent parcel anymore and will eventually sell the adjacent property also once their new home is built. The listed lot doesn’t have water and electric yet but there’s already a perfect clearing for a house. Also, there are no home owner association rules and very flexible ordinances in the township so we could build our smaller house. Oh, there’s also a shed and a one car garage that would come with the lot. They’re small but in great condition. The listed price is $199,000, which is not too far off for cost per acre in the area and perhaps on the low side given the demand for this location and type of property. So suddenly it all becomes pretty real.
We decide that to beat the rush we’d put a cash offer in immediately and figure the rest out later. We figure it’s reasonable to think that most people would have a financing contingency so a cash offer should help secure the purchase. Yikes! Neither of us are spontaneous people so this is waaaaay out of our comfort zone. But we knew that this is what we’ve been looking for and we’d really regret it if we passed it up. So, really long story short, we made an offer, seller countered, we own it at $196,000. As it turns out there were already 2 other offers on the table.
So here we are trying to figure out what to do next. First things first… we want to find financing! Yes, it’s not in the offer but it we don’t have to part with our money and can find cheap financing we’d rather do that. We have about 35 days to close so there should be time to throw this together. From the couple of calls I’ve made it looks like we can secure an 80% loan with a 5/1 ARM and a 20-year amortization at under 4%. Not bad for a lot loan! And we love the idea of having a fixed rate for 5 years considering the current rate environment.
The long term plan is still the same… stay in our current home for maybe 5 more years. That should give us some time to aggressively pay down the lot loan and figure out what we want to build and who we want to build with. Ideally, we’ll have most of the $160,000 loan paid off when we’re ready to build. Then we can help secure construction financing using the land equity. I still don’t have a sense as to what a new home will cost but without any significant restrictions we can be flexible on cost. And we have lots of time to figure it all out. In 5 years, we should also have the mortgage on our current home paid down to about $75,000 leaving us with $300,000 of equity when we sell. So if the new build costs, say, $250,000 we should be debt-free for retirement even if we have a small balance left on the lot loan. I think that all works.
The initial shock has worn off but we still have quite a bit of anxiety about the whole thing. It kind of upsets my stomach to be even writing about this. But I think it’s all good, and maybe this is good therapy. Can anyone tell me everything will be okay? Please??
DW and I are mid to late 40's and have been planning for FIRE by age 55 (lately it feels like 53 is a better plan). I'd like to say we've lived pretty modestly over the years to be able to put away lots of money for retirement. The home we currently own is below our means with a current value of around $375,000. Yet, with one DS in college and another about one year away from college, we've been talking more about housing in retirement. We certainly won't need a 2,600 sq ft home with just two of us. It’s just more maintenance and cleaning. Yet, we like where we live and there's really no rush to move... our target for selling was as close to retirement as possible. And when we do move, our thought was that it would likely be lateral in cost or maybe even a slight step up even though the space would be smaller. This is because we were hoping to find a location with a bit more land (and privacy) and a few additional amenities (like a 3 season porch). currently, we’re on 1/2 an acre with close neighbors and not enough trees. The subdivision was developed from a farm field. We’ve planted many trees but there’s only so much you can do when you’re starting with nothing.
There's a community about 30 minutes from us that we really like and we've thought a lot about how it would be a good fit for us in retirement if we could find the right spot. It's a small community with a really nice downtown, filled with restaurants and shops, etc. It's pedestrian-friendly with great bike and running paths, and minutes off the freeway if we need a bigger city, which is only 20 minutes away. The problem has been there's very little available close to downtown that has more than 1/4 acre. Once you get further out, the only land to be had is farmland that's being developed and we don’t want the same thing we currently have. No trees, no character and too far from the downtown area. Also, if you find something in the ballpark, there's a house that's way too big (and/or pricey). So with only one eye open, we kind of put the idea on hold unless something falls in our lap.
So fast forward to a couple days ago when DW is poking around on her laptop looking at new listings in the area we like and she stumbles across a lot that was just made available just 24 hours before. Was that the sound of something falling into my lap
It’s a 2.6 acre wooded lot that backs up to the creek that runs through town and it appears to have the close proximity to town that we were looking for. We decided to jump in the car and go check it out. As we pull up, we see the realtor talking to a couple people and exchanging contact information. We knew already based on location that this lot wasn’t going to last long… hours or days, certainly not weeks or months. The realtor gave us the background on the owner/history and gave us a tour. The owner lives in the house next door and their family has owned the lot for many years. They are looking to build somewhere else and have no reason to keep the adjacent parcel anymore and will eventually sell the adjacent property also once their new home is built. The listed lot doesn’t have water and electric yet but there’s already a perfect clearing for a house. Also, there are no home owner association rules and very flexible ordinances in the township so we could build our smaller house. Oh, there’s also a shed and a one car garage that would come with the lot. They’re small but in great condition. The listed price is $199,000, which is not too far off for cost per acre in the area and perhaps on the low side given the demand for this location and type of property. So suddenly it all becomes pretty real.
We decide that to beat the rush we’d put a cash offer in immediately and figure the rest out later. We figure it’s reasonable to think that most people would have a financing contingency so a cash offer should help secure the purchase. Yikes! Neither of us are spontaneous people so this is waaaaay out of our comfort zone. But we knew that this is what we’ve been looking for and we’d really regret it if we passed it up. So, really long story short, we made an offer, seller countered, we own it at $196,000. As it turns out there were already 2 other offers on the table.
So here we are trying to figure out what to do next. First things first… we want to find financing! Yes, it’s not in the offer but it we don’t have to part with our money and can find cheap financing we’d rather do that. We have about 35 days to close so there should be time to throw this together. From the couple of calls I’ve made it looks like we can secure an 80% loan with a 5/1 ARM and a 20-year amortization at under 4%. Not bad for a lot loan! And we love the idea of having a fixed rate for 5 years considering the current rate environment.
The long term plan is still the same… stay in our current home for maybe 5 more years. That should give us some time to aggressively pay down the lot loan and figure out what we want to build and who we want to build with. Ideally, we’ll have most of the $160,000 loan paid off when we’re ready to build. Then we can help secure construction financing using the land equity. I still don’t have a sense as to what a new home will cost but without any significant restrictions we can be flexible on cost. And we have lots of time to figure it all out. In 5 years, we should also have the mortgage on our current home paid down to about $75,000 leaving us with $300,000 of equity when we sell. So if the new build costs, say, $250,000 we should be debt-free for retirement even if we have a small balance left on the lot loan. I think that all works.
The initial shock has worn off but we still have quite a bit of anxiety about the whole thing. It kind of upsets my stomach to be even writing about this. But I think it’s all good, and maybe this is good therapy. Can anyone tell me everything will be okay? Please??
