Considering F/T'ing

[FX2Crazy]

My wife and I are at a unique point of our lives and we're trying to decide if going F/T for a year or so would be beneficial for us and our long term goals.

Maybe some of you can share your thoughts on the matter. After all we don't want to make any mistakes.

So here it is...... The wife and I are in our mid 40's. We both have well paying occupations and if all goes as planned, I should be able to retire at 55-57 from my current employer.
We have two grown girls and our last child (Son) is in the midst of getting an apartment with friends so in a matter of a few weeks we'll have no more kids at home so we won't need this big house.

We purchased a 2900 sq foot 4 bedroom, 2 bath home here in Central Florida 8 years ago with hopes we could fix it up and sell it once the kids were gone and make some $$ for our retirement plans. It's a nice older Tri-Level home that appraised at $375,000 8 years ago when we bought it but It has since lost about half it's value with the housing market fall so we owe about 25-30% more then it currently appraises for. Needless to say, with no kids left, we don't need all this space and expense and we want out of the home and the debt is brings.

We both have a long term retirement goal of purchasing an acre or so of mountain land in Scaly Mountain, NC and having an acre or so here in Central Florida as well. We are just going to install hook-ups in the beginning for our RV and Eventually we'd like to build a log cabin in N.C. and travel the country with our RV full-time.

BUT in the meantime I want to sock some serious cash away to make all this happen in time for retirement.

With my wife in Real Estate we have quite a few investor friends that will buy the house from us at market value and we'll just have to eat the rest.

figuring it out It looks like getting rid of the house is going to save us about $40,000 a year.

What have others experienced by getting rid of their primary home and going F/T? What obstacles have people experianced?
We found a really nice CG here locally that we can do an annual lease for $235 a month plus electric.... Seems like a good deal and it will allow us to continue to go off and camp at other places as well.

Kinda interested in others experiences.

[flaggship1]

If you're going to stay in the area, why not rent the house for a while and let values come up before selling. The housing market should recover and in the meantime - if rent will cover the note your golden. Even if rent falls a little short, you can make up the difference for quite some time before reaching the loss you seem to be facing now.

I have heard of others moving into local camp grounds and "staging" their house for sale before hitting the road. In your case you would just be renting it instead.

You should look into the tax benefits of keeping it vs selling it and get the big picture first. Like you said, you don't want to make a mistake...

[G.G.]

Hey...this is your next door neighbor in Lake Ashton. I'm going with flaggship and say look into renting it out. We have two rentals (one in Lakeland and one in N. Ga. mountains) and have had very good experiences with both of them.

If you do rent it out, I would get a good, reputable property management company. They are worth the expense, IMO. Your wife might know someone or have access to someone being she's in the real estate business. I've found that a good property mgmt. company will have stringent guidelines and hoops potential renters must jump through before they give the renter the okay. It's not 100% bullet proof, but really helps. (My sister had absolute nightmares with her rentals when she tried to go it alone. Once she went with her current property mgmt. company, things are much better).

It sounds like you've got 10 yrs. or so before you retire. If you can rent it out and at least stay even on cash flow-give or take, maybe the market will have appreciated a good bit by then, and then you can sell it.

Good Luck on your decision.

[FX2Crazy]

Originally Posted by flaggship1

If you're going to stay in the area, why not rent the house for a while and let values come up before selling. The housing market should recover and in the meantime - if rent will cover the note your golden. Even if rent falls a little short, you can make up the difference for quite some time before reaching the loss you seem to be facing now.

I have heard of others moving into local camp grounds and "staging" their house for sale before hitting the road. In your case you would just be renting it instead.

You should look into the tax benefits of keeping it vs selling it and get the big picture first. Like you said, you don't want to make a mistake...

Originally Posted by Dance Chick

Hey...this is your next door neighbor in Lake Ashton. I'm going with flaggship and say look into renting it out. We have two rentals (one in Lakeland and one in N. Ga. mountains) and have had very good experiences with both of them.

If you do rent it out, I would get a good, reputable property management company. They are worth the expense, IMO. Your wife might know someone or have access to someone being she's in the real estate business. I've found that a good property mgmt. company will have stringent guidelines and hoops potential renters must jump through before they give the renter the okay. It's not 100% bullet proof, but really helps. (My sister had absolute nightmares with her rentals when she tried to go it alone. Once she went with her current property mgmt. company, things are much better).

It sounds like you've got 10 yrs. or so before you retire. If you can rent it out and at least stay even on cash flow-give or take, maybe the market will have appreciated a good bit by then, and then you can sell it.

Good Luck on your decision.

This reply is to both of you (Howdy Neighbor )

We've considered renting it out but we had a terrible experience in the past renting a home we had in Lakeland, the home we left to move to Lake Wales. There are also other variables.... Most importantly, we can't rent it for enough to cover the Mortgage payment. We're on a 15yr Fixed so our Payments are huge. To add to that, We live on a Lake so our Property taxes are on average around $2500 to $3000 a year....And insurance is sickening.
In order to "Break even" every month we'd have to get $2700 a month when I calculate in taxes and insurance. My wife's realtor friends tell us at the most, we can only ask $1300 a month. The differance is too much to absorb every month.
Another thing we have to consider is that house was built in 1950... The bottom floor and the third floor were completely updated and remodeled when we bought the house, the second floor is still all original in it's 50's flair. Looks funny. We have $26,000 in the third floor which is 3 bedrooms and a bathroom. $19,000 in the bottom floor which is our Master Bedroom, Bathroom and Foyer. We would have to remodel that 2nd floor to be able to rent it.

It's a ton of things to consider and quite expensive regardless which way we go.

I think it will be cheaper in the long run to just sell it to the investor and pay the $20-30K we're under water and get out from under it. We'll make it back in 6-9 months of not having the house expenses But as I said, I don't want to make any mistakes.
The house itself doesn't mean all that much to us, we haven't lived here long enough to have any long term memories or anything of that nature... It's just a house.... a House that costs us a fortune to keep.

Never Full-timing before creates allot of questions so I am very indecisive right now.... The longest we've ever lived in our previous Class A Motorhome was 15 days and it was fine with less room then our current one has.
I keep thinking that if we don't just make a decision and do it then nothing will ever change and we won't be able to do our retirement desires.

I apologize for being so long winded... This topic has been on my mind for months now and something the wife and I have talked about at great length so I'm ready to put some kind of plan into action.

Thanks for the replies

[flaggship1]

Have you or you wife looked into a HARP Refinance loan. Pretty sure they now go above 125% LTV - would lower your rate and extend your term to 30 years. Not sure of the requirements - you can Google it for starters. Might work. Not discouraging you from going full time - just offering another suggestion to keep ya in the home until the market turns a little more in your favor. If you can make up the $ loss in as short a time as you say - if you get your payment down you might be able to do that upgrade to the middle floor instead of tapping the nest egg now and growing it again. Folks with Motorhomes know all about depreciation and losing money on a purchase. Hate to hear your upside down on the house - but I'd still try to salvage the situation if you can. If ya can't, ya can't and you have a fall back plan.

Now for full time thought or two. Some folks are happy to sit for 6 months at a time. For us - when we go next year - we want to travel and see things. We won't be continent to sit for months at time. Not sure how long after selling the house you plan to sit - but you have 10 years before retirement. My hope is that however long you do it, if you do, you don't lose the desire to hit the road. That's what the motor is for - moving along. Good luck and keep us posted.

[Selah]

We are not full timers but I'll throw my $0.02 in here. Living for 15 days in your coach is not enough time to determine if this is something the both of you can really enjoy or even tolerate.
If you sell the house and can absorb the $30K loss you might be money ahead in the long run. How long would it take to recover that loss? But before you do that you need to look at what a contingency plan would be and it's associated cost. If you find that living FT in the MH is not going to work what is the next step. Would you have the resources to buy a smaller place or would you need to rent and would that work for you?
There is a lot to think about and you need to make sure your numbers are realistic and conservative. If you have a financial advisor I'd certainly go over the possibilities with them.
One other thing about selling the house at a loss. I would strongly recommend that you not consider absorbing that loss by taking money from any kind of retirement plan, 401K, IRA, 457B, etc...
This is strictly my opinion and you know what they say about opinions..

[WheelingIt]

Well since you seem set on getting rid of the house I say go for it. You can certainly get rid of debts and excess this way. What's the worst that can happen? You decide you hate RVing and go buy your next place...which is something you're planning on doing anyway. It's just all a question of timing if I understand it correctly.

So, from a fellow set of 40 year olds who are full timers I'd be inclined to say just go and do it.

[FX2Crazy]

Originally Posted by flaggship1

Have you or you wife looked into a HARP Refinance loan. Pretty sure they now go above 125% LTV - would lower your rate and extend your term to 30 years. Not sure of the requirements - you can Google it for starters. Might work. Not discouraging you from going full time - just offering another suggestion to keep ya in the home until the market turns a little more in your favor. If you can make up the $ loss in as short a time as you say - if you get your payment down you might be able to do that upgrade to the middle floor instead of tapping the nest egg now and growing it again. Folks with Motorhomes know all about depreciation and losing money on a purchase. Hate to hear your upside down on the house - but I'd still try to salvage the situation if you can. If ya can't, ya can't and you have a fall back plan.

Now for full time thought or two. Some folks are happy to sit for 6 months at a time. For us - when we go next year - we want to travel and see things. We won't be continent to sit for months at time. Not sure how long after selling the house you plan to sit - but you have 10 years before retirement. My hope is that however long you do it, if you do, you don't lose the desire to hit the road. That's what the motor is for - moving along. Good luck and keep us posted.

Our whole area (along with half the country) took a huge hit. Houses that were selling in the $500,000 range 4 or 5 years ago are lucky to be bringing $175,000 right now. The House right across the street from us sold 3 years ago $335,000...It just sold again 3 months ago for $155,000. That hurts!

We talked to our financial adviser and he also suggested the refinance idea but I'd have to pay the difference between appraisal and the payoff on the current mortgage to refinance it. $33,000

As mentioned we have approx 10 years of work left so we've talked about all kinds of different scenarios including buying some acreage now and installing hookups and placing the RV there for now...... Lots of thoughts and ideas.

Originally Posted by Selah

We are not full timers but I'll throw my $0.02 in here. Living for 15 days in your coach is not enough time to determine if this is something the both of you can really enjoy or even tolerate.
If you sell the house and can absorb the $30K loss you might be money ahead in the long run. How long would it take to recover that loss? But before you do that you need to look at what a contingency plan would be and it's associated cost. If you find that living FT in the MH is not going to work what is the next step. Would you have the resources to buy a smaller place or would you need to rent and would that work for you?
There is a lot to think about and you need to make sure your numbers are realistic and conservative. If you have a financial advisor I'd certainly go over the possibilities with them.
One other thing about selling the house at a loss. I would strongly recommend that you not consider absorbing that loss by taking money from any kind of retirement plan, 401K, IRA, 457B, etc...
This is strictly my opinion and you know what they say about opinions..

I'm inclined to believe that selling the house now would be cheaper in the long run... The one time $30K expense to get out of the house would be cheaper then keeping it. I mean, one year of mortgage payments now is $32,400 and that does not include property taxes and insurance, add those in and I'm over $40K a year.

I have an investment account, not related to any type of retirement account that I can use if I need to, most of what I need is in savings so no I would not use any retirement savings to do any of this.

Originally Posted by WheelingIt

Well since you seem set on getting rid of the house I say go for it. You can certainly get rid of debts and excess this way. What's the worst that can happen? You decide you hate RVing and go buy your next place...which is something you're planning on doing anyway. It's just all a question of timing if I understand it correctly.

So, from a fellow set of 40 year olds who are full timers I'd be inclined to say just go and do it.

Appreciate the thoughts lol

I'm not "Set" on getting rid of the house...I'm just not looking forward to all the remodeling headaches (and mess) that second floor will bring if we keep the house so I'd prefer not have to deal with it at all. We're basically in "Weigh all options" mode right now....
Do I want to rid myself of all this unneeded debt with the kids gone, of course.

Thanks

[Jack1234]

Well as the song says....."ya gotta know when to hold-em....know when to fold-em.....know when to walk away....know when to run." You, along with millions of others who have found themselves upside down on their mortgage and drowning in expenses have crunched the numbers to the point where it kinda looks like it's time to "fold-em". You are not alone!

Finding a living arrangement where your monthly expenses are extremely low ($225 p/mo.) and this gives you the opportunity to begin banking serious cash .....is an intelligent idea. That is "if" you already own (?) an RV. If you do not already have a livable RV.....don't buy one!!!

It appears that your plan will not involve defaulting on your existing mortgage obligations or jeopardizing your credit rating/score. This is very important....Why? As you have already noted real estate is at an historic "low" in your area and interest rates are also at unprecedented "lows". IMO....You want out from under this current financial albatross as quickly as possible so you can regroup & recapitalize enough cash to get back-in (ASAP) .....don't waste precious cash on a guaranteed "depreciating" asset (RV) when the window of opportunity to snatch a great deal on an "appreciating" asset (seriously undervalued real estate) is staring you in the face and the government is (1) begging you to buy by pumping cash into the system & thus keeping mortgage rates artificially and unnaturally low and (2) giving you a tax benefit to boot!!

You are still working and need a place to live.....while you reload for the future. This window of opportunity will not last forever and I' d hate to see you watch it slip away while going to work everyday only to return to a $225 p/mo. trailer park, and your very own 300 sq. ft tin box....can you spell depressing?

Even better...how will you feel 5yrs from now when the house you could have bought today for 150k is selling for 350k and your trailer is worth next to nothing? Hey .... Just my opinion, but we just parked our MH after 2.5 years of full-time travelling in the US & Canada and I am still glad we kept our Real Estate in Cabo and found our new place in Victoria. It was fun living & travelling in an RV, but I couldn't have lasted any longer and it sure wasn't a good investment idea!

Good luck in your decision.

[FX2Crazy]

Originally Posted by Jack1234

Well as the song says....."ya gotta know when to hold-em....know when to fold-em.....know when to walk away....know when to run." You, along with millions of others who have found themselves upside down on their mortgage and drowning in expenses have crunched the numbers to the point where it kinda looks like it's time to "fold-em". You are not alone!

Finding a living arrangement where your monthly expenses are extremely low ($225 p/mo.) and this gives you the opportunity to begin banking serious cash .....is an intelligent idea. That is "if" you already own (?) an RV. If you do not already have a livable RV.....don't buy one!!!

It appears that your plan will not involve defaulting on your existing mortgage obligations or jeopardizing your credit rating/score. This is very important....Why? As you have already noted real estate is at an historic "low" in your area and interest rates are also at unprecedented "lows". IMO....You want out from under this current financial albatross as quickly as possible so you can regroup & recapitalize enough cash to get back-in (ASAP) .....don't waste precious cash on a guaranteed "depreciating" asset (RV) when the window of opportunity to snatch a great deal on an "appreciating" asset (seriously undervalued real estate) is staring you in the face and the government is (1) begging you to buy by pumping cash into the system & thus keeping mortgage rates artificially and unnaturally low and (2) giving you a tax benefit to boot!!

You are still working and need a place to live.....while you reload for the future. This window of opportunity will not last forever and I' d hate to see you watch it slip away while going to work everyday only to return to a $225 p/mo. trailer park, and your very own 300 sq. ft tin box....can you spell depressing?

Even better...how will you feel 5yrs from now when the house you could have bought today for 150k is selling for 350k and your trailer is worth next to nothing? Hey .... Just my opinion, but we just parked our MH after 2.5 years of full-time travelling in the US & Canada and I am still glad we kept our Real Estate in Cabo and found our new place in Victoria. It was fun living & travelling in an RV, but I couldn't have lasted any longer and it sure wasn't a good investment idea!

Good luck in your decision.

Yeah, I sure know that song... Great tune.

It is what it is, I can't change how much the house has dropped in value. What I do know is that we don't need all this space anymore, nor do we need the debt it incurs.

We do already own a livable RV so I don't have to buy anything other then maybe some more accessories lol. It currently just sits in our back yard with weekend use twice a month in the summer. Once in Winter we take it to Georgia for 10-15 days.

I might not have explained our thoughts well enough but we do want property both here and in the North Carolina mountains. We're not abandoning owning property all together.

We're thinking about purchasing an acre or two in both locations and installing hook-ups for the RV. We are considering one of the following AFTER we acquire land... 1. Living in the RV for a while to save up cash... 2. Living in the RV while we build a small house on the same land.... 3. Purchasing an inexpensive mobile home to place on the same land.

It's just something the wife and I need to sort out but it looks like we're going to move forward with something soon. we keep finding acreage around here and we're thinking about buying some of it....

Thanks for all the thoughts and ideas

[denochs]

Here's a response from someone that's ft for almost a year now.

You need to make sure a 34 ft mh is going to be comfortable and reliable enough for a long term use. Make sure DW is 110% on board. It will be more difficult for the person that needs & uses two bath rooms. From the size of the home you have, my guess is that one of you may have a problem with one small bath room.

We were in a similar situation except we were not underwater. However, we sold for much less than what we wanted/needed. So, we have a lot in FL & NC to deal with the cold weather issue. However, you will need more of a change in scenery than that. We try to go to the beaches, mountains, and other places for a change up.

Also, your insurance will go up on your MH when you go ft. Factor that into the equation. I realize it's not that much. But when you add in the inconvenience of not having a washer/dryer and the cost to do laundry elsewhere, it will take a toll more than financially.

Now, consider the refrigerator. Can the two of you live with going to the grocery 2 to 3 times a week for various items that you don't have room to store in a MH?

What about pets? That is a complete other challenge. For example, what if you need service that will take a couple of days at the dealership? Motel expenses? Alternate location? What to do with the pets.

Now for the positive, I love it. But it takes some adjustments you cannot anticipate.

Dave

[FX2Crazy]

Originally Posted by denochs

Here's a response from someone that's ft for almost a year now.

You need to make sure a 34 ft mh is going to be comfortable and reliable enough for a long term use. Make sure DW is 110% on board. It will be more difficult for the person that needs & uses two bath rooms. From the size of the home you have, my guess is that one of you may have a problem with one small bath room.

We were in a similar situation except we were not underwater. However, we sold for much less than what we wanted/needed. So, we have a lot in FL & NC to deal with the cold weather issue. However, you will need more of a change in scenery than that. We try to go to the beaches, mountains, and other places for a change up.

Also, your insurance will go up on your MH when you go ft. Factor that into the equation. I realize it's not that much. But when you add in the inconvenience of not having a washer/dryer and the cost to do laundry elsewhere, it will take a toll more than financially.

Now, consider the refrigerator. Can the two of you live with going to the grocery 2 to 3 times a week for various items that you don't have room to store in a MH?

What about pets? That is a complete other challenge. For example, what if you need service that will take a couple of days at the dealership? Motel expenses? Alternate location? What to do with the pets.

Now for the positive, I love it. But it takes some adjustments you cannot anticipate.

Dave

Thank you for that,

You mentioned several things I had not thought about..... All valid points.

Realistically it will probably be just temporary thing, maybe 6 months or so.... but we will see. I'll know more soon on what we're gonna do.

I'm meeting with a realtor friend to see about some of this acreage around here. Even if we don't sell the house right now we still want to get out of the City and out away from it all.

[jandk]

So many options out there for you We went full time 6 months ago our renters had to move out of the area and we decided not to rent it again as we too have to charge a large rental price and I'm sure that not all can afford over 2,000.00 a month so in saying that our home could be empty for a spell which would mean that we would have to cover mortgage plus rv'ing, utilities for home maintenance so we moved back to our sticks and bricks and will sell before we go out on the road again. Come tax time the rent money was added as income which didn't hurt us much but did bring up our taxes a bit (boo). Fortunalty our home isn't underwater but we certainly can't sell it for what we want out of it. We will be waiting until next spring to put it on the market again. Renting your home out doesn't save you a whole lot of money except the mortgage payment if you can charge to cover it, you still have maintenance, repairs etc.. oh and renters are picky that everything is just so

[okmunky]

Have you considered not owning any real estate for a few years and claim South Dakota residency? What you'll save in taxes and insurance will make up a chunk of what you'll lose on the house sale.

I've been FT for 2 years and am amazed at how much lower my monthly living expenses are now. Plus, the change in square footage has changed the way I spend $. Less is now more.