ERE w/ condo

[FrugalFred]

Assuming someone owns a paid off one-bedroom condo, how much would he need in savings to ERE? I assume it would require much less than the usual target numbers, no?

Also, would it be realistic to rent out the living room? Or alternatively, rent out the bedroom and sleep in the living room yourself? That alone should cover any monthly condo fees, property tax, and electricity I would think.

[BRUTE]

since housing typically costs humans about 25-50% of their cost of living, that would be reduced by the corresponding amount, and therefore monthly expenses and required FIRE principal would also be reduced.

since basically only food, clothes, entertainment, and miscellaneous are left, it should be relatively cheap. might be worth putting in 2 years to not have to have roommates for the remainder of this hypothetical human's life.

[BlueNote]

From a purely financial perspective you'd need to do a rent-vs-buy analysis (google it) to answer that question. BTW many popular online calculators for rent-vs-buy suck (at least in Canada). Basically you might be able to ERE faster by selling and investing the proceeds.

[chenda]

Yes, yes and yes

Even better have 2 spare rooms to rent and live off the income...

[chicago81]

Let me add a data-point:

I live in a condo in Chicago.

- Last year, my property taxes increased 60% over the prior year, with rumors that this year will have another large increase on top of that.
- Also last year, I had my normal HOA dues increase, AND a special assessment of about $5000.
- Furthermore, my HVAC unit also needed to be replaced last year, which cost $5500, so you are not immune from large one-time expenses.
- (Not really relevant, but one of my rentals also needed a new refrigerator and a new dishwasher last year.)

Yeah, 2016 was quite an expensive year for me. A paid off condo does not guarantee a low fixed monthly cost of living.

Edit: For what it is worth, when I pull the plug on my employment and retire, I will no longer be living in a condo and will look to get a house in a much lower cost of living area. My retirement-tastes have somewhat evolved over time and I am probably more a MMM-style than an ERE-style.

[BeyondtheWrap]

The calculation is the same. After paying off the condo, whatever your annual expenses are, multiplied by 25-33.

[jacob]

I think it would be prudent to multiply by a bit more given the increased risk of unforeseen large expenses. In a house, you have more control over them. In a rental you could move.

[BlueNote]

Renting is a much more predictable expense, especially in rent controlled areas. I think renting probably has a much lower unexpected expense variance than owning. What if your condo's roof is shot? What if your houses foundation is cracked and it didn't show during inspection? etc. When I do a rent vs buy calculation , in Toronto, renting always wins because housing costs as a multiple of rents are at long term historic highs right now. Some (probably most) people have trouble saving money, renting is really only a good option for people who can wisely invest the surplus they get from renting vs. buying. I know a lot of 'normal' people who bought a condo or a house and it was actually a good move for them because it's a forced savings plan and I can't think of another situation that would have forced them to convert so much cash to assets i.e. they'd have spent the surplus on stupid stuff like cars , vacations, fancy restaurants etc. Condo's do seem to come with more "unexpected" expenses than houses, also there are the condo fee's that always seem to go up over time and are often totally out of the owners control. I looked into buying an old condo 7 years ago and the fee's were more then the mortgage payment. The price was really low and I found out the reason was because the fee's had gotten so high that the owner couldn't sell otherwise.

If you rent in a rent controlled area, like I do, the opportunity cost of moving goes up the longer you live in the unit. Rents here have gone up a lot recently because of the housing boom and I'd have to pay 10-20% more per square foot to move to a similar place in the same hood. In order to justify a move I'd need to start seeing drug dealers in the halls or something of that order.

[Shep]

Ha, we lived in a small condo in downtown chicago. Although we loved it, the HOA fees kept going up and up and up...and we realized that by the time we retire, the fees would be the price of rent in a cheaper apartment. We moved out of that state and into a house. Houses of course have maintenance but it has been by far less than condo fees because we do a lot of it ourselves. We can also control maintenance of Heat pumps, other systems in the house, etc and are not held hostage to the Condo Big Government where like all governments, is never satisfied.