Looking for guidance (retirement related)

Wondering how many others have considered/done this and what ya'll have learned. Wife and I are mid 40's, and starting to consider and plan for where we would like to retire. We don't have kids, and being close to any family is not important to us. So here's the situation;

We have spent the last several years looking at and scouting places we think we would like to spend our retirement years, or at least use as a home base (we like to travel). We definitely know that place is not where we are currently making our living. We have found an area (not specific town, but specific region) we like, and are considering purchasing land with the intent to build a home on that land later on.

The thinking is we can purchase the land (depending on what we find, either cash outright or pay off in a few years) and save cash to build the house (or at keast 75% of it) without affecting our current retirement saving contributions/strategies. AND wind up where we want to be before developers own and subdivide everything. We are obviously looking to be outside city limits or on the edge, with some space between ourselves and neighbors as well as HOA-free if at all possible (becoming increasingly more difficult - thanks again, Karen!)

Anyone successfully do this? Or catastrophically fail at it? What did you learn, would you do different, or the same? Trying to make sure we're not missing anything.

 

I've contemplated this as well, housing prices are insane right now especially in Texas and about to get much worse...I'm just in the beginning stages of the process and don't have any advice to offer, but I'm in a similar situation

 

Land-ception... but a chunk in an area where you’re afraid that developers will infiltrate. But another piece of land in an undisturbed area. Build your homestead on the second piece of land. When the developers come knocking on your first property, run it off in them when they try to buy it. Pay off homestead with developer blood money. Win.

 

wife and i are in our mid 30's now and bought some land about 5 miles outside city limits of a smaller town. we were able to find a lot in a subdivision with no HOA that's a lil over 2.5 acres. landed the land for a lot cheaper since it's on the outside of town. now people are seeing the appeal and land has almost doubled (we bought our 2.59 acre piece for 29,800. last I seen/heard the same exact size lot appraised for 55k I think. I mention this to show how price changed dramatically in just 5 years due to demand/want) . luckily, most of our neighbors are like us and don't desire the fancy HOA life. If we did it, it'd be strictly to help keep up a sign up front and enforce people not building crap homes or trailers being dropped and lowering the value of our homes. we searched for a while and landed this. we are in the process of trying to find some more land at a cheaper rate in hopes to sit on it and develop to sell and/or to build a smaller home on in the future when our kids are grown and move out. it's possible man, but you have to search high and low. i'd say to find the small towns that are near the larger ones, but on the outskirts as well like we did. get in touch with a realtor to help find those too if you'd like. hopefully you find what you're looking for. we're looking to do the same as what you're mentioning. as of now, we're planning to retire close to 55 or 60, but times can change all that quickly. hope this helps a lil bit. any questions, let me know. never know if i could help any more

 

That's the other piece... land/home prices are high now everywhere in TX thanks to, uh, certain things that would get me banned to discuss. The concern is 1) the run on property continues and we wind up totally priced out of where we want to be, or 2) the bubble bursts and TX becomes like AZ was a decade ago when housing prices bottomed out leaving tons of people way upside down.

At least if #1 happens, we'll likely be priced out on home/tax values anyway, but could make some $ selling the land. We'd just have to retire in Oklahoma or something instead. lol

If #2 happens, at least we have land and maybe build prices would be less - or we could buy something else and sit on the land to sell later.

Either way, I can't see a benefit to waiting on a land purchase. Although I suppose it's always possible we change our mind 10 years from now. I just can't help thinking there could be something I'm missing that might trip me up (outside of major life-altering events that cannot be known or controlled).

Glad to see I'm not the only one thinking ahead!

 

so between talking with our financial advisor starting about 15 years ago and realtors....one thing is almost certain: taxes won't go down and neither will the price of land. it's one of those things where you bite the bullet and purchase now to save yourself grief from seeing what you could have saved haha. it's proven itself in both circumstances for us in SW Louisiana. and honestly, if you haven't already, something talking with a financial advisor can help you make some decisions. we're pretty good with money in terms of what we spend it on, value holding, etc. but talking with one helped us a bit. prob the only thing we do that they don't agree with is planning to pay off our house early. they believe in refinancing over and over. i see their reasoning, but i have different plans and intentions in terms of that.

 

I retired and moved from Ca to Ga. I absolutely love my property. I love being in the south. What I learned about GA where I live is the cost of living is only lower in the housing and gas markets. Food, utilities, insurance, service, everyday living expenses was no cheaper than San Diego. There is mass exodus from blue states into less taxed and less regulated states driving the housing prices up like crazy. Health care access is super important and the cost will effect your retirement location. Other consideration are: state income tax, property taxes, how often do they assess value? Tennessee for example, no state tax, low property taxes and only assess every 4-6 years. Second Amendment friendly I live in an uber second amendment friendly state coming from a communist nanny state, liberty and freedom taste good. What I would do over? If I could have found similar size, style acreage that was not super rural meaning an hour drive to civilization each way we would have gone to Tennessee. Good luck.

 

This is what I'm really looking for as well... getting out of the city... The wife is very stubborn, because of her eldest... he does require some kind of lifetime training and may require some city dwelling, but I do feel that in a place out of the city, we can gainfully employ him in other subjects and keep him active instead of keeping him on a short leash in the city due to excessive traffic....

 

My compadre grew up in the south but lived much of his working life in the San Diego area. He made a lot more money than I ever did but he spent heavily and raised a family ~ all things I didn't do.
When he retired he moved to South Carolina ~ back home for him. His son followed him after he was settled in Greenville, SC. It made a lot of sense to him because he could free up a lot of equity in his home and buy a nice spread in SC and still have money left over. The political climate here in California didn't play well for my compadre, either.
Me? I don't have the option of moving back home ~ I'm living less than a mile from the hospital where I was born.
I like SoCal since it's all I've ever known and it's my hometown ~ but there's a lot to be said for a less hectic and less expensive part of the world to call home.

 

We love Coronado!

 

Buy land now. Prices will only go up. They are not making any more. My brother just bought a place just outside of Burnet. Hill Country land is getting ridiculous.

 

One of my wife's coworkers has some land around Lake Buchanan. They had the same plan. Recently they started talking to builders and found they grossly underestimated building cost!

Our friends are in the process of buying some land out by Fredericksburg. We've been thinking about where want to be for a few years now. We've waffled back and forth from buying a cheap fixer upper (basically to get lot, water, sewer, electric hookuos for cheap), to building new, from being in town to country and everything in between.

I think the hardest part is considering how much or how little I'll be able to maintain as we get older - or the likely reality she will outlive me and it'll be on her. So my dream of buying 1000 acres and building in the dead center of it to be as far away from neighbors as I can get likely won't happen. lol

 

A slight devil’s advocate with part of the idea. If you’re 10 years out, things can change a lot in that timeframe, stuff happens, plans likely get adjusted. Yes, land cost goes up over time, but there is some carrying cost, mainly taxes.

I’ve moved around a fair bit, usually rented to get a feel for things before buying. I’ve owned houses for as short as 1.5 & 2.5 years. I did come out ahead since it was the lowest cost house in a nice, & growing area.

With no kids, fewer ties, still a bit with friends & familiarity. I’ve known about 5 relatives move south with retirement then come back north after a few years.

I’m(we) are 7 or so years away, have some ideas in mind. First off, here isn’t bad, one can still bug out as needed. My serious plans include the better parts of SD & areas of the FL panhandle.

 

Wife refuses to go back to 6 month winters, ice, snow, and cold, so we'll be staying somewhere coastal south (but far enough inland hurricanes won't be a big concern). She doesn't mind visiting the desert SW, but thinks she'd get tired of the scenery (lack of trees, grass, etc...).

Good call on carrying costs/taxes/maintenance.

 

Like has been said previously in the other posts, if you can afford to buy the land now, buy it. It will never be cheaper than it is right now. When you come closer to the time to build and it appears that the neighborhood may have possibly gone to hell (think mobile homes, hog lots, junk cars, etc.) you can always still sell, and with the proceeds, go buy in a more suitable location. You are in the drivers seat now. The land is nowhere near as expensive as the house that will eventually sit on the lot

 

I’m not suggesting you move from TX to WI or MI. I may just wander some myself, depending on how one does it, can cost $$.

If one has 10 or so years to go, I think it’s great to explore, save $$, & visit potential locations. What’s right for one, may not work for another.

With no kids in school & no job, it’s easier to change state residency. One just has to pick one for a driver’s license, voting & most mail.

 

I can relate to this. I’m 56 and the wife and I have been taking more trips down to the Carolinas and Georgia area. She loves the beach I love the mountains and I need a 2nd amendment friendly state. I’m also getting the shits of the snow here in Pa. Love to see it but my back complains more and more every year. Looking to hearing everyone’s opinion about this, great topic.

 

We were looking in neighboring Llano and San Saba county for land. We have some good friends just west of Burnet and the neighbor put up his house sale. Perfect for us, but the man was wanting California prices. Even our friends said that he will not sell it. It has now been up for sale for over a year. Land is becoming expensive out here. I agree with you.

 

Not true in the Texas Hill Country if you have acreage. Brothers place was about $1.25m. 4000+ sf house with pool and hot tub. Land value is $800k

 

Buy land they're not making it anymore. Mark Twain.

If you find a deal now jump on it. My wife and I bought a small cabin on 4.5 acres for a weekend getaway. 4 years later a neighbor offered to buy it and we sold it for 30k more than what we paid. Where else can you put money and get that return? Currently shopping for another getaway.

 

I think this is a tough call because it's hard to know what the real estate market is going to do, and real estate in some areas will be affected differently than others. I know in my area there has been a big buying spree creating a lot of demand and a lack of supply. In the past it was short-lived and there was a big sell-off, but prices were still pretty high because some people were just patient.
Generally, I would lean towards buying because land is usually always an investment. There are highs and lows for housing but usually not on land and or not very dramatic. I doubt that the land you're describing would see any loss in value, and in the end, it's what kind of value you get out of it or expect to get out of it in the future.
As far as weighing the costs and considering you're financial situation; now is a great time to finance. Interest rates are low and staying there for a bit. The market is a risk; as always, and there is some expected cooling coming up, plus the market usually dips early in the year. However; returns in a conservative market should still be equal to or higher than interest rates on a lot loan. Lot loans are restrictive in you only have a few years before you have to start building and roll it into a construction loan.
The other option would be to use equity in your existing house. If it's paid off I would do a cashout refinance and use that to pay for the lot. That should be a pretty low rate and gives you the most options as far as payment plans.
Or if you have a mortgage, possibly refinance your existing mortgage and take out more equity for the lot or use a HELOC to finance. Keep your cash working towards your long-term goals.

That's my long-winded nickel worth of advice. Hope it's helpful.

 

I hadn't considered refinancing our current mortgage to tap into our equity. That is definitely an option to think about and keeps our current savings/investments untouched. We got into this house at pretty much the bottom of the market (in this area) 9 years ago - current value is over double what we have left on the mortgage.

Originally I figured we'd just sell this house when we're ready to move and put that $ back into the new house - and we could still do that. We'll most likely have decent equity again when the construction starts. This would just give us some of that equity up front.

 

You could stay in your current house during construction so you aren’t trying to rent and then having to deal with a lease and changing terms when construction takes longer.
The biggest benefit is that construction loans are a pain in the a$$ to deal with. With construction loans the money is Held’s by the title company. Every bill from the contractor has to go to them to get reviewed and approved and then a payment is cut.

When I did my remodel/addition 2 years ago/last year we did a cash out refinance using our existing equity put that money in a short-term bond fund earning interest and pulled money as needed for payments. Earned a little bit to offset our interest rate. I think our real rate over the term of construction factoring in what we earned over that time was below 1%. Then we got lucky with the market diving and refinanced again with a much lower loan-to-value and higher priced appraisal. But I don’t think you would need to worry about that since you’re looking to sell and current rates are so low you can’t really do much better.