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Money Pit

Richard Quinn

ON JUNE 6, 2018, we closed on our new condo in a 55-plus community. The time had come to avoid the stairs in our three-story house. Moving after more than 40 years was quite a transition. Still, condo living is great—so much less house stuff to do or worry about. Eventually, our monthly expenses will be greatly reduced.

Notice I haven’t mentioned selling our house. That’s because we haven’t. The thought of cleaning out a house, closing on the sale and moving within a few days was beyond comprehension, so we did what any pair of sensible 75- and 79-year-olds would do. We took out a $600,000 mortgage to buy the condo, which we’d pay off when the house was sold a few months later.

That few months is now close to one year—and the wait could go on for months, if not longer. What the heck was I thinking? This reminds me of 1987, when I bought a beach house four months before the oldest of our four children started college.

Given my confidence that the condo mortgage would only last a few months, I put down just 10%, thus incurring both the cost of mortgage insurance and a higher interest rate. That proved to be a questionable strategy. The “good news” is, our 2018 itemized deductions exceeded the $24,000 standard deduction and we got a whopping tax refund—in return for losing $13,000 to mortgage interest.

For almost 12 months, I’ve been paying property taxes, insurance and utilities on two residences, plus the beach house. I was smart enough to cancel one cable service, though. Did I mention the monthly condo homeowners’ association fee?

It seems we’re paying a high price for our questionable stress-reduction strategy—which lately hasn’t been so good for my stress level. I now marvel at the apparent efficiency of others. A woman moved into our new condo building a few months after we did. She’s fully settled in and has yet to place a single item in the two large storage units that come with each condo. Ours are bulging at the seams, with more stuff to come.

I pride myself on being fiscally conservative, logical and practical, covering all the bases when it comes to money. But as you can see, there are exceptions. Downsizing? You might want to consider a different strategy from ours.

Richard Quinn blogs at QuinnsCommentary.com. Before retiring in 2010, Dick was a compensation and benefits executive. His previous articles include Crying PovertyShortsighted and Farewell Money. Follow Dick on Twitter @QuinnsComments.

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parkslope
parkslope
2 years ago

My wife and I are facing a similar dilemma. We just purchased a home in NC and our plans to sell our Brooklyn brownstone are up in the air because nothing in our neighborhood in our price range is selling. The rental market remains in good shape (at least for now), so we may go that route for the next year or two.
Sorry to hear about your wife’s accident and hope that her recovery goes well.

CraftsmanCT
CraftsmanCT
2 years ago

Sending best wishes for your wife’s recovery. We have a house in CT and a condo in Palm Beach County, FL. Our plan had been to sell our house in CT and move permanently to the FL condo as soon as we returned from winter in Fl this year. On our drive back in April we had serious concerns, mostly emotional and sentimental, about selling our house. We decided to keep it for probably no more than five more years, although the carrying costs (real estate taxes primarily) run about 17,000+ annually. I ran the numbers and reviewed them with my financial advisor and we should be able to keep the two places without much financial difficulty, but we will be to be careful. But this means that for personal reasons, we are giving up the monetary value of the annual carrying costs on the house – that could have been spent on something else. But weighing all factors, we are satisfied with our decision, even though to many it might not make basic financial sense. It means we will very likely not be able to do as much traveling as we had hoped, etc., but the tradeoff is worth it to us. The saving grace is that we were able to buy our (modest) condo for a very reasonable amount from an estate, and paid cash. $600,000 can get you a lovely condo in most places in Florida, within 5-10 miles of the beach, which is a much safer distance from the coast in the event of hurricane surge; ours cost considerably less than that (2 beds, 2 baths, W/D and balcony). I think the trick is to have a nice place to live in retirement, yet not necessarily in the style to which we may have been accustomed. Another think is to run a worst-case scenario before making any big financial decision, especially those involving real estate. Real estate involves one factor that can’t easily be valued: the psychic benefit the owners receive from it.

William V. Yount
William V. Yount
2 years ago

We plan to uncouple the sale from the buy and become opportunistic renters and possibly later cash buyers of a half sized downsize.

Mik Barbasol
Mik Barbasol
2 years ago

I wish your wife a speedy recovery. Tagging onto your real estate story…I wonder how long homeowners will be able to afford the ever escalating property taxes much less the actual house and maintenance…to be sure, some people will lose their homes because they can no longer afford both.

Dwayne73
Dwayne73
2 years ago

I know that this sounds counterintuitive, but I learned this dealing with my mom’s estate. Get rid of the pride and lower that sale price. You could have already lowered it by the cost of maintaining the empty house for a year and still made out ahead if it sold. If it takes another year you will lose that much more money again. Think of the net profit if and when you sells the house after all the expenses and not the getting the list price. At the end, the list price will not replace all that you spent the longer that you have the empty house.

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