cash out of Calif SFR?

[astromeria]

It is more buggy and humid here than anywhere I've been in CA for sure--San Diego is paradise climate-wise, and we didn't have or need window screens in San Francisco. Some SC people who want to be in their yards at dusk and in the evening spray for bugs or use bug zappers--I never saw a screened-in pool here. While there are gnats and mosquitos, I don't develop the huge itchy/painful welts that I got when I lived in New England. The evening bugs are worse in Massachusetts & New Hampshire (and according to my daughter, Houston and Dallas) than here--but I'm a mile or so from the ocean, so it might be better here than further inland.

 

[justin]

I'm a lifelong resident of Raleigh-Durham-Chapel Hill and I can tell you it is a nice place to live. Growing very fast though. Cost of living is relatively low compared to California, DC, urban Florida or New England. Generally good schools in the urban areas. Good roads. Low property taxes (as long as you aren't in Chapel Hill).

My wife just started a new job at a company with a few hundred other new employees, most of whom were former New England residents. After talking to many of her coworkers over the last few weeks at holiday parties, I keep hearing about how they decided to move to Raleigh-Durham because of the cheap housing and costs of living, and how the pace of life is a little "slower". People say "hi" when you pass by and wave to you. And don't think we're illiterate hicks from the sticks - it's one of the best educated areas in the nation with almost the highest concentration of PhD's in the nation.

Get used to hot, humid summers and generally mild winters (usually above freezing during the day). Spring and fall - the weather is perfect!

 

[Brat]

hot, humid summers

In my part of the world moisture has the decency to fall to the ground. I can walk, run and breathe in comfort.

 

[Jay_Gatsby]

I'm a lifelong resident of Raleigh-Durham-Chapel Hill and I can tell you it is a nice place to live.  Growing very fast though.  Cost of living is relatively low compared to California, DC, urban Florida or New England.  Generally good schools in the urban areas.  Good roads.  Low property taxes (as long as you aren't in Chapel Hill). 

My wife just started a new job at a company with a few hundred other new employees, most of whom were former New England residents.  After talking to many of her coworkers over the last few weeks at holiday parties, I keep hearing about how they decided to move to Raleigh-Durham because of the cheap housing and costs of living, and how the pace of life is a little "slower".  People say "hi" when you pass by and wave to you.  And don't think we're illiterate hicks from the sticks - it's one of the best educated areas in the nation with almost the highest concentration of PhD's in the nation. 

Get used to hot, humid summers and generally mild winters (usually above freezing during the day).  Spring and fall - the weather is perfect!

I've heard a lot of good things about living in North Carolina, particularly if you have kids. If you're young and single, then a large Eastern Seaboard city is a better choice.

 

[dumpster56]

I've heard a lot of good things about living in North Carolina, particularly if you have kids. If you're young and single, then a large Eastern Seaboard city is a better choice.

Kids grown and married and professional jobs.

Gonna be 50 in april, the wife is 52 and still sweet and beautiful!

Still looking at nc, the wifes fun family is in the carolinas and my family would move there or visit!

 

[justin]

I've heard a lot of good things about living in North Carolina, particularly if you have kids. If you're young and single, then a large Eastern Seaboard city is a better choice.

Where I live in NC is rather kid/family friendly. Two nice city parks within walking distance. Good K-12 schools and two great Universities within 30 minutes that offer in state tuition and essentially every curriculum known to man. My daughter can walk to her elementary school (when she learns to walk). The public high school I attended here in Raleigh usually gets ranked in the top 50 nationally on some poll. Low crime.

 

[califdreamer]

OK, I've had the holidays to think this thing (cash out of Calif SFR?) through and here's my thinking today (as of 10:30 AM PST subject to change by 11:30).

The investment real estate will provide for FIRE (see original post in this thread for detailed financials) but it will take a few more years. I could cash out of CA, move to a less expensive place and have 200K more for investing and buy a house for cash. That would get me in a position to retire, perhaps in 2006. But the fact is, I really like it here and I think I'd like to retire here. Yes, it will take an additional year (or three) to do it but I have a lot of years left and I'd like to spend them here (for forseeable future anyway).

In order to be able to retire here sooner, I could broker some apartment investment deals. After a year or two, if this enterprise looks promising, I could leave my paycheck job (where I work out of my home and have tremendous flexibility) and just do the real estate deals. I could, I suppose, do some of this as a sideline during ER. I've been investing in apts for almost ten years so I have a good feel for the business. I might even be better at it than I am at my current pleasant but boring job.

Possible downsides: San Diego home prices crash and I lose a quarter million I could've used for relocation... the real estate brokerage doesn't pan out... I die of boredom waiting for ER

I'll throw it open to everyone. Am I crazy? Should I take the money and run? Would it be crazy to relocate just to cash in on home equity? Is my 10:30 decision to stay and pursue a side career in real estate brokerage a good one? As always, thanks in advance for your valuable input.

 

[dumpster56]

OK, I've had the holidays to think this thing (cash out of Calif SFR?) through and here's my thinking today (as of 10:30 AM PST subject to change by 11:30).

The investment real estate will provide for FIRE (see original post in this thread for detailed financials) but it will take a few more years.  I could cash out of CA, move to a less expensive place and have 200K more for investing and buy a house for cash.  That would get me in a position to retire, perhaps in 2006.  But the fact is, I really like it here and I think I'd like to retire here.  Yes, it will take an additional year (or three) to do it but I have a lot of years left and I'd like to spend them here (for forseeable future anyway). 

In order to be able to retire here sooner, I could broker some apartment investment deals.  After a year or two, if this enterprise looks promising, I could leave my paycheck job (where I work out of my home and have tremendous flexibility) and just do the real estate deals.  I could, I suppose, do some of this as a sideline during ER.  I've been investing in apts for almost ten years so I have a good feel for the business.  I might even be better at it than I am at my current pleasant but boring job. 

Possible downsides:  San Diego home prices crash and I lose a quarter million I could've used for relocation... the real estate brokerage doesn't pan out... I die of boredom waiting for ER

I'll throw it open to everyone.  Am I crazy?  Should I take the money and run?  Would it be crazy to relocate just to cash in on home equity?  Is my 10:30 decision to stay and pursue a side career in real estate brokerage a good one?  As always, thanks in advance for your valuable input.

Your time responses are just what I have been going thru. I however do not post them . I too have doubts at times but when I look at my numbers, with a state pension of over 30,000 with medical bennies for both myself and wife with minimal co pays and prescription coverage foe generics at 15 dollar co pay for 90 day supply and then the selling of the home and having near 300,000 to purchase a home for cash in north carolina from new jersey I say what the heck it is time and I am only 50!

Sure I can stay for anothe 1 2 or 3+ years and get an additional 250 dollars a month every year but that means still having to drive 120 miles a day and continue to teach in Newark new jersey!

My situation is a no brainer, New jersey stinks! Time to go, heck Selling Kayaks and running shoes at a sporting goods store while coaching a track team part time is my new career track!

 

[Targeting40]

We lived in Cary for 5 years. Cary is right between Raleigh/Durham. We absolutely loved the area. Real estate prices and corresponding property taxes are very reasonable. There has been very little change in real estate prices in Cary for about the last 8 years. Many studies show real estate prices are undervalued compared to the rest of the country. The only downside is state taxes and that is ultimately what made us decide to move to Florida. We were paying 8.25% in NC state income taxes. We absolutely loved the area but by moving to Florida the tax savings alone would pay for our mortgage.

We moved to Central Florida about 4 years ago and built a new home. Then the housing boom hit and our property nearly doubled in price in just 2 years. We were now sitting on a tax-free capital gain of $410K. We could not believe people were willing to pay such prices so we could not resist the temptation to cash out. About this time a year ago, we put our house on the market and sold within 3 months.

We then moved to north Florida where prices are extremely affordable. In fact the prices in Tallahassee are equivalent to what the central Florida prices were 4 years ago. For the first time we own our own home without a mortgage. We are only in our low 30s so we feel this is quite an accomplishment.

Both moves were difficult because we loved both areas we were leaving, but the financial gains were too good to pass up. Cashing out and moving was a tough decision but locking in the gains has been very satisfying.

Good luck in making your decision.

 

[califdreamer]

Thanks for replies!

Newguy, if I were in your situation I would go to NC in a heartbeat. Everything about moving makes sense for you.... you can cash out of a big SFR... you can move to a very high-quality-of-life area that is actually cheaper!... you can say goodbye to a brutal commute... you can get away from inner city violence (that in itself would be enough for me to go)... you have a defined-benefit pension with health coverage... you have family connections in the new location... you can do things you enjoy while you earn a little spare cash (kayaks, track coaching, etc.)...you can even go back to teaching if you get restless. Makes all the sense in the world to go for it.

Targeting40 thanks for an interesting post and congratulations on being mortgage free in your early 30s. You have made some shrewd real estate moves and you've likely made another one with your purchase in No FL. If I were in my 30s (I'm 46) I would be more inclined to take the money and run. Or if I were dissatisfied with where I was living (like newguy) I'd bolt. But I'm kinda close to ER and I really like it here so I'm leaning toward staying put.

By the way, if you have some money to invest you could consider buying another house or fourplex (perhaps with a partner) in your area. Could be a good investment.

I welcome any other input, opinions, etc. Thanks again!

 

[LEX]

I would figure out how to stay in SD. 8)

Home Equity at the high end of the range ( throphy homes La Jolla and Rancho Santa Fe) will most likely go down but you can handle it. Look at it this way, you can open your windows in winter for the 70 degree breeze rather than pay 200/month gas bills. Outside of the house costs its not so expensive to live in SD. Shop at Costco and drive a Mazda or Toyota.

I would check the craigslist for SD real property adds. There are a lot o good deals FSBO w/o brokers (but plenty of crooks, do your homework before hand!). IMHO by middle of next year you will see the flippers dumping their high leverage no money down 'investments' and some may be worth picking up, especially in the edges of North County and out east. Its all good!

 

[califdreamer]

Thanks for the post LEX. You make some good points about the SD housing dilemma. Yes, my property value will go down. But so will everyone else's around here. And if you want to stay here that's what matters. I agree with you it will be the La Jolla high end stuff that will get socked more than my tract home on the cul de sac in the burbs. There will also be deals to be found in 2007 and 2008 and maybe beyond as the troubled loans come home to roost. I haven't looked at craigslist that much but sounds interesting for FSBOs. Maybe my best strategy is to stay put and keep an eye out over next several years for distressed seller opportunities.

Yesterday I went golfing with some friends and it was just an absolutely beautiful sunny day. We had drinks and bbq on my friend's patio and watched the sun set over the Pacific. And we talked about what to do with home equity. He had contacted an agent in San Antonio (I didn't tell him about the fire ants and scorpions) and said he and his wife were looking into a possible move. We also talked about what a beautiful day it had been golfing and sitting outside. We wondered if we'd end up regretting it if we did move.

 

[LEX]

Dreamer:

I lived in Texas when I was younger ( I now live in Arizona) and there are lots of nice things about Texas, especially the lack of a state income tax.  However, having spent a significant time each summer in SD (Vista) I prefer the climate and abience of SD county. Tastes and preferences vary, of course.

There are always Real estate deals no matter where you live.  People divorce, go broke, and leave estates and though there are pro's that always work these listings you have a chance to find them, especially if you net work with your friends.  Yes, its easy to move to Texas as well as other places and ride your equity into the sunset.  That is a very valid decision.  However, I bought into North County for an investment/summer getaway and do not regret it at all.  It helps me save on my annual utilities once the temp here in Phoenix gets above 100 in April enough to offsett some of the costs, and I expect that a one bedroom flat will hold its value. 8)

 

[califdreamer]

Tomorrow evening (Tuesday) I'm going to see Robert Campbell speak in Los Angeles. He writes an newsletter about the San Diego and Southern California real estate markets. He has an interesting model for predicting rates of appreciation and the best time to get in and out of RE markets. I know he is extremely bearish on the RE mkt here. I've heard he is forecasting a mind blowing 40% drop in housing values in SD. Even though I think he's smart to look at lots of data and all that I think he's going too far with that prediction. I think we're in for something like a 15-20% drop. I know he likes the idea of investing in undervalued mkts like those in Texas. Should be very informative and thought provoking. I believe his website is realestatetiming.com if anyone's interested.

Having said all that, even though I could stand to save equity by bailing out of the house and renting I would sure hate to go thru the moving drill if housing prices didn't drop enough to offset costs of moving. I figure the breakeven point for coming out ahead would be a 10% decline in market value but the psychic costs would tag on another 10%. I figure it would be about a wash so might as well stay put. Unless robert scares the s**t out of me tomorrow night.

 

[LEX]

You might find this article by Scott Burns about your home as an investment a good read, given what you are thinking about these days:

http://www.uexpress.com/scottburns/

8)

 

[califdreamer]

Thanks LEX... good article. Maybe it's best to look at the very long term and enjoy the shelter benefits author talks about. I'll report on Campbell's presentation tomorrow PM or Wednesday.