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Do we need a bigger home?

by retirebyforty on February 26, 2014 · 76 comments

in real estate

I hope you enjoyed Cindy’s article about Living In The Sandwich Generation last time. Actually, I don’t think it is a necessarily a bad thing. We should strive help our parents and kids in whatever way we can. Helping each other builds a tighter family bond and shows the younger generation a good example. Through most of human history, each generation helped the one before and after it. The modern independent retirement is nice, but it might not be possible for many families.

For Asian families, the idea of helping the older generation is second nature. We were raised in a culture with a strong sense of filial duty (responsibility for parents). My parents aren’t well off and they worked hard to put us through college. They have some savings and they live a frugal lifestyle in Thailand, but they will run out of money at some point. My dad is still working a bit to make some money, but my mom hasn’t worked for quite a while now.

That’s why I want to combine households by having my mom to come live with us. I really need some help with RB40 Jr. and I’ll be able to keep an eye on my mom at the same time. She’ll live with us part time and go back and forth between our place, my brother’s, and Thailand.

Of course, there will be some adjustments, but she stayed with us over an extended period before, so hopefully it won’t be a difficult transition. The major change is the need for a bigger home. We live in a 1,000 sq ft, 2 bedroom condo and that’s not enough space for 4 people now that Jr. is 3 years old. We like living in a smaller home and probably wouldn’t get a huge house.

Moving would be hard because Mrs. RB40 really loves our current home and its location. She hates moving, and she only agreed to move to our current place believing that it would be truly permanent. (Is anything really ever permanent?)  We got a one bedroom condo nearby which I thought my mom could live in, but that’s not going to work out (a whole other story…) Anyway, I’m going to share our options and perhaps you can help us decide.

A Single Family Home

The first option is to find a single family home that would work for our family. We’ll need a 3 beds/2 bath home with at least 1,500 square feet. Our preferred location is also quite expensive and we’d be lucky to get in at $450,000. Most 3 beds/2 bath homes I’ve seen are around 2,000 sq ft so it’s going to be difficult to find a smaller home.

Now, the good news. If we sell all our properties, we’d be able to pay cash for a house! It would be great to not have a mortgage anymore. Mortgages aren’t bad debt, but no debt at all would be awesome.

Our monthly expense would drop quite a bit if we own a house outright. Currently, we are also paying $470/month for HOA and we’d be rid of that as well. Even with property tax and higher utilities, we’ll probably come in way under $1,000/month for housing. That would be a nice reduction from $2,200 we are paying now and it would improve our monthly cash flow by quite a bit.

Mrs. RB40 prefers a single family home because she doesn’t want to deal with renters anymore.

A Multifamily Home

On the other hand, I prefer an owner occupied triplex in the same area. We’d probably have to raise our budget to around $750,000 and get a mortgage for the property.

Ideally, we’d have a 2 bedroom unit to live in and two 1 bedroom units to rent out. My mom can stay in one of the 1 bedroom units when she’s here with us. When she’s not here, we can rent it out short term via Airbnb or other similar sites.

The upside is we’d have renters to help pay our mortgage. I’ll be on the premises so it will be easy to deal with issues as they come up. The downside is we’d have shared walls. I’d have to be extremely careful about tenant selection as well since we’ll be living under the same roof.

Do we need a bigger home?

Here is a triplex that I like. This one just sold for $640,000 according to Zillow. There are two 2 bedroom units and one 1 bedroom unit. The location is perfect too. Hopefully we can find something similar when we’re ready to buy.

A compromise?

One compromise would be a single family home with a mother-in-law suite. This type of home is quite rare in our area and I have only seen a few listings on Zillow. We’ll let our real estate agent know that we’d consider this option as well.

Seller’s market

From what I hear, Portland is quite a seller’s market right now. Homes are sold quickly and bidding has become the norm. We are not in a huge hurry so I think we’ll sell the rental properties this year and start a search for the perfect home. I don’t mind taking it slow. Our condo’s value is still recovering because there were a lot of short sales in the building over the past few years. I think in a year or so, we’d be able to get a good price on our current residence. The new public transit line nearby should be done next year and give a little boost to our property value.

For Mrs. RB40’s sake, this move will have to be it for a long time. We’d like to stay in the area until RB40 Jr. finishes high school. That’s 15 years, though, so who knows what’s going to happen in the mean time. I would be open to pretty much anything after that. Maybe a year long around the word trip, then live in other countries for a while. We’ll see how the missus feels at 55.

Anyway, I think 1,500 to 2,000 sq ft would be perfect for 4 people. What do you think? Do you think we need a bigger home? What’s your ideal home size?

{ 76 comments… read them below or add one }

Clarisse @ Make Money Your Way February 26, 2014 at 2:07 am

I can relate to you because I’m an Asian too, especially Filipinos have a well-known value of close family ties. Sometimes even the married children still living with their parents or the parents lived in with their married children.

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C. the Romanian February 26, 2014 at 2:58 am

In Romania the situation is similar and it’s quite common to have your parents or mother move in (or live with them in their house). Regarding the size, I believe that anything betweeb 1,500 – 2,000 sq ft are enough for 4 people and there would be no real need for anything bigger.

Even though the triplex idea might sound nice for now, I don’t particularly like it. Sharing the same house and having shared walls with your tenants… that’s something I don’t really like and it could backfire no matter how good you sort through the applicants. It would help financially, but it would just add an extra thing to worry: repairs, finding people to rent. Plus, if you are to rent one unit via AirBnb, you’d have little control over the people who come and live there.

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retirebyforty February 26, 2014 at 9:40 am

Thanks for your perspective. Mrs. RB40 will appreciate this. :)

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The Stoic February 26, 2014 at 3:13 am

I’ll start by saying I have a bias for smaller homes so keep that in mind when you read my comment.

My first question is this; are you making a financial decision or a quality of life decision? I think you can take action that is based on considerations for both, but you may do so at the detriment of one or the other. I can certainly see the appeal of a triplex as I’m very much pro-rental, however combining your business where you live might not be the best move. I’m going to side with Mrs. RB40 and say that a single family dwelling is probably going to be better. If you are wanting to make this move the last one for several years adding tenants to where you live might not make for peaceful living. Just something to consider.

In determining how much space you need I think it’s wise to work backwards. Saying you need double the space is not really meaningful unless you have really considered how you use a space. For example, gaining 300-500 sq. ft. and that gain mostly being larger bedrooms want really translate to a feeling of more space if your family spends most of its time in the kitchen or living room. Sit down with Mrs. RB40 and really consider how your family uses the space and how frequently your mother will be with you and how she will use the space as well. You may be surprised to find out what you can do with smaller spaces if you create the space to reflect the actual usage by your family. This might mean doing a renovation and expanding a kitchen or living room and don’t forget how enjoyable a deck can be in creating a space outdoors.

Whatever you decide let it reflect your true needs as a family and not just an arbitrary number that has no to relationship to how you actually live. Think floor plan not square footage.

Best of luck

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retirebyforty February 26, 2014 at 9:43 am

Thank you for your feedback. Mrs. RB40 will appreciate your support.
We really just need 1 more bedroom. We have a 2 bed/2 bath now and it works very well for us. My mom would have to share the room with our kid when she comes. She’ll live with us the majority of the year. Probably at least 8 months. We don’t mind a smaller home, it just needs to be 3 bed/ 2 bath.

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C. February 26, 2014 at 5:37 am

Zillow, Trulia etc are handy to set up a daily search but don’t rely on their “quotes”. We created space for my parents in two homes & currently have daughter/spouse/grandson with us. We live in expensive tri state. I have found 3 homes in towns we were told we could never afford. It would be a good idea to get your Realtor license. It is tough to pay commission after doing all the work!
I suggest single family w/”office” space(bedroom) & strongly consider Stoic’s advice. I personally would try to keep a rental property, especially if it is in an area that could build equity. Mrs Rb40 will prob need a move in ready home but we we’re hands on & fixed basement’s as apt/living space for folks. However long term when looking at homes consider handicap accessible single floor w/parents in mind. We had a raised ranch with walk out to yard which we had converted into full apt for DD when she had grandson( did not affect our lifestyle as lower level was “rec room’) & laundry which we shared. Current home has two bdrms/full bath above garage but was not listed as mother/daughter. Home had horrible 70’s lighting/paneling/bath tile colors but excellent neighborhood. After a certain price range people get picky which translates to good negotiation for you. We paid 500, houses around us all at 700 & up. Spent 30 k & “voila” Also a small home with room to expand ex: add dormers/ area to add a small room & bath will give you options down the road. Physically look at Many many houses it is always worth the time. Work with many Realtors while looking. Realtor loyalty is only as good as the Realtor. Consider if the town schools are adequate or growing fast which= more taxes. Consider if there will be mall development etc as that will increase local traffic & undermine home value. Get the best home inspector possible. Ugly house great bones vs pretty house with problems hidden = value. Easy home updates will give you a new hobby :-) & equity. Gardening pays off big time so landscaping may not be important, unless it is trees that have to be removed! Good schools, activities, & senior centers/ baby keep well / senior transportation are all possible in the right town & helps to save $. Start reading about simple home additions/ small home storage & Diy projects & see if that is something you would consider. Garages can often be converted to living space as well especially if attached. Think outside the box.

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retirebyforty February 26, 2014 at 9:46 am

Thank you for your advice. I don’t mind DIY at all. Our area is pretty developed so not much yard space for an additional structure. A small home would an office would be a great option. It would be great if we can find a nice fixer upper with 3 bed/2 bath. Adding a bathroom is a huge job…

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JP February 26, 2014 at 6:23 am

Friends; pretty much every culture other than Norther Europeans (and their colonies), take care of their elderly. Indians, French, Italians, Spaniards, Asians in general, and of course, South and Central Americans.

On to a bigger home. I don’t know your mom’s age; but the US is not a friendly place for healthcare for foreigners. Is your mom a US citizen or resident? If so she probably has medicaid. Also, if she carries a social security card, you can claim her as a dependent in your taxes. If not, I have no idea how to insure an elderly long term visitor.

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retirebyforty February 26, 2014 at 9:48 am

She is a resident and we will purchase health insurance for her. Taking care of our elder is really a privilege. It’s a chance for us to give back.

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Survive The Valley March 10, 2014 at 1:08 pm

This is a good point. We’re going through the same conversations about where my in-laws should reside after they’re no longer independent. My wife is a single child and her parents don’t really have anyone else back in China to support them when the day comes.

Health insurance is our biggest concern. Although they can apply for permanent residence (via “Greencard”) but our research indicates that they would not qualify for Medicare or Medicaid, for the former since they have never worked here, for the latter there are a lot of requirements they must first fulfill. The most realistic option is private health insurance – but it’s VERY expensive as they get up there in age. Otherwise there are state-specific “Medicaid”-like programs that may be an option.

In the end though I completely agree that children should help out their parents in old age, if the parents are in another country, options could be limited. When you consider all of the risks and expenses there is a valid argument that it might be better if they stay in their home country.
I guess this the reality of our global world today, something that our forebears didn’t have to worry about.

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retirebyforty March 11, 2014 at 1:01 am

I’m sure they would rather stay in their home country. Hopefully, you’ll be able to pay for elderly care. I’m not sure what kind of options they have in China. My parents lived here before so it’s not a huge adjustment. My dad still prefer to live in Thailand so he’ll probably stay there. Thanks for sharing.

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Justin @ Root of Good February 26, 2014 at 6:25 am

There’s five of us in 1800 sf in the land of cheap real estate. And we only use 2 out of the 4 bedrooms (for now!).

Mrs. RoG and I were discussing how we missed our old 2 BR 1200 sf condo. It was cozy and provided about as much functionality as our current house.

For you, I get why you would need more space. I think I would need to keep any parents a little further away from our main living area for their sanity and ours. It looks like you’re in a good financial position to make whatever move you want to.

Oh, and good news on the multi-family front. I saw a major US homebuilder promoting “multi-family homes” for some new developments they are working on. I forget which builder, but it was certainly an interesting development I haven’t seen before on a mass scale (in the continental 48 anyway).

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retirebyforty February 26, 2014 at 9:50 am

Really? 1200 sf would be quite tight for 5, wouldn’t it? We’ll work on it and discuss it with my mom. Combing household is a great way to save on housing so I think the multi-family development is great news.

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Wilson February 26, 2014 at 7:20 am

I like the mother-in-law suite idea. If those are scarce, perhaps a double where the rental unit is substantially smaller but will provide good income on AirBnb or can be a short-term rental when she’ll be away for months. This is our ideal scenario as we’re looking to add a 3rd bedroom to house my parents, albeit for much shorter periods, when they come to visit their grandchild. It’s a sellers market here too. There’s a lot of renovation here so the seller’s want big profits for their work, or you have to find a dilapidated dump and renovate it yourself, but even those are surprisingly pricey.

We currently live in a double and have been extremely lucky with our tenants and have gotten along great with all of them and they’ve all loved and accommodated our daughter. However, I fear that luck has to run out eventually so I’m not sure I want my next house to have a permanent tenant. Our ideal house is a local Spanish architecture style that has a basement (in a strictly local sense – nothing where I live is subterranean) that can be multi-functional – a guest room for family or occasional rent, storage, and with office and/or playroom space. Upstairs can be 2 to 3 bedrooms, usually 1800- 2200 sq ft. That would take a lot of toys out of the living room and save my ankles. For me that is the perfect style for a 3 person family conscious of space and costs and needing to accommodate family.

Maybe you can find a single family home with a big backyard and put up a yurt? They can be really nice.

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retirebyforty February 26, 2014 at 9:52 am

I’m afraid my luck will run out too. We have been really lucky and I don’t want to run into a troublesome case. I would love a yurt, but I don’t think my mom would like it. We’ll search for a home with a mother in law suite. Our area is getting pricey as well.

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writing2reality February 26, 2014 at 7:25 am

Yikes… that is a tough decision as it cannot be weighed on financial merits alone. Any time a personal residence (for 15 years no less) is considered, there is always an emotional and intangible side of the conversation. In this case it is the sense of security and lack of hassle that a SFH will offer compared to pursuing furthering you economic situation with the rentals.

For me, knowing my fiancé, we would end up going with the SFH and forgoing the triplex. I’m in the same camp as you in seeing the great potential of the triplex, but family happiness is worth far more than a few extra bucks in the bank.

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retirebyforty February 26, 2014 at 9:53 am

Thanks for your input. I’m leaning more toward a suitable SFH as well. I’m tired of dealing with tenants. It’s a lot of work and that’s with good tenants…

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barb February 26, 2014 at 7:33 am

I would but a home with a mother in law suite. Make sure it has an outside entrance. When your mom passes on, you can rent out the mother in law suite if you want. Whatever you do, do not buy a two story house. When you get older it will be a big problem.

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retirebyforty February 26, 2014 at 9:54 am

Most homes in our area is a 2 story house. We probably will have to just sell when we get older. Our old home has a bedroom on the ground floor, that’d be perfect.

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William Cowie February 26, 2014 at 7:36 am

Here’s something to think about, Joe: the best time to trade up on a residence is in a recession. You might like the fact that it’s a seller’s market when you sell, but every time you sell, you have to buy again, so it never matters whether it’s a seller’s or a buyer’s market — you’re going to have to do both.

The time when you are getting the most for your place is also the time when you’ll be paying the most for the place you buy. That means the gap is also at its highest. The gap is at its lowest when the market is down.

The good news is you don’t have that much longer to wait: the last recession bottom was 2009. In our lifetimes, downturns always started 5-8 years after the preceding downturn — always!

5 years from 2009 is when? It may not happen now, but that downturn isn’t too far into the future anymore.

Just saying… :)

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retirebyforty February 26, 2014 at 9:56 am

Got it. We’ll definitely sell our rentals this year. Maybe we could hold on to our primary resident for another 2 years and see if there will be a market correction. It seems like the housing market is in a big upswing right now. It might take 4-5 years to blow up again.

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C. February 26, 2014 at 2:01 pm

I agree with William, history repeats itself & so do real estate markets, which is why I would try to hang onto one rental. Just because your making money off sale at this time doesn’t mean you can’t make more or will lose money.

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Done by Forty February 26, 2014 at 7:53 am

For what it’s worth we are renting out a room to a couple now, so there are 4 of us living in 1276 square feet. I won’t lie: it’s a little tight. But with an extra 200 or 300 square feet, I agree that it would probably work. I figure as long as you have a big kitchen, spots for everyone to sit for dinner, and bedroom doors for everyone to find sanctuary behind, then you’re golden.

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retirebyforty February 26, 2014 at 9:57 am

A nice kitchen would go a long way to convince Mrs. RB40 to move. Our kitchen is cramp whenever 2 people are in there. A little more space would be great.

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UrbanSaltlLake February 26, 2014 at 8:03 am

I’m in somewhat of the same situation. I’m Asian and my parents live with me and my partner. We have also taken in my 11 year old nephew to help with his education. We took advantage of the housing bust and bought a house that is bigger than we need to allow each family member their own space, but also to ensure that the house will have a good return down the road when we sell it. At the peak of the housing market, the original owner built the house for $600K with all the upgrades. We bought it from them as a short sale for $290K and the house is currently worth $500K market value. It is over 4800 sq/ft with 7 bedrooms, 6 bathrooms, two kitchens, theater, office, dining, living, two family rooms, etc. We know we don’t need all this space, but extra space is better than not enough space and you can’t beat the price. Location was very important to us, so having beaches, boat captains, rec center, swimming pools, dozens of neighborhood parks/playgrounds, fiber optic internet, and many more all included for $100 HOA was a dream. We literally have all the free entertainment we need without ever needing to go out of our community. We got such a great deal that we will be able to pay it off in the next 6 years. As a side note, Portland or the Oregon coast is where we want to retire. I’m 37, so I still have 15 more years before I’m willing to retire. However, it has hasn’t stopped me from occasionally looking at some properties in Oregon ?

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retirebyforty February 26, 2014 at 9:59 am

Oh wow, you got a great deal. That is such a huge fluctuation in price. It’s great that you have so many entertainment options nearby. That’s one reason why we love our current location. There are so many activity options. Oregon isn’t really a great place to retire. The 10% state tax is not retiree friendly at all.

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Dividenden-Sammler February 26, 2014 at 8:17 am

Hi RB40,

my wife and I have bought a house 12 years ago.
I have work hard and so now the house is debt free.

Now my wife say: Come on, buy a bigger house! More rooms, more garden, more…

But I don´t want!
It was very hard, to work every day 8,10 or 12 hours only for to pay off the house.
Now I don´t want a bigger house – I want only Peace, quiet and a lot of shares which pay me some dividends.

Best whishes
D-S

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retirebyforty February 26, 2014 at 10:00 am

Thanks for your perspective. We just need one more bedroom. I don’t want a huge house either. It’s a lot of work to maintain.

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Mr. Utopia February 26, 2014 at 8:22 am

It definitely seems like you have done your initial research and mapping of options quite thoroughly. Living in a small space with a growing family is doable, but tough and potentially frustrating. We have a 2 bedroom apartment with a 1.5 year old son and another child on the way. So, pretty soon we’ll be facing a similar dilemma although not nearly as complicated since there isn’t the sale of multiple properties involved. The good news for you is that you aren’t in a rush, which is means you can modify and further define your options as things progress. By the way, your wife is right, moving can be a drag (although it’s usually worth it once that part is over!).

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retirebyforty February 26, 2014 at 10:02 am

Two kids can share the room for a while, right? :) Mrs. RB40 really hates moving. She’s mad at me for months whenever we moved.

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Kurt @ Money Counselor February 26, 2014 at 8:33 am

I kinda like the triplex idea. No matter which way you go, your mother’s not going to live forever (sorry!), so I think you want fully independent units so you’re comfortable renting to a ‘stranger’ once your mom is gone.

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retirebyforty February 26, 2014 at 10:02 am

I like the triplex too, but maybe a SFH with a mother in law suite would work better for us. We’ll see what we can find.

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Petra February 26, 2014 at 8:35 am

To me it seems like moving to a bigger house for a grandmother who will live with you roughly 1/3rd of the time is doing things backwards. I would try to make it work as it is, or find a place closeby for her to stay for say 4 months out of the year. Renting that place will likely be a hell of a lot cheaper than moving, closing costs, and lost opportunities of the money now stuck in the new bigger house.

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retirebyforty February 26, 2014 at 10:03 am

She’ll stay with us 8-10 months out of the year. Sorry I didn’t make that clear. She doesn’t want to live by herself in an apartment. That’s another problem I didn’t mentioned…

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davidmichael February 26, 2014 at 8:58 am

Great topic! At age 77, having travelled in an RV for the past seven years after completing our teaching contracts in the Middle East, my wife is looking again for community and stability (after 15 years of travel). Our five kids are scattered all over the West (blended family). My wife just spent the past ten days flying to San Diego to take care of the grandkids during school vacation to help the working parents. That’s our agreement…she can fly anytime, anyplace to be with the kids and grandkids.

But…we are faced with the question now of housing for our last 15 or so years. Live in a town with one of the kids close by or move to a Dell Webb type retirement resort found in the Southwest? As of last week, we are now favoring buying a house in Tuscon in a Retirement Community with every senior convenience out there…including golf courses, fitness centers, Olympic size swimming pools, tennis courts, etc. In short, daily classes and fitness features that would keep us physically and mentally fit until one’s final days.

As for the kids…it would really, really help if they could pay part of the mortgage ($120,000 after 20% down), but that probably won’t happen. Thus, I plan to work for the next three years seasonally to get enough cash, until I am 80. It seems that most of our kids have the belief that loaning or giving money to any family members is a burden worse than death. There is a huge difference between the concept of caring for parents in the Asian and Middle Eastern Cultures vs. the US culture.

Thus, I think there are different ways of helping aging parents…having them live with you in a larger home (at least 1800 sq ft with three bedrooms and two baths), or helping them fund a retirement home as in a Dell Webb type community. As for us, I really do not want to be a burden to my kids. On the other hand, what a gift it would be to have help with the mortgage. (Thoughts from a senior and the dilemma of aging parents.)

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retirebyforty February 26, 2014 at 10:07 am

Thank you for your perspective. It’s hard to talk to our parents because it’s a bit awkward to bring up this topic.
Your kids really should help out a bit. Maybe they don’t know that you’d appreciate the help. You should bring up this topic with them and see what they say. They might be too financially stretched, but who knows.
I really want my kid to learn about taking care of the older generation and that’s one big reason why I asked my mom to come live with us. He’ll learn by example and hopefully help us out when we’re older.

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Andrew@LivingRichCheaply February 26, 2014 at 10:38 am

If your wife doesn’t want to deal with tenants anymore, and I’m not too sure you really want to deal with them either, the single family house is probably the better choice. I’m Asian also and it definitely isn’t common to live with and help out your elderly parents. The first year we were married, we lived with (and paid rent) to my parents. I think it’s tough though…you ever watch Everybody Loves Raymond? The mother-in-law and daughter-in-law tends to have more tension/conflict. But hopefully that’s not an issue for you guys. The mother-in-law suite is probably a good idea so there’s a separate space.

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retirebyforty February 26, 2014 at 9:28 pm

We had some issues too, but it’s pretty good now that we’ve been married for a long time. A mother in law suite would be ideal. My parents lived with us for a while when we first got married too. That was tough because everyone hasn’t mellowed with age yet…

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Andrew@LivingRichCheaply February 28, 2014 at 6:23 am

Glad to hear they mellow with age…so there’s hope!

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Insourcelife February 26, 2014 at 10:41 am

Mother-in-law suite would be my choice. If you can’t find a house with that included you can always spend some money to add it on as long as the existing floor plan allows it. I would try to find something where that suite can be on the other side of the house and it would be great to have a separate entrance – your family and your mom would appreciate that. As far as a triplex – I would stay away in your situation. Your wife does not want it and if she is not happy, you won’t be happy. Also, having zero mortgage debt would give you an amazing level of security, given that all your other financial ducks are already in a row.

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retirebyforty February 26, 2014 at 9:29 pm

I shudder to think how much it would cost to add a kitchen…

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insourcelife February 27, 2014 at 7:28 pm

You don’t need a whole new kitchen. A small fridge, a hot plate with a couple of burners, a sink. Ever stayed in one of those extended stay hotels? Something similar to that. Basically, give your mom enough to be self-sufficient when she wants to but not too much that you would never see her joining your in the big kitchen.

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insourcelife February 27, 2014 at 7:29 pm

“joining YOU”… I wish there was an Edit button!

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Jay February 26, 2014 at 10:51 am

You mentioned about the possibility of paying cash for a new house. At today’s relatively low interest rates, it may be worth considering taking out a mortgage and then using the cash you have spent on the house to invest in equities. Over the long term (greater then 5 years), you may be able to achieve a higher rate of return in stocks and/or mutual funds then the mortgage rate you would be paying. It represents a risk but taking risks is how I made my money.

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Spencer February 26, 2014 at 4:30 pm

I would have to agree here. If the goal is to increase wealth, then having a primary home mortgage with a relatively low (locked) interest rate plus a home mortgage interest tax deduction (free money) seems like the way to go.

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retirebyforty February 26, 2014 at 9:30 pm

We probably wouldn’t be able to borrow much because I don’t have a W2 anymore. I’m also a bit nervous about stocks. I already have a lot invested and I’m hesitant to add a lot more. I’m more risk averse now that I’m a bit older.

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Sam February 26, 2014 at 2:40 pm

How close to downtown Portland do you really need to be? Have you considered just moving to something a bit further out close to a MAX line? The savings would be pretty huge.

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retirebyforty February 26, 2014 at 9:31 pm

We could move back to our old house. It’s near the MAX line, but it’d take a hour for Mrs. RB40 to get to work. We’d save a ton of money though.

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SavvyFinancialLatina February 26, 2014 at 2:52 pm

Thanks for this article. You are tackling issues now that I will have to tackle in the coming years. The hispanic culture is very much take care of your elders. Well, at least that’s what my parents have drilled on us. So I plan on making sure my brother and I take care of our parents.

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retirebyforty February 26, 2014 at 9:32 pm

I’m sure you’ll be in a position to help out as they get older. Good luck!

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freebird February 26, 2014 at 3:42 pm

Joe, I’m looking at a similar situation as you, planning to move from my own apartment to a 3/2 house in the near future, with parent moving in. One thing I’d caution you about is that it’s hard to predict friction with respect to household decisions, this is the main reason for my move. Kitchens can turn into family battlegrounds, so I think your idea of the triplex with independent units is really the best solution. Actually since you need only two units, can you find a duplex for less? Where I live there are lots of these.

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retirebyforty February 26, 2014 at 9:33 pm

I’ll keep a look out for duplex too, but it seems to less common than the triplex for some reason. You’re right about the friction. My mom lived with us for almost a year previously so at least we know what to expect.

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sarah @ little bus on the prairie February 26, 2014 at 7:44 pm

I know that everybody’s situation is different and you have very valid reasons for the decision that you are making, but this just makes me laugh as we are two weeks away from moving into a double decker school bus with five people as we save to build a home on our land :) I love that you are making the choice in order to help your mom though. I would want to do the same in that situation.

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retirebyforty February 26, 2014 at 9:35 pm

You guys are nuts, but good luck! :) At least it’s not permanent and you’ll have a home to look forward to. It will be an interesting journey.

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Sarah @ Little Bus on the Prairie February 27, 2014 at 2:08 pm

Ha, thanks! That’s the plan, at any rate. I kind of think your wife is nuts for wanting to live with her MIL, but that’s another discussion altogether :)

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Frugal pediatrician February 26, 2014 at 8:05 pm

We have same issue. My husband is Korean and I am Vietnamese. His parents moved in right after our first child was born. They helped us out immensely through the first 8 years especially before our 2 went to school. Now they are older and we have a happy combined household. My mother in law keeps up the house and father in law helps with drop off, but otherwise they spend most of the time with friends, exercising, at church. We pay for all health insurance, vacations, housing costs and car costs. They pay for their own incidentals and Korean food they want. For some reason it makes them feel better when they buy the eggs, rice, and meat every week. We have smaller 2050 sq ft SFH with 3 bedrooms and 1 flexible office space. 3 baths. Honestly without them I would not and could not work. They enable us to work reasonable hours without worrying about household stuff and enable us to make a good living. We pay yearly outside of housing probably only 30k to enable them to have a very nice retirement, and in exchange we probably make an additional 200k from my income. Most importantly they are cared for, and my husband has done his duty as only son. When my mother in law broke her hip, our living together already helped her recover very quickly and now she is back exercising and traveling again. I think it’s wonderful Joe that you will have grandma with you. Love your blog!

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retirebyforty February 26, 2014 at 9:37 pm

Thank you for sharing. It’s great that it works out for everyone. That’s what I envision for our family as well. My dad probably can’t live with us though. He causes a lot of friction so he’ll probably just visit 3-4 weeks/year and that’s it.

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Alan February 26, 2014 at 9:28 pm

My brother recently bought a 10,000 sqft house in the NYC suburbs for his family of 4. Originally I thought I wanted that much space too, but after visiting him a few times it seems like too much house. His kids even said they don’t like playing hide and seek as much because no one can find each other. We’re living in a small apartment in Manhattan right now, but I’m thinking after our kids arrive in a few weeks we’ll likely look for a 5000-6000 sqft house in the burbs. That feels like the ideal size for a family of four with caretakers thrown in.

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Dividend Mantra February 26, 2014 at 10:18 pm

Joe,

Good for you for making family a priority. I couldn’t agree more. What’s the point of money and time if you can’t share it with the people that mean the most to you?

I think 1500 sq. feet is probably perfect. You’re only adding one more person, so a 50% increase in space should be more than enough. Most of that would probably be in the extra bedroom, but you’d also have a little extra space for everyone to stretch out a bit. Now, that’s only if you can find it. You mentioned the difficulty of finding anything under 2,000 sq. feet.

Maybe it’s just me, but I’d stay away from the triplex. Seems great on paper, but that seems like it’s asking for a problem. And I know you haven’t had the best of luck with rentals. If you could go into a nice house for your whole family mortgage free you’re in a really great spot – especially considering the area of the country you’re in with high real estate costs.

Good luck. :)

Best wishes!

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retirebyforty February 27, 2014 at 11:49 am

We saw a 1,350 sq ft place and I thought that could work well. The only problem is that it has only 1 bathroom… That’s not going to work for 4 people. I’m leaning toward a SFH too. Thanks for commenting.

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Diane C February 26, 2014 at 10:33 pm

Hi Joe. Long time no talk. Perhaps we can agree to disagree on some entitlement issues…
However, this topic is my life at the moment. Three weeks after I married my husband, his dad died and we quickly discovered his mom has Alzheimer’s. We sold both of our houses and bought one together. We are four adults, as DH’s son still lives with us while attending college. We bought a larger one-story, single family home in walking distance to DH’s work. If you choose the single family home option, floorplan is crucial. Sure, an open floor plan is nice, until you realize they’re noisier and have less privacy. Everyone needs a place that’s an oasis from everyone else, which is why we’re already planning an addition to this 4+3.5, 2600 sf house. Ugh.
I favor the idea of a triplex for a couple of reasons. One, I assume that your father will follow at some point. Two, it gives you much more financial flexibility. Three, you don’t need to tell your tenant(s) that you are the owner. A friend of mine owned several apartment buildings and everyone thought he was just the property manager. Four, the fact that there are even nice triplexes in your area is cool. Resale value on the other end should be good. Investors are always looking for nice multi-family property. Should you buy the triplex, I’d look into adding insulation to the interior walls for maximim soundproofing between units.
Finally, when mortgage rates rise to say, 7% or more, are you going to kick yourself for not grabbing as much 4.5% money as you could when you had the chance? A mortgage can be looked at as a debt or as a tool for creating wealth. We paid cash for this house because the loan officer pissed us off withtoo many penny-ante nitpicking paperwork requests and a refusal to lock the day I requested it. Two business days later the rates jumped 75 basis points! We have been mortgage free since this house closed in August. Surprisingly, neither one of us feels wonderful about not having a mortgage. We are seriously considering taking out a new first and investing the proceeds in the very near future. We figure if done correctly, the investments will throw off enough to make the mortgage payments and then some.

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retirebyforty February 27, 2014 at 11:53 am

Hi Diane, Hope you and family are doing well.
Thanks for your advice. We’ll pay attention to the floor plan. Although at 1,500 sq ft, it will be compact.
Not telling the tenants is a good idea. I should try that next time. My dad doesn’t plan to move it with us, but who knows…
I’ll think more about the mortgage. Previously I like having a cheap mortgage, but I’m starting to change my mind. The stock market seems high at this point as well so I don’t know if I’d be comfortable adding in a large lump sum. It feels like we’ll get a large correction in the next 1-3 years.

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jane savers @ solving the money puzzle February 27, 2014 at 6:19 am

I believe in the old saying a happy wife a happy life. You have answered your own question in this one sentence “Mrs. RB40 prefers a single family home because she doesn’t want to deal with renters anymore.”

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retirebyforty February 27, 2014 at 11:53 am

And that’s me dealing with renters. If she has to deal with the renters directly, she’ll really be unhappy.

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Little House February 27, 2014 at 6:53 am

I think I’d go with a single family home only for privacy sake and the fact you’d have some outdoor space to stretch into for a little more room. I’m also biased towards smaller homes, so I think 1,500 – 2,000 would work fine for a family of four. Good luck on your search!

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retirebyforty February 27, 2014 at 11:54 am

Thanks! I prefer about 1,500 sq ft too. Not sure if we can find one that size in our area, though.

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Getting burnt out February 27, 2014 at 8:42 am

I would go with a single family home paid off by selling your properties. I recently decided to sell the smallest of my three OC properties because I wanted to take some profit off the table with the run up in housing prices over the last two years. Taking profits on your portfolio of properties may be a good idea. Also, if you can live in a property fully paid off it will give you peace of mind. I am of the mentality that no debt is good debt. While the mortgage tax write off is nice, there are plenty of other tax write offs when you are self employed.

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retirebyforty February 27, 2014 at 11:55 am

Thanks for your comment. It would be quite nice to not have any debt at all.

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Daisy February 27, 2014 at 11:11 am

Have you considered tax implications when you sell your rental properties (i’m sure you have)? I have considered selling mine but when you calculate real estate fees and capital gains tax (including depriciation claimed throughout the years) it gets very expensive. I have considered doing a 1031 exchange – leasing it for two years and then making it my homestead at a future date. Rents in Houston are currently going through the roof and I’m very happy with my current rental cashflow.

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retirebyforty February 27, 2014 at 11:57 am

I thought about the tax implication, but I haven’t calculated it. We’ll try 1031, but we might not be able to do it. It’s complicated with multiple properties and I’m sure our search will take longer than 90 days. I’ll try to calculate it when I do tax… It’s great that you have good cash flow. Our market is tough to cash flow, but usually we can make money with appreciation.

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Erin @ My Alternate Life February 27, 2014 at 1:02 pm

My husband and I look around at real estate here and there, even though we don’t plan on purchasing any time soon. The area we want is near where we are now though, and it’s pretty expensive. Still, I’ll pay more to live in the city and not have to be car-dependent.

Our perfect no-kids size is much less than 1,000 SF. Our current place is a 400 SF studio. Eventually, we’ll upgrade to a 1 bedroom. I don’t need any more space though :)

Excited to see what decision you make for your next home!

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EL February 28, 2014 at 10:31 am

Joe I would say to find someway to get a SFH mortgage free, as the whole purpose of the blog is to have freedom. Having no mortgage can set you up nicely going forward, and if in the future after you saved real $$$, you can always buy again in the next down real estate market. In addition to that you are already getting good income from the blog and dividends which will only speed up the process to reinvest in the future. Let go and really be free my friend.

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Anneli @thefrugalweds February 28, 2014 at 1:25 pm

We’re currently just above 900 sq ft with the mister and I. That’s perfect for us. When we finally get to having kids, it might just be a little too cramped – although I think anything above 1,200 would probably suffice.

We’ve toyed around with the idea of purchasing a multi-family unit and occupying one of the units (renting out the others) We’ll keep tabs on what you guys end up doing. Best of luck!

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Tushar @ Everything Finance March 1, 2014 at 7:59 am

I think it’s great that you’ll have some help and it’s such a good setup for both your family and your mom. It does sound like you need more space but it also sounds like you have a good grasp on what you need. Good luck.

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Laurie March 11, 2014 at 11:25 am

We have lived in our 4-unit building for 6 years now and I’m going nuts. I recognize the financial value but I am so tired of hearing tenants clunk around upstairs and the lack of space niw that we have 2 kids. Pros: fantastic walkable neighborhood, nice little yard with garden, tons of stuff for kids and nanny.
Cons: tired of hearing tenants, need more space for 3 and 5 yr olds to run around. The noise really gets to me and this isn’t as noticeable when we’re visiting larger homes.
We are hoping to buy next year but I sure will miss this hood…

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retirebyforty March 12, 2014 at 10:07 am

Thanks for your input. I’ll tell Mrs. RB40 about your experience. I suspect we’d go a little nuts too unless we find the ideal tenant that’s never there. A workaholic engineer would be a great tenant.

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