We have some exciting news to share about an unusual goal we met a while ago. The Nuestra Casa funds are being put to use. We are moving! Again!
Yes, you heard right. We are buying a house and becoming permanent residents of another state.
After much searching, thinking of whether we’d move abroad after FIRE vs. staying in a warm climate U.S. state, we’ve chosen Florida as our next home state. We’re bringing our purchasing power to the sunshine state! 🙂
Gulf Coast, here we come!
If you been reading our latest posts, you might have noticed that we were heading in that direction. We’ve been staying in Florida for extended periods of time for the past two years.
Something happened during the last trip though: we found an area that we really liked that offers a family-friendly environment, lots of greenery, recreational activities, trails, beaches, and close proximity to Grandma! We found that a great way to know a community you’d consider moving into is by walking the streets and we did a lot of that. We walked, visited the parks, beaches, and playgrounds, met some individuals, and pictured ourselves living there. So when the time came to decide whether to buy this house, it was a relatively easy decision.
Change in plans
By November of this year, we were supposed to be going to Florida to hibernate for the winter and continue looking at homes. However, there has been a change in plans.
Instead of arriving in Florida, renting apartments until April, or until we find a house to buy and then having to move, we considered finding our home online and moving right into it.
Also, buying sooner makes sense because we are no longer thinking of putting our current house up for sale and plan to rent it instead.
And there she was!
Next thing you know, we saw a home that has most of the features we were looking for in our desired area, took a video tour with my mother-in-law present, and put in an offer!
After a round of countering, the buyers accepted our offer with a closing date of October 5th.
The sale price?
$100 under what we budgeted for Nuestra Casa two years ago! Insane coincidence? Or were the positive forces aligning to meet our plans?
The timeline worked well in our favor as we plan to move in October and rent out our current property starting November 1st. This also avoids having our house semi-empty for a 5-6 month period while in Florida.
Renting vs selling the property
Our initial goal was to sell the rental property. Then fund about 2.5 years of spending during the first 5 years of early retirement. The first 5 years are crucial as early retirees. We can’t access the retirement funds without incurring penalties since we are younger than 55.
Earlier this year we changed our mind and decided to rent out our property entirely. This property provides very healthy returns. That would be harder to replicate with equities as it also has an in-law suite that rents as a unit.
In addition to that, selling a real estate asset to invest it in the stock market defeats one of our current long-term goals. We plan to increase tangible assets in our net worth. As we enjoy retirement, we’re focused on slowly turning funny money into investments we can physically touch and are not just a number on a computer.
After all, we can’t punch the wall of a stock if we’re pissed at something. 😂
Renting the property provides a short-term cash shortage
Not selling the rental property provides an issue or opportunity, if you have an investor’s mindset. It means that we’d be short on cash to cover some living expenses while our Roth IRA conversion takes place. We get more out of the investment by renting but we’re limited because we can’t easily tap into the equity without the help of a bank.
We considered two options:
a) get a mortgage on the rental property
b) buy our new home with a mortgage to account for the missing funds tied to the rental property
Aah, an option never considered: getting a job! 😂 No way, José.
A mortgage on the rental property is considered a refinance and thus, more expensive. Refinancing comes with added fees due to the current mortgage payment deferrals program in effect.
We opted to get a small mortgage on the new home and leave the equity in the rental property untouched. With a 3% interest rate and potential for large profits, why wouldn’t we? The rental property net income should cover our new mortgage, insurance, and property taxes.
We’re applying for an asset depletion loan. It’s different than your typical job income loan. Our situation as early retirees is different than most. It’s a hybrid of a younger working person and a traditional retiree. We’ll explain how the process went after we make the purchase.
On your mark, get set, go!
We have less than 45 days to close and the deadline is fast approaching. With lots of to-dos and still trying to meet up with friends and family before the summer is over, we’re pushing the pedal to the metal.
We’re selling as much of our belongings as we can, especially the bulky items that we’re willing to part with to get a smaller moving truck. We’re still deciding on whether I’ll drive a truck there or just outsource the entire job.
If we can get rid of items such as our bedroom set, main couch, TV stand, and a few other fragile items, I think I’d be comfortable driving a smaller truck to Florida. If you’re in PA and want to check out some of these items, let us know in the comments and we’ll take it offline.
It’s going to be a hell of a ride before we reach that moment when we can sit in our lanai, but we’re beyond excited to get there. But never without losing sight of enjoying our journey since it’s just as important as reaching our destination. This move is different from previous ones in many ways. A big difference is that we have more time to get things done without a full-time job getting in the way. Our 9-5 is prepping for the move until we move. 🙂