cash out of Calif SFR?

[califdreamer]

Hi everyone.  I just signed on and wanted to ask if anyone out there has cashed out of their home and moved, downsized or used their equity in some way that assisted them in retiring.  I'm single and 46 and sitting in too big a house and sitting on too much equity.  I actually sold the house last Spring but got cold feet and decided to stay put.  I love living in the San Diego area but have toyed with moving to an area with lower housing costs (Phoenix, Tucson, Austin, El Paso, etc.)   I could consider going jobless if I were to manage things well enough after making such a move. 

Perhaps someone who has gone through this has some insight.

Thanks and great to be aboard. 

 

[Brat]

Almost any place in the country has cheaper housing the San Diego!! Start looking for a job, when you find what you want move.

 

[dumpster56]

Hi everyone. I just signed on and wanted to ask if anyone out there has cashed out of their home and moved, downsized or used their equity in some way that assisted them in retiring. I'm single and 46 and sitting in too big a house and sitting on too much equity. I actually sold the house last Spring but got cold feet and decided to stay put. I love living in the San Diego area but have toyed with moving to an area with lower housing costs (Phoenix, Tucson, Austin, El Paso, etc.) I could consider going jobless if I were to manage things well enough after making such a move.

Perhaps someone who has gone through this has some insight.

Thanks and great to be aboard.

Well my friend we are putting the house here in new jersey on the market in jan . Gonna take about 300,000 in equity when we sell it even if the market slows, a nice 2700 sq foot center hall colonial toll bros house.

I will be 50 in april and gonna buy a house for cash in North Carolina outside of Raleigh.

I am Sick of teaching in Newark nj.

Have a pension and with the penalty I still get around 30 and med bennies.

It is a no brainer the kids are grown and on there own.

Hey I can always sell books at borders, coffee at starbucks kayaks at rei or tend bar!

Lets go for it!

 

[Nords]

I'm single and 46 and sitting in too big a house and sitting on too much equity.  I actually sold the house last Spring but got cold feet and decided to stay put.  I love living in the San Diego area but have toyed with moving to an area with lower housing costs (Phoenix, Tucson, Austin, El Paso, etc.)   I could consider going jobless if I were to manage things well enough after making such a move. 

There's nothing wrong with taking your $250K tax-free cap gain and getting on with your life. San Diego's a great place but way too expensive & crowded for daily living, and you seem to have found other areas of the country that you can tolerate with a quarter-million and your freedom...

 

[califdreamer]

Thanks Brat and Newguy.  

Brat, you make a good point.  Why not move to another sunny but cheaper place and work a few more years before securely retiring.

Newguy, right after I posted I found your thread.  You've got a perfect situation with the pension, etc.  You are absolutely doing the right thing!

I'm doing well on paper due to real estate investments that have turned out better than I planned on and a generous ESOP from my employer.  As I mentioned, I'm 46, single, no dependents.  I have about 850K equity in rental properties with a bit over 200K in cash on the sidelines.  I would clear about 400k on the sale of the SFR.  The ESOP and 401K total 330K.  Of course I can't touch those without penalties until 59.5.  

It looks great on paper but it's basically a lot of built-up equity that I haven't figured out quite how to harness for ER.  

Thanks for your replies.  And congratulations Newguy on your move!

 

[califdreamer]

Thanks for your post Nords. Yes, life is very good in San Diego when you're not in traffic or contemplating losing your home equity in a possible real estate crash. Is life here really so much better than in, say, Phoenix, that it's worth sitting on the equity? I've rolled this around in my head for the better part of a year.

 

[Michael Moore]

We own our home in San Francisco. So far, we haven't found a compelling reason to move to somewhere less salubrious.

cheers,
Michael

 

[Jarhead*]

We own our home in San Francisco.  So far, we haven't found a compelling reason to move to somewhere less salubrious.

cheers,
Michael

Word of the Day at Dictionary.Com for Tue. Feb 6, 2002.

Salubrious: Favorable to health, promoting health, healtful.

Have about two hours before T-Off this AM, so thanks for helping me kill some time.

 

[HFWR]

I'm already teed-off this morning...

But then I'm at work...

 

[Dawg52]

Have about two hours before T-Off this AM, so thanks for helping me kill some time.

This makes me sick. I haven't played in 2 weeks due to frigging work! Lord, help me get through one more year of work. 

Cali, I sold my house 2 years ago and downsized to less than half of what I had. It really feels good to have low fixed expenses too. Low taxes, utilities, maintenance, etc.  You won't be sorry!

 

[califdreamer]

Thanks for input. Just curious, dog51, did you downsize your housing in the same market or did you move from an expensive housing market to a less expensive one? Did you opt to pay cash or keep a mortgage? Some have advised me to pay all cash for the cheaper home, others tell me I should have a mortgage even if I'm able to pay cash.

Has anyone one else gone through this? Any advice?

PS One (somewhat risky) strategy is to sell out and rent. Most seem to advise against timing the market though.

 

[Dawg52]

Thanks for input.  Just curious, dog51, did you downsize your housing in the same market or did you move from an expensive housing market to a less expensive one?  Did you opt to pay cash or keep a mortgage?  Some have advised me to pay all cash for the cheaper home, others tell me I should have a mortgage even if I'm able to pay cash. 

Has anyone one else gone through this?  Any advice?

PS  One (somewhat risky) strategy is to sell out and rent.  Most seem to advise against timing the market though.

Actually I moved in a house my aunt owns. She had already moved in with my mother due to age and health reasons. I'm gonna inherit the house anyway so instead of letting it go down, I decided to go ahead and take advantage of it. I probably sold my house a little early as it was located in a new subdivision that was fairly hot. But thats life. 

 

[Mr._johngalt]

Actually I moved in a house my aunt owns. She had already moved in with my mother due to age and health reasons. I'm gonna inherit the house anyway so instead of letting it go down, I decided to go ahead and take advantage of it. I probably sold my house a little early as it was located in a new subdivision that was fairly hot. But thats life. 

My parents have deeded their house over to my brother and me.
It's a nice house. I can't imagine any circumstances where
either of us would ever live in it.

JG

 

[Dawg52]

My parents have deeded their house over to my brother and me.
It's a nice house.  I can't imagine any circumstances where
either of us would ever live in it.

JG

I won't be here forever as the neighborhood has gone down but it's just around the corner from my mother and aunt. Easy to keep an eye on them from here. 

 

[ALushLife]

Hi Dreamer! This is what I just did! I own my home in So Fl on the water and I bought a second home in the mountains in NC. I plan on spending summers there and if I LOVE it there then I may eventually sell my So Fl home...I bought a beautiful turn of the century farmhouse on 2.7 acres on a river w/ mountain views that was a real fixer upper. I am enjoying updating my new old home. For now I am looking at this as an adventure and I'll be living the best of both worlds! I personally wouldn't sell a home I loved unless I had a very good reason to or I had to. The area I purchased my second home reminds me of So Fl 25 years ago....they are building gated developments w/ million dollar homes all around me....beleive me...I didn't pay anywhere near 1 million! Good luck! Annie

 

[califdreamer]

Thanks for replies everyone! Annie, your NC property sounds great. Those million dollar comps in the area won't hurt!

 

[Retire Soon]

Califdreamer,

We're in a situation very similar to yours.  We also live and own a home in the San Diego area.  A year and a half ago, we purchased a home in Bend,Oregon.  We plan to retire in June and to relocate there.  We would like to escape the congestion of Southern California.  We were able to purchase a house in Oregon that was nearly comparable to ours at one half the price of what our San Diego property is worth. Yes, San Diego does have perfect weather, but it is at a price that we're no longer willing to pay.  Traffic was a major consideration.  It is getting progressively worse.  The governor has recently approved Veijas Casino  for an unlimited amount of slot machines.   This move will seriously impact traffic on I-8 in East S.D. County. San Diego has only a few major freeways to accommodate  the large influx of people who move here every day.

It is a difficult decision to sell a home that we both like and have  made improvements on for the past 15 years. However, we're keeping our fingers crossed that when we put it on the market in April, that  prices will still be stable.  It's a hard decision to make, but we have many relatives who have left the area with absolutely no regrets.  I think it's a good time to take an advantage of the real estate prices.  If they go way down, it may be a long, long time before they return to their current level.

 

[califdreamer]

Thanks for message, Retire Soon. Congratulations on your purchase in Bend. That is a beautiful place!

It's easy to agonize over deciding whether to stay put in a place I really enjoy or pulling out and living mortgage-free and having additional capital to invest.

Even though many other markets have experienced drastic appreciation, most still look attractive compared to California. It's tempting when you see newly constructed homes with a pool in a sunny climate listed for 300,000 or less on realtor.com.

One other option would be to move to a smaller house in Temecula (Riverside County). I could stay nearby and live mortgage free (or live with a small mortgage and some additional money to invest). But if housing takes a tumble in SD, nearby areas would surely follow.

Then there's Cabo.....

 

[danm]

We did so, sold our house recently (N. Ca) and took nearly $400k from the sale and are now renting a much better house, with no worries and nothing to fix. We're not even sure when we'll next buy a house, maybe if prices fall and bottom out. We've now got more money, less work and more mobility than we ever did with the house.

 

[Retire Soon]

Califdreamer,

Temecula has great weather and is not too far from San Diego. We just drove through there on I-15 this weekend. It's almost unbelievable that so many new developments could have sprung up since we went through there a year ago. A friend at lunch today, who lives up there, mentioned that you can buy 5 bedroom houses up there for $300,000. A lot of people have left San Diego to move there, because they have been priced out of the market here. But, you're leaving for a better reason in that you want to lock in profits on a booming real estate market. Sounds like a good decision.

 

[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]

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!