Suggestions regarding real estate

[firemediceric]

Reading the threads here as well as on some other forums has me feeling slightly despondent regarding real estate and my future plans. I'd appreciate opinions on what course of action I should take given my situation and future goals.

As the saying goes "We make plans and God laughs." Certainly my experience.

2017 I became a renter with a view to moving out of Florida as soon as the beginning of 2023. Moving sooner isn't a good option due to needing to finish out my time to receive my full retirement benefit without penalty. Although I am anxious to leave the job and Florida, the longer I stay beyond 10/2022 the larger my DROP accumulation. In 2017 the rent vs. buy calculators I consulted all recommended renting over buying for a window of 5-9 years.

My plan has been to move to Tennessee. Apparently over the last year or so that has become the plan for quite a few people. Real estate there has risen astronomically, even more so than the exponential growth in many other areas of the Country. As is also the case elsewhere, inventory is very sparse leading to homes in the TN market being sold well above listing price. No newsflash with any of that.

My original thought a few years ago was to start looking at the beginning of 2023 for the right house in the right setting. When found, buy it and retire within a few months afterwards. As an aside, similar to what another poster mentioned in another thread, my taste in houses runs much different than what is the norm for Tennessee. I resolved myself to shopping for quite some time at a distance, although in this market anything would be snapped up before I could make the trip up to Tennessee to look at the property firsthand. Another option would be to purchase a house that lends itself to the improvements I would desire while realizing that route may quickly become cost prohibitive. Finally, I considered having a house built to get it the way I want. I feel that option, as many smarter than myself have experienced, is the choice which will cause the most stress and end up costing the most money for the finished product.

I've been comfortable with regard to saving for the house while I'm renting. I feel I have a good amount of liquid cash ready to be put down when the time is right. That bucket will certainly be added to going forward.

So what do I do? Do I sit on my hands continuing to rent and saving money while I fight a panic attack from FOMO as I see real estate continuing to sky rocket? Do I purchase something in Florida in the meantime, tying up that liquid savings earmarked for a down payment, hoping I can sell the house when I need to, with the hope of it being a sound investment even for just a couple of years despite feeling the offerings are overpriced?

I feel that so much is out of my control and that any decision is as likely as not to be the wrong decision. The regular posters to this forum are a lot more savvy than I will ever be and I welcome comments as to what they would do if they found themselves in my shoes.

 

[Oz investor]

OUT of Florida ??

but you live there ( and i don't ) so maybe you know best

now i am on the other side of the world , but can see US property taxes ( in some states ) are going to sky-rocket

there are also a LOT of people struggling with debt ( all over the world ) i would suspect property prices will fall in the next two years , in many states


maybe a quote from an old TV show will help

' patience , grasshopper '

you have two more years to study trends and legislature moves

maybe you could consider renting storage in 2023 , go traveling and look for your new home whilst traveling ..

i notice many financial gurus that made fortunes in the US now reside outside of the US , maybe there is a perfect home in another nation ( at possibly cheaper costs )

am not saying you have to leave but certain state governors seem to be acting like headless chickens ( just like some in my country , sigh )

you can still FIRE without 'settling down ' right away

over here we call such people grey nomads , and they are quite happy to migrate from state to state ( when there are no crazy virus restrictions in place ) for as long as it takes their fancy

PS 2 years is a l-o-n-g time in the current global economy

good luck

 

[FreeBear]

I've been comfortable with regard to saving for the house while I'm renting. I feel I have a good amount of liquid cash ready to be put down when the time is right. That bucket will certainly be added to going forward.

So what do I do? Do I sit on my hands continuing to rent and saving money while I fight a panic attack from FOMO as I see real estate continuing to sky rocket? Do I purchase something in Florida in the meantime, tying up that liquid savings earmarked for a down payment, hoping I can sell the house when I need to, with the hope of it being a sound investment even for just a couple of years despite feeling the offerings are overpriced?

We moved 5 years after FIRE, although this wasn't planned when w*rking. Made a cash offer on a place in SE Arizona, still in the process of moving out and selling the old place (still has mortage). I'm glad we were able to pull the trigger on a great place quickly because we were liquid.

It sounds like you sold and started renting as in 2017 as part of a long term plan to evac FL. In my view, I'd avoid buying anything except for where you REALLY want to live in retirement. If you plan on a mortage for your retirement house, don't forget to do this before you retire; it can be difficult afterwards. Since you seem to be planning for a cash offer, then you can buy anytime.

I wouldn't worry about housing in TN becoming "overvaluled" as long as you can afford to buy something you would enjoy. If this could become too $$ based on projected cost escalation, then I'd look at backup options if you really want out of FL.

We'd love to live in a more moderate climate like San Diego, but housing was twice as expensive as our budget for less house. So we're in SE AZ and loving it.



Just curious, why would you like to leave FL for TN??

 

[Mr. Tightwad]

Why not rent in TN until you are sure you want to make it permanent?

If prices drop you'll feel really good about yourself.

If they don't, at least you'll be able to wisely choose your new residence by being more familiar with the state.

 

[firemediceric]

Just curious, why would you like to leave FL for TN??

I moved from Massachusetts to Florida as soon as I graduated high school. I've been here for 35 years. I at one time enjoyed the beaches, SCUBA diving, fishing, water sports, gator hunting, frog gigging, etc. I've grown bored with all of that. I really have become tired of the 7-8 months of oppressive heat and the year round stifling humidity. In the summer I feel I need a shower just after walking across the parking lot at a shopping plaza. When I'm in a suit & tie it is way worse. No matter how good the A.C. is in your car, those first few minutes getting into a vehicle that has been sitting in the sun is excruciating. At the risk of sounding like a grumpy old man, the shift in demographics in the areas of Florida I frequent (the Keys up to Jax all along the east coast, a lot of time in Broward and over to Kissimmee/Orlando) and the way things have become so crowded has really turned me off.

I thank you for your comment and relating your firsthand experience with your move after retirement. I will have a mortgage. I plan (and God laughs) to secure the mortgage before retiring because it is in my best interest to work as long as possible until I can't. By that I mean until I find the place to go which makes commuting to work impossible, I might as well continue putting in time building my DROP. Even if I should retire before having a mortgage I'm told that my defined benefit retirement will be plenty adequate to secure a mortgage approval.

 

[firemediceric]

Why not rent in TN until you are sure you want to make it permanent?

If prices drop you'll feel really good about yourself.

If they don't, at least you'll be able to wisely choose your new residence by being more familiar with the state.

Those are good points however it is in my best interest to work as long as possible until I can't. Until I find the right house in the right setting to buy which makes commuting to work impossible, I might as well continue putting in time building my DROP. Each month I stay adds roughly another $7k to my DROP. If months turn into a year or more and frustration gets the best of me as far as not finding a place or missing out on offerings because my distance doesn't allow me to respond quick enough, than I just may retire and move. I can, as you point out, rent and look around while being in a better position to move quickly. I feel though that will have me leaving money on the table unnecessarily.

 

[pjigar]

I say you sit tight. The prices you see today are due to severe supply shortage and unusually high demand due to cabin fever. The interest rates are fuel to this fire. The supply will stabilize eventually and prices will normalize. This is not to say prices will not stay higher, it very well can but that would be be due to "asset inflation". The asset inflation is happening in every asset class (Stock, bond, gold, land, houses, etc.) due to easy and cheap access to money, thanks for QE policy of fed. This can't go on forever but no one knows when or if it would stop. In there words, Feds can keep printing money forever until we loose our shirt in the world market. But so far, our bonds have been the only bad place compared to all the other worst countries. I don't want to imagine how the dominos will fall. I would rather take asset inflation or even inflation compared to unemployment and anarchy. Sorry for taking the discussion in the whole new directions.

But to summarize, like you said, any action or inaction will have same results in the end i.e you might lose some paper money. So pick your pill But I would rather not a house I will not be living in right away because then you would be paying maintenance and tax on the empty house.

 

[pb4uski]

Get a remote car starter and you can start you car a few minutes ahead of time and your car will be nice and cool buy the time you get to it.

 

[someguy]

Get a remote car starter and you can start you car a few minutes ahead of time and your car will be nice and cool buy the time you get to it.

+1 on this. Such a simple and relatively inexpensive option. Some now are even cell network connected, so as long as your car is parked somewhere with cell phone coverage, you can use your phone to remote start.

 

[kaudrey]

I'd just wait. The real estate market is changing constantly. In 2 years, the situation will look much different than today. The rest of us will all have moved already, so you won't be fighting us for houses....that is somewhat tongue in cheek, but the market is always changing....two years from now the market could plunge again, for all anyone knows. Or it could keep going up; but real estate like other areas of the economy, is cyclical.

(Side note - we bought our house in October in a bidding war....not in TN).

 

[firemediceric]

+1 on this. Such a simple and relatively inexpensive option. Some now are even cell network connected, so as long as your car is parked somewhere with cell phone coverage, you can use your phone to remote start.

If the car not cooling down fast enough was my only complaint about Florida, I would probably stay. I’m craving a change in scenery and look forward to leaving Florida’s flat landscape of Brazilian pepper trees, palmettos and palm trees behind.

One of my priorities is privacy and seclusion. Prior to getting in this rental house I had purchased a home on 5 acres in a rural area of the county. I misjudged thinking that would give me privacy. As those familiar with Florida know, a home in an area dependent on septic is built on a raised pad of dirt. Despite the privacy fence I had erected around the property, the neighbors and I could wave to each other as our homes were perched at a height that allowed us to see over the privacy fence. People driving by on the road in front of my house were also able to look over the fence. That portion of fence along the front of the property was actually 9’ above grade. That wasn’t enough to compensate for the house being placed on an elevated mound of dirt.

The native flora does not lend itself to natural privacy screens unless one allows the Brazilian pepper trees or palmettos to run wild. To do so though completely sacrifices the land that vegetation is on.

 

[ivinsfan]

Have you ever been to Tennessee? You don't actually say why you want to go there.

Your issue as I see it is, you want to add to your drop by continuing to a work and at the same time lock in what you see as rising RE prices. Most times every positive has a negative attached. What will you do if you find a house in TN now and don't live in it for 2 years?

I certainly wouldn't buy a house short term in a place you don't really want to live in.

 

[firemediceric]

I'd just wait. The real estate market is changing constantly. In 2 years, the situation will look much different than today. .

Thank you for the input. I am of the opinion that waiting is probably the best course, but patience has never been my strong suit. Another thing that contributes to my anxiety is how vulnerable I feel being a renter. My concern is that at any moment the elderly landlord will decide to place the house on the market. That would have me looking for a place to rent in a highly competitive market and then having to go through the headache of moving for what will likely be a short tenancy. I try to persuade the landlord that I’m a good tenant by not only taking care of the place but by paying my rent 4 months at a time so perhaps the property as a rental is more appealing to him than putting it up for sale.

 

[firemediceric]

What will you do if you find a house in TN now and don't live in it for 2 years?

I certainly wouldn't buy a house short term in a place you don't really want to live in.

Without a doubt purchasing a home in Tennessee at this juncture would not be wise for me. Various reasons that does not make sense for my current situation.

Once I reach my minimum retirement benchmark October 2022 I can walk away from the job with a level of comfort to where I will start looking for a home. When that home is found I can throw in the towel at work. Until I find that home though, I indeed would like to add to my DROP.

I am reading the opinion from yourself and others replying confirming that indeed purchasing a home for the short term here in Florida where I don’t want to stay would not be wise despite the market’s continued astronomical growth. I’ll continue to ride things out and hope for the best

 

[Markola]

+1 on this. Such a simple and relatively inexpensive option. Some now are even cell network connected, so as long as your car is parked somewhere with cell phone coverage, you can use your phone to remote start.

I can’t help but comment, if the OP focused on FIREing, he wouldn’t have to get in his car as often or wear monkey suits in the heat. [emoji267][emoji876]

 

[firemediceric]

I can’t help but comment, if the OP focused on FIREing, he wouldn’t have to get in his car as often or wear monkey suits in the heat. [emoji267][emoji876]

You make a good point about the monkey suit, whether it be suit & tie or my firefighter bunker gear.
Unfortunately even in my leisure time I seldom enjoy being outside perspiring in the heat and taking the enjoyment out of the activities I otherwise have fun with. The weather in Florida at the moment though is close to perfect

 

[pb4uski]

Do you rent a house or an apartment? If the latter, might buying a condo for a few years be an option? You would get any appreciation or depreciation in real estate prices.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

 

[ivinsfan]

Do you rent a house or an apartment? If the latter, might buying a condo for a few years be an option? You would get any appreciation or depreciation in real estate prices.

Or a possible third option if the OP has the funds is to buy and live in now. Maybe keep the place in FL as an income producing property

Depends how much money he and has and his tolerance for risk. He's talking to to three years max living in FL. if prices don't hold between a falling price and RE commission he could lose a lot of money. Of course rent is sunk cost.

 

[firemediceric]

Do you rent a house or an apartment? If the latter, might buying a condo for a few years be an option? You would get any appreciation or depreciation in real estate prices.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

I’m renting a house. Although I don’t need the yard that comes with the house, I am grateful for a little bit of elbow room from the neighbors. A condo could work if needed. Keeping the money tied up in the condo is not an option for me when it’s time for me to purchase a home.

I was once a landlord. I have no desire to do that again.

 

[firemediceric]

Of course rent is sunk cost.

That’s another reason renting goes against my grain. An upside though is that the current rent is very reasonable. That allows me to maximize what I’m saving each month towards a home purchase.

 

[irishgal]

Without a doubt purchasing a home in Tennessee at this juncture would not be wise for me. Various reasons that does not make sense for my current situation.

Once I reach my minimum retirement benchmark October 2022 I can walk away from the job with a level of comfort to where I will start looking for a home. When that home is found I can throw in the towel at work. Until I find that home though, I indeed would like to add to my DROP.

I am reading the opinion from yourself and others replying confirming that indeed purchasing a home for the short term here in Florida where I don’t want to stay would not be wise despite the market’s continued astronomical growth. I’ll continue to ride things out and hope for the best

I am in middle Tennessee and yes, a lot of people are moving here. Since you have time, why not book various Airbnbs around the state, maybe 3 or 4 days in each, or more, then look around that area and then check out a new area. I have an Airbnb and I would say 25% of my guests are coming out to check out the area and don't want to stay at a hotel.

 

[firemediceric]

I am in middle Tennessee and yes, a lot of people are moving here. Since you have time, why not book various Airbnbs around the state, maybe 3 or 4 days in each, or more, then look around that area and then check out a new area. I have an Airbnb and I would say 25% of my guests are coming out to check out the area and don't want to stay at a hotel.

It’s not that I’m trying to decide if I want to go to Tennessee. I’ve been there often and I am drawn mostly to the Cookeville area in Middle TN. For me that includes Crossville, and the smaller towns of Spencer, McMinnville, etc. I also like the Erwin area over in Unicoi County in East TN. I just hope there’s houses left in my price range by the time I get ready to make the move.

I’m concerned that my money sitting idle in the bank won’t keep up with how quickly real estate is accelerating. I’m wondering if I should jump on the real estate bandwagon. I can’t do that in Tennessee as long as I’m in Florida, but FOMO has me wondering if I should try to benefit from the meteoric rise in real estate while still here in Florida with a view to divesting from it and going to Tennessee in a couple of years. I have purposely made the decision to rent while having my real estate nest egg in cash so that a downturn in the market or difficulty selling a home would not hobble me in Florida when I want to head to Tennessee. I’m wondering if that’s still the best course.

 

[ivinsfan]

It’s not that I’m trying to decide if I want to go to Tennessee. I’ve been there often and I am drawn mostly to the Cookeville area in Middle TN. For me that includes Crossville, and the smaller towns of Spencer, McMinnville, etc. I also like the Erwin area over in Unicoi County in East TN. I just hope there’s houses left in my price range by the time I get ready to make the move.

I’m concerned that my money sitting idle in the bank won’t keep up with how quickly real estate is accelerating. I’m wondering if I should jump on the real estate bandwagon. I can’t do that in Tennessee as long as I’m in Florida, but FOMO has me wondering if I should try to benefit from the meteoric rise in real estate while still here in Florida with a view to divesting from it and going to Tennessee in a couple of years. I have purposely made the decision to rent while having my real estate nest egg in cash so that a downturn in the market or difficulty selling a home would not hobble me in Florida when I want to head to Tennessee. I’m wondering if that’s still the best course.

You said you have a short time frame, are in a place you like with very reasonable rent, don't want to own two houses at the same time and don't want to be a landlord. So yes stick with the rental plan, you'll sleep better at night. Or retire and move ASAP either one would work..

 

[pjigar]

It’s not that I’m trying to decide if I want to go to Tennessee. I’ve been there often and I am drawn mostly to the Cookeville area in Middle TN. For me that includes Crossville, and the smaller towns of Spencer, McMinnville, etc. I also like the Erwin area over in Unicoi County in East TN. I just hope there’s houses left in my price range by the time I get ready to make the move.

I’m concerned that my money sitting idle in the bank won’t keep up with how quickly real estate is accelerating. I’m wondering if I should jump on the real estate bandwagon. I can’t do that in Tennessee as long as I’m in Florida, but FOMO has me wondering if I should try to benefit from the meteoric rise in real estate while still here in Florida with a view to divesting from it and going to Tennessee in a couple of years. I have purposely made the decision to rent while having my real estate nest egg in cash so that a downturn in the market or difficulty selling a home would not hobble me in Florida when I want to head to Tennessee. I’m wondering if that’s still the best course.

If you have already made up your mind on FOMO then a compromise would be to take a few weeks dedicated break for house hunting in TN. Buy the house and then rent it for few years. It would be little hassle to manage rental remotely but you will be able to lock-in the price and live peacefully otherwise while you work in FL.

 

[FreeBear]

I thank you for your comment and relating your firsthand experience with your move after retirement. I will have a mortgage. I plan (and God laughs) to secure the mortgage before retiring because it is in my best interest to work as long as possible until I can't. By that I mean until I find the place to go which makes commuting to work impossible, I might as well continue putting in time building my DROP. Even if I should retire before having a mortgage I'm told that my defined benefit retirement will be plenty adequate to secure a mortgage approval.

We visited the American SW over a couple of years on vacation without the express intent of moving. On our last trip, we narrowed it down to 2 cities, with one the strong favorite. It was a recon trip mainly to check out neighborhoods and casually look at the real estate market. We had been checking of houses on Zillow extensively for months, casually for years. When we visited our favored city, we ended up going visiting 2 houses, both heavily Google Mapped ahead of time. We made a cash offer on the 2nd house, and scrambled to liquidate equities and move around funds before the quick close.

It was nice that we didn't force ourselves into having to buy a place. We just saw an opportunity we couldn't pass up so we just pulled the trigger. This was just a few months before the wheels fell off with covid.

Here in SE Arizona, nicer areas have been tight for a couple of years even before covid. In fact, we were priced out some beautiful houses and even entire neighborhoods that moved in 2018 and 2019, per Zillow "sold" search. Talk about FOMO!! Plus we realized that we would have been priced out any decent neighborhood in the entire city within 1-2 years, even before covid. Covid just tighened the RE market even more against buyers.

Honestly, if you want out of w*rk and FL in 2023, I suggest starting the process NOW. Spend every waking momemt looking at rentals, existing houses, and new construction. Fly out on weekends and every vacation to recon. In some markets, the existing RE stock is so limited, new construction becomes tempting, despite the cost. In this market it could easiy take a year to find something, let alone fix or build. I don't see this changing in your timeframe.

If you manage to find your dream house and location, regardless of how, you'll be much more motivated to push through the pain, both emotional and financial. If you don't find anything in the next 2 years, you can just retire in 2023 as planned and then move, even if into a rental.

Just the effort of doing something to further your plan ASAP could help with FOMO and give you a sense of control of your destiny. If you find something you love, it can become all consuming and you may have to move up you retirement from 2023 just get everything done without going crazy! If you are financially strong enough, consider pursuing your dream soon, even if it's not financially optimal (as in owning a house in TN with renting/wrapping up in FL). Perhaps enjoying your life in a place you love is more important than making more $$.

Our current move is lasting almost 2 years, twice as long as expected, and will cost twice as much as planned (not including house price). Still, we can afford it, plus the current equity market and hot home market have actually increased our net worth despite the heavy $$$ burn. I have no regrets as I sit sipping my coffee in our new home while watching the sun rise on the local mountain in the National Park just down the road.