I was out walking my dog last week and ran into a neighbor down the block who we “cordial” with. I wouldn’t say we are good friends, but whenever we meet, we talk for 5-10 minutes. Before I met them, I envied their house. The developer of our little nook of a neighborhood used a similar plan for all the houses.
However they’ve significantly added on to the house. They raised the roof (in the rarely-used literal sense) and added an in-law apartment. It would be perfect for a
hot well-qualified nanny (just checking if you reading, honey). It has two beautiful balconies in the front (though this is probably dangerous for our small children) and their garage extends to cover a third car (we’d use it for storage, not a third car). It borders on what I’d call a McMansion.
Alas, I’d never have a chance at the house as the owner made it clear in the past that renting it out for income is part of their core retirement plan. However, last week, she had a different story. They had some recent events that made them realize that their long-term plan of being a long-distance landlord might not be for them. She said that she was thinking of maybe selling in August and was curious if we were interested with our growing family.
I kept the best poker face I could and said that I’d talk with my wife, but I was (still am) excited. I have to admit that the scarcity of houses that I’m envious in our neighborhood plays a factor. I’ve never been one to want a huge amount of living space, but going from a family of 2 to 5 (yes the dog counts) in a few years has me thinking again about our space requirements.
The “problem” is that the house isn’t going to be cheap. Not only that, but money in a house isn’t accessible for things like paying for college or our retirement (unless you get a HELOC or something similar). Then again, that’s not really what your home is for. It’s for living life, right?
In an ideal, financial-specific, world, one would live in a tiny house in an area with a cheap cost of living. They might be able to own it outright in just a year of saving. From then on out, the money that would normally go towards rent or mortgage could be redirected towards your financial freedom. I proposed this idea a few years ago: Get Rich by Thinking Small?
The large house with an large mortgage (perhaps from the appropriately named Newcastle Permanent company) runs counter to that. The only saving grace is that we could rent out our current home. This would be stealing our neighbors plan to use income from our house as a tool for retirement.
As you can tell, I am conflicted on this. As a result, I feel like I’m rambling. Fortunately, there’s a lot of time to think about this, and it might never be a realistic possibility.