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PostPosted: Sun Dec 12, 2010 9:47 am 

Joined: Sat Aug 28, 2010 7:58 am
Posts: 81

Would love to hear your thoughts:


I've been working on an re-organization of my life for the past few months, trying to reduce costs.


Time to move has come. I'm re-locating closer to work, and have ran into few choices thus far -


Option 1.

RV Park - approx. $450/mo. which includes space lease and utilities. I will also have to purchase a trailer - approx. 8K for a decent 26 footer less than 10 yrs old. Distance to work is about 4.2 miles. Bike commute would be mostly city blocks.


Option 2.

Condominium - approx. 30k or 40k (roughly $600/mo. @ 30 yr. including property tax and association fee). Built in the 80's. I estimate utilities will add another $100/mo. 20% down would be about 8K. Distance to work is about 4.7 miles. Next to a bike trail so commute would be 75% bike trail + 25% city blocks.


Option 3.

Suburb nearer to the city - approx. 75k for a 800 sq. ft. 2bd/2bath home, 7 miles away. About $500/mo. @ 30 yrs. including property tax. I estimate utilities to be about $125/mo. 20% down would be about 15k. Home is only 5 yrs old.


Bear in mind that I'm moving out of a suburb apartment 20 miles away at $850/mo. with misc. fees and additional $150/mo. in utilities.


I'm also selling my truck (not paid off) and keeping the car (paid off) which would reduce my insurance by about 40% and no more car payments.


Crime wise either the condo or the RV Park are about the same - some property crimes but fairly low violent crimes.




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PostPosted: Sun Dec 12, 2010 5:16 pm 

Joined: Thu Jul 22, 2010 10:15 pm
Posts: 280

Why are the only options purchases? Until you're absolutely sure about what you want to do, renting might be the most flexible/cost effective option.




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PostPosted: Sun Dec 12, 2010 7:34 pm 

Joined: Sun Dec 05, 2010 9:58 pm
Posts: 431

Well, you've got least expensive to most expensive. I wouldn't even consider option 3...too expensive. Only you would know if you can actually live in an RV. I've asked myself that question and I would definitely have to try before I buy. How big is the condo? You didn't list size or sq foot. If you can buy the condo and rent out a 2nd bedroom, that might be the best option.




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PostPosted: Sun Dec 12, 2010 7:38 pm 

Joined: Wed Jul 28, 2010 3:28 am
Posts: 2669
Location: Orygun

Along the same lines with Robert Muir, why not consider the option of sharing an apartment/house for reduced cost?


Otherwise, if you're in a climate where freezing weather is seldom seen, then I'd probably pick option 1 to save more for option 2 or 3. Don't forget insurance on the RV.


With each of the options, you don't mention how far away the groceries are.




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PostPosted: Sun Dec 12, 2010 9:25 pm 

Joined: Mon Aug 02, 2010 4:45 am
Posts: 770

These options are all over the place, so I would come to a firmer conclusion about the location and form of housing you want before you buy. Buying real estate is a big commitment with high transaction costs so you really want to get it right.


On location: As discussed in the ERE book, you can make a lot of things easier and cheaper by minimizing the number of miles you travel, including but not limited to commuting to work. What about groceries and connecting to public transit? Any other trips you make frequently? Also, how likely is your workplace to stay in the same place?


On RV -> condo -> house:

These options are on a continuum of amenities and price, where the left is lowest price and least amenities. Will you use the added amenities enough to make their price a good value for you? E.g. how much will you benefit from the full size kitchen of a condo/house, or the yard of a house?


They also form a continuum of resource sharing. How do you feel about sharing laundry facilities, mailboxes, driveways, etc.? More sharing means higher utilization of resources and fewer capital outlays (good), but tighter coupling with paid services (bad).




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PostPosted: Mon Dec 13, 2010 11:18 pm 

Joined: Wed Jul 28, 2010 1:35 pm
Posts: 443

From the numbers above, the suggestion is that the condo assoc fee is very high.


$40k Condo + Tax + HOA = $600/mo


vs


$75k House + Tax = $500/mo


Unless the fee includes something truly incredible, it doesn't seem worth it. Once you have the condo paid off, you'll still be stuck with the HOA fee.


Actually, IMO, the HOA thing is one downside to condo ERE living. If you reach FI/ERE then you should have the time to do your own minor maintenance (like what is typically included in a HOA fee). This should reduce your monthly expenses, and thus reduce the amt of money you'd need in a portfolio.




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PostPosted: Mon Dec 13, 2010 11:27 pm 

Joined: Thu Jul 22, 2010 10:43 pm
Posts: 505

I agree with Mo, the condo HOAs make it a non-starter. The condo board will decide when a new roof is needed, not you; and I've never heard of HOA fees going down rather than up.


WRT the RV. I urge you to try living in one before buying. How? Approximate the square footage of the RV in your current living circumstance and restrict yourself to that space for your things and yourself. Note whether or not you feel constrained as you go about your daily life. Note how many times you live "beyond" the restrictions other than using your (presumably) fixed bathroom and kitchen. Just remember to reduce your RV space by those areas so you get as much real-world data as this experiment can provide.


Personally, I think you'd be better served renting a studio apartment in the city core, much closer to your job. But some city cores are crime ridden and low on grocery stores with fresh produce; so it isn't always an optimal solution.




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PostPosted: Tue Dec 14, 2010 5:14 am 

Joined: Sat Aug 28, 2010 7:58 am
Posts: 81

Thanks everybody - really appreciate your feedback. Many of you have brought up viewpoints that I had not considered and it's been very helpful in my search. Please keep those comments coming!


I have been running around like crazy for the past few days looking at these three options, and thought to share my experience for the benefit of others on similar track.


RV Park Option - To my surprise, I was able to find many RV Parks that exceeded my expectations. Many parks had long term residents. Many resided in neighborhood with low crime. People generally tended to look out for each other - i.e. people immediately knew my truck didn't belong in the park and that I was a guest.


Many parks offered amenities such as a swimming pool, a small private garden area, a laundry facility and some even offered shower facility as well. Most parks tended to be quiet and peaceful, surrounded amongst trees, tho some were basically gigantic parking lots. The age group tended to be higher than 30's, typically in 40-50's, many working couples. There were many families with children, which was encouraging. (I half expected to see a community of loners that is drug ridden and crime infested but this wasn't the case at all.)


Most parks required that RV's be less than 10 years old. Typical space lease for our area is between $400 - $500 range, which includes water, garbage and sewer. Electricity was not included in any of the parks that I've been. As luck would have it, Walmart is within a half of mile of several of the parks and there are about 6 or so parks to choose from in this area.


Overall pretty good, with only two things that bother me - one, is swallowing your pride in terms of perceived social status and two, the money paid is not invested.


The 40K Condo - The condo was located in a very bad neighborhood and the condo itself was in bad shape. Distance to downtown was the main advantage of this condo, but due to the fact that it's located in a middle of a very undesirable area, I've written this option off completely.


Some of the positive point were that city is trying to clean up this area and has raised rent. As a result, many of the former "residents" have all but moved out of the complex. Also, city has provided a small plot for the residents for gardening.


The condo can be seen here:

(This is my website I just created on blogger - nothing commercial - click on each picture to enlarge)


http://homecheck.blogspot.com/


The 75K "short sale" house - Spoke to several brokers and found out the latest "game" in the real estate market. The gig is that many agents are listing homes as "short sale" at really low prices which draws people and then they take bids from this interest. So the sale prices are much higher. The listing agent that I spoke to wanted 135K for this house (825 sq. ft., 2 bedroom, 2 bath, 0.04 acres with appraisal of about 80k - 40k land, 40k structure). I immediately declined to make offer.


I would estimate that over 90% of current real estate listings for a typical 3 bedroom, 2 bath, 1500 sq. ft. homes are "short sales". In my opinion this is nothing but a scam to draw as many people as possible to get higher prices.


As interest rates are rising, I believe home prices will head lower again if the trend continues and there will be better bargains. This house may really be a 75K home pretty soon.




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 Post subject:
PostPosted: Tue Dec 14, 2010 5:46 am 

Joined: Mon Aug 02, 2010 4:45 am
Posts: 770

"Most parks required that RV's be less than 10 years old."


Does that mean you are forced to replace your RV when it gets to that age? If so, depreciation will be a constant drain.




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 Post subject:
PostPosted: Tue Dec 14, 2010 9:51 am 

Joined: Thu Nov 25, 2010 7:19 am
Posts: 97

Lived in RVs my entire adult life.


I just wrote a blog about it. http://apps.biodieselhauling.org/blog/?e=56886&d=11/24/2010&s=Minor%20celebrity


RVs are well designed, have furniture and appliances built in, ways to save space, so comparing floor space really isn't accurate. I lived with another person and two cats in a 26ft motorhome for 5 years. Finally upgraded to a larger trailer mainly because wanted the ability to drive the tow vehicle while leaving the trailer at home.


Even when residents are poor, crime tends to be fairly low - people don't bother breaking into an RV, because they assume you don't have much. Even when I have had drug addict neighbors, no one ever broke in (stuff left outside in the yard is another story.) In fact, even when I accidentally left my door open (not just unlocked, OPEN) for an extended weekend vacation, nothing was touched (I live in Oakland).


I have rarely, if ever, heard of the 10 year rule actually being enforced. If your rig is clean and in good condition, and you are clean and in good condition, they are likely to make an "exception". To be on the safe side, show the park you want to move into a picture of the RV you want to buy before you buy it.


RV insurance is the equivalent of both comprehensive vehicle coverage and home owners / renters insurance. It covers things like storm damage, property theft, or someone getting hurt while visiting you. I pay $300 for a year.


I paid $7500 for my 15 year old (when I bought it) deluxe model 35ft travel trailer with 15ft "super" slide (entire living room / kitchen expands when parked). You can get something totally decent and livable and comfortable and presentable looking for less than that.


Its all paid off, and splitting rent with my girlfriend, we'll pay about $250 a month each, after utilities (electricity is really cheap in a home designed to be able to run off of batteries for a week). Given that the average 1 bedroom apartment in my city goes for about $1000, I think that's pretty good.


One thing to consider before calling a home purchase an "investment" is that if you sell it, you become homeless. If your home price went up X%, so did every other home in your neighborhood. So, in order to ever cash in on that equity, you either have to move to somewhere less desirable, or somewhere smaller. But if you were willing to live somewhere less desirable, why not just move there in the first place? And remember, a 75k house is really a 140k house, unless you can pay the full amount in cash. Rent doesn't go to equity, but 30 years of interest payments don't either.




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 Post subject:
PostPosted: Tue Dec 14, 2010 9:56 pm 

Joined: Wed Sep 29, 2010 7:34 pm
Posts: 170

@Joe


I would go for the RV approach, save up a lot of money while the RV depreciates in value, and then buy some cheap property when you are close to ERE to park the RV on so you don't have to pay lot rental fees anymore.




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PostPosted: Wed Dec 15, 2010 1:52 am 

Joined: Thu Nov 25, 2010 7:19 am
Posts: 97

I'd love to do that too, but most municipal codes (at least in CA) won't allow you to live in an RV on your own land, even though you can in a designated RV park. Doesn't meet zoning restrictions or building codes, or some code word for "we don't like how tacky it looks". Maybe I should move to Montana; I hear they are big on property rights and libertarian style freedom there...




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 Post subject:
PostPosted: Sun Dec 19, 2010 9:28 am 

Joined: Sat Aug 28, 2010 7:58 am
Posts: 81

Just wanted to post an update:


It appears that I'm settling down to RV Park Option.


I have found an RV Park that's about 1.5 miles from where I work and monthly rental is $350 a month without utilities. (I couldn't believe it myself)


I'm planning to visit them soon and will be updating as things progress.


Wish me luck :)




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PostPosted: Mon Dec 20, 2010 11:00 pm 

Joined: Thu Nov 25, 2010 7:19 am
Posts: 97

Good luck.

Feel free to contact me if you end up having RV questions in the experiences to come

BioDieselHauling at Google's version of email




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