All, long time follower and enjoy the wisdom this community offers. the wife and I feel the need to downsize and will make a good profit on our investment in the current house. for discussion lets say 300k. we want to relocate to upper Seattle (Everett or Arlington) from the midwest to be close to our grandchild where housing is more expensive for less. That being said and at mid 60's for both of us would we be better investing the profit into purchasing and paying off a home or taking a loan to preserve the profits or just renting? thoughts? We understand the neighbors and condo close living thing discussed in other threads, we are purely looking at the financial aspect only for retirement which we both enjoy currently.
should I buy or rent at age 64
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brucethebroker
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You need to spreadsheet it out. What would a suitable home cost? Would you have to take out a mortgage? How much would comparable rents be? This is not a "one answer fits all situations, or a rule of thumb" question.
Bring us some numbers. You will most likely get some thought provoking answers.
Good luck.
Bring us some numbers. You will most likely get some thought provoking answers.
Good luck.
gauss
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Do you expect real estate prices in that part of the country to increase, decrease, remain the same going down the road?
What about your opportunity cost (ie same question applied to market based investments)
Seems like that would be the biggest financial aspect driving this decision.
-gauss
What about your opportunity cost (ie same question applied to market based investments)
Seems like that would be the biggest financial aspect driving this decision.
-gauss
Moemg
Gone but not forgotten
Since you are moving to live near a grandchild I would rent . Children change jobs and move so you may be stuck somewhere you really do not want to be .
Blue Collar Guy
Thinks s/he gets paid by the post
+1. My oldest sister, who im on bad terms with, and her husband who I detest, used to live in long island. My sisters in laws were life long renters. They had a rent CONTROLLED apt(not rent stabilized) their rent was less than 70 bucks a month hahahaha. Any how they buy in a over 55 community to be near their only son and grandchildren in long island. These people hadnt even owned a car in 40 years. They buy a car, buy the house, and as a house warming gift my brother in law decides he is going to move to a new job in the Midwest . Good thing he was an only child he would be the poster boy for getting disinherited. Moral of the story rent, rent, rent.
I am in a similar situation. On road now so can't provide links. There are some good buy vs rent calculators. I started there.
Right now, I am considering working with DD/SIL, to purchase a house that we will rent. They have down payment but if not I can gift or loan part of it. They would have a great tenent and I would be happy to see the equity and tax benefits going to them. As with any deal, you will need to consider the risk/family fallout that could occur.
If that does not work out for us, I will likely rent but my situation is beyond the simple financial analysis.
Right now, I am considering working with DD/SIL, to purchase a house that we will rent. They have down payment but if not I can gift or loan part of it. They would have a great tenent and I would be happy to see the equity and tax benefits going to them. As with any deal, you will need to consider the risk/family fallout that could occur.
If that does not work out for us, I will likely rent but my situation is beyond the simple financial analysis.
Seattle is in an strong real estate bull market (my youngest who works for MrSofty bought a house in Renton last year and he made bids on two houses before landing one), so I would strongly consider renting, particularly since circumstances (your grandkid) can change.
We considered buying on the Olympic Peninsula two years ago, before deciding on Reno.
We considered buying on the Olympic Peninsula two years ago, before deciding on Reno.
Divide the monthly rent by the cost of buying the house. If you can rent for less than 0.4% per month, of the cost of the house, which is the case in many expensive cities then go ahead and rent.
As the rent gets closer to 1% of the cost to buy you can consider buying as an investment as it's a great place to rent it out.
Anything in between can be either or so why not rent anyway and keep the flexibility.
Sent from my iPhone using Early Retirement Forum
As the rent gets closer to 1% of the cost to buy you can consider buying as an investment as it's a great place to rent it out.
Anything in between can be either or so why not rent anyway and keep the flexibility.
Sent from my iPhone using Early Retirement Forum
I would guess you needn't be concerned with this, but dependent on one's financial situation, the current provisions of Medicaid provide some security for the surviving spouse, if assets should be depleted due to high medical or nursing home costs over an extended period.
Understanding how this works could be a factor in the buy/rent decision. Note the 5 year lookback.
Brief explanation here, on post #34.
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html#post1214332
Note that after the death of the surviving spouse, the state may place a lien on the home for the expenses paid by medicaid, but in the interim, a continuation of living in the security of the homestead.
Understanding how this works could be a factor in the buy/rent decision. Note the 5 year lookback.
Brief explanation here, on post #34.
http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html#post1214332
Note that after the death of the surviving spouse, the state may place a lien on the home for the expenses paid by medicaid, but in the interim, a continuation of living in the security of the homestead.
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This NYT online tool is the best I've found: Is It Better to Rent or Buy?
Whenever I think about swapping homeownership for the "nirvana" of renting (nirvanic state achieved thru absence of maintenance worry) I come up short because of my concern about "rent" inflation.
If where I wanted to live had good rent control laws (as in my old renting days in NYC before we bought for example) that offered decent protection against out of control rent increases it could be a viable alternative. However, to be "naked" potential outsize rent inflation is not a risk I would personally want to take in my sixties.
If where I wanted to live had good rent control laws (as in my old renting days in NYC before we bought for example) that offered decent protection against out of control rent increases it could be a viable alternative. However, to be "naked" potential outsize rent inflation is not a risk I would personally want to take in my sixties.
A problem that is often eliminated by buying in a relatively small, well run condo association. That's what we did two years ago and it has been wonderful.
No one ever argues for capping out of control house appreciation
Actually every single person NOT YET on the property ladder might argue, and rather convincingly, that point with you... [emoji6]
100% agreed. We're convinced our next more will either be condo or townhouse, which mitigates maintenance issue and avoids rent inflation exposure.
FIREmenow
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....or whose property taxes are a significant portion of the budget.
great discussion and much appreciated!!! here are some more assumptions:
400k profit on existing house
350K potential new house cost in Everett wa or arlington wa
2000 dollars to rent/month if we don't buy
should we buy and pay off house?
buy and take out mortgage ?
or simply rent...?
I know some have answered but brucethebroker asked for more assumptions and wanted to provide that and also appreciate the other insights that have been offered. this is a great community of wisdom that we appreciate!!!!! hope this extra assumption data helps...
400k profit on existing house
350K potential new house cost in Everett wa or arlington wa
2000 dollars to rent/month if we don't buy
should we buy and pay off house?
buy and take out mortgage ?
or simply rent...?
I know some have answered but brucethebroker asked for more assumptions and wanted to provide that and also appreciate the other insights that have been offered. this is a great community of wisdom that we appreciate!!!!! hope this extra assumption data helps...
You're in that gray area that captain3d mentioned.
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
+1
Our 2 grandkids have moved 3 times in 6 years. Trying to follow them around would have been a fool's errand. I would vote for renting if you must be close to the grand kids. For us, we went where we wanted to live and then we said "the planes fly both ways." YMMV
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Before buying in Everett, talk to your relatives about neighborhoods. Everett has become kind of tricky in some areas.
Also, I haven't kept up with property trends in Snohomish County, but if it has more or less followed Seattle, I would be concerned that you might be buying just in time to get your butts kicked. Historically, when central Seattle or high quality eastside properties get a cold, more distant parts of the metro get pneumonia.
Boeing has had recent layoffs locally, but I am not sure if the Mukilteo plant is affected or just Renton. Whoops, looks like Mukilteo is affected. https://www.heraldnet.com/business/cuts-continue-as-boeing-issues-more-layoff-notices/
Overall, I would likely side with the "just rent" fans. Even though I am a very long term Seattle resident, and never plan to take my carcass anywhere else for any time, if I did not already own my condo, I would rent, not buy on this recent crazy market. An anecdote: We all tend to have at least one reliable contra-timing friend on real estate matters. My friend reliably zigs when he should zag. So he recently got laid off and decided to tide himself over by buying some ground and a yurt farm which he will administer. Well, almost anything is possible, but some things are not very probable, and some things are downright get out of Dodge asap warnings. I see this as one of these leave now type things.
I believe that timing is key in any transaction, so if you do not see things this way, do whatever, but I would avoid deteriorating Everett and some other Snohomish county neighborhoods. I have no recent reliable information, as I have lived in Central Seattle for quite a time now, and I don't see much Snohomish County news. Penetration of opioids into formerly ok neighborhoods has been profound.
I have sometimes managed to get cops to talk to me about areas I might want to avoid.
Hard to imagine that you would get into much trouble in Arlington, other than perhaps landslides on slopes around the river. Still, seek local counsel, not realtors some of whom will lie their heads off.
Ha
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Good advice haha and had heard of the Everett situation so we will try to avoid those areas. Marysville and lake Stevens are also under our consideration, any thoughts on those areas? With the real estate market being bonkers due to Amazon hiring etc.,, renting for a while and waiting for the calm is weighing heavy in the decision process. Thanks!!!
brucethebroker
Thinks s/he gets paid by the post
Here are two questions to consider: If you pay cash for a house (I am having a hard time with $24k a year in rent), would you be OK if the market crashed and your home devalued to $275K? If the kids moved, would you stay put (if so, find a house 20-30 min. to a major airport...). If you like that area, and don't care about your home future values, and aren't going to play the "follow the kids game" after one time, I think that paying cash for a home is a good idea.
Having said that, you can borrow $200k for around $955 a month (4%, 30 year fixed, P&I only) and much cheaper than rent. Why not put $150k down and finance? (Who cares if you die and still owe a mortgage?). Should interest rates jump up, laugh all the way to the bank (when getting 7% on your $200k in CD's). Should rates fall, refinance.
Just a few thoughts to add to the wisdom already revealed....
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think you can read the Everett Herald free online. WWW. Heraldnet.com. It is a pretty decent paper. Also Seattle tv news- li
Komo tv, or KIRO. These will carry a lot of Snohomish County news, both real estate and crime. Try city data online, it may have an Everett area. I used to live in northern Snohomish County, and I really enjoyed coming down to Everett, a good working class industrial city. But investigate carefully.
Ha
Following this line of thought, a poll could be created - "Should you live your life for the sake of your adult children and/or grandkids?"
I expect that question would elicit some very heated discussion!
