cash out of Calif SFR?

[ALushLife]

I LOVE Realtor.com! That's how I found my Buyer's agent and flew to NC to look at properties Annie

[califdreamer]

Thanks for replies. DanM, sounds like you made out well selling in Nor Cal. Because I moved some equity into this house when I bought it three years ago my mortgae payment is reasonably low. Because of that, I'd have to pay more in rent for even a smaller place in San Diego. Of course, if the market takes a dive, renting would look brilliant in hindsight.

Great to hear from you again, retire soon. I checked out Temecula SFRs on realtor.com and found the lowest detatched homes at around 360K. I think as you move north up I-15 you get lower prices in Lake Elsinore, Perris, Hemet, etc. It might still make sense to get into Temecula at 400K or thereabouts. Would provide for extra funds for investment.

Just curious, LushLife, how did you decide to look in NC for your second home? Was it from browsing on realtor.com or some other research?

Note to Retire Soon: I think the housing mkt here may hold out pretty well in early 2006. Looks like hike in interest rates may slow down as inflation looks tame. Good news if you're a seller in Spring 06.

[Retire Soon]

Califdreamer,

Thanks for the moral support. I am cautiously optimistic.* I think you're right, in that slowing* inflation can work in our favor.

[NYCGuy]

Quote:

Originally Posted by califdreamer The ESOP and 401K total 330K. Of course I can't touch those without penalties until 59.5.

There are at least two ways that you can tap the 401k money prior to age 59.5 without a penalty:

1. If you leave your last company at age 55 or older you can begin withdrawals from the 401k without penalty even if you are not yet 59.5. This is one of the unique benefits of a 401k and is often overlooked in discussions about rolling over. This option does not apply to 401k accounts you may still have from prior employers. If you have any of those and do want to take this option then you could roll them into your current 401k before you retire, if that plans permits you. Of course, you would have to weigh this benefit versus the investment choices, maintenance fees, etc.

2. You can always take Substantially Equal Periodic Payments from a 401k or and IRA prior to 59.5 without penalties. Google it if you are unfamiliar with SEPP.

There is a new book on the question you raise: Gillette Edmunds' "Retire on the House". I haven't read it, but liked his earlier book on retirement a lot.

I think it is at least sometimes possible to time a market and the current real estate market is one of them. I sold my apartment in New York City and am renting now. Very glad I did it from every point of view, not the least of which is protecting my RE gains for retirement.

Good luck.

[ALushLife]

How did I find NC!!!? I published a high end design magazine for 15 years and in the last 5 I know at least 6 very successful So Fl homeowners buying 2nd homes in NC. Funny story...just before the last hurricane I was at Target and ran into aquantainces that own a home in the mountains in NC. The wife is a little b**chy and lets her Hubby work while she is in the mountains all summer.. I was so excited to share my news and tell them I bought and closed on a home....LOL...she said to me...."why do you need a home in NC?"....I replied..."Do you think you are the only upwardly mobile baby boomer entitled to a vacation home?" LOL! LOL! Her Hubby and I had a good laugh!

[califdreamer]

Thanks NYCGuy for heads up on SEPP for 401k/IRA withdrawal. I will research!

LushLife, sounds like you'll have active social life in NC.

I crunched the numbers more carefully and came up with an interesting scenario. I sell house in SD and reposition some income properties (won't bore you w/ details). Relocate to sunny town in SW that didn't go nuts during RE boom and pay cash for 3br newer (<5yrs) home w/ pool and perhaps a little more sq footage than I actually need. Take in 51,500 in cash flow on repositioned RE assets (5% yield), leave one propty for growth w/o expectations for cash flow and bank 100K. For now, leave ESOP (which will become IRA) and 401k alone pending research on early withdrawal options.

I am EXTREMELY tempted to do this but I would certainly miss San Diego and my friends here. I would risk not being able to jump back in the SD housing mkt if for some reason I wanted to return someday. I would need to make the right moves to get 5% cash return on RE (it's tougher than it sounds). I would slow down my RE investment equity growth by tapping into it for cash. I am pretty frugal and unconcerned with status-oriented material stuff but would need to be comfortable with 51.5K. Out of that would come health insurance and money for hobbies (golfing, skiing, intl travel).

I've been very impressed with the wealth of experience, knowledge and wisdom throughout the website. I appreciate your views and insights.

[califdreamer]

Quote:

Originally Posted by califdreamer Thanks NYCGuy for heads up on SEPP for 401k/IRA withdrawal. I will research! LushLife, sounds like you'll have active social life in NC. I crunched the numbers more carefully and came up with an interesting scenario. I sell house in SD and reposition some income properties (won't bore you w/ details). Relocate to sunny town in SW that didn't go nuts during RE boom and pay cash for 3br newer (<5yrs) home w/ pool and perhaps a little more sq footage than I actually need. Take in 51,500 in cash flow on repositioned RE assets (5% yield), leave one propty for growth w/o expectations for cash flow and bank 100K. For now, leave ESOP (which will become IRA) and 401k alone pending research on early withdrawal options. I am EXTREMELY tempted to do this but I would certainly miss San Diego and my friends here. I would risk not being able to jump back in the SD housing mkt if for some reason I wanted to return someday. I would need to make the right moves to get 5% cash return on RE (it's tougher than it sounds). I would slow down my RE investment equity growth by tapping into it for cash. I am pretty frugal and unconcerned with status-oriented material stuff but would need to be comfortable with 51.5K. Out of that would come health insurance and money for hobbies (golfing, skiing, intl travel). I've been very impressed with the wealth of experience, knowledge and wisdom throughout the website. I appreciate your views and insights.

Hi everyone,

I didn't mean to sign off when I wrote that last paragraph... I guess it sounds like a goodbye. Or maybe you're bored with me ... which is understandable .

I'll throw out another scenario and see if anyone has an opinion on which method is better:

I sell SD house and move to Temecula (inland about 30 minutes from where I am now... and cheaper per sq ft). I buy smaller house. I get a mortgage that will equal my current one and invest the extra equity. I like rental properties (not in Calif ) so that's where I'd invest. If I got 5% on investment RE equity at that point I'd bring in about 66K/yr. But I would have a 1600/mo house payment. So I'd count on 10% compounded return on equity for the next 2 yrs (which I believe is quite conservative) so that my cash flow would be 80K. I would be able to keep my current job if I move there so that's how I could let the RE equity grow for 2 yrs.

I know lots of people think this sounds like overkill, but rental income is not as ironclad as pension money. I would also be shouldering the costs of health insurance. Some have a guaranteed pension and health coverage. That enables them to not have to shoot for quite so much income and provides some peace of mind due to less volatility. Perhaps some of my concern is from my down and out days in the nasty early nineties! Never want to go back there.

Thanks in advance for any opinions, advice, etc.

[riskadverse]

I'm retired in San Diego, and I can't imagine moving.* Sure there's lots of traffic, but I almost never hit it because I'm not going to work or returning from it.* Some of the worst traffic I've ever seen (outside of LA) is in Temecula.* As for real estate values, I can't think of a place that is more likely to keep high values.* In your situation, I might sell and buy smaller, getting the excess out tax free.* In my case, I like a big house and am keeping mine all paid off.* If I ever start running out of savings, a reverse mortgage should tide me over till the end.* * *

[Trace]

The following article from Money Magazine is interesting.* It provides real estate appreciation projections for the next two years in the top 100 markets:

http://money.cnn.com/pf/features/lis...owth_forecast/

I was feeling good about my decision to relocate to San Antonio this year (#1 city for projected real estate appreciation).*

[REWahoo]

Trace,

This article was posted yesterday in this thread:

http://early-retirement.org/forums/i...91876#msg91876

BTW, I live in the San Antonio area. Send me a PM if I can help you out with area information.

REW

[califdreamer]

Quote:

Originally Posted by riskaverse I'm retired in San Diego, and I can't imagine moving. Sure there's lots of traffic, but I almost never hit it because I'm not going to work or returning from it. Some of the worst traffic I've ever seen (outside of LA) is in Temecula. As for real estate values, I can't think of a place that is more likely to keep high values. In your situation, I might sell and buy smaller, getting the excess out tax free. In my case, I like a big house and am keeping mine all paid off. If I ever start running out of savings, a reverse mortgage should tide me over till the end.

Believe me, risk averse, I often have a hard time thinking about moving away. And you're absolutely right about Temecula traffic. What I've found about the idea of downsizing in SD is, by the time you pay commissions and closing costs, it's difficult to gain much.

Thanks to REWahoo and Trace re Money magazine article on housing markets. Interestingly enough, the town I had my eye on for relocating was El Paso which is near the top of the list for best appreciation in 06-07.

[old woman]

*The ESOP and 401K total 330K. *Of course I can't touch those without penalties until 59.5.

There are ways to take your retirement money sooner without penalties. Read publication 590 from the IRS. I know you are 46 but at 55 you could take 401K money if you leave the employer without penalty. You can roll your 401K to a IRA and convert some to a ROTH then after 5 years you can withdraw without penalty. You would pay the tax on conversion and can't take out the profits. That would work if you did it now you could start getting some out penalty free at 51. Another method is substantually equal payments.
Any money you already have in ROTH that coverted more than 5 years ago or you contributed can be taken now except the profits.

[califdreamer]

Thanks, OW, for early withdrawal options for 401k.

I should probably quit looking at realtor.com. I was inspired to look again after seeing another post about people retiring early to rural towns. It is just crazy what deals you can find in Tyler, TX and places like that. It's the old dilemma, is it really worth staying put in CA when you can literally free up 100s of 1000s of dollars to buy a beautiful home for cash and have lots left over to invest?!? After all, if you can go golfing, wine and dine, travel and do plenty of things you like to do does it really matter where you are? For me, as long as it's pretty much a sunny and warm climate, I can be happy.

I also looked at San Antonio at realtor.com and came away astounded at what you can get for 100-200K. Nice, newer homes in good areas of town. I know there are some San Antonians out there. What do you think are the pros and cons of living there? It's probably a fast growing area with people from all over.

Has anyone out there cashed out of an urban area and moved to a small town? How has it gone for you?

[REWahoo]

Quote:

Originally Posted by califdreamer I also looked at San Antonio at realtor.com and came away astounded at what you can get for 100-200K. Nice, newer homes in good areas of town. I know there are some San Antonians out there. What do you think are the pros and cons of living there? It's probably a fast growing area with people from all over.

San Antonio has fire ants, scorpions, high property taxes, and 90 to 100F temperatures from May through October. Other than that, it's OK. :P

Seriously, it is a nice place but is growing like mad. I live just northwest of the city and for various reasons, the housing boom and population growth is moving westward from the city after bumping up against growth barriers to the south (lower socio-economic area), east (industrial area), and north (building restrictions over the aquifer recharge area supplying almost 100% of the city's water). The growth concentration is placing real stress on the infrastructure, and traffic is going from bad to really bad (I know you are from California, so don't laugh). The school district where all the growth is occurring is predicting they will need 60+ additional schools constructed in this area in the next 10 years. And since schools are funded by property taxes in Texas, hang on to your wallet!

But it's a nice place...really!

[califdreamer]

Hmm... fire ants, scorpions, heavy traffic. You're giving me second thoughts, Wahoo. Are you pretty far outside of the city? Are there areas with lakes that are within an hour or so of town (I know, an hour outside of the commuting hours)? I'm familiar with some of Central TX. How far out is Kerrville? Is that a remote outpost or are there things to do? Any nice places north of SA toward Austin? Thanks for your input on this.

Anyone out there go the rural route? Perhaps a small college town in Georgia or the Carolinas? Are there some "sleeper" towns out there that are underpriced for the lifestyle offered?

[Brat]

Husband and I cashed out of NW Portland and moved to Bainbridge Island- which the locals like to think of as 'rural'.* Because of our taste in real estate it was a push.* Property taxes are actually lower, and there is no income tax.

NW Portland is very pedistrian oriented with lots of street life, the neighborhood I live in now is much more suburban.*

In the neighborhood near the ferry (called Winslow) there is a good supply of condos (more going up every day) - and a decent cultural life.* [The library is outstanding, bakeries and coffee shops plentiful.* There is a community performing arts center and world class performing arts just a ferry ride away.]

Weather wise, it is no San Diego.* However, it seldom gets below freezing for long and weather in the 90s is rare.* A much more moderate climate than Portland's because the Pudget Sound acts as a heat pump. *No tornadoes or hurricanes, but an occasional shake that wouldn't wake a Californian.* For me it is valhalla.

[REWahoo]

Quote:

Originally Posted by califdreamer Hmm... fire ants, scorpions, heavy traffic. You're giving me second thoughts, Wahoo. Are you pretty far outside of the city? Are there areas with lakes that are within an hour or so of town (I know, an hour outside of the commuting hours)?

I'm about 10 miles outside the city limits (25 miles northwest of downtown) in a neighboring county. I'm three miles from a lake (Medina) and here are a couple of links to developments nearby. Search zip 78056 in realtor.com to sample some home prices. Note that the developments below are near but not on the lake. Prices go up substantially for waterfront property.

http://www.laurelcanyonranch.com/
http://www.dancingbearranch.com/

North of town an hour or so is Canyon Lake. I'm less familiar with the developments around it, but they are numerous. Both Medina and Canyon are beautiful "clear water" lakes located in limestone basins.

Quote:

Originally Posted by califdreamer I'm familiar with some of Central TX. How far out is Kerrville? Is that a remote outpost or are there things to do?

Kerrville is 60 miles out I-10 from SA. It's nice, but in my opinion, overpriced and over developed. It became a retirement hot spot a few years ago and is suffering the rewards.

Quote:

Originally Posted by califdreamer Any nice places north of SA toward Austin?

Lots of nice places north of SA and west of Austin in the Texas Hill Country. This area has been "discovered" and people (like me and Ol_Rancher) are filling the place up. The roads in towns like Boerne, Kerrville, Wimberly and Fredericksburg are jammed with RV's and Buicks with stuck turn signals.

Glad to help...

[califdreamer]

Thanks, wahoo, that's a wealth of information that will be very useful. No wonder the area is filling up. It looks very desirable.

Thanks also to Brat for info re Bainbridge Island in WA. Beautiful area. Had some friends who lived there in the 90s and enjoyed it very much.

[old woman]

Quote:

Originally Posted by Brat Husband and I cashed out of NW Portland and moved to Bainbridge Island- which the locals like to think of as 'rural'.* Because of our taste in real estate it was a push.* Property taxes are actually lower, and there is no income tax. NW Portland is very pedistrian oriented with lots of street life, the neighborhood I live in now is much more suburban.* In the neighborhood near the ferry (called Winslow) there is a good supply of condos (more going up every day) - and a decent cultural life.* [The library is outstanding, bakeries and coffee shops plentiful.* There is a community performing arts center and world class performing arts just a ferry ride away.] Weather wise, it is no San Diego.* However, it seldom gets below freezing for long and weather in the 90s is rare.* A much more moderate climate than Portland's because the Pudget Sound acts as a heat pump. *No tornadoes or hurricanes, but an occasional shake that wouldn't wake a Californian.* For me it is valhalla.

I like the Seattle area weather, I don't like it when it is over 80 and my perfect day is 70 and overcast with a slight drizzle. I don't like sun in my eyes. To me Texas or Pheonix or most of California would be misserable. I had to spend the night in Yuma once couldn't wait to leave. Some people like sun and heat, I like to wear sweaters year round. My office hasn't got air conditioning, several days a year I wish I wasn't at work. I have a window unit for one room at home but only need it about a week a year.

[califdreamer]

Some like it hot... I tend to enjoy warmer, sunnier climates. Southern California weather is just about ideal but I like the sunny Southwest as well. In those "Places Rated" books I tend to disagree with their emphasis on moderation. I look for things like number of sunny days, least number of freezing days, least rainy and the like. I could get into Hawaii or Cabo San Lucas climates. That's stating the obvious I guess. As gorgeous as the Northwest is, and it is phenomenally beautiful, I struggle with short winter days, cloud cover and cool temps.