A Home for Tomorrow - Today
As you know, I like to start off each month’s email with a something that will put a smile on your face. Here’s this month’s attempt – I hope you find it as funny as I did!
One day a man decided to retire. He booked himself on a Caribbean cruise and proceeded to have the time of his life... that is, until the ship sank. He soon found himself on an island with no other people, no supplies, nothing, only bananas and coconuts. After about four months, he is lying on the beach one day when the most gorgeous woman he has ever seen rows up to the shore. In disbelief, he asks, "Where did you come from? How did you get here?"
She replies, "I rowed over from the other side of the island where I landed when my cruise ship sank." "Amazing," he notes. "You were really lucky to have a row boat wash up with you." "Oh, this thing?" explains the woman. "I made the boat out of some raw material I found on the island. The oars were whittled from gum tree branches. I wove the bottom from palm tree branches, and the sides and stern came from a Eucalyptus tree."
"But, where did you get the tools?" "Oh, that was no problem," replied the woman. "On the south side of the island, a very unusual stratum of alluvial rock is exposed. I found that if I fired it to a certain temperature in my kiln, it melted into ductile iron I used that to make tools and used the tools to make the hardware."
The guy is stunned. "Let's row over to my place," she says. So, after a short time of rowing, she soon docks the boat at a small wharf. As the man looks to shore, he nearly falls off the boat. Before him is a long stone walk leading to a cabin and tree house. While the woman ties up the rowboat with an expertly woven hemp rope, the man can only stare ahead, dumb struck. As they walk into the house, she says casually, "It's not much, but I call it home. Sit down, please." "Would you like a drink?"
"No! No thank you," the man blurts out, still dazed. "I can't take another drop of coconut juice." "It's not coconut juice," winks the woman. "I have a still. How would you like a Tropical Spritz?" Trying to hide his continued amazement, the man accepts, and they sit down on her couch to talk.
After they exchange their individual survival stories, the woman announces, "I'm going to slip into something more comfortable. Would you like to take a shower and shave? There's a razor in the bathroom cabinet upstairs."
No longer questioning anything, the man goes upstairs into the bathroom. There, in the cabinet is a razor made from a piece of tortoise bone. Two shells honed to a hollow ground edge are fastened on to its end inside a swivel mechanism. "This woman is amazing," he muses. "What's next?"
When he returns, she greets him wearing some small flowers on tiny vines, each strategically positioned... she smelled faintly of gardenias. She then beckons for him to sit down next to her. "Tell me," she begins suggestively, slithering closer to him. "We've both been out here for many months. You must have been lonely. When was the last time you played around?" She stares into his eyes.
He can't believe what he's hearing. "You mean..." he swallows excitedly, heart thumping away as tears start to form in his eyes... "You've built a Golf Course?"
As you near or enter retirement, one of the decisions that typically comes up is whether to sell their "big" home and buy a smaller one. If you know anyone who has been faced with that situation, selling one home and buying a smaller one may not save enough money to make it worthwhile.
There are sales expenses on the property being sold and acquisition costs on the replacement home. Generally speaking, you may not mind a home with less square footage, but you usually don't want to give up amenities or locations that you've become accustomed.
After a little number crunching, the move may not make enough difference in savings and you might end up staying in your current home even if it doesn't fit your needs anymore.
What if while you were still in your peak earning years and you acquired a home in an area where you would consider retiring and rent it during the interim. You could put it on a 15-year mortgage and possibly, even accelerate the principal payments to have it paid off by your anticipated move.
In the meantime, you could continue living in the "big" home until it is time to make the transition. Sell the "big" home that may be paid for by then and avoid up to $500,000 of capital gain. Take part of the proceeds and remodel the transitional home and invest the proceeds for retirement income.
Ideally, the former rental would be mortgage free by this point, so you would not have a house payment. Even if at this point, if you changed their mind about retiring to this particular home, you still have a property that acted as a hedge against rising prices and have sufficient equity to purchase something else without using the proceeds from the "big" home.
It is difficult to know what the situation will be years from now when you retire. It is clearly advantageous to have a plan that allows for options and choices. To find out more about purchasing your retirement home today, give me a call at (281) 599-6575.
Dale Ross Realty Group.