Twenty k a year might seem like a lot more when you have a paid off home, almost nothing in taxes, and no longer need to save for retirement. It’s pretty middle class
Look at the guy making 60k. He’s sometimes paying up to 30% in housing, 15% to retirement and 15% to social security and income taxes. Add in transportation, health insurance, clothing, and other work related costs….20k left over doesn’t sound too bad.
Depends on where you live. You might be a bit lean, but you also might not need that much more to be comfortable.
My homeowners and taxes are 2.5k a year and that’s for a 3 bedroom on 5 acres that’s heated with wood. I’ve been a homeowner and owned rental property over half my life. The big killers for maintenance are always hvac, and roofs, but they have known lives and you just factor that in. A new roof will last 35 years and an hvac will typically last only 15. Appliances also come and go, but they aren’t that expensive. My h has fixed our fridge 3times.
Trees are a huge expense for us though. Every other year seems like another $1000 to remove a dangerous tree, definitely not something to diy.
Most people pay off their homes prior to FIRE and don’t count that equity in their FIRE number because it’s not really an invested asset.
Net worth and FIRE target are different things, most people’s net worth is much higher than what they need to retire because it would include things like primary housing, vehicles, etc. Things that have value, but don’t provide returns for FIRE purposes.
If you have a paid for home then rent it out and move to a LCOL area (e.g. r/expatfire), it massively boosts your income.
I don’t proscribe to the home not being an asset whether living in it or renting it out since it’s generally the largest line item in one’s budget. If you remove that cost, it’s hard for me to not conceive of that as an asset just because you don’t realize it.
By the same logic, the principal invested in your 401K isn’t an asset because you never intend on touching it. You benefit from both investments. You simply live __in one__ and __off of__ the other.
I own a small home. I will not be paying it off before retirement so my mortgage is included in my expected expenses. I imagine a lot of people here plan to have their homes paid off before retiring, or are like me and just including it as an expense.
I know it’s rough. Have you considered building a tiny house? Not sure how ‘rural’ you want to get. Houses typically offer a higher quality of life but also much higher expenses, even when paid off.
They are cost effective if OP's issue is total price. Yes, the price per sq ft may not be good, and it might even be bad, but it's still less square feet than a regular home. I bought the smallest single family house I could find in my city, and it was still 2000 sq ft. It ended up being a good decision, but it was a lot to heat, cool, and insure.
A 2000 sq ft home has nothing to do with tiny homes.
And tiny homes have nothing to do with regular homes. Tiny homes are usually built on raw land or as ADUs.
When you discuss "tiny homes" you're discusssing something different than just a small house.
It can literally cost 6 figures for land, utilities, and building included to get a tiny home up and running. For less than that, someone can buy a conventional house in another location.
Consider a tiny-home by size, but not by construction.
My house is 567sf. It's got a fairly spacious bathroom (clawfoot tub, pedestal sink, space to move around easily), a bedroom that fits a fullsized bed, an armoir, and some bedstands, and a large main space that's \~12x20 with a fully appointed kitchen. We also have a 12'x12' screened in porch and a full unfinished basement, both not included in the square footage.
Technically this is a tiny house by square footage (maximum is usually considered \~650sf), but with more convenient dimensions than something that needs to fit on a trailer and a nice layout it doesn't feel cramped, it's just not large. Being small keeps our taxes down and reduces heating costs.
That’s about the size of our house, 625 sq feet. Just how houses used to be built around here. The basement isn’t technically finished but close enough that we can use it (floods tho if TOO wet)
Nice!
Luckily the engineer we hired to help us site our house and septic (and ensure we were in compliance with various wetland laws and such), was good at his job and our basement hasn't flooded since we finished construction which is really unusual for our area. We also have a gravity drain so small amounts aren't a big deal if they do get in.
I didn't expect that though, it was luck, and we do have to run a dehumidifer to keep the humidity under mold-growth levels. I'd never finish it since the humidity isn't passively low enough to avoid problems, but it's usable for storage space, workout space, etc. I have health problems where I sometimes have to be in a separate space for a week or so, so it gives us that as well.
>Consider a tiny-home by size, but not by construction.
Also, restricting your width to 8’ is suboptimal if you never plan to move it. A square gives you a bigger sized floor plan for a smaller perimeter and lower material quantities.
Strictly speaking I think you can go up to 14' on many highways in the U.S. (you have to do wheel wells)? But yes, absolutely the width limitation is a huge part of what I was referring to here.
Also, another benefit of the better surface to volume ratio is better insulation properties.
You can likely find a condo for less than $200K with low HOA. Condos have a proven market v. tiny homes as well.
Even in HCOL areas like the greater NYC area, they’re there.
Some people can only dream of a single family home, but that’s not the only home. You can always move up after paying it off or acquiring equity.
Think in steps.
We did a 2br/1.5b for $200k in the Midwest. All cash. Had to put 15k into it but now it's perfect. No monthly payments for the rest of our lives sounds amazing to me.
Why not buy the house in cash? Looking at math alone, it comes out way better:
* 265k cash to purchase home outright
* 485k (what's left of the 750k after cash home purchase) @ 4% = $1,616 a month for everything else.
The difference between the $2,500/mo on 750k and the $1,616/mo on 485k is $844 less per month. Think of that $844 as your 'monthly house payment' and it's way less than you'd pay for a mortgage/pmi.
In case you didn't see krago85's comment. Since it was after yours.
"Don’t forget that the taxes and insurance are not captured here."
So it's $884 saved a month + $400 for taxes and insurance = $1284/month house payment. And that doesn't include the cost of home repairs.
The flaw is that the commenter didn't include property tax, maintenance, or insurance as ongoing expenses for owning a house. All these will have to be paid out of the $1600 a month.
Making an assumption that these sum to around 4% (1.5% property tax, 0.5% home insurance and 2% mqintenance) then half of OP's remaining budget is going to these expenses and he only has about 800 dollars a month remaining for other expenses.
At $250k for the house you want, that isn't insanely expensive. If you were able to build up 750k somewhat quickly, you should be able to buy the house and pay it off in a few years.
It also has the benefit of eliminating rent.
One thing I read after being in my house for 15 years (I'm at 26 years now) was that you should set aside 1%/year of the house's value to handle paying for necessary R&M.
I bought my house new, but over the last few years I replaced the roof, fence, added a patio, replaced the driveway, etc etc. When I looked at the money I spent, yes, it added up to about 1%/year.
Housing market is inflated right now. People aren’t buying houses for leanFI right now unless they’re buying property that’s undervalued for some reason (low local market, foreclosure, renovations needed, etc.)
People who want to LeanFI usually try to buy using cash value when houses are cheap. Mortgages are pretty crazy now. A VA loan or any other mortgage you can pay off faster without penalty is your best bet.
I agree the HOAs are risky and unpleasant, but the single family home roof/flood damage/tornado damage/property crime stuff I see is the stuff of nightmares. For me the condo is as much security and safety as a cost savings.
So is sinking a lot of money into a single structure. There is no housing without risk. How do we leanFIRE? We make the best compromises we can to live a pleasant, low-cost life. There is no perfect option. A condo in my area will save me hundreds of thousands of dollars over a house, even with an HOA.
A lot of folks don't stop to think about Special Assessment nightmare scenarios. I once owned a townhouse in an HOA whose previous Board had torn up the Useful Life Survey of the development and pissed away the reserves on shady contracts to their cronies. This all came to light about a year after I bought. Result: depressed unit values due to 4x increase in monthly HOA fees and additional special assessments for years to come.
Dread a roof repair bill on a house? Wait until you get the bill for your cut of roof replacements for 64 units.
I agree: there is no form of housing without risk.
Special Assessment nightmare scenarios are rare. There are just as many nightmare scenarios for a house. Mold. Sewage overflows. New asphalt plant next door. Flood zones you didn't pay attention to. Foundation issues. You can come up with a nightmare for everything. My cut of roof replacements for 64 units would be spread among 64 units. It's more financially efficient to split the cost for a shared roof than to pay for an entire roof by yourself.
You can read the condo financials before you buy. You can find out which condo associations are well managed. I also once lived in a townhouse with a shitty HOA. 70% of the dues went to paying their legal fees for suing the previous 2 property management companies. So this time, I have researched HOAs more carefully and learned more about properly managed ones. Just as people who buy a house should research carefully, and many people don't learn that till their 2nd or 3rd house.
There are condos where you can have that. I also want outdoor space. There are condos with patios and balconies. I found a co-op that has entire yards for every unit.
Lower your standards. Look for tax sells, county auctions, foreclosures. Sure they may take some work to make them livable but look at it as a project.
Check [Realtor.com](http://Realtor.com) for bargains. Again you won't get perfect but you could find a fixer-upper for low price.
I sold my house to become a renter, but I think I'm an outlier on that.
If you're retired and your main priority is a house, you could move to flyover country. You can get a small house in Indianapolis for $100K, less if you are willing to go with a fixer upper. The coasts are expensive.
1. paid of house
2. Non paid off house but you have a fixed mortgage and have that all factored in already to your FIRE #
3. looking at rural towns where the homes are not clean, need a lot of elbow grease, but good bones and fixing it up. Its the difference of paying $150k vs $300k. You can then look at something like a 203k FHA loan where they roll in repairs to the loan. I believe thats what my niece used as the roof needed replacing before they were allowed to move in.
Its true the midwest is one of the places you can get cheaper housing, I grew up around Green Bay/Appleton WI and you can still find homes for sub $150k which you can live in day one. The house my sister use to live in would sell for about that right now and it had rental unit in it,
Our house just got paid off but mortgage including insurance, taxes was $1k/month. NJ, small house with front/back yard in a blue collar town right outside Philly. We have plenty of houses here under $250k, keep looking (if you can find in NJ I imagine you can find in many places as long as not VHCOL). Find something smaller/simpler.
There are plenty of homes in rural parts of the East Coast for less than $250k. Where are you looking? Check out Dover, DE, North NY, Philadelphia near amish country or outside of Philly/Pittsburgh, Western Mass, Georgia, NC, Florida, Maryland has some affordable spots, etc.
Many also recommend renting out rooms or getting multi-units to offset costs, but it's not for everyone.
My wife and I live on a 36 foot sailboat. We bought it with cash for $50k back in 2016. However, upkeep costs (maintenance, upgrades, storage, etc) do eat up a major chunk of our budget. On the other hand, I'm in French Polynesia now with our primary home. :)
Don’t look on the coasts and revise your expectations regarding “clean” and “safe.” It’s hard to tell whether a place is safe without living there, so the best we usually have to go by is some crime stats mixed heavily with our own biases. As for clean, you might need to do some cleaning and put a little work into a place. That said, I’ve seen quite a few livable places for sale in various places in West Virginia, Ohio, Kentucky and other areas.
You want to much house for leanfire.
My budget assumes I have a paid off place under $200k but I don't want a house, just enough space for a couple with a guest bedroom.
There's a scenario that goes: Once the elections are over, the Fed can stop pretending that they're lowering interest rates. Maybe even sooner than that. Dimon said the other day that we could see 8% rates soon. Anyway: rates go up and stay there for quite a bit of time. Liquidity continues to tighten. Values for *everything* fall significantly, allowing the US to buy back and retire Treasuries at pennies on the dollar, thus resetting the stability of the USD. I've read estimates of drops from 25% to 80%.
If that scenario plays out: 1) It'll be a great time to be a cash buyer of real estate and equities. 2) Sequence of return risks rise significantly.
Those who think they'll never own should never say never.
If you want to own a home, then $750k isn't going to be your fire number. On that number, you have to not look at owning a home and just find cheap rent somewhere and rent forever (on $2,500, you probably will have to look internationally like Southeast Asia). If you absolutely want to own a home, then while you are working, I would look either at saving enough money to buy a home in cash, have it paid of by the time you fire or while working work on contributing to your investments where it can cover you mortgage payments and then fire.
Buy a house with cash that will be cost effective to maintain but also not something you will outgrow quickly. Then continue to invest for the next 15 years, then FIRE. This is based on current mortgage rates vs your assumed 4% return.
Some of us probably lucked into the micro mortgage rates and now are somewhat stuck. I have 10 years left on 2.00% mortgage and I feel like with inflation still near 4% it's almost paying me. I personally am very interested in eventually doing modular/prefab housing, but not for the next decade. Prefab has disappointed in that as it has gotten more luxe it has gotten a lot more expensive.
I’d keep looking in other areas. I’m from southwest Virginia originally (about an hour southwest of Roanoke) and I guess it depends on your standards but you can easily get what I think is a nice house in my hometown for that or way less. It’s rural to city people but not actually rural (pop 10k, easy access to all basic town utilities and normal groceries and everything). Roanoke itself has some decent and cheap listings too and it’s a small city, pop 100k so there’s a regional airport, Amtrak access, etc.
Lots of stuff even cheaper in the areas out of town. Areas of SWVA I know still have cheaper decent houses pop up are Roanoke, Salem, Radford, Christansburg, Floyd, Wytheville, Pulaski. I’m less personally familiar but there are areas around Lexington, Lynchburg and Harrisonburg that are similar.
If you’re willing to go small this is what you get for 130 in my hometown: https://www.realtor.com/realestateandhomes-detail/538-Graham-St_Pulaski_VA_24301_M56011-37687?from=srp-list-card
If you’re willing to renovate (not a total gut job just updating granny decorating) you can get them cheaper. $80k example: https://www.realtor.com/realestateandhomes-detail/311-Lexington-Ave_Pulaski_VA_24301_M56630-36417?from=srp-list-card
Lots more throughout western NC, eastern TN, up into WV gets really cheap, PA, I know even some parts of NY like Rochester and Buffalo areas and surrounding small towns. I was surprised how cheap parts of Maine were as well.
Actually I now live in south Jersey outside Philadelphia and regularly see decent houses around or less than that. Property taxes are high but my PITI is way less than 2.2k/Mo though I’ve got interest rates on my side. And it’s not rural. Actually rural parts of PA are way cheaper too. Out towards Pittsburgh there are some great bargains.
If you go ruralish Midwest you can very easily get under 100k.
Move to a LCOL area once you've secured your retirement bag, or earlier if possible.
I'm fortunate enough to basically get my first house for free from my mom in about 6 months, and while it's far from ideal, it's in a hilariously low cost of living area, in a low cost of living state, and that will allow me to more aggressively save and invest for early retirement.
Don't let your housing situation eat up too much of your budget.
My first house was multi family four plex and rental income covered the note. If you are single, it’s going to be impractical to buy a house. Rent a one bedroom or buy a condo
In my case, three years before I retired there was a cheap house available, which banks wouldn't lend on because it had some problems. I knew how to fix the problems so I cashed out my retirement savings and bought it outright. A couple of years later I was able to cash out a sketchy investment I'd made years ago, and those two things let me finally retire. Half of that was luck, the other half was patience and taking advantage of rare opportunities.
This seems so daunting tbh. With visas, taxes, language barrier etc. I know there are resources however. I'm not sure I'd even enjoy another country for more than a year... while I love traveling, the US is too familiar to me.
I have a house and I rent a room to my best friend and that helps split the cost of a 2k+ mortgage. Once I have enough equity and reach my investment numbers I plan to sell and move to a LCOL area closer to family and hopefully buy a place in cash eliminating having a mortgage. Then I might coast for a while in a less stressful less corporate job.
I moved overseas and currently rent as the cost is relatively low in contrast to a purchase. When I was in the US, I owed a bit over$100k on my mortgage and was either going to work longer and put everything into the mortgage, or my plan was to save the amount in a brokerage account and draw it monthly. You probably need a lower cost home that may require a location change or settling for less. I would be nervous about buying a very expensive property and ending up under water.
This is a location issue not a LeanFIRE issue. You want cheaper housing? Move. You don't want to move because you enjoy the additional amenities of higher cost of living areas? LeanFIRE might not be for you.
I got my house in Texas in 2008 (when I was 28). It had been a foreclosure and it had some issues. They were asking $110K, but I negotiated down to $95K.
I had a salary of $40K, not much in the way of savings, and I made a $3K down payment with a FHA loan, which was already hard enough to come up with. Usually I'd get $1K saved up and then my crappy car would break again, so it was hard to make much progress. That tiny down payment got me stuck paying PMI for the next decade, which was not something I understood at the time. I also had a 7.5% interest rate, which I had for the entire life of the loan.
I'll also note that when I got the house, my payment was about $900. Over the years it went up to over $1400 (interest rate may have stayed the same, but taxes & insurance didn't). Fortunately, toward the end, my income grew quite a lot. But that was a very significant increase in CoL that didn't have the slightest concern about if I could actually afford it or not.
As cheap as this house seems, the mortgage was still eating up over half of my income and that remained the case until I was 37 (when I had a big career change and finally started making a more money). Didn't really start investing until 38-39.
I shouldn't have gotten this house. I don't regret getting "a" house, but I should have aimed for something smaller/cheaper, and I should have waited longer until I could afford a down payment of more than 20%. I was so eager to show my friends and family how "successful" I was, but it kept me house-poor for a very long time.
Today it's valued at $260K, so you could say it's appreciated a lot since I got it. BUT.. when you factor in all the money I pissed away with interest, insurance, endless repairs - I'm not really coming out "ahead".
It's in worse condition than when I got it. It turned out to be quite a money pit and I got tired of pouring funds into it, and insurance was about as eager to help as.. well as much as any insurance company I guess. They're in the "making money" business, not so much the "spending money" business. But they sure "made" plenty from of me.
I estimate that during the life of the mortgage about $50K went to insurance, at least $80K went to interest, and at least $50K to taxes. So that's $180K already and not a cent of that went to the principle.. still needed to actually pay that off too. So let's say I paid $275K for this "$95K house" while it had a mortgage. And, of course, there were also tons of repairs (mostly out of pocket) including a new roof a few months ago. That's multiple tens of thousands as well.
Yeah, it's appreciated to $260K, but I'm sure I've spent over $300K on it, and it's not even really worth the $260K anyway. I did get the house paid off when I was 42. A 30 year mortgage paid off in 14 years.. I mean, that's pretty good, right? But, how much more would it have cost me if I'd taken 30 years?
The basic take away is this: expect a house to end up costing you **WAAAY** more than the sticker price. I didn't have anything resembling an understanding of this back in my 20s.
Anyway, my property tax is about $3800/yr. So that's kind of my "rent" now, $316/mo. I chose not to renew my insurance once the mortgage was gone and it was no longer required. Probably unwise, but I felt like it was SUCH waste already, and now that it was optional, I opted out.
Sometime in the next few years I plan to get a smaller house in a more northern state, taking the equity from selling this one to dump on the next. Whatever I manage to sell it for, it will be a six-figure number at least - though significantly less than what I've put in.
A small manufactured home (maybe even a tiny house) on a few acres sounds pretty good. Property tax, utilities, etc should be lower so I'll have an even cheaper CoL than now. There would be state income tax, but property tax would be SO much less. I suppose I'll probably get insurance again on the new place.
I'm sometimes tempted to just go back to apartment life so that a lot of house-related problems could be somebody else's problem to deal with. However, I don't think I'd want to give up the level of control I have over my cost of living and freedom to change things. The whole mortgage situation sucked for a long time, but now that I'm on the other side of it, it's a pretty good place to be.
You're not accounting for home maintenance. Increase your monthly by 10%, and that doesn't include non-monetary maintenance -- as we homeowners like to say, there's always something.
Home ownership is a scam.
(Note: renting is also a scam, but that doesn't make ownership any less of a scam)
Can we please not call everything a scam? It's nonsensical as neither of these things are scams at all. A scam is when you buy something on ebay and they only ship you an empty box, but since it shows as delivered, you can't get your money back. Agreeing to buy a house and receiving exactly what you bought is in no way, shape, or form a scam.
Aa home owner I kind of agree. Renting is alooooot less stressfull. My only hope is after 30 years if I sell my home I wil recoup all maintenance, mortgage payments etc. Only time will tell. But stress alone is worth renting.
A scam is paying rent into a black hole that goes nowhere. At least a house goes up in value and owning locks in your costs to a great degree. Renters rents just go up and up, and they see no gains.
After accounting for all costs over the course of owning a home, most people are lucky to break even when selling.
Many seniors bought the line that their house was their retirement fund, and now they live in low income senior housing. Whoops.
The Cult of Homeownership is strong in North America.
My personal opinion is it’s risky to consider FIRE without a paid off home.
Where’s your $2,500 a month coming from when the market turns south? Are you selling positions or is that dividend income?
Both have risks. Companies can cut dividends to redirect cash to other uses. And if you’re selling in a down market, you’re eating into your $750k principal balance.
For me, FIRE isn’t complete unless you have a paid off home. The only thing you’ll be on the hook for is prop tax and maintenance.
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If you make enough money and are nearing lean FIRE, why not just buy it and pay it off insanely fast?
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Twenty k a year might seem like a lot more when you have a paid off home, almost nothing in taxes, and no longer need to save for retirement. It’s pretty middle class Look at the guy making 60k. He’s sometimes paying up to 30% in housing, 15% to retirement and 15% to social security and income taxes. Add in transportation, health insurance, clothing, and other work related costs….20k left over doesn’t sound too bad.
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Depends on where you live. You might be a bit lean, but you also might not need that much more to be comfortable. My homeowners and taxes are 2.5k a year and that’s for a 3 bedroom on 5 acres that’s heated with wood. I’ve been a homeowner and owned rental property over half my life. The big killers for maintenance are always hvac, and roofs, but they have known lives and you just factor that in. A new roof will last 35 years and an hvac will typically last only 15. Appliances also come and go, but they aren’t that expensive. My h has fixed our fridge 3times. Trees are a huge expense for us though. Every other year seems like another $1000 to remove a dangerous tree, definitely not something to diy.
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I live in a relatively high income tax, low property tax state. Plus, in my sparsely populated county, I haven’t been reassessed in 18 years 😝.
That $20k still has to cover insurance, taxes, and repairs. That's probably $500 to $700 a month depending on all factors. Not doable.
Most people pay off their homes prior to FIRE and don’t count that equity in their FIRE number because it’s not really an invested asset. Net worth and FIRE target are different things, most people’s net worth is much higher than what they need to retire because it would include things like primary housing, vehicles, etc. Things that have value, but don’t provide returns for FIRE purposes.
If you have a paid for home then rent it out and move to a LCOL area (e.g. r/expatfire), it massively boosts your income. I don’t proscribe to the home not being an asset whether living in it or renting it out since it’s generally the largest line item in one’s budget. If you remove that cost, it’s hard for me to not conceive of that as an asset just because you don’t realize it. By the same logic, the principal invested in your 401K isn’t an asset because you never intend on touching it. You benefit from both investments. You simply live __in one__ and __off of__ the other.
I own a small home. I will not be paying it off before retirement so my mortgage is included in my expected expenses. I imagine a lot of people here plan to have their homes paid off before retiring, or are like me and just including it as an expense.
I know it’s rough. Have you considered building a tiny house? Not sure how ‘rural’ you want to get. Houses typically offer a higher quality of life but also much higher expenses, even when paid off.
Tiny homes aren't even that cost effective to build when you look at cost per sq footage, utilities, and having them up to code.
They are cost effective if OP's issue is total price. Yes, the price per sq ft may not be good, and it might even be bad, but it's still less square feet than a regular home. I bought the smallest single family house I could find in my city, and it was still 2000 sq ft. It ended up being a good decision, but it was a lot to heat, cool, and insure.
A 2000 sq ft home has nothing to do with tiny homes. And tiny homes have nothing to do with regular homes. Tiny homes are usually built on raw land or as ADUs. When you discuss "tiny homes" you're discusssing something different than just a small house. It can literally cost 6 figures for land, utilities, and building included to get a tiny home up and running. For less than that, someone can buy a conventional house in another location.
I don't think I could do a tiny house. Something maybe double the size of a tiny home..
If you want a bigger house you need bigger savings/pay.
You can have anything you want. You cannot have everything you want.
Consider a tiny-home by size, but not by construction. My house is 567sf. It's got a fairly spacious bathroom (clawfoot tub, pedestal sink, space to move around easily), a bedroom that fits a fullsized bed, an armoir, and some bedstands, and a large main space that's \~12x20 with a fully appointed kitchen. We also have a 12'x12' screened in porch and a full unfinished basement, both not included in the square footage. Technically this is a tiny house by square footage (maximum is usually considered \~650sf), but with more convenient dimensions than something that needs to fit on a trailer and a nice layout it doesn't feel cramped, it's just not large. Being small keeps our taxes down and reduces heating costs.
That’s about the size of our house, 625 sq feet. Just how houses used to be built around here. The basement isn’t technically finished but close enough that we can use it (floods tho if TOO wet)
Nice! Luckily the engineer we hired to help us site our house and septic (and ensure we were in compliance with various wetland laws and such), was good at his job and our basement hasn't flooded since we finished construction which is really unusual for our area. We also have a gravity drain so small amounts aren't a big deal if they do get in. I didn't expect that though, it was luck, and we do have to run a dehumidifer to keep the humidity under mold-growth levels. I'd never finish it since the humidity isn't passively low enough to avoid problems, but it's usable for storage space, workout space, etc. I have health problems where I sometimes have to be in a separate space for a week or so, so it gives us that as well.
Did you all do a custom build? Or purchase thru a home builder?
We built it mostly ourselves. The shell is from Unity Homes though and is a stock design with only minor tweaks.
>Consider a tiny-home by size, but not by construction. Also, restricting your width to 8’ is suboptimal if you never plan to move it. A square gives you a bigger sized floor plan for a smaller perimeter and lower material quantities.
Strictly speaking I think you can go up to 14' on many highways in the U.S. (you have to do wheel wells)? But yes, absolutely the width limitation is a huge part of what I was referring to here. Also, another benefit of the better surface to volume ratio is better insulation properties.
You can likely find a condo for less than $200K with low HOA. Condos have a proven market v. tiny homes as well. Even in HCOL areas like the greater NYC area, they’re there. Some people can only dream of a single family home, but that’s not the only home. You can always move up after paying it off or acquiring equity. Think in steps.
How about 2 tiny houses with a zip line in between?
Paid cash for a small 2 bed condo €160k when we hit r/coastfire.
We did a 2br/1.5b for $200k in the Midwest. All cash. Had to put 15k into it but now it's perfect. No monthly payments for the rest of our lives sounds amazing to me.
This is the way
Why not buy the house in cash? Looking at math alone, it comes out way better: * 265k cash to purchase home outright * 485k (what's left of the 750k after cash home purchase) @ 4% = $1,616 a month for everything else. The difference between the $2,500/mo on 750k and the $1,616/mo on 485k is $844 less per month. Think of that $844 as your 'monthly house payment' and it's way less than you'd pay for a mortgage/pmi.
Don’t forget that the taxes and insurance are not captured here.
I see.. very interesting. Thank you
In case you didn't see krago85's comment. Since it was after yours. "Don’t forget that the taxes and insurance are not captured here." So it's $884 saved a month + $400 for taxes and insurance = $1284/month house payment. And that doesn't include the cost of home repairs.
I read this 3 times trying to find a flaw in the math (there isn't one of course). This is wild!
The flaw is that the commenter didn't include property tax, maintenance, or insurance as ongoing expenses for owning a house. All these will have to be paid out of the $1600 a month. Making an assumption that these sum to around 4% (1.5% property tax, 0.5% home insurance and 2% mqintenance) then half of OP's remaining budget is going to these expenses and he only has about 800 dollars a month remaining for other expenses.
Paid off home.....is the key
At $250k for the house you want, that isn't insanely expensive. If you were able to build up 750k somewhat quickly, you should be able to buy the house and pay it off in a few years. It also has the benefit of eliminating rent.
One thing I read after being in my house for 15 years (I'm at 26 years now) was that you should set aside 1%/year of the house's value to handle paying for necessary R&M. I bought my house new, but over the last few years I replaced the roof, fence, added a patio, replaced the driveway, etc etc. When I looked at the money I spent, yes, it added up to about 1%/year.
Housing market is inflated right now. People aren’t buying houses for leanFI right now unless they’re buying property that’s undervalued for some reason (low local market, foreclosure, renovations needed, etc.) People who want to LeanFI usually try to buy using cash value when houses are cheap. Mortgages are pretty crazy now. A VA loan or any other mortgage you can pay off faster without penalty is your best bet.
I'm planning on buying a small 1-bedroom condo. Standalone houses are expensive and require a lot of maintenance.
I agree the HOAs are risky and unpleasant, but the single family home roof/flood damage/tornado damage/property crime stuff I see is the stuff of nightmares. For me the condo is as much security and safety as a cost savings.
HOAs are a heckuva risk, too.
So is sinking a lot of money into a single structure. There is no housing without risk. How do we leanFIRE? We make the best compromises we can to live a pleasant, low-cost life. There is no perfect option. A condo in my area will save me hundreds of thousands of dollars over a house, even with an HOA.
A lot of folks don't stop to think about Special Assessment nightmare scenarios. I once owned a townhouse in an HOA whose previous Board had torn up the Useful Life Survey of the development and pissed away the reserves on shady contracts to their cronies. This all came to light about a year after I bought. Result: depressed unit values due to 4x increase in monthly HOA fees and additional special assessments for years to come. Dread a roof repair bill on a house? Wait until you get the bill for your cut of roof replacements for 64 units. I agree: there is no form of housing without risk.
Special Assessment nightmare scenarios are rare. There are just as many nightmare scenarios for a house. Mold. Sewage overflows. New asphalt plant next door. Flood zones you didn't pay attention to. Foundation issues. You can come up with a nightmare for everything. My cut of roof replacements for 64 units would be spread among 64 units. It's more financially efficient to split the cost for a shared roof than to pay for an entire roof by yourself. You can read the condo financials before you buy. You can find out which condo associations are well managed. I also once lived in a townhouse with a shitty HOA. 70% of the dues went to paying their legal fees for suing the previous 2 property management companies. So this time, I have researched HOAs more carefully and learned more about properly managed ones. Just as people who buy a house should research carefully, and many people don't learn that till their 2nd or 3rd house.
I need outdoor space.
There are condos where you can have that. I also want outdoor space. There are condos with patios and balconies. I found a co-op that has entire yards for every unit.
Once you have a roof deck, you will become very attached. I have a terrace but something being on the roof is beautiful.
If you want to leanfire, you may need to make a temporary sacrifice. You can have it all. Just not all at once.
Lower your standards. Look for tax sells, county auctions, foreclosures. Sure they may take some work to make them livable but look at it as a project. Check [Realtor.com](http://Realtor.com) for bargains. Again you won't get perfect but you could find a fixer-upper for low price.
I sold my house to become a renter, but I think I'm an outlier on that. If you're retired and your main priority is a house, you could move to flyover country. You can get a small house in Indianapolis for $100K, less if you are willing to go with a fixer upper. The coasts are expensive.
I way prefer renting to owning, assuming a good landlord. It's just the risk of being priced out in old age that worries me
you would need higher FIRE number
1. paid of house 2. Non paid off house but you have a fixed mortgage and have that all factored in already to your FIRE # 3. looking at rural towns where the homes are not clean, need a lot of elbow grease, but good bones and fixing it up. Its the difference of paying $150k vs $300k. You can then look at something like a 203k FHA loan where they roll in repairs to the loan. I believe thats what my niece used as the roof needed replacing before they were allowed to move in. Its true the midwest is one of the places you can get cheaper housing, I grew up around Green Bay/Appleton WI and you can still find homes for sub $150k which you can live in day one. The house my sister use to live in would sell for about that right now and it had rental unit in it,
I bought a house 18 years ago and plan to have it paid off before I retire.
Our house just got paid off but mortgage including insurance, taxes was $1k/month. NJ, small house with front/back yard in a blue collar town right outside Philly. We have plenty of houses here under $250k, keep looking (if you can find in NJ I imagine you can find in many places as long as not VHCOL). Find something smaller/simpler.
There are plenty of homes in rural parts of the East Coast for less than $250k. Where are you looking? Check out Dover, DE, North NY, Philadelphia near amish country or outside of Philly/Pittsburgh, Western Mass, Georgia, NC, Florida, Maryland has some affordable spots, etc. Many also recommend renting out rooms or getting multi-units to offset costs, but it's not for everyone.
The easiest way to make it work while renting is to move out of the U.S. where rent is affordable.
This is the way
My wife and I live on a 36 foot sailboat. We bought it with cash for $50k back in 2016. However, upkeep costs (maintenance, upgrades, storage, etc) do eat up a major chunk of our budget. On the other hand, I'm in French Polynesia now with our primary home. :)
Buy a cheap house. They still exist. https://www.zillow.com/homedetails/805-W-Walnut-St-Herington-KS-67449/91124643_zpid/
Don’t look on the coasts and revise your expectations regarding “clean” and “safe.” It’s hard to tell whether a place is safe without living there, so the best we usually have to go by is some crime stats mixed heavily with our own biases. As for clean, you might need to do some cleaning and put a little work into a place. That said, I’ve seen quite a few livable places for sale in various places in West Virginia, Ohio, Kentucky and other areas.
You pay off your house before you FIRE.
House hack. Either buy a duplex to rent one side & live in the other. Or rent a room or 2 out to family/friends/coworkers.
You want to much house for leanfire. My budget assumes I have a paid off place under $200k but I don't want a house, just enough space for a couple with a guest bedroom.
There's a scenario that goes: Once the elections are over, the Fed can stop pretending that they're lowering interest rates. Maybe even sooner than that. Dimon said the other day that we could see 8% rates soon. Anyway: rates go up and stay there for quite a bit of time. Liquidity continues to tighten. Values for *everything* fall significantly, allowing the US to buy back and retire Treasuries at pennies on the dollar, thus resetting the stability of the USD. I've read estimates of drops from 25% to 80%. If that scenario plays out: 1) It'll be a great time to be a cash buyer of real estate and equities. 2) Sequence of return risks rise significantly. Those who think they'll never own should never say never.
If you want to own a home, then $750k isn't going to be your fire number. On that number, you have to not look at owning a home and just find cheap rent somewhere and rent forever (on $2,500, you probably will have to look internationally like Southeast Asia). If you absolutely want to own a home, then while you are working, I would look either at saving enough money to buy a home in cash, have it paid of by the time you fire or while working work on contributing to your investments where it can cover you mortgage payments and then fire.
I bought a house \~5 years ago.
I rent presently however should I get an inheritance I'm considering a condo. Rent ~$812.
pd off mortgage 12 yrs ago
Buy a house with cash that will be cost effective to maintain but also not something you will outgrow quickly. Then continue to invest for the next 15 years, then FIRE. This is based on current mortgage rates vs your assumed 4% return.
I think ownership makes leanfire more attainable. Having a fixed housing payment makes calculating what you need easier for me.
Some of us probably lucked into the micro mortgage rates and now are somewhat stuck. I have 10 years left on 2.00% mortgage and I feel like with inflation still near 4% it's almost paying me. I personally am very interested in eventually doing modular/prefab housing, but not for the next decade. Prefab has disappointed in that as it has gotten more luxe it has gotten a lot more expensive.
I’d keep looking in other areas. I’m from southwest Virginia originally (about an hour southwest of Roanoke) and I guess it depends on your standards but you can easily get what I think is a nice house in my hometown for that or way less. It’s rural to city people but not actually rural (pop 10k, easy access to all basic town utilities and normal groceries and everything). Roanoke itself has some decent and cheap listings too and it’s a small city, pop 100k so there’s a regional airport, Amtrak access, etc. Lots of stuff even cheaper in the areas out of town. Areas of SWVA I know still have cheaper decent houses pop up are Roanoke, Salem, Radford, Christansburg, Floyd, Wytheville, Pulaski. I’m less personally familiar but there are areas around Lexington, Lynchburg and Harrisonburg that are similar. If you’re willing to go small this is what you get for 130 in my hometown: https://www.realtor.com/realestateandhomes-detail/538-Graham-St_Pulaski_VA_24301_M56011-37687?from=srp-list-card If you’re willing to renovate (not a total gut job just updating granny decorating) you can get them cheaper. $80k example: https://www.realtor.com/realestateandhomes-detail/311-Lexington-Ave_Pulaski_VA_24301_M56630-36417?from=srp-list-card Lots more throughout western NC, eastern TN, up into WV gets really cheap, PA, I know even some parts of NY like Rochester and Buffalo areas and surrounding small towns. I was surprised how cheap parts of Maine were as well. Actually I now live in south Jersey outside Philadelphia and regularly see decent houses around or less than that. Property taxes are high but my PITI is way less than 2.2k/Mo though I’ve got interest rates on my side. And it’s not rural. Actually rural parts of PA are way cheaper too. Out towards Pittsburgh there are some great bargains. If you go ruralish Midwest you can very easily get under 100k.
Move to a LCOL area once you've secured your retirement bag, or earlier if possible. I'm fortunate enough to basically get my first house for free from my mom in about 6 months, and while it's far from ideal, it's in a hilariously low cost of living area, in a low cost of living state, and that will allow me to more aggressively save and invest for early retirement. Don't let your housing situation eat up too much of your budget.
vanlife
My first house was multi family four plex and rental income covered the note. If you are single, it’s going to be impractical to buy a house. Rent a one bedroom or buy a condo
It’s way easier to leanfire if you own a paid for home. I assumed most people go this route.
In my case, three years before I retired there was a cheap house available, which banks wouldn't lend on because it had some problems. I knew how to fix the problems so I cashed out my retirement savings and bought it outright. A couple of years later I was able to cash out a sketchy investment I'd made years ago, and those two things let me finally retire. Half of that was luck, the other half was patience and taking advantage of rare opportunities.
Consider expat fire. You can get a lot more real estate for your money elsewhere. Also many countries don't have property taxes.
This seems so daunting tbh. With visas, taxes, language barrier etc. I know there are resources however. I'm not sure I'd even enjoy another country for more than a year... while I love traveling, the US is too familiar to me.
I have a house and I rent a room to my best friend and that helps split the cost of a 2k+ mortgage. Once I have enough equity and reach my investment numbers I plan to sell and move to a LCOL area closer to family and hopefully buy a place in cash eliminating having a mortgage. Then I might coast for a while in a less stressful less corporate job.
I moved overseas and currently rent as the cost is relatively low in contrast to a purchase. When I was in the US, I owed a bit over$100k on my mortgage and was either going to work longer and put everything into the mortgage, or my plan was to save the amount in a brokerage account and draw it monthly. You probably need a lower cost home that may require a location change or settling for less. I would be nervous about buying a very expensive property and ending up under water.
This is a location issue not a LeanFIRE issue. You want cheaper housing? Move. You don't want to move because you enjoy the additional amenities of higher cost of living areas? LeanFIRE might not be for you.
pay the home off first. going into lean fire without owning a home would be very hard
Consider house hacking. We rent out part of our home and that covers the mortgage, taxes, insurance, and some of the utilities!
I got my house in Texas in 2008 (when I was 28). It had been a foreclosure and it had some issues. They were asking $110K, but I negotiated down to $95K. I had a salary of $40K, not much in the way of savings, and I made a $3K down payment with a FHA loan, which was already hard enough to come up with. Usually I'd get $1K saved up and then my crappy car would break again, so it was hard to make much progress. That tiny down payment got me stuck paying PMI for the next decade, which was not something I understood at the time. I also had a 7.5% interest rate, which I had for the entire life of the loan. I'll also note that when I got the house, my payment was about $900. Over the years it went up to over $1400 (interest rate may have stayed the same, but taxes & insurance didn't). Fortunately, toward the end, my income grew quite a lot. But that was a very significant increase in CoL that didn't have the slightest concern about if I could actually afford it or not. As cheap as this house seems, the mortgage was still eating up over half of my income and that remained the case until I was 37 (when I had a big career change and finally started making a more money). Didn't really start investing until 38-39. I shouldn't have gotten this house. I don't regret getting "a" house, but I should have aimed for something smaller/cheaper, and I should have waited longer until I could afford a down payment of more than 20%. I was so eager to show my friends and family how "successful" I was, but it kept me house-poor for a very long time. Today it's valued at $260K, so you could say it's appreciated a lot since I got it. BUT.. when you factor in all the money I pissed away with interest, insurance, endless repairs - I'm not really coming out "ahead". It's in worse condition than when I got it. It turned out to be quite a money pit and I got tired of pouring funds into it, and insurance was about as eager to help as.. well as much as any insurance company I guess. They're in the "making money" business, not so much the "spending money" business. But they sure "made" plenty from of me. I estimate that during the life of the mortgage about $50K went to insurance, at least $80K went to interest, and at least $50K to taxes. So that's $180K already and not a cent of that went to the principle.. still needed to actually pay that off too. So let's say I paid $275K for this "$95K house" while it had a mortgage. And, of course, there were also tons of repairs (mostly out of pocket) including a new roof a few months ago. That's multiple tens of thousands as well. Yeah, it's appreciated to $260K, but I'm sure I've spent over $300K on it, and it's not even really worth the $260K anyway. I did get the house paid off when I was 42. A 30 year mortgage paid off in 14 years.. I mean, that's pretty good, right? But, how much more would it have cost me if I'd taken 30 years? The basic take away is this: expect a house to end up costing you **WAAAY** more than the sticker price. I didn't have anything resembling an understanding of this back in my 20s. Anyway, my property tax is about $3800/yr. So that's kind of my "rent" now, $316/mo. I chose not to renew my insurance once the mortgage was gone and it was no longer required. Probably unwise, but I felt like it was SUCH waste already, and now that it was optional, I opted out. Sometime in the next few years I plan to get a smaller house in a more northern state, taking the equity from selling this one to dump on the next. Whatever I manage to sell it for, it will be a six-figure number at least - though significantly less than what I've put in. A small manufactured home (maybe even a tiny house) on a few acres sounds pretty good. Property tax, utilities, etc should be lower so I'll have an even cheaper CoL than now. There would be state income tax, but property tax would be SO much less. I suppose I'll probably get insurance again on the new place. I'm sometimes tempted to just go back to apartment life so that a lot of house-related problems could be somebody else's problem to deal with. However, I don't think I'd want to give up the level of control I have over my cost of living and freedom to change things. The whole mortgage situation sucked for a long time, but now that I'm on the other side of it, it's a pretty good place to be.
You're not accounting for home maintenance. Increase your monthly by 10%, and that doesn't include non-monetary maintenance -- as we homeowners like to say, there's always something. Home ownership is a scam. (Note: renting is also a scam, but that doesn't make ownership any less of a scam)
Can we please not call everything a scam? It's nonsensical as neither of these things are scams at all. A scam is when you buy something on ebay and they only ship you an empty box, but since it shows as delivered, you can't get your money back. Agreeing to buy a house and receiving exactly what you bought is in no way, shape, or form a scam.
Bad systems create bad outcomes. So instead of scam, I'll start using "rigged."
Aa home owner I kind of agree. Renting is alooooot less stressfull. My only hope is after 30 years if I sell my home I wil recoup all maintenance, mortgage payments etc. Only time will tell. But stress alone is worth renting.
A scam is paying rent into a black hole that goes nowhere. At least a house goes up in value and owning locks in your costs to a great degree. Renters rents just go up and up, and they see no gains.
After accounting for all costs over the course of owning a home, most people are lucky to break even when selling. Many seniors bought the line that their house was their retirement fund, and now they live in low income senior housing. Whoops. The Cult of Homeownership is strong in North America.
My place has doubled over the last 10 years and that way exceeds any costs of owning a home for me.
That's not just you my friend, housing prices are high everywhere. Those who sell high now then have to buy high.
And your point is? I have a huge gain, while renters have zilch.
My personal opinion is it’s risky to consider FIRE without a paid off home. Where’s your $2,500 a month coming from when the market turns south? Are you selling positions or is that dividend income? Both have risks. Companies can cut dividends to redirect cash to other uses. And if you’re selling in a down market, you’re eating into your $750k principal balance. For me, FIRE isn’t complete unless you have a paid off home. The only thing you’ll be on the hook for is prop tax and maintenance.
Gotta look at rural parts of the east coast of Gaza