Early retirement without home ownership

How to avoid signing your life over to a mortgage
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Early retirement without home ownership

Post by thrifty++ »

Interested to hear from people who are now early retired or are pursuing early retirement without home ownership.

How is/will this work for you? Are there issues obtaining rental accommodation if you no longer work in a traditional full or part time job? How are you planning to obtain and/or fund accommodation costs?

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Re: Early retirement without home ownership

Post by unemployable »

viewtopic.php?f=14&t=10520 ... What the hell, you started that one too, did you learn nothing?

I managed to change the conversation to the topic of the valuation of cheap houses. Turned out it would've been a good idea to buy back then in the area I was looking at.

I've been renting the same place for 10 years. I'm paying well under market so feel I'm on borrowed time. I have actively looked at moving, however, and tell people the truth, that I live off investments and savings and that I'm "basically retired". They can check with my landlord and run my credit. I don't sense finding some place would be a problem. I would a favor individual landlords over large management companies, which may have less flexible policies. I actually lease through a management company right now, but they manage rentals for individual owners, rather than owning entire complexes.

I also have lots of options. They include buying a place (still), living with Mom for at least awhile (see concurrent thread on familial assistance) and leaving the US (I will be eligible for retirement visas soon). I can even live out of my car for short periods, as I did for two months this summer. Non-fragility.

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Re: Early retirement without home ownership

Post by Alphaville »

i rent a city apartment but own a house in a rural place. a “cabin,” but lived there a bunch of years, on and off, attempting homesteading. do i want to live there right now? no way, it costs too much to be poor, and i prefer cities while i still have some life in me. do i want to retire there in old age? maybe... but regardless, as a shf, it’s proven its value repeatedly between jobs, projects, relocations, as a storage, and also as a retreat/vacation/studio place.

since i became aware of your predicament, some ideas have popped in my head (“w” for “widen your options” in the wrap method that’s in that book i mentioned which you should be reading right now :D )

-you could buy yourself a cheapo shf cabin outside of town, as a retreat/vacation place, and fix it up for some day in the future
-you could buy a building as a business, not a consumer purchase, and rent out apartments (keep one for yourself)
-you could buy a ratty house in a crappy neighborhood and rebuild it (gentrify)
-you could buy a commercial property and live upstairs
-you could buy the smallest thing possible, like a tiny house/pied-à-terre
-you could buy something larger and split it into 2 pied-à-terres
-you could just keep saving your money and invest in stocks
-you could buy a house when you’re ready to retire, and not before
-you could live in a boat
-you could live in an rv
-you could brainstorm some options on you own given that you best know your market and i can’t possibly fathom
-you could ask experts around your area
-you could learn more about real estate, alternative housing, etc
-you could look at being a caretaker for all those “investment properties” that are flooding your market
-you could wait till the bubble crashes or new construction happens before buying something
-you could go live in a cheaper country
-you could go live in a cheaper area after all
-but definitely definitely definitely avoid tunnel vision, because there isn’t just one way to keep a roof over your head.

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Re: Early retirement without home ownership

Post by Alice_AU »

I am a renter while pursuing FIRE, and housing is my #1 financial worry. So decided to go the “rentvesting” route - continue renting where I work but buy where I can afford and rent it out.

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Re: Early retirement without home ownership

Post by basuragomi »

When rent:price ratios trend to buying beating renting, then having enough investments to cover your rent would necessarily mean having enough investments to buy a place outright.

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Re: Early retirement without home ownership

Post by 2Birds1Stone »

I like where Alphaville's head is at.

There are SOO many choices for housing, and no one will be perfect for everybody or each unique situation. It's good to have options.

That being said, I like the flexibility of renting/leasing vs. being stuck in one place. Maybe that will change in the future.

Currently "homeless" in that we've been traveling for 7 months and only returned to the USA this past weekend. I am not even locking into a rental situation until figure out what I want my winter to look like. That means staying with family and friends for the time being, which is difficult but we are pleasant guests and add value to our hosts (such as helping with projects, cooking gourmet meals, etc).

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Re: Early retirement without home ownership

Post by ertyu »

Same, I'm doing this without buying. I don't want to tie that much money down into a dwelling, and I don't like the lack of flexibility: owning ties you to a location and limits future prospects. I miss owning a place in the sense that I think I'd find it meaningful to improve on a place and beautify it and so on if I knew I'd be tied to it long term. There are many housing options that are not owning a house.

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Re: Early retirement without home ownership

Post by zarathustra »

I've been semi-ERE for many years now and have had to find rentals three times.

The first time, I rented a room from a friend, so that was easy.

The second time, it was a big management company, so I was worried about not having a job. They had me upload the last 3 months of checking statements and brokerage statements and I was approved in less than 24 hours.

The third time, it was an apartment complex owned by a very large management company with an online application portal. I uploaded my brokerage statements in the place where they wanted pay stubs and was once again approved within 24 hours, which the property manager said had never happened to her in the five years she had worked there.

Turns out there's nothing to fear. Since I technically retired I traveled in SE Asia for 1.5 years then came back to the states to work a remote job for one year. Then I had an accident on my bike and had to recover but eventually started my own small very part time business. I also made some coin schlepping really high end rugs (think $30k!!) here and there, helped stage a crazy photo shoot in mansions for a week, and did random house sitting as well.

It is true that the flexibility of renting has been convenient for me even though I have been ready for and wanted a home to stay at, beautify it like ertyu mentioned. I keep making choices that make that untenable but someday . . .

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Re: Early retirement without home ownership

Post by Seppia »

I am with Alphaville on this, there are a lot of possible solutions and the key is finding the one that works for you.

My solution:

I am at a time in my life where I could technically pull the plug on a semi-lean budget, but I’m making good money doing a job I really enjoy that has great side benefits.
My job demands that I stay flexible geographically.
Hence I’m more focused on downside protection than wealth creation.
So what I’ve done is to buy a VERY small place in an area close to our family ties (both DW and I are from the same town), and keep renting anywhere we live/work.

The very tiny place offers SHTF protection, as the cost of maintaining that apartment would be around 2000€ all-in per year (taxes, expenses, electricity, internet etc), making it possible for our family to survive on 1 blue collar job even if I somehow lost all my investment assets overnight.

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Re: Early retirement without home ownership

Post by Sclass »

I’ve posted about this in the last thread...and some others. So this is kind of an update.

The story so far is I rented for the last thirty years. I rented cheap places and put all my extra money into stocks. About fifteen years in something started to get obvious. Had I bought the average Silicon Valley engineer’s home in my town I’d be poorer than if I rented my teardowns and put all the rest in Silicon Valley stocks. Now I’m not interested in buying a home anymore. I mean how could I after tasting that sugar?

I look at my landlords and the amateurs trying to rent out in my town. Not the side I’d take in this game. They don’t even know how to run a good business...so they buy a home and rent it out. Then they get frustrated with lousy tenants coming and going while treating them like disposables. Had they run a better operation and carefully courted quality clients they’d be better off than their pay per use revolving door they operate. I get attitude from landlords for the first few years before they figure me out. Then they realize they found a gold mine. It’s an educational period.

After seeing this replay several times I realize we are just entering into a bet against one another by renting vs landlording. Of course I’m better than they are. It just takes them awhile to figure out their place in our new hierarchy. They’re used to their tenant being their subordinate and not the valued customer.

So the unthinkable happened this summer. After stabilizing my rental relationship with my landlord for five years where they are now grateful for my tenancy Covid struck. Landlord is dead. That was a big fear but somehow being afraid didn’t stop it from happening. So I’m either going to have to move again and train another landlord or convince the heirs that they own a gold mine.

I did inherit my mom’s home a couple of years ago. Not really interested in moving in. Cashing it in for stocks would be easier than mowing the lawns and getting the mail.

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Re: Early retirement without home ownership

Post by Tyler9000 »

When we first ER'ed we owned a home, but we ended up selling it and renting a place. It's an apartment with a large management company, and one benefit is that they offer very clear application requirements up-front. They do have an income requirement of 3x the rent, but they also consider all assets (savings, investments, etc) when evaluating that income. I estimated a conservative monthly portfolio income and clearly labeled it from "investments". Since the total was over the required minimum and our credit is excellent, they never even asked about it and approved us right away.

I've also noticed a decent number of people here who might qualify as traditional retirees, so I'm guessing our situation isn't that uncommon at this particular place. I can imagine applying to a complex full of broke college kids where management is accustomed to focusing solely on month-to-month work income might have yielded different results. So if you're worried about it, think about the context of where you're applying and how a different choice might make the process easier.

YMMV, but there are definitely ways to comfortably retire without owning a home.

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Re: Early retirement without home ownership

Post by Mister Imperceptible »

I live and work in a HCOL area where I rent. My parents pay as much in property taxes per year as I do in rent. Sometime ago I traveled for work and lived for a few months in a beat up old RV. I own one property in a LCOL area and rent it out. We are at a time where a lot of economic pain must be meted out. Landlords are an easy target. House prices are still going up (for now) but so are property taxes, and with very high unemployment rates, it’s going to be hard to evict half the country. I cash out refinanced and invested the appreciated equity. I also accepted the offer of forbearance and have not paid my mortgage since March. So I feel like I have a call option on hyperinflated housing costs, but not the same exposure as someone who owns a bunch of properties and may be asked to support unemployed people for the good of society. I would hate to be wrangling for rent from a tenant at this time. Have been lucky so far with quality tenants, but if circumstances change I can ask the renter to move out and I can leave the HCOL area and take all my liquid assets with me to my property in the LCOL area. With creativity I feel like it’s not really a big problem, and a different solution could better for you.

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Re: Early retirement without home ownership

Post by classical_Liberal »

I'm retired in the sense that I don't have a job or business and am not looking for one at the moment. I rent, but used to own. I had a bad experience with neighbors, got sick of the constant maintenance, and owning is against my core strategy of staying mobile.

I've noticed that it seems to be easier to find "deals", so to speak, on rent than it is to find a really great deal on real estate. For example, I'm paying about 60-70% market rent on my current place. It's just a good deal because of some deferred maintenance on the exterior, it's off a busy street, plus the owner has owned this complex forever and probably isn't following the market real well. I'd never be able to find a house at 40% off market price in my neighborhood unless it needed a ton of work (like it's gutted or something). Yet I've been pretty successful at replicating the cheap rent thing across half a dozen different cities. You just need to know what to look for in the right neighborhoods.

I pay about $2500 annual for my rent (1 bed apmt split with GF). I was joking with her a few days ago that my housing in 2020 was mostly covered with the $1200 helicopter payment and credit card bonuses/rewards.

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Re: Early retirement without home ownership

Post by Sclass »

Tyler9000 wrote:
Sat Oct 17, 2020 11:05 am
I've also noticed a decent number of people here who might qualify as traditional retirees, so I'm guessing our situation isn't that uncommon at this particular place. I can imagine applying to a complex full of broke college kids where management is accustomed to focusing solely on month-to-month work
This is really a great tip. I have a lot of trouble where I live because I’m surrounded by salaried couples with kids. While watching TV a year ago I caught the story of how Whitey Bulger got caught and I wondered how he secured his rental. He lived in an area with apartments filled with senior citizens. They probably didn’t ask enough questions.

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Re: Early retirement without home ownership

Post by Ego »

The world is changing fast. In this case, in our favor. I've seen some surprising approvals and rejections since this has been implemented.

https://www.wsj.com/articles/robots-are ... 1574332200
Robots Are Taking Over (the Rental Screening Process)
Landlords are using artificial intelligence to vet prospective renters

For decades, when you applied for an apartment, the landlord—or a tenant screening company hired by the landlord—would examine your credit file and pay stubs to verify your ability to pay rent. But today, landlords are using the artificial intelligence revolution to predict something else: Your willingness to pay rent.

“Some people earn three times the monthly rent, but they may love eating out and driving BMWs,” said Matt Davis, senior vice president of financial services for RealPage, a software and data analytics provider to the real-estate industry in Richardson, Texas. “Another person may only make 2½ times the rent, but eat ramen and drive a 20-year-old car.” This summer, RealPage rolled out an artificial intelligence-based tool that would likely score the poorer ramen-eater as a better candidate than the richer gourmand
Is this an example of the world moving in the - dare I say it - right direction? Rewarding thrift. Encouraging prudence.

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