What to do? Lake House or earlier FIRE ?

[panhead]

Hi all, I haven't been on for a while, but I pop in occasionally to catch up with the posts. Anyway, I have been hit with a bit of a dilemma which I could use some insight on, tho I am pretty sure what I will get here...
I am 36 and own my own house outright, and the house has been completely redone from the bottom up, new everything, and needs nothing. Then this nice little lakehouse pops up. It needs some work, and costs about $129k more than my house is worth. With my current investments, I am sitting on the fringe edge of FIRE, I could quit working and pay all of my expenses now, but no safety net. In about 2 years, it would be much more comfortable. If I buy the lakehouse, I'll be where I want to live (nice town, on a lake, bigger garage, nice wood stove to heat with wood, etc) but will put out my target fire date 4 to 5 years. If I stay where I am (not a great town but nice neighbors, smaller garage, completely finished house) I could quit now, or quit nicely in about 2 years.
Comments ? I like the idea that I can quit any time I like right now, or if I get laid off (work in a niche tech field, could happen) I'm in a great spot. At the same time, I don't really see myself staying in this (current) house long term.
Then again, I guess if you are FIREd you don't need to live on the lake, you can be there every day anyway !?
Help !!

-Pan-

 

[brewer12345]

Personally, I think you would be off your nut to buy the house when you are so close to FIRE.

 

[Rich_by_the_Bay]

I am 36 ...With my current investments, I am sitting on the fringe edge of FIRE, I could quit working and pay all of my expenses now, but no safety net. In about 2 years, it would be much more comfortable.

FIRE at 36 sure leaves a lloooonnnngggg time to account for. So much can change, and virtually none of this change is predictable.I would personally plan on a lot more reserve FIREing at 36 than at 56 in order to meet my comfort zone. You say you are on the "fringe" of FIRE. Think about bolstering that position by a lot. Suppose you become diabetic in 3 years? Suppose there is a car accident leaving you with needs. Suppose ... you get the idea.

Also, neat houses have a way of feeling like "once-in-a-lifetime" opportunities. They rarely are. There will be others down the road if/when you are ready - not the same but better in some ways, worse in others.

I may be reading between the lines but since you asked , I'd forego the sexy new house, put your nose to the grindstone a few more years, then re-explore your options. OTOH, if you are truly financially completely comfortable (including lifelong health insurance), buy the house, hope for job security and if you get laid off you can always sell or rent out the house for a while.

Good luck, but you're making me nervous .

 

[youbet]

Help !!

You're asking for opinions on what lifestyle would be best for you.........  that ain't gona happen!  We've hardly been introduced.

But, since you asked........  you said you have zero safety net and that you would like to live on the lake.  The lake house would have a higher value and the additional equity would serve as a safety net.  You could sell and move to less expensive quarters if ever necessary.  So, two birds with one stone, buy the lake house and live where you have expressed a desire to live and consider the extra equity your safety net.  ER'ing at 40 yo ain't so bad...........

 

[KB]

If you think your quality of life will be much better at the Lake house, I'd go with that.

Would you be as happy living in the paid off house, spending all that free time there? Compare the lifestyles at the different houses...having all your time to do what you want. Which house would you rather do it in?

 

[rs0460a]

Suppose you become diabetic in 3 years?

Rich,

This one kind of jumps out at me... Since you are a doctor, and I'm diabetic (yes I know the "classic problems") I'm kind of interested in your thinking that this condition "may" impact a financial/lifestyle decision?  This may not be the correct forum for this, but I had to respond.

As for your question Pan, I'd keep my $$$ and work on getting FI.  Who knows, maybe a nicer home will "appear" while you "firm up" your financials?  Of course, being cheap frugal (with no mortgage myself) I can't see myself getting into that situation again.  Since I'm 58, age may have something to do with it...

- Ron

 

[Andre1969]

I know this is glaringly simple, but it really boils down to which one you truly want more: the lakefront home or the early retirement.

Now if it were me, I'd probably go with the early retirement, but like rs0460a, I'm pretty cheap myself. And burned out.

One thing you really have going for you is that you're still at a very young age, so even if you had to put off retirement a few years, it would still be an early one.

 

[panhead]

Thanks for all the insight so far, this is what i need, to hear this thrown around among like minded people as myself. I've talked to some of my friends, but they are not of the ER mindset, so they don't have the same point of view.
Keep em' comin ' !!

-Pan-

 

[Rich_by_the_Bay]

This one kind of jumps out at me... Since you are a doctor, and I'm diabetic (yes I know the "classic problems") I'm kind of interested in your thinking that this condition "may" impact a financial/lifestyle decision?  This may not be the correct forum for this, but I had to respond.

Well, to keep it on topic I'll just expand on how that diagnosis (and many others) can impact your financial outlook. First of all, it may have no effect at all -  many do just fine with lifestyle changes, etc. More likely, though, you will have a) high medication and supply costs (covered by insurance for many), b) difficulty getting non-group health insurance or much higher premiums), c) ironically, a better deal on fixed annuities which sometimes grant higher yields in the face of a chronic disease).

As decades go by (remember, he is 36 yo), there are the "-opathies" to deal with each of which may generate more cost. While many of these can be markedly reduced in likelihood by good control and good doctoring over the years, there is a statistical risk that can't be denied. Much the same can be said of coronary disease, MS, AIDS, various cancers, rheumatoid arthritis, etc.

Of course, virtually all of us will be dealing with one disease or another along the way, but a 36 yo planning on FIRE for 45-50 years with marginal reserves would be happier not having diabetes . Just used it as an example of planning for the common but unforeseeable potholes in the road.

Hope this helps.

P.S. When I look at what I can offer my diabetic patients today compared to just 20 years ago (especially if they cooperate on diet and exercise) it wouldn't surprise me a bit if this disease becomes a much lower risk issue than it used to be.

 

[laurence]

Were you yearning for a lake house in this community for a while and then found this house, or did the discovery of the house generate this desire? If the former, I lean towards buying it. If the latter, I say stay where you are. In any case, I agree with the sentiments of most here. You have a huge time horizon, and "once in a lifetime" opportunities usually aren't. I would plan on working another 4-5 years anyway to pad that margin, and if you find a perfect lake house at that point, go for it, and retire. Then you can always sell the house down the road and downsize if you are worried about your pile lasting long enough.

 

[astromeria]

Have you considered getting an appraisal and/or talking to a couple of good realtors to determine more accurately what your house is worth? Perhaps the difference between your take-out and the cost of the new house is much more--or less--that you surmise.

 

[wallygator69]

Thanks for all the insight so far, this is what i need, to hear this thrown around among like minded people as myself.  I've talked to some of my friends, but they are not of the ER mindset, so they don't have the same point of view. 
Keep em' comin ' !!

-Pan-

Hi,

House is worth more and on a Lake- What about taxes, My MIL has a camp on a nice lake in maine and pays $7000 a year in taxes. She has a 6 bedroom house on 6 acres in Massachussetts 12 miles from Boston and pays $5000 in taxes.

Lake House means higher Insurance.
Lake house means lots of improvements even if they are minor.
Lake House means a boat in all likelyhood (would for me).
Boat means boat insurance.
Boat is a money pit

Not trying to talk you out of it but the Real Estate Bubble in New England is letting some air out. What would the house have cost 3-4 years ago. If it's up 50%+ then I guess I am trying to talk you out of it.

If you FIRE could you find another lake 20, 50.100 miles away and pay 50% less for a lake house there?

I'm as spontaneous as just about anyone I know and I'd proceed slowly.

GooD Luck

Wally

 

[terminator]

Since you asked for opinions . . .

I'd pass on the lake house. It's like going to a beach hotel. Do you want the $100 room facing the hill or the $200 room facing the ocean? I'd take the $100 room. When the sun rises you get up and go enjoy the ocean just the same and when the sun goes down you head back to your room -- and when it's dark you can't see the ocean anyway.

Unless it's such a huge difference in happiness that the decision is a no-brainer, I'd take take the extra couple years. And if it were a no-brainer, you wouldn't have to ask.

 

[maddythebeagle]

Very good point on the ongoing expenses. If you havent, talk to somebody that lives on a lake. I have a few coworkers that live on a lake but it is keeping them from retiring. In northern Wisconsin, with the overbuilding and IL and MN folks moving in pushing up prices, I would avoid here (probably not much different other places with the boomers pushing).

 

[donheff]

...I'm 36... I am sitting on the fringe edge of FIRE, ... If I buy the lakehouse, I'll be where I want to live ...but will put out my target fire date 4 to 5 years.

Fun thread. This is like a Rorschach Test where we get to project our own concerns on you.

Me - I would put off ER about 5 or 10 years and build up a bigger pile so I wasn't on the fringe of anything. If the Lake House was close enough for a convenient commute and I really liked the whole package I would move there now. And I would probably get a boat. But that's me. I retired at 56 and viewed that as ER.

Bottom line, I don't have a clue about what you should do.

 

[SteveR]

Buy the lake house and enjoy your life while you are still young enough and healthy enough to enjoy living on the water. Retirement is a long term life style and getting there is not a race it is a choice.

We have a second home in the mountains we bought a few years ago. We knew it would delay ER for a few years but for us it was worth the price. What we receive from staying there far outweighs a few more $$ in the bank.

Of course, you must do what is best for you. Try to look beyond ER for a while and imagine living in this house. If it is truly what you want and the life style you crave then just do it. ER will be there a couple of years later...so what! The point is to make yourself happy while you can...tomorrow might not happen for you. If your job is not killing you and you actually enjoy what you are doing then get the house and be happy. If not, that is a whole other discussion.

 

[CCdaCE]

Once you've lived on a lake, you'd never want to go back.

The question I ask is, would you regret NOT buying it more than buying it?  Five or ten years from now when you could be retired, and didn't buy the lake home, is it really going to burn you down?  IF I had the chance to buy it for a fair price, and I didn't... It'd gnaw at me all the time.

Buyers remorse/buyers regret? vs. regretting NOT buying.

My .02

Why save all that money if you're not going to spend it?

Disclosure: I've never owned a lake home, BUT grew up on a MN lake from when I was 15 to 20something.  Was a "caretaker" on one for a summer after that.

-CC

 

[perinova]

My opinion: Wait your 2 years. Don't buy a property when it doesn't make total sense for you.
You will have plenty of time to consider moving to a lake house later. There a a lot of lake houses for sale all the time. The next one might even be better!

 

[unclemick]

Hmmmm

I don't have a clue as to what you should do either.

1979 - bought the lakehouse(aka fish camp) cause that was where SHE wanted to live - age 36 - planned early retirement at age 63 - was layed off at 49. Then the rental income from both sides of our duplex really helped early ER.

To paraphrase Cambell(Joseph) - follow your bliss. Then adjust your plan accordingly.

BTY - the locals said at the time - we overpaid.

heh heh heh

 

[Dawg52]

Fun thread.  This is like a Rorschach Test where we get to project our own concerns on you.

Me - I would put off ER about 5 or 10 years and build up a bigger pile so I wasn't on the fringe of anything.  If the Lake House was close enough for a convenient commute and I really liked the whole package I would move  there now.  And I would probably get a boat.   But that's me.  I retired at 56 and viewed that as ER.

Bottom line, I don't have a clue about what you should do.

I pretty much agree with this one. I might consider passing on this lake house and look for one that is closer to the value of your current house. That may not be possible in your area though. Good luck.

 

[lazygood4nothinbum]

if you like your job enough, a little sunfish or hobie cat on that lake will make those 5 years breeze by.

i lived across the street from a nice sized lake for a while and took the sunfish out every day after work. i converted a golf bag cart to get the boat across the street. worked really well. was a very nice few years living like that.

 

[panhead]

Great replies, thanks ! I still have no idea what to do, but this is helping. Here's a little more info that might help things make more sense. The lakehouse is 5 miles from my current house, so it's an easy commute from anywhere i was going before. The town my current house is in now is not great, but the taxes are low which really helps on the cost of living. I can reasonable expect to pocket (after costs) about $200k for my house. The lake house is $329k. I might get a little more for my house, but not much, the schools aren't great and that (and other things) is putting a cieling on the prices. I have ALWAYS wanted to live on a lake, problem is, I have certain requirements: The lakefront has to be good to excellent, I need a garage, it has to be year-round or convertable to year round, and I would really like a fireplace. This place has all that. Oh yeah, damn tootin' I'll have a boat ! Actually I have one already.
I understand the maintenance thing, I'm quite handy,so that doesn't scare me
very much

As for RE on the fringe, I don't really have any intentions of doing it, i plan on building up a larger nest egg either way, it's just a measure of how close I am to not having to work. I'm not terribly thrilled with working any more as the job has required tons of travel and stress, tho i imagine I could find a lower paying one that would still easily support my lifestyle, but would put off RE even longer.

You guys are the best, thanks !

-Pan-

 

[Nords]

Then this nice little lakehouse pops up.  It needs some work, and costs about $129k more than my house is worth.   With my current investments, I am sitting on the fringe edge of FIRE, I could quit working and pay all of my expenses now, but no safety net.  In about 2 years, it would be much more comfortable.  If I buy the lakehouse, I'll be where I want to live (nice town, on a lake, bigger garage, nice wood stove to heat with wood, etc) but will put out my target fire date 4 to 5 years.  If I stay where I am (not a great town but nice neighbors, smaller garage, completely finished house) I could quit now, or quit nicely in about 2 years.   

Well, here's a couple thought experiments:
- Will you spend the rest of your life wondering if you should have bought the lake house?
- Is there only one lake house in that community or will others come on the market?
- Is this a binary situation with only two answers?  Our kid is perpetually educating us that there are never just two solutions to every problem.
- What is that lake house going to do to your current lifestyle? Will the repairs take more time & effort than you can provide with your work schedule?
- How much research have you been able to get at, and how good is your estimate of the repairs needed?  Are you sticking your head in a money pit?

Here are some other possible solutions:
- Let the lake house go but give the new owner your contact info.  You may be pleasantly surprised a few years down the road.
- Let the lake house go but give the realtors your contact info and a timeline.  They'll be able to keep an eye out for new opportunities.
- Figure out how to duplicate that lake house in some other neighborhood/location.

When we found our first "dream house" as DINKs we went crazy.  We lost $5000 on the attempt and in retrospect (raising a family!) that was still cheap tuition at the School of Experience.  When we found our second (and final) dream house we were much better prepared and much less emotional about it.  We don't spend the rest of our life wondering about that first house any more because the second one is so much better.

 

[wabmester]

We currently live in a waterfront house.    We absolutely love the lifestyle, ever-changing view, etc.   And waterfront/view properties have been good investments since I've been interested in real estate (20 years?).

The "good investment" aspect can be a two-edged sword, depending on where you live.    If your property value goes up and up, but you plan to continue living there, the only effect you feel is the increase in property tax.   And that sucks.

 

[gtmeouttahere]

We currently live in a waterfront house.    We absolutely love the lifestyle, ever-changing view, etc.   And waterfront/view properties have been good investments since I've been interested in real estate (20 years?).

I agree, God doesn't make any more waterfront and it will always be a good investment.  At your age, I would not hesitate in buying the lakehouse, only I would sell/or rent your other house.  If you own your home free and clear, rental income would more than make your payment for your waterfront home.  Also having that rent coming in every month may even HELP you reach your FIRE goals sooner. 

Not to mention the value of your lakefront most likely will go up faster than the value of your current home leaving you access to more cash in case of emergency in the future.  Also, you're young and may decide to move somewhere else later in life.  You may then be able to sell your lakefront home for way more than your current home, leaving you with enough cash to pay for your next home, wherever that may be....Or you'll have the home you always wanted and can retire happy, sounds like you like boating, that property sounds like it is right up your alley.