Buying a home without a job after retirement

[CactusSurfer]

Is it possible to buy a home with assets but no job after retirement? Do HOAs, condo boards, or sellers want to see a job or regular income like a pension? Or do you just need to show up with the money? I'm about two years from financial independence and I want to move someplace cheaper and less subject to climate change at that point. I'm in Tucson in case any of you are curious. I've rented all my adult life so I have absolutely no idea what's involved in buying a home.

[chenda]

Vendors just want cash, the won't care about your income. You might need to provide proof of financing i.e. confirm you have x amount of cash in your bank account before they accept an offer.

[unemployable]

Co-ops in places like NYC will basically interview you about your life and can vote you down.

Otherwise, not likely if you're paying cash. If you're looking to finance it may be easier and cheaper to get a margin loan than a traditional mortgage, or pull assets from IRAs, which can't be put up as collateral.

We've had a few discussions about renting without a job, one thread is here: viewtopic.php?t=10520 Unfortunately real estate in the US has become markedly less affordable since that was written.

[Ego]

If you are buying into a coop you may need to apply to the board and get approved before purchasing. The application process can be rather intrusive. That said, they must follow fair housing rules so they cannot discriminate the usual categories. In many states, including Arizona, source of funding cannot be considered as long as it is legal. So you do not have to worry about that. Though there are a lot of gray areas.

[take2]

If you’re buying cash for a single family home you should be fine. If you need financing then obtaining a mortgage may be a bigger issue.

+1 to unemployable if you do need financing.

[white belt]

If you're looking to finance it may be easier and cheaper to get a margin loan than a traditional mortgage, or pull assets from IRAs, which can't be put up as collateral.

Can you elaborate on this? 30 year mortgage rates are between 6-7%, while Fidelity margin loan rates are 9.5% for assets from 250k-500k. So I’m not understanding how it is cheaper unless you’re saying that you don’t need a down payment, so you can increase leverage.

[unemployable]

Can you elaborate on this?

https://www.interactivebrokers.com/en/t ... -rates.php

IBKR right now is 6.83 on the first 100k and then 6.33 up to a million. This might be a wash versus an ordinary mortgage right now but most of the time it's lower by about a whole handle.

Other benefits include that a margin loan looks like cash to the seller, lower closing costs and some stuff can be skipped in the buying process, you do own the home outright (it's not collateral against the loan, your stonks are) and the process of getting the loan is probably more straightforward.

Naturally you want to have a plan for anticipating and meeting margin calls.

[jennypenny]

You used to be able to get a no-doc mortgage with 50% down. I think they were specifically called NINA/NIVA depending on whether you were using personal assets or anticipated rental income to cover the payments. Not sure if these are still available?

[Gewie]

As others have said, no one asks about your income or credit history if you can pay cash. Having cash means you have additional opportunities to get a better price if you are willing to consider homes that are foreclosed or otherwise cannot be mortgaged. Some of these homes can be in pretty bad shape, but I think generally if you are willing to put in some work the return on your time (ROI?) can be quite high if you find the right house. Having cash also means you can take as much time as you want to wait for the right house to come along.

[banker22]

@unemployable

What would your plan be for a margin call in this scenario?

Huge benefit of a mortgage is it isn't marked to market in real-time (or at all)

[unemployable]

@unemployable

What would your plan be for a margin call in this scenario?

Huge benefit of a mortgage is it isn't marked to market in real-time (or at all)

Oh wow, someone cares about me.

Anyway, first I wouldn't take out the full marginable amount; I'd shoot for a cushion of at least 20% less than that, so that Reg T wouldn't hit until down about 45%. Then the portfolio itself would be protection, as I tend towards low-beta, low-covariance, dependable-earnings stocks. Oil, pharma, tobacco, utilities, stuff like that. I underperform when tech stonks moon but made money in the 2001 and 2022 declines for example. For the actual shit hitting the fan I'd have a plan for what gets sold when, a predetermined policy statement if you will, which probably would let me survive to down 70% or so. And finally I can tap I-bonds (paying CPI+3) and Roth IRA contributions, which combined, should exceed the principal amount.

And if I blow through all of those I still have a house; it's not collateral for anything. And if they take that? Well whatever happened fucked over everyone else too; it was a nice 250-year run for the country though and a decent 20 or so years for me.

[Laura Ingalls]

We call that the if I am broke so will everyone else in this country. In that case we probably become a nation of squatters just staying in the place you already are regardless of your location payment record as a renter or a mortgagee.

[xmj]

Oil, pharma, tobacco, utilities, stuff like that. I underperform when tech stonks moon but made money in the 2001 and 2022 declines for example.

Tobacco tends to have higher dividend yields than the margin rates IBKR currently quotes - so your loan-to-portfolio value will shrink over time

[unemployable]

MO isn't even my highest-dividend holding. I also own KSS. Just you wait, in the apocalypse the only viable currency will be Kohl's Cash.

[conwy]

I recently had asked myself a similar question but about renting rather than buying.

For renting I had essentially no problem finding multiple offers even in the very tight market that is any major Australian city. The key was, of course, to show my assets. I didn't even have to show my stock holdings, just having 1-2 years' rent in savings was already sufficient.

There were cases where I didn't get the rental, but that was more due to those particular places being very popular and getting many applications, not specifically because I didn't work.

[frugaldoc]

I probably sound like a broken record in these forums but there is a much better way of leveraging your portfolio than taking out a margin loan. I think MMM popularized the margin loan concept a few years ago when IBKR Pro had margin rates less than 2%. However, if you would like to not have to worry about a margin call, changing margin rates, and also get a tax deduction, then consider using a short box spread. The website boxtrades.com does a pretty good job of showing the yield curve.

I mentioned in my journal how I had used a box spread to purchase property in Vermont. The property price was $135k so I sold short three Dec '26 box spreads (on .SPX) with a expiring value of 50k each. So, in December 2026 I'll owe $150k. I received around $134k proceeds from selling the spread short. I just withdrew that money and bought the property. That 16k difference (150k-134k) is what you would consider interest. But technically it is considered a capital loss and as .SPX options are 1256 contracts it is subject to 60/40 capital gains taxation. So, even if you don't itemize deductions, you get to use the capital loss to offset gains. Since I am not realizing capital gains currently, $3000 of that capital loss can be used to offset regular income, which is valuable to me in the 32% marginal bracket.