Feeling forced into becoming a reluctant landlord

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Lynx310650
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Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

We are DINKs with no plan to have kids, and have been really enjoying our small rental which is walkable to work. We live in a very expensive area of the SF Bay Area (Menlo Park). We are 40 years old, and we've hit our "number" in our retirement accounts alone, although we plan on working at least another 10 years or so.

I've been absolutely horrified lately due to inflation concerns and esp the rising prices of housing (the latter happening even when inflation was "low"). I'm feeling compelled to buy something before it's too late, esp in California.

I have about $250k liquid saved up, which makes my budget around $1.2M. People familiar with the Bay Area will know this does not go far, esp in the area I live in. Even looking for a 2br townhome is pretty depressing, without a doubt I'm looking at adding substantial time to my commute.

Thus I've been kicking around the idea of becoming a reluctant landlord. Was thinking of 3 primary locales. One is in some far-flung area of the Bay Area, maybe a 2 br condo. Another idea is a small SFH in Sacramento. These would be places I can kind of check in on from time to time. Also looking at San Diego area (maybe a small SFH if I can swing it, more likely a condo/TH) as my parents live there and can look in on the property for me from time to time. I'd hire property management, and try to be as hands-off as possible. I've never had any interest in being a landlord, but again, buying some physical real estate is feeling much more imperative to me and I'm pretty determined to do so.

So I'm looking at the following options:

(1) Just buy in Bay Area, drive until I can afford and deal with the commute. Obviously we can also look at jobs closer or remote jobs if commute gets too difficult, although my spouse currently loves her job.

(2) Reluctant landlord idea I mentioned above.

(3) Vacation home/leave home empty idea - this is just an offhand idea I had but it seems like some people (though usually much wealthier than me) do it. We vacation 3-4 times a year down in SoCal because we have family down there. We could buy a small condo or townhome there (probably San Diego or OC area) and just use it as a vacation home. Another idea is to buy a home in Sacramento and leave it empty as well. Sacramento is a bit cheaper. not exactly a vacation destination, but I could check in on the home and spend the weekends there and then also keep the option of renting it out or even living there.

I don't think any of the options are the most ideal for me, as I like our current renting situation. But again, I am looking at buying physical real estate as almost essential "insurance" at this point due to ongoing trends that I don't think will stop. Don't want to do the usual "just buy REITs" strategy.

All the options will increase our housing costs, but we already hit our retirement number, so I don't necessarily mind drastically reducing savings rate and that extra money will be going into a home, not being spent on useless things, so I don't neccessarily mind.
namajones
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Re: Feeling forced into becoming a reluctant landlord

Post by namajones »

Lynx310650 wrote: Tue Sep 14, 2021 1:30 pm I don't think any of the options are the most ideal for me, as I like our current renting situation.
Then don't do anything. Put that on your list of options.

Just wait. When a choice becomes clear, you'll know it.
Mike Scott
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Re: Feeling forced into becoming a reluctant landlord

Post by Mike Scott »

I think this is called FOMO. Don't let it push you into doing something you don't want to do and will be expensive to unwind if you change your mind.
Ramjet
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Re: Feeling forced into becoming a reluctant landlord

Post by Ramjet »

If you have already hit your number why do you have to work/live in the Bay Area
VT & HFEA
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Sandtrap
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Re: Feeling forced into becoming a reluctant landlord

Post by Sandtrap »

1
Do nothing
2
Option 1

Do not become a reluctant landlord. Ever.
Do nothing reluctantly.
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orange12
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Re: Feeling forced into becoming a reluctant landlord

Post by orange12 »

Option 3 would be to buy a 2-4 unit place in SF and rent the other units out.
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ResearchMed
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Re: Feeling forced into becoming a reluctant landlord

Post by ResearchMed »

Don't become a reluctant landlord, especially if you don't already have a property that for some reason you truly can't sell!

And REALLY don't become a reluctant landlord long-distance!
It will cost a LOT extra in various ways AND be a much bigger drain on your time (and emotions).

Okay, there is the occasional time it could work like a charm. That is so unlikely if you aren't already used to this, alas.

RM
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mr_brightside
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Re: Feeling forced into becoming a reluctant landlord

Post by mr_brightside »

can't think of a worse time in the history of RE to be a residential landlord than the present.

the pendulum has swung massively to favor tenants in rent payment disputes (ostensibly due to COVID economic factors)

the stories of non-paying renters is enough to scare me off that potential route

---------------------------------------------------------
Maverick3320
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Re: Feeling forced into becoming a reluctant landlord

Post by Maverick3320 »

Ramjet wrote: Tue Sep 14, 2021 2:08 pm If you have already hit your number why do you have to work/live in the Bay Area
+1
Topic Author
Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

mr_brightside wrote: Tue Sep 14, 2021 3:14 pm can't think of a worse time in the history of RE to be a residential landlord than the present.

the pendulum has swung massively to favor tenants in rent payment disputes (ostensibly due to COVID economic factors)

the stories of non-paying renters is enough to scare me off that potential route

---------------------------------------------------------
This did enter my mind. Now that eviction moratoriums have been used in times of economic crisis, they may be used again in future recessions.
Topic Author
Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

Maverick3320 wrote: Tue Sep 14, 2021 3:34 pm
Ramjet wrote: Tue Sep 14, 2021 2:08 pm If you have already hit your number why do you have to work/live in the Bay Area
+1
Many reasons, bottom line is no plans on moving away from the Bay Area anytime soon.
MAKsdad
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Re: Feeling forced into becoming a reluctant landlord

Post by MAKsdad »

I would 100% do none of those options if I was you. If you've already "hit your number", what's the burning need to buy real estate? Do you have a similar burning desire for crypto? Tesla stock? I don't see how buying a house (especially a rental) is any different. What's wrong with whatever your current asset allocation is?
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Watty
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Re: Feeling forced into becoming a reluctant landlord

Post by Watty »

Be sure to consider taxes in your decision. If you buy an investment property and keep it 15 years until you retire and are ready to buy a retirement home then you will likely be hit with a huge tax bill to sell the investment property in order to buy your retirement home.

You could also retire in someplace where housing is not as expensive.
mr_brightside wrote: Tue Sep 14, 2021 3:14 pm can't think of a worse time in the history of RE to be a residential landlord than the present.

the pendulum has swung massively to favor tenants in rent payment disputes (ostensibly due to COVID economic factors)

the stories of non-paying renters is enough to scare me off that potential route

---------------------------------------------------------
Also add in insane housing markets with bidding wars, people waving inspections, and people even buying property they have not seen.
wilked
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Re: Feeling forced into becoming a reluctant landlord

Post by wilked »

"To do nothing at all is the most difficult thing in the world, the most difficult and the most intellectual"

-Oscar Wilde
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ResearchMed
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Re: Feeling forced into becoming a reluctant landlord

Post by ResearchMed »

Watty wrote: Tue Sep 14, 2021 3:43 pm Be sure to consider taxes in your decision. If you buy an investment property and keep it 15 years until you retire and are ready to buy a retirement home then you will likely be hit with a huge tax bill to sell the investment property in order to buy your retirement home.
When considering future tax implications, don't forget that if you own a primary residence and live in it for at least 2 years (of the "most recent 5 years ... I think it's "5"?), then as a married couple, you would be able to keep up to $500k tax free ($250k if single) - at least for Federal taxes, which is usually the biggie.

RM
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Sophie Spence
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Re: Feeling forced into becoming a reluctant landlord

Post by Sophie Spence »

Having watched relatives, friends, and neighbors attempt those options over the years I would rule out ever, ever adding long commutes or reluctant landlording (even with property management) to your life unless you truly have no option or are guaranteed an immediate payoff - neither of which appears to be true in your situation.

However buying a well run condo near family in a place you already visit 3-4 times a year and leaving it empty in between visits is something to consider. No landlord hassles and more comfortable visits for you.

My brother bought a small place close to his in-laws' retirement community just to make family visits smoother. It became an absolute godsend a few years later when his MIL began fighting a long battle against cancer. He allowed anyone who was visiting the in-laws to stay there and he says it was so comforting to go "home" after long days in hospitals and rehab and nursing centers. Even before his in-laws fell ill, he and his wife would go down for spontaneous visits, packing only a lunch for the trip because every other thing they needed was already in the condo so he and his wife saw her family much more often. They owned it about 15 years I think and made a profit when they sold even after expenses.

Just a something to consider.
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protagonist
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Re: Feeling forced into becoming a reluctant landlord

Post by protagonist »

If you are reluctant going into it, listen to your gut talking.
Being a landlord is not for everybody. When it's good it's good, but when it's bad it can be REALLY bad.
imho, unless you love doing it, there are simpler ways to make money.
Topic Author
Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

Sophie Spence wrote: Tue Sep 14, 2021 5:23 pm Having watched relatives, friends, and neighbors attempt those options over the years I would rule out ever, ever adding long commutes or reluctant landlording (even with property management) to your life unless you truly have no option or are guaranteed an immediate payoff - neither of which appears to be true in your situation.

However buying a well run condo near family in a place you already visit 3-4 times a year and leaving it empty in between visits is something to consider. No landlord hassles and more comfortable visits for you.

My brother bought a small place close to his in-laws' retirement community just to make family visits smoother. It became an absolute godsend a few years later when his MIL began fighting a long battle against cancer. He allowed anyone who was visiting the in-laws to stay there and he says it was so comforting to go "home" after long days in hospitals and rehab and nursing centers. Even before his in-laws fell ill, he and his wife would go down for spontaneous visits, packing only a lunch for the trip because every other thing they needed was already in the condo so he and his wife saw her family much more often. They owned it about 15 years I think and made a profit when they sold even after expenses.

Just a something to consider.
Thanks, I think you are the first person to suggest considering the vacation home idea. I'll be honest, I can't decide in my mind if it's a good idea or just completely bonkers. I guess (like your brother) I would need to count on some hefty appreciation for it to work out.

But I've been hesitating about being a landlord and some of the responses here scared me even more. So if not the buy my own residence idea, maybe buying the vacation home is better than the landlord idea. I guess I could also consider Airbnb'ing it when I'm not there.
surfstar
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Re: Feeling forced into becoming a reluctant landlord

Post by surfstar »

Lynx310650 wrote: Tue Sep 14, 2021 1:30 pm I don't think any of the options are the most ideal for me, as I like our current renting situation. But again, I am looking at buying physical real estate as almost essential "insurance" at this point due to ongoing trends that I don't think will stop. Don't want to do the usual "just buy REITs" strategy.
You've presented no compelling reason to buy RE, let alone be "forced" to buy RE.

You've hit your number at 40 and plan to work 10 more years. Leave your $ in the market and you can buy a $5m home in 10 years if you want to. Or move somewhere that a $500k home is a mcmansion, etc.

Option D - none of the above.
Do not buy RE if you have no need. Feeling that you can time/predict the future housing market is not a compelling reason.
Wannaretireearly
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Re: Feeling forced into becoming a reluctant landlord

Post by Wannaretireearly »

How soon do you plan to retire? With no kids, I'd be tempted to bum around renting in different local and Intl locations. Especially if work allows it while planning retirement!
Death and taxes. Only one is under your control!
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Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

Wannaretireearly wrote: Tue Sep 14, 2021 5:43 pm How soon do you plan to retire? With no kids, I'd be tempted to bum around renting in different local and Intl locations. Especially if work allows it while planning retirement!
No sooner than 10 years I think
pizzy
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Re: Feeling forced into becoming a reluctant landlord

Post by pizzy »

It feels like you are creating a problem in your head that doesn’t exist.

And more importantly, being extremely inflexible while trying to solve it.

As you describe your situation, there is no reason to own real estate.

At 40, unless your wealth is from a recent windfall, if you wanted real estate you would’ve bought it years ago.

Continue to rent. 100%
retiredjg
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Re: Feeling forced into becoming a reluctant landlord

Post by retiredjg »

Lynx310650 wrote: Tue Sep 14, 2021 1:30 pm We are DINKs with no plan to have kids, and have been really enjoying our small rental which is walkable to work.
You have what you want. There is no reason to look for something else just because interest rates are low.

A bargain is not a bargain if it is not something you want or need. This is nothing more than fear of missing out. I vote for doing nothing.
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ResearchMed
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Re: Feeling forced into becoming a reluctant landlord

Post by ResearchMed »

retiredjg wrote: Tue Sep 14, 2021 6:47 pm
Lynx310650 wrote: Tue Sep 14, 2021 1:30 pm We are DINKs with no plan to have kids, and have been really enjoying our small rental which is walkable to work.
You have what you want. There is no reason to look for something else just because interest rates are low.

A bargain is not a bargain if it is not something you want or need. This is nothing more than fear of missing out. I vote for doing nothing.
This reminds me:

"An elephant for a dime is only useful if you have a dime and need an elephant."

OP, you apparently have the dime.
Do you really need the elephant?
:wink:

RM
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dodecahedron
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Re: Feeling forced into becoming a reluctant landlord

Post by dodecahedron »

Even long before COVID, California was a nightmare to be a small landlord. If and when you do want to live in your property, you may find it very hard to remove your tenants if they don't want to leave.

https://www.sfgate.com/bayarea/article/ ... 849250.php

Rent control has existed in California long after it has disappeared in many other places. If inflation takes off, you may be able to pass your increased operating costs for maintenance, etc. on to your tenants in most other states. Not a foregone conclusion that you can do that in California.

https://bungalow.com/articles/californi ... -explained
stoptothink
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Re: Feeling forced into becoming a reluctant landlord

Post by stoptothink »

pizzy wrote: Tue Sep 14, 2021 6:11 pm It feels like you are creating a problem in your head that doesn’t exist.

And more importantly, being extremely inflexible while trying to solve it.

As you describe your situation, there is no reason to own real estate.

At 40, unless your wealth is from a recent windfall, if you wanted real estate you would’ve bought it years ago.

Continue to rent. 100%
+1. Confusing thread, there is literally no logical reason OP should consider buying RE right now, let alone feel pressure to do so.
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celia
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Re: Feeling forced into becoming a reluctant landlord

Post by celia »

I think you the nail on the head with your own observation:
Lynx310650 wrote: Tue Sep 14, 2021 1:30 pm All the options will increase our housing costs, but we already hit our retirement number, so I don't necessarily mind drastically reducing savings rate and that extra money will be going into a home, not being spent on useless things, so I don't neccessarily mind.
This sounds like you have been saving too much.

You are wringing all the juice out of a carrot just so you can retire early, possibly ridiculously early.
There’s no need to do that. Spend some money on housing, with a possible goal to pay it off before you retire.

More importantly is what your spouse thinks, not us.
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Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

dodecahedron wrote: Tue Sep 14, 2021 6:59 pm Even long before COVID, California was a nightmare to be a small landlord. If and when you do want to live in your property, you may find it very hard to remove your tenants if they don't want to leave.

https://www.sfgate.com/bayarea/article/ ... 849250.php

Rent control has existed in California long after it has disappeared in many other places. If inflation takes off, you may be able to pass your increased operating costs for maintenance, etc. on to your tenants in most other states. Not a foregone conclusion that you can do that in California.

https://bungalow.com/articles/californi ... -explained
Thanks, this is a good point. Well the reasons I feel so urgently that I need to buy a home are grounded more in my extreme fear of inflation, esp home price inflation. I feel like I need to protect myself. Of course many won't agree so I wanted to avoid that aspect of the decision and framed the OP as that I've already decided to buy, just don't know which option to pursue.

That being said your point of CA is a good one, and someone else mentioned eviction moratoriums. I think those may become fairly common tools in times of economic recession, so maybe another strike against being a landlord.
Wannaretireearly
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Re: Feeling forced into becoming a reluctant landlord

Post by Wannaretireearly »

dodecahedron wrote: Tue Sep 14, 2021 6:59 pm Even long before COVID, California was a nightmare to be a small landlord. If and when you do want to live in your property, you may find it very hard to remove your tenants if they don't want to leave.

https://www.sfgate.com/bayarea/article/ ... 849250.php

Rent control has existed in California long after it has disappeared in many other places. If inflation takes off, you may be able to pass your increased operating costs for maintenance, etc. on to your tenants in most other states. Not a foregone conclusion that you can do that in California.

https://bungalow.com/articles/californi ... -explained
Great thoughts. Should be a must read/sticky for CA wannabe landlords
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beyou
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Re: Feeling forced into becoming a reluctant landlord

Post by beyou »

Single worst financial decision I made was feeling compelled to buy in my HCOL city (NYC). I preferred to rent but found more choices and better condition condos for sale compared to rentals. Bought at a time when people assumed RE only goes up. Had to sell years later at a loss, when there was a downturn and I wanted to move. Became reluctant landlord when I couldn’t sell, but it was terrible, so I sold at a large loss later.

Real estate is a very hands on investment, with repairs, and non stop expenses beyond mortgage. You buy to have a nicer home, not as a hedge.
jarjarM
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Re: Feeling forced into becoming a reluctant landlord

Post by jarjarM »

Agree with many of posters above, do nothing and continue to rent. Rent to buy ratio is completely broken in bayarea, and we're home owner in the bayarea! Given the strong preference to renter from a city/county/state code perspective, it's difficult to be landlord in CA (especially in bayarea). I know of several friends/colleagues in the process of selling their rentals given the high price now and unknown status of eviction going forward.
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Re: Feeling forced into becoming a reluctant landlord

Post by humblecoder »

I know you said you aren't looking for the advice "just buy REIT's", but why not? If you think that housing prices are going to skyrocket, a REIT investment seems reasonable to me. You can use any money you make from a REIT to offset your increased rental costs. That sidesteps the issues of a long commute or being a reluctant landlord. Plus, a REIT is generally a more diversified investment since you are purchasing an interest in multiple properties, rather than one.

If you don't like REIT's, there are other low effort vehicles for investing in real estate (fundrise, crowd street, etc).

You mention buying a vacation home and leaving it empty. That seems like cutting off your nose to spite your face. You are basically hoping on appreciation, but the "expense ratio" of carrying an empty home is quite high... more than the ER of your typical BH-style mutual fund. Doesn't seem like a winner to me. If you do go down that path, then why not AirBNB it while it is empty? You can always offload the work to a management company. Obviously that reduces your income on the property, but you'd make more doing that versus leaving the property vacant.
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Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

humblecoder wrote: Wed Sep 15, 2021 8:08 am I know you said you aren't looking for the advice "just buy REIT's", but why not? If you think that housing prices are going to skyrocket, a REIT investment seems reasonable to me. You can use any money you make from a REIT to offset your increased rental costs. That sidesteps the issues of a long commute or being a reluctant landlord. Plus, a REIT is generally a more diversified investment since you are purchasing an interest in multiple properties, rather than one.

If you don't like REIT's, there are other low effort vehicles for investing in real estate (fundrise, crowd street, etc).

You mention buying a vacation home and leaving it empty. That seems like cutting off your nose to spite your face. You are basically hoping on appreciation, but the "expense ratio" of carrying an empty home is quite high... more than the ER of your typical BH-style mutual fund. Doesn't seem like a winner to me. If you do go down that path, then why not AirBNB it while it is empty? You can always offload the work to a management company. Obviously that reduces your income on the property, but you'd make more doing that versus leaving the property vacant.
Already own a decent amount of REITs in retirement accounts (I've tilted 5% of overall AA to them). I'd rather own physical property, which also has the benefit of being able to use leverage.

I may come around to the AirBNB idea, but I am overall liking the vacation home idea more and more
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bligh
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Re: Feeling forced into becoming a reluctant landlord

Post by bligh »

Lynx310650 wrote: Tue Sep 14, 2021 3:35 pm
Maverick3320 wrote: Tue Sep 14, 2021 3:34 pm
Ramjet wrote: Tue Sep 14, 2021 2:08 pm If you have already hit your number why do you have to work/live in the Bay Area
+1
Many reasons, bottom line is no plans on moving away from the Bay Area anytime soon.
If you are planning on living in and/or retiring in the Bay Area long term then that needs to factor into your expenses. There is no wrong or right answer to this, but in the long run, I'd imagine owning your home there is the better bet if you want to retire there. If you do not want to retire there, then you can rent there but buy your home where you do see yourself retiring.

In my case I planned to retire to a lower cost of living area. However I realized I was choosing to retire to the lower cost of living area, not because I wanted to retire there, but because I didn't want to spend the money on a place in a VHCOL area. I bit the bullet and just accepted that this is where I really wanted to retire to, and so purchased a home where I am currently living. If I change my mind in the future and move to a lower cost of living area, then I can always sell and cash out some equity.

It certainly sucked going from being almost FI (provided I moved to a Lower COL area) to no longer being FI. But hopefully I will be able to return to being FI in the next few years, this time while owning a home where I _want_ to live.
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Lynx310650
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Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

bligh wrote: Wed Sep 15, 2021 1:52 pm
Lynx310650 wrote: Tue Sep 14, 2021 3:35 pm
Maverick3320 wrote: Tue Sep 14, 2021 3:34 pm
Ramjet wrote: Tue Sep 14, 2021 2:08 pm If you have already hit your number why do you have to work/live in the Bay Area
+1
Many reasons, bottom line is no plans on moving away from the Bay Area anytime soon.
If you are planning on living in and/or retiring in the Bay Area long term then that needs to factor into your expenses. There is no wrong or right answer to this, but in the long run, I'd imagine owning your home there is the better bet if you want to retire there. If you do not want to retire there, then you can rent there but buy your home where you do see yourself retiring.

In my case I planned to retire to a lower cost of living area. However I realized I was choosing to retire to the lower cost of living area, not because I wanted to retire there, but because I didn't want to spend the money on a place in a VHCOL area. I bit the bullet and just accepted that this is where I really wanted to retire to, and so purchased a home where I am currently living. If I change my mind in the future and move to a lower cost of living area, then I can always sell and cash out some equity.

It certainly sucked going from being almost FI (provided I moved to a Lower COL area) to no longer being FI. But hopefully I will be able to return to being FI in the next few years, this time while owning a home where I _want_ to live.
Thanks for sharing your experience.

I'm kind of working off of 10 year horizons right now. When I was 25-30, 40 seemed SO old. So I saved to try to hit FI by 40. One of the motivations was I also thought we'd have kids and wanted flexibility for 1 parent to stay home with kids if need be. Well kids didn't happen and 40 doesn't seem that old once I hit it. So abandoned the RE part of FIRE. Now 50 seems old and thinking of retiring then, but considering my paradigm shift, maybe once I hit it I won't mind continuing to work.

So right now the plan is to live/work in the Bay Area for another 10 years at least, and then reevaluate. Of course plans can always fall apart or change, but that's where I am right now.
ChrisLA
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Re: Feeling forced into becoming a reluctant landlord

Post by ChrisLA »

My contrarian take on CA landlording these days is that now we've been through COVID hell it should be easier to identify who is or isn't likely to be a good tenant.
Nyarlathotep
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Re: Feeling forced into becoming a reluctant landlord

Post by Nyarlathotep »

stoptothink wrote: Tue Sep 14, 2021 7:01 pm
pizzy wrote: Tue Sep 14, 2021 6:11 pm It feels like you are creating a problem in your head that doesn’t exist.

And more importantly, being extremely inflexible while trying to solve it.

As you describe your situation, there is no reason to own real estate.

At 40, unless your wealth is from a recent windfall, if you wanted real estate you would’ve bought it years ago.

Continue to rent. 100%
+1. Confusing thread, there is literally no logical reason OP should consider buying RE right now, let alone feel pressure to do so.
+1, I couldn't agree more. Besides, if you buy RE now, wouldn't you be buying at a time when prices are at historical, stratospheric highs? And why do you think RE is such a clear-cut, obvious hedge against inflation? Like many others, I am confused by the rationale behind this entire idea.
tonyclifton
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Re: Feeling forced into becoming a reluctant landlord

Post by tonyclifton »

My neighbor is a reluctant landlord of a duplex. I know he is reluctant because he tried to flip the house during the great financial crisis of 2007 and it was for sale at the same time as our house.

He does not make the time or energy to take care of the house. Each tenant (we are on maybe the fifth cycle) has left the house in worse condition so it is a negative feedback loop. The house now needs hundreds of thousands of renovation to bring it to the level that the top dollar houses are selling for in the neighborhood.

The rent is very high and the tenants don’t like their landlord either so it is bad feelings all around.

My guess is in another 15 years when his mortgage is paid off the house will have just about collapsed into the ground as the current problems are serious (gutters leaking into walls).
Topic Author
Lynx310650
Posts: 246
Joined: Fri Sep 15, 2017 1:33 pm

Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

Nyarlathotep wrote: Wed Sep 15, 2021 2:17 pm
stoptothink wrote: Tue Sep 14, 2021 7:01 pm
pizzy wrote: Tue Sep 14, 2021 6:11 pm It feels like you are creating a problem in your head that doesn’t exist.

And more importantly, being extremely inflexible while trying to solve it.

As you describe your situation, there is no reason to own real estate.

At 40, unless your wealth is from a recent windfall, if you wanted real estate you would’ve bought it years ago.

Continue to rent. 100%
+1. Confusing thread, there is literally no logical reason OP should consider buying RE right now, let alone feel pressure to do so.
+1, I couldn't agree more. Besides, if you buy RE now, wouldn't you be buying at a time when prices are at historical, stratospheric highs? And why do you think RE is such a clear-cut, obvious hedge against inflation? Like many others, I am confused by the rationale behind this entire idea.
Unfortunately a lot of my rationale is based on things we can't discuss on this forum (rightfully so imo). Hence why I wasn't really asking whether to buy or not buy RE.
Maverick3320
Posts: 766
Joined: Tue May 12, 2015 2:59 pm

Re: Feeling forced into becoming a reluctant landlord

Post by Maverick3320 »

Lynx310650 wrote: Wed Sep 15, 2021 3:07 pm
Nyarlathotep wrote: Wed Sep 15, 2021 2:17 pm
stoptothink wrote: Tue Sep 14, 2021 7:01 pm
pizzy wrote: Tue Sep 14, 2021 6:11 pm It feels like you are creating a problem in your head that doesn’t exist.

And more importantly, being extremely inflexible while trying to solve it.

As you describe your situation, there is no reason to own real estate.

At 40, unless your wealth is from a recent windfall, if you wanted real estate you would’ve bought it years ago.

Continue to rent. 100%
+1. Confusing thread, there is literally no logical reason OP should consider buying RE right now, let alone feel pressure to do so.
+1, I couldn't agree more. Besides, if you buy RE now, wouldn't you be buying at a time when prices are at historical, stratospheric highs? And why do you think RE is such a clear-cut, obvious hedge against inflation? Like many others, I am confused by the rationale behind this entire idea.
Unfortunately a lot of my rationale is based on things we can't discuss on this forum (rightfully so imo). Hence why I wasn't really asking whether to buy or not buy RE.
It's kind of tough to give proper advice if we can't talk about the reasons why...
Topic Author
Lynx310650
Posts: 246
Joined: Fri Sep 15, 2017 1:33 pm

Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

Maverick3320 wrote: Wed Sep 15, 2021 3:13 pm
Lynx310650 wrote: Wed Sep 15, 2021 3:07 pm
Nyarlathotep wrote: Wed Sep 15, 2021 2:17 pm
stoptothink wrote: Tue Sep 14, 2021 7:01 pm
pizzy wrote: Tue Sep 14, 2021 6:11 pm It feels like you are creating a problem in your head that doesn’t exist.

And more importantly, being extremely inflexible while trying to solve it.

As you describe your situation, there is no reason to own real estate.

At 40, unless your wealth is from a recent windfall, if you wanted real estate you would’ve bought it years ago.

Continue to rent. 100%
+1. Confusing thread, there is literally no logical reason OP should consider buying RE right now, let alone feel pressure to do so.
+1, I couldn't agree more. Besides, if you buy RE now, wouldn't you be buying at a time when prices are at historical, stratospheric highs? And why do you think RE is such a clear-cut, obvious hedge against inflation? Like many others, I am confused by the rationale behind this entire idea.
Unfortunately a lot of my rationale is based on things we can't discuss on this forum (rightfully so imo). Hence why I wasn't really asking whether to buy or not buy RE.
It's kind of tough to give proper advice if we can't talk about the reasons why...
That's fair, but my specific question didn't pertain to whether to buy RE or not. It was under the assumption I am buying something, so which would be the best (or least worst) option.
surfstar
Posts: 2763
Joined: Fri Sep 13, 2013 12:17 pm
Location: Santa Barbara, CA

Re: Feeling forced into becoming a reluctant landlord

Post by surfstar »

You have not (and cannot, regardless of forum policies) provide a sound, logical reason for buying RE right now. Fear of inflation, etc, is not a reason.

You're worried you'll be priced out of RE, yet historical stock market returns beat the national average of RE easily. Concentrated risk in a single home / stock can provide outsized returns (or losses!), and are not guaranteed.

Enjoy the freedom of renting. Do not buy a "vacation home" unless you want to experience the joys of homeownership (aka housework) when on "vacation".

If the ideas that make you so certain that you must buy a home, and NOW!, are unable to be discussed on this board - perhaps they are not very valid ideas? BHs are pretty level-headed. This isn't reddit/wsb; and for good reason.

Don't just stand there; do nothing.
Gibby45
Posts: 38
Joined: Sun Nov 04, 2018 10:55 am

Re: Feeling forced into becoming a reluctant landlord

Post by Gibby45 »

We are DINKs with no plan to have kids, and have been really enjoying our small rental which is walkable to work. We live in a very expensive area of the SF Bay Area (Menlo Park). We are 40 years old, and we've hit our "number" in our retirement accounts alone, although we plan on working at least another 10 years or so.
OP, I completely understand looking around and wondering if you'll be priced out of the market. Stop, take a deep breath, and realize that you've already won the game. You've hit your number, things are stable (as they can ever be) in terms of your future plans/expenses, and your current rental that you love allows you to walk to work. Do not snatch defeat from the jaws of victory. I'm willing to bet that you would be able to find another rental in your current area easier than you would find a home to purchase that would not significantly reduce your quality of life. Basically, you can rent in an area you love for your 10 years for less than your likely downpayment on a property/location that you dislike.

If you feel the need to do something, look around your area and compare purchase prices to going rents. Each year you renew your lease for a place you love that allows you maintain your quality of life puts you further ahead in the game. Being a landlord has its perks, but don't go into reluctantly in a market that is very pro-tenant with very high maintenance costs and taxes.

I like to calculate something I call the "stress-adjusted" return of a decision. You don't have a compelling reason to drastically increase your stress. Don't just do something, stand there.
Topic Author
Lynx310650
Posts: 246
Joined: Fri Sep 15, 2017 1:33 pm

Re: Feeling forced into becoming a reluctant landlord

Post by Lynx310650 »

Gibby45 wrote: Wed Sep 15, 2021 7:01 pm
We are DINKs with no plan to have kids, and have been really enjoying our small rental which is walkable to work. We live in a very expensive area of the SF Bay Area (Menlo Park). We are 40 years old, and we've hit our "number" in our retirement accounts alone, although we plan on working at least another 10 years or so.
OP, I completely understand looking around and wondering if you'll be priced out of the market. Stop, take a deep breath, and realize that you've already won the game. You've hit your number, things are stable (as they can ever be) in terms of your future plans/expenses, and your current rental that you love allows you to walk to work. Do not snatch defeat from the jaws of victory. I'm willing to bet that you would be able to find another rental in your current area easier than you would find a home to purchase that would not significantly reduce your quality of life. Basically, you can rent in an area you love for your 10 years for less than your likely downpayment on a property/location that you dislike.

If you feel the need to do something, look around your area and compare purchase prices to going rents. Each year you renew your lease for a place you love that allows you maintain your quality of life puts you further ahead in the game. Being a landlord has its perks, but don't go into reluctantly in a market that is very pro-tenant with very high maintenance costs and taxes.

I like to calculate something I call the "stress-adjusted" return of a decision. You don't have a compelling reason to drastically increase your stress. Don't just do something, stand there.
Ouch, that 10 year thing hits hard. But you are right about that. My goodness homes are expensive here.
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