Downsizing

[WRBT]

(apologies if posting in wrong forum)

We've decided we're sick of taking care of this big four bedroom house and doing yard work. We have no children so half it goes unused anyway.

The plan? Townhome!

We've enjoyed a nice runup in home value, so are now sitting on this 350k home with a 145k mortgage. We've seem townhomes that we like in the 175k range, so we're thinking sell big and buy smaller with cash from the profit.

We have no car payments, have finished the student loans, and carry no consumer debt at all... so woohoo completely debt free in our mid 30s. Our retirement savings are currently in the 160k range so obviously we're still not as close to an early retirement as we'd like to be, but our combined income is about 150k (most of which has been used to attack student loans until this year) and we like the flexibility of being able to really save a lot for retirement in the coming years or consider scaling back to working part time and enjoying life a little more while we're young.

Any obvious flaws in the plan?
Any comments on townhome living?

Thanks in advance for kind advisement.

 

[Martha]

I think it is a great idea. We downsized a few years ago from a big house we didn't need into an apartment in a fourplex. We own the fourplex so we can control who our direct neighbors are. But there nevertheless is some courtesies you have to observe by living so close. No cranking up the music full volumn.

We really started saving money when we didn't have the big house to support.

 

[wabmester]

If you really don't like doing *any* yard work, then it's a good idea. But you'll pay HOA fees that cover somebody else doing the yardwork and other maintenance for you. In retirement, I sort of like doing my own yard work. It provides both exercise and lower expenses. You might want to consider a smaller house with a tiny yard instead.

 

[WRBT]

Thanks for kind replies.

Yeah it seems that the HOA fees are usually in the 100-150 range for townhomes around here, and that covers just the front so we'd probably still have a small back area to play gardnening on. Right now we pay 40/month anyway.

 

[Jay_Gatsby]

I t hink that you made the right decision. As I posted on another thread, people often buy far more house than they need, especially those who have kids. The latter type have probably dreamed of owning a house with a yard, a porch/deck to enjoy the sunset, and a backyard with a swing/playset for the kids. Unfortunately, that kind of home can be more trouble than it's worth, especially for a young couple. Think about it this way. If you own a 4-bedroom home, you need to furnish it, put in new carpets, paint the walls, refinish floors, update fixtures, etc...so that's many thousands of dollars right there. Then there's the property taxes, utilities and upkeep. In regards to upkeep, it's not just mowing the lawn and painting the house -- it's the broken water heater, plumbing clogs/leaks, foundation cracking, septic backups, electrical problems, etc...

Large houses can be money pits, and for a young couple -- even one that earns a combined income of $150k annually like WRBT -- the requisite expenses can be prohibitive.

 

[frayne]

Sold the big house 3300 sq. ft. on two wooded acres last year and bought a garden home in a condo community. No more mowing, snow shoveling, spreading mulch, weeding, cleaning gutters, repaving drive, picking up leaves, just to name a few. The additional time I now enjoy, I spend on the golf course or riding two wheels on the black top, reading playing music, walking with my wife, etc. The only regret I have is that I didn't do it five years earlier. I don't think you will regret it.

 

[Alan]

We downsized from a 3,500 sq ft house with pool etc about 2 years ago and love it. It was actually one of our kids that inspired us. (We have 2, the last of whom left home 4 years ago). Our married daughter had moved into an apartment after graduating and getting a job with IBM in Austin. After spending a few days with them. They will be buying a house themselves in due course, but we are in our late 40's and were ready to downsize. The apartment life looked great with very low maintenance fees, great facilities etc, so we decided to give it a go. So far we love it

We invested the proceeds of the house sale in Vanguard's Wellesly Admiral fund which has returned over 9% per year since we invested which is close to its 30+year historic norms.

 

[Mr._johngalt]

We love it! - I went from a 2,000 sq. ft. house to a 3600 sq. ft. Townhome. - No more Lawn mowing or snow shoveling or the tools to do so. I am the President of our Assoc. and the Landscape Co. is at my call!

Off for a anotehr week of fishing tomorrow! 8)

So, where you goin' and what are you fishing for??

JG

 

[LovesLife]

I live in a 3300 sq. ft. older home that needs a little updating on the lower level. I have lived here 5 years and plan on at least another 3 years. Since I've lived here I have had to replace the roof, next is the furnace and air. This is why I don't like bigger homes. The maintenance is always more.

LL

 

[KB]

I downsized last year, but not to the extent as many of you.

My last house was only about 2000 sq feet but it was a 2 story with a built in pool.

My curent house was built in 2004 and is a 1670 sq feet one story house. I don't miss the pool or the upstairs, and this house is better insulated so stays at a more constant temperature.

Another thing I did with this house was to NOT put in a back lawn. I have front yard maintenance which takes care of mowing the front. While my back yard is not larger, it does open to a greenbelt with a small creek by having a wrought iron back fence. So I have visitors which I enjoy, lots of birds and bunnies.

I also have 24 hours security also, which I will really probably appreciate when my boys move out.
This is my first new house, and I really love having the minimal maintenance that comes with a new house.

 

[Brat]

You need to seriously look at the construction of the town home, or even a new home . There are a lot of short cuts being taken with new construction and some are having a problem with dry rot because contractors are using a siding underlayment that doesn't breathe - and their flashing is shoddy.

 

[Martha]

Yes, always get a home inspected before you buy. And don't use the realtor's favorite inspector.

 

[Mr._johngalt]

Yes, always get a home inspected before you buy.  And don't use the realtor's favorite inspector. 

Good advice. I didn't always do it, but it could save a lot of grief.
BTW, it's a good contingency for a buyer as it is broad enough to
allow you to wiggle out of a deal (or get a better price if anything pops
up - which nearly always happens).

JG

 

[Mr._johngalt]

We love it! - I went from a 2,000 sq. ft. house to a 3600 sq. ft. Townhome. - No more Lawn mowing or snow shoveling or the tools to do so. I am the President of our Assoc. and the Landscape Co. is at my call!

Off for a another week of fishing tomorrow! 8)

Good luck C-T! I may have had an epiphany. My beater riding mower died
and I sold it for parts. What to do now? Temporarily hired the guy who
mows for the "weekenders". Anyway, I always said that mowing was the
single household chore I didn't mind doing. However, now that I don't do it there
is more room in the garage, I have one less thing on my to-do list, and
one less possession requiring maintenance. Maybe I won't miss it

JG

 

[Brat]

Don't just accept "meets code".  Before you go shopping spend an hour with an architect who is a member of the Construction Specification Institute.  Ask that person what problems are surfacing in their area and what you should look for to avoid purchasing a problem.  Make sure that those issues are in your list when you have the home inspected.  Warning, the inspectors you engage usually don't warranty their work.  Make sure that the person has only your interests at heart.

BTW, I am with you when it comes to down sizing.  We are taking a long look at our "stuff" and culling.  Our yard is small and our home in great shape in a magnificent setting, but it would be nice to be able to travel without thinking about maintaining a large home. 

 

[wabmester]

BTW, I am with you when it comes to down sizing.  We are taking a long look at our "stuff" and culling.  Our yard is small and our home in great shape in a magnificent setting, but it would be nice to be able to travel without thinking about maintaining a large home. 

Brat, next year might be a good time to sell.   I assume you heard about the Money magazine article and what it's likely to do to both housing prices and building permits in our area.

http://money.cnn.com/best/bplive/

Personally, I cannot stand living in high-density housing.   I need some space between me and my neighbors.   And my kid and two dogs need a place to run around in circles.   And my R/C helicopter needs room to hover and land. 

 

[WRBT]

Thanks again for kind advice and replies.

The latest from the Phoenix area feeding frenzy: a house down the street that's definitely is of lower value (no lake view, smaller house, smaller lot) just went for 396k. That's sick. I've read that everything went up over 40% here in the last year but sheesh. I have the "this is as high as they'll go" feeling and want to bail and reduce the percentage of my net worth that involves a single house. Hell we could easily get a 220k townhome now and still be debt free when the dust settles.

 

[Mr._johngalt]

Thanks again for kind advice and replies.

The latest from the Phoenix area feeding frenzy: a house down the street that's definitely is of lower value (no lake view, smaller house, smaller lot) just went for 396k. That's sick. I've read that everything went up over 40% here in the last year but sheesh. I have the "this is as high as they'll go" feeling and want to bail and reduce the percentage of my net worth that involves a single house. Hell we could easily get a 220k townhome now and still be debt free when the dust settles.

Then do it!

JG

 

[ESRBob]

If you have the chance to downsize now, probably perfect timing and right for all the reasons you've outlined.

Still, you said you are a couple in mid-30s. Are you sure you either can't have or don't want to have kids? Would be unfortunate to move into a cozy townhouse just as the first little one decides its time to make you a Mom and Dad.

 

[SteveR]

Downsizing....Hmmmmmmm. That would be a huge undertaking at this point but one we have (are) looking at. We have a 6000 ft2 house now with more than 1/2 acre; all in plants and trees...tons of work. I don't mind doing the yardwork but working full time means my weekends are pretty much yard work maratons. We also have a 1500 ft2 cabin an hour away that is on 5 acres. We would like to expand it from 2 to three bedrooms and expand the living area and move there after ER. The hitch is that the area is frequently snowbound in winter so a SnowCat would be required 8). We are still in the thinking stages but have been considering it after ER. It would take about $150,000 to do what we want to it but selling the HUGE house would allow a mortgage free house in the mountains. Longer term when our health goes South, we can keep the cabin for family and find a condo somewhere.

Now to find a place for all the stuff in this place.

 

[Dawg52]

I can't downsize any more than I already have. I built a 2500 sq ft house a few years ago but sold it to be closer to my mother and aunt(87 and 93 years old). My aunt moved in with my mother and I am using my aunt's house. Her house is about 1200 sq feet and seemed so small when I first moved in, but now I can't imagine ever needing anything any larger. I like the small cozy feeling and low maintance. I won't stay there forever as it is in a declining neighborhood, but its gonna be small houses for me from this point forward. Also frees up more cash for golf trips. 

 

[Mr._johngalt]

I can't downsize any more than I already have. I built a 2500 sq ft house a few years ago but sold it to be closer to my mother and aunt(87 and 93 years old). My aunt moved in with my mother and I am using my aunt's house. Her house is about 1200 sq feet and seemed so small when I first moved in, but now I can't imagine ever needing anything any larger. I like the small cozy feeling and low maintance. I won't stay there forever as it is in a declining neighborhood, but its gonna be small houses for me from this point forward. Also frees up more cash for golf trips. 

Man, I heartily second that notion. I also owned about 2500 SF when I lived in
northern Wisconsin. Got terribly tired of maintenance work (and I was 13 years
younger). Anyway, current place is about 1100 sf and we could go even smaller.
Condo is 1000 sf and of course the work there is pretty limited. If we ever
did move again I know larger is out.

JG

 

[Mr._johngalt]

And another thing.................. I believe I have posted about the cabin I owned in
Upper Michigan. I sold it long before I met my current spouse who was bortn and raised in Michigan. Otherwise, we would probably be living there. Absolutely lovely and remote, 4 acres with 400 ft. of river frontage. Anyway, I would estimate
the SF at about 600, plus a loft, large deck and two (2) storage
buildings. I have no doubt we would have been most comfortable
there.

JG

 

[maddythebeagle]

One of my coworkers in Rhinelander was considering a cabin in U.P. He is already in the woods with a nice house built about 10-15 years ago and Rhinelander is 7000-8000 people with enough shopping and things to do, so I think he gave up on. Is stuff a lot cheaper as you go farther out in the sticks?

A few years ago, land here in NW Wisconsin was 500/acre for ag. land and now I hear 3000-4000/acre, which is probably not as bad as a lot of areas, but when you consider you need 40 acres usually for building any type of house, you are talking about big bucks and many more years as a wage slave, lol. I am glad that I am in my current rural house with the remodel, much of it is like new (with a lot lower taxes).

 

[WRBT]

Still, you said you are a couple in mid-30s. Are you sure you either can't have or don't want to have kids?

Definitely sure. In fact we've been researching getting me the snippety snip operation soon, since I'm not qualified to attempt it on myself.

So I have another question for you wise people. We pretty much want to start looking around on weekends etc. and if we find the townhome we want jump on it. Given that we have enough equity in existing house to buy outright what's the best way to go about this? We've never sold a home before, so pretty clueless. I figure some of our options are:

- Have our current home equity line limit increased to 200k and just right a check when we find the house we want, then sell existing house.

- Prequalify for interest only mortgage and use that to buy new townhome, then sell existing home and use proceeds to pay it off.

- Make an offer on new townhome with qualifier that we'll pay for it as soon as existing home sells.

The homes that have been selling in our neighborhood have generally been going in a day, some without even getting a real estate sign up. I'm fairly confident we could unload our house for a fair price in a hurry if we needed to.

Thoughts?