cash out of Calif SFR?

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 said:
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.
 
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.     
 
riskaverse said:
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.
 
 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.
 
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?
 
califdreamer said:
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! ;)
 
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?
 
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.
 
califdreamer said:
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.

califdreamer said:
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.

califdreamer said:
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... :)
 
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.
 
Brat said:
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.
 
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.
 
califdreamer said:
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.

I am still trying to figure out where in North Carolina to drop my hat from New Jersey. I am tending to think 50 or so miles outside of wake county the raleigh area. They are growing like mad and building schools.

Property taxes are much less in the carolinas, they fund education a bit differently with the property tax NOT the real funding source.

Anyhow, my house here in NJ goes on the market around march 1st or so, decided to wait out the snow and cold here, not in the mood for realtors and people tromping thru in jan and feb with wet shoes etc!
A spring sale, WE HOPE.
 

Califdreamer wrote:

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. 


I will share with you my initial thoughts from living in the city for 7 months.

I enjoy all of the activities that are within a short driving distance:    The Riverwalk, Fiesta Texas, Schlitterbahn, Sea World & Parks. 

I also appreciated the opportunity to buy a nice home in a great community at a low price.   Most of the houses in my neighborhood are 75-80% brick exteriors.  Community swimming pools & recreational facilities add to the value. 

This article outlines 300 real estate markets.  It shows that San Antonio is currently 11% undervalued.

http://money.cnn.com/2005/12/29/real_estate/buying_selling/handicapping_housing_markets/index.htm

I was also very impressed with the Northeast ISD school district.  Great schools with state of the art technology &  small class sizes. 

I do not like how the roads are layed out.  The city uses "Access Roads" that parallel some of the main highways.  For example, there are many times I have to use the turnaround to reach my destination (instead of just using an exit).   This is hard to explain - - you really need to experience it.   The city needs to spend some $$ to upgrade it's roadways.   This may happen through the use of toll roads. 

There are times the the heat is unbearable (July, August, & September).   You really need to be inside during the 100+ heat days.  The weather during the winter months has been great. 

I currently pay a property tax rate of 2.5%.  My home is right on the city limits border and I expect to be annexed at any time.   This will increase my tax rate up to 3.0%.  The majority of my taxes go for the schools.  No state taxes though.   

One additional thing ...   The soil where I live (and much of San Antonio) is very rocky.   The landscaping company had to utilize a jackhammer to plant my tree.   

I hope this helps.   Let me know if you have any additional questions.       
 
Trace said:
I will share with you my initial thoughts from living in the city for 7 months.

Trace, you mentioned the opressive summer heat, but you failed to say anything about the high property taxes, high water bills, fire ants, scorpions, and other varmits that inhabit city hall... :rant:
 
Oh yeah ...   Scorpions

Seven months = Three scorpions in the house

The first one showed up the first night in the new residence (crawled up through the pipes).    They don't eat much though   :D

That number would have been higher w/o the pest control company. 

The water bills are very high (just paid it today $109.00).   
 
Thanks for additional feedback to all.

New Guy, I think interest rates will stay reasonable through Spring when you're going to sell, so waiting til March should be fine. Don't blame you for not wanting snow and sleet dragged thru the house... having the house ready to show is a pain even in perfect weather. All of the "places rated" articles seem to rank Raleigh-Durham-Chapel Hill highly. Sounds like it's got a nice mix of mild weather, culture and laid back lifestyle. I've heard the area along the coast in Wilimington has become popular though it looks like we're in a nasty hurricane cycle for a while. Others talk about Asheville and the mountains although that sounds like it has cold winter weather that you're getting away from up North. What about the Charlotte area? Sounds like its economy is bouncing back and the housing is very reasonably priced. All in all, NC sounds like it has a lot to offer for the early retiree. Good luck and keep us posted.

Trace, thanks for your thoughts about living in San Antonio. Last night I had nightmares from wahoo's post.... driving down a packed I-10, air conditioner on the fritz, scorpions and fire ants coming in the rolled down car window. :eek:
I'm surprised your propty tax rate would go to 3% if your area gets annexed by San Antonio. Geez, that's pretty hefty.

Thanks very much for feedback and Happy New Year to all!
 
califdreamer said:
Trace, thanks for your thoughts about living in San Antonio. Last night I had nightmares from wahoo's post.... driving down a packed I-10, air conditioner on the fritz, scorpions and fire ants coming in the rolled down car window. :eek:

califdreamer, I saw this on a chamber of commerce website for a small town in NY state, and thought it would be an interesting measuring stick for life in San Antonio:

"...we don't have earthquakes, mud slides, wild fires, floods, droughts, hurricanes, tornadoes, hail storms, dust storms, air pollution indoor-only days, 100 degree heat, high humidity, laws banning fireplaces, avalanches, scorpions, rattle snakes, alligators, fire ants, water restriction days, killer bees, or roaming power outages "

6 out of 21 ain't too bad... :LOL:
 
califdreamer said:
Thanks for additional feedback to all.

New Guy, I've heard the area along the coast in Wilimington has become popular though it looks like we're in a nasty hurricane cycle for a while.


Thanks very much for feedback and Happy New Year to all!

We have a family vacation house near wilmington, Nice to visit, the area as far as I am concerned is NOT what I like.

The thought of having a new home in a Hurricane zone is well NOT appealing, sure ya get insurance but a cat 4 or 5 storm destroys so much, we all saw what Katrina and Rita did to areas on the gulf, I remember HUGO and Fran in north carolina so I am aware!

So it will be off to raleigh area and a new start.

Happy new year guys from the newguy..
 
Caldreamer:

I live in Phoenix, but I really like San Diego, especially in the summer.  As part of my so called "investing" (read random luck, both good and BAD!) I  bought a small one bedroom 1980's vintage condo in Vista just outside of Oceanside two years ago. It had sunburst tan toned  appliances, which are now back in vougue>  Please, that is what I told my spouse and I may be able to keep her semi-happy at least until this next summer when I pull them out and go with stainless fridge, dishwasher and Stove.  I paid 225K for it (its worth about what the same today,  as a one bedroom this far inland is not a big since its too small for the move-up crowd, and its not west of I5) and it works for the present as a summer getaway, but I could live there year round.  Its not a bad idea, since you are already wired into SOCAL.  Sell the big place and pay cash for a one bedroom or so in North County.  (The beach is is just a short cruise away and if you are like me you would miss it.)

Maybe you should consider just scaling down but staying in the San Diego area? 

Heres but one example of a potential way to scale down and still remain in San Diego County:

http://www3.helpusell.com/FirstChoiceOceanside/Listings/ListingDetail.ASPX?LID=17755751
 
We cashed out of our San Francisco place and bought in Charleston County, South Carolina. This is a great place to live if you love a walkable and beautiful small city with moderate traffic, white sand beaches, pretty gardens, nature areas and tidal creeks, restaurants from great cheap eats & up, fresh local seafood and farmers markets, boating, colleges for free & cheap events, as well as lots of music & theatre groups, art galleries, and the annual SpoletoUSA Festival--one of the outstanding arts festivals in the world. For the sporty, there's fishing/shrimping/crabbing/oystering, boating/parasailing/swimming, minor league baseball, College of Charleston basketball, and lots of golf courses. We love the slower pace here and the balance among age groups--lots of retirees and semi-retirees in their 40s-60s, quite a few former military who were once based at the Charleston Navy Yard or Air Base, and quite a few from the mid-Atlantic and Midwest. There's a wide range of housing options and prices--small, older houses from $100k and brand new ones for $150k on up, and condos start under $100k. Our property taxes are really REALLY low compared to the Bay Area and suburban Boston. There's a 10 (15?)% prop tax break for seniors.

This part of SC has a lower rate of hurricane hits than the area close to NC--not to mention a far lower chance of hurricanes than FL or NC. Hurricane Hugo actually did more damage inland in Charlotte, NC than it did in Charleston. I pay attention to the weather June-October and keep a hurricane stash (canned food, batteries, tarps and such), good insurance, and my 8-yr-old 4Runner with manly tires :D
 
Wahoo, you really should consider running for mayor of San Antonio ;)

Newguy, sounds like you're zeroed in on Raleigh-Durham area of NC. I've never been to that part of the state but it sure sounds good from all the "most livable cites" type articles.

You know, LEX, I have looked at downsizing here in SD and I always run into the same mental roadblocks. I brought some equity into the purchase of my current house 3 yrs ago and got a 5% loan rate. So it's tough to beat the monthly payments. I also have a strong preference for detatched housing. And, of course, the thought of spending 40k+ on commissions, etc. makes me sick to my stomach. I figure I really have to move further inland (for example to Temecula) or to another state to make the downsize strategy worthwhile.

Thanks for great info on Charleston, SC, astromeria. I saw the perfect house in the area on realtor.com for about 230k. Interesting. Sounds like a very comfortable lifestyle there. This will sound somewhat trivial but are the mosquitoes bad? Do people put those nets around their backyard pools to keep them away?

Thanks for all the great input and hope everyone's 06 is off to a good start!
 

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