Please share early strategies to build retirement home?

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Topic Author
ElmoHongZito
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Joined: Tue Mar 27, 2018 9:17 am

Please share early strategies to build retirement home?

Post by ElmoHongZito » Wed Mar 13, 2019 12:45 pm

Thank you in advance for reading my post.

So me and my wife (both in our mid 30’s right now) would like to retire in the Carribean or at least go back and forth between Carribean and US during retirement.

I do not currently invest in real estate other than our current townhome that is paid off. We paid about 220k for it in 2011 and its worth about 330k now.

I am toying with the idea of purchasing something now in the Carribean that we can rent out and it can pay for itself over the years. Or at least lower our net cost of acquisition with the rental annuity. My sister in law and her husband live where we want to retire so they can give us a hand in light managing the rental aspect over the years.

What are some sound strategies and opinions around this?

We have excellent credit and a large amount of equity in other vehicles (bonds in 401k, stock index portfolios, IRA’s and cash). I was hoping maybe a HELOC with fixed rate could be an idea however my understanding is that a fixed rate heloc with a long maturity date will come at a high cost as far as the rate you can get.

I would like to tackle this topic now so I don’t get to retirement age and realize that I should have been more proactive years before.

Thanks in advance

HobbesMB
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Re: Please share early strategies to build retirement home?

Post by HobbesMB » Wed Mar 13, 2019 12:56 pm

I have no advice on your specific query, but I would offer a caution.

Depending on your time frame before retirement be aware that you may have different ideas about where you would like that retirement home to be than you do now. I have two friends that purchased their "retirement home" a number of years before they retired. In both cases they changed their mind about where they wanted to live in retirement and had to sell the homes to adjust to their new plans.

With family in the destination area you many not have this issue, and perhaps the rental income will make it a worthwhile endeavor regardless. But just be aware that it's hard to predict what you will really want in retirement, particularly if you are far out from the retirement date.

megabad
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Re: Please share early strategies to build retirement home?

Post by megabad » Wed Mar 13, 2019 1:22 pm

Thread title says "build" retirement home so I assume this means build a new home. If my choice was to build a new home on a Caribbean island vs. just rent---than I would rent every time. Depending on the island, Airbnb should have lots of options for intermediate to long term rentals at attractive prices. If you were to build, you would need to be intimately familiar with the contractor market, the real estate market, and be prepared for numerous problems. Dealing with a foreign rental is also not something that I personally would want to deal with as I approach retirement. Additionally, it seems pretty risky to assume your housing/travel tastes will remain the same for your whole life, especially if you are young (as in your case).

Honestly, if you really want to build and then rent out a home, I would prefer to do the exact opposite. I would build my home in the US in an area with attractive rental rates and then rent the US home out while I was overseas and just rent there. In the area where I live, you can build a duplex in the city and rent it out through Airbnb and come out pretty ok financially (not great, but ok). I would feel much more comfortable doing this in the US where I know the ins and outs much better.

chevca
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Re: Please share early strategies to build retirement home?

Post by chevca » Wed Mar 13, 2019 1:36 pm

You're in your mid-30's. What you want in retirement could change 10, 20, or 30 years from now. I would not go buying a place now. When you're 5 years or so from retirement, then think about it. Save in the meantime and likely be able to pay cash for the place someday.

Especially if you have a S-I-L that lives there already... easy vacations with a place to stay. :happy

Topic Author
ElmoHongZito
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Joined: Tue Mar 27, 2018 9:17 am

Re: Please share early strategies to build retirement home?

Post by ElmoHongZito » Wed Mar 13, 2019 6:13 pm

megabad wrote:
Wed Mar 13, 2019 1:22 pm
Thread title says "build" retirement home so I assume this means build a new home. If my choice was to build a new home on a Caribbean island vs. just rent---than I would rent every time. Depending on the island, Airbnb should have lots of options for intermediate to long term rentals at attractive prices. If you were to build, you would need to be intimately familiar with the contractor market, the real estate market, and be prepared for numerous problems. Dealing with a foreign rental is also not something that I personally would want to deal with as I approach retirement. Additionally, it seems pretty risky to assume your housing/travel tastes will remain the same for your whole life, especially if you are young (as in your case).

Honestly, if you really want to build and then rent out a home, I would prefer to do the exact opposite. I would build my home in the US in an area with attractive rental rates and then rent the US home out while I was overseas and just rent there. In the area where I live, you can build a duplex in the city and rent it out through Airbnb and come out pretty ok financially (not great, but ok). I would feel much more comfortable doing this in the US where I know the ins and outs much better.
This sounds like a sound strategy. The problem is that I have no experience buying, renting, or building and I am afraid I might end up in a bad deal.

Where I want to retire i lived there as a teenager and my wife is from there. We go back yearly. My brother in law actually does sales for a large developer and thru him I could actually purchase a brand new apartment in pre-construction and he can help get it rented for me. And its in a very clean and developed popular tourist area where there is zero crime. For this reason and my lack of real estate contacts and experience here in south florida, I feel like I am at a disadvantage trying to purchase and be a landlord in south florida. Thoughts?

staythecourse
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Re: Please share early strategies to build retirement home?

Post by staythecourse » Wed Mar 13, 2019 6:47 pm

If it was me I would focus on how to increase savings and investments so you can 1. retire when you want and 2. Do whatever you want at that time. I don't think it is a good idea to purchase real estate out of the country when you don't expect to use if for ?20 years.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

Scrapr
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Re: Please share early strategies to build retirement home?

Post by Scrapr » Wed Mar 13, 2019 7:03 pm

It's been a few years but we have been to a lot of Caribbean islands. I'm in construction but as a trade not a GC. I have not been impressed at all with construction practices anywhere we have been. The concrete does not seem to hold up as well as I would hope. Infrastructure seems cobbled together (see Puerto Rico)

We had fleeting thoughts of having something there. Looked at some mags. But ultimately bought a 2nd home 3 hours from our main home. And are very happy we did it that way. More opportunity to get there and enjoy a long weekend

Topic Author
ElmoHongZito
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Joined: Tue Mar 27, 2018 9:17 am

Re: Please share early strategies to build retirement home?

Post by ElmoHongZito » Wed Mar 13, 2019 7:15 pm

staythecourse wrote:
Wed Mar 13, 2019 6:47 pm
If it was me I would focus on how to increase savings and investments so you can 1. retire when you want and 2. Do whatever you want at that time. I don't think it is a good idea to purchase real estate out of the country when you don't expect to use if for ?20 years.

Good luck.
Thanks. I am already doing that but with time on my side I just feel that a property that could pay itself off with the rent over the years is an additional asset and equity that I can have with minimum effort.

Topic Author
ElmoHongZito
Posts: 212
Joined: Tue Mar 27, 2018 9:17 am

Re: Please share early strategies to build retirement home?

Post by ElmoHongZito » Wed Mar 13, 2019 7:22 pm

Scrapr wrote:
Wed Mar 13, 2019 7:03 pm
It's been a few years but we have been to a lot of Caribbean islands. I'm in construction but as a trade not a GC. I have not been impressed at all with construction practices anywhere we have been. The concrete does not seem to hold up as well as I would hope. Infrastructure seems cobbled together (see Puerto Rico)

We had fleeting thoughts of having something there. Looked at some mags. But ultimately bought a 2nd home 3 hours from our main home. And are very happy we did it that way. More opportunity to get there and enjoy a long weekend
I am referring to Punta Cana in the Dominican Republic. The construction that is close to the airport which is a separate area than where all those all-inclusive resorts are at. Not sure if you have observed the construction there. Much prettier and sturdier than what I see here in south Florida.

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