Real Estate Stake While Cruising - Are you in or out?

[NYSail]

I’ll never sell my land home.

[TPG]

We sold our house and bought a condo that we can live in while we're having our boat built. Will keep the condo while we are gone since we'll be back home in FL from time to time. Also family can use it while we are away.

When we are done cruising will use the condo to transition back to land at which point we'll either sell the condo or rent it depending on what we do next.

I wrestled with keeping a place and the condo was a good compromise; we don't have to be here to keep an eye on things like a house.

[OrignalBudman]

Our decision to liquidate all real estate was strictly a business decision. We sold our home last September and we're selling our rental property in the next few months.

It wasn't about maintaining a stake on land. It was about market timing. I've been a commodities broker, I've been a day trader, and I've been a home builder. I've been through three other real estate bubbles in the last 50 years, so when the market said "sell", I took the money and ran.

When old age and poor health tell us it's time to return to land, we'll do so.

[NYSail]

If the resources are plentiful to buy when all done cruising then perfect. I have heard many cases where people liquidate and run out of money…… bad planning

[Fishigan]

There is a lot of misinformation in this thread about property taxes on vacant land and improved land. State by state and municipality by municipality the taxes are different. I am a real estate broker in Michigan. If I were doing it I would pick a few states I was thinking about living in after I am finished and see what the taxes are for vacant land vs improved land. I would buy that land now. You can call an assessor for the municipality the land is in and ask them what the tax on XXXX square foot home would be today and they will tell you. In Michigan vacant land that I own is taxed at $500 a year. Once I put a 1,200 soft home on it that goes to $7,000 a year. BUT if my lot was in the next town over it would only be $3,000 a year with the house on it. It is simply different everywhere. Now if you are talking about buying a home... Nobody knows what the market is going to do. I can give you an educated guess but nothing more. At the moment my area normally has 2,000 + homes for sale, today there are 322. That is why the market is the way it is. People aren't selling but there are still 2,500 buyers out there. When people decide to start selling the market will level out and the prices will adjust, but there is no bubble to burst. People making $50,000 a year aren't buying $750,000 homes on a ARM like they did in 2006-20010.

[Nepidae]

Originally Posted by steffan

Is anyone holding raw land to build on after cruising? That doesn't help with the first two points above but does address the last two. I see deciding to live somewhere else and construction cost inflation as the biggest risks. Taxes should be fairly low where we are looking.

I was thinking if I'd respond since I/we are similar to many, but the bare land brought up a point.

Bare land was once called an alligator, it ate you with taxes but didn't return anything. That isn't necessarily true.

When the MIL passed, we bought a piece of land from the estate/siblings who had no interest in it. This is in VT. There is a tenant with a double-wide who rents the land. Not a lot of money but IF we ever wanted to move to it, we could evict him and build ourselves or put our own double-wide in place.

We also own a slip in NC which is rented.

Cashflow has been OK and no real issues in either place (knocking on wood & my head).

We also own a main house in PA, outside of Philly, which we return to. I also apologize that we are NOT full-time cruisers, from the questioner's standpoint, we cruise about 6mo a year, (we are on the Loop, our 6th year) then return home to be with kids & gkids.

BTW, we also own a rental, a TownHouse in PA, not far from main house. IT is under control of a management comp as is the slip in certain ways, that has been doing a great job. BTW, it was a loan against the TH, that was free & clear, that bought the boat so now our tenants are paying for our boat. Gives us extra money to do what we want while boating.

As was said, each of us has our own story and what works for us.

Hope it has provided some incite for others though.

Stay safe out there.

[mako]

It's interesting reading what various persons' thoughts and strategies are for their own particular needs. Different viewpoints.

I'm now giving serious thoughts about my own exit strategy, planning to retire in about 3 years. It includes liquidating some commercial/residential property to reinforce the portfolio.

Regarding keeping a stake in land, OP's original question, I'm going to build us a small retirement home (for us to occupy part of the year) on some land I currently own, and our boat (which will be a new-build) will be our overseas home (eventually in Europe) for the remainder of the year.

I refuse to own any long term rentals, because of bad experience in the past.

[MWhite]

As others said, the answer to this is very much based on your individual situation including your finances. It also depends on where you are. We are in the Pacific NW and when we left the dock the first time we struggled with whether to sell our family home. I was staunchly against selling because I felt sure that real estate pressures from over-priced Seattle would be trickling down our way and we would get a better price later. But mostly I was worried that we would not be able to buy back into the market if we sold at that point. We rented it out and covered our expenses for the most part. We may have lost a small amount, but we more than made up for that because I was right about the house increasing in value. We came back to crazy house prices, like every other part of the country. Had we sold, we'd be living aboard our boat in the winter, which is not much fun up here, and I would be very concerned about being able to find something suitable for our eventual old age.
Goals for our next cruise were to make money and also secure a property that was easier to care for, then rent that out. We sold our house at the top of the market and within 4 months we had purchased another one for cash. Did we pay too much? Oh yeah but that's the market we're in. Had we not held onto our other house there would have been no way we could have been competitive as a buyer. Just no way. We got this house purely because we had the cash. There were several backup offers.
For what it's worth, I don't think we are in a 'bubble' that is going to burst like it did in 2008ish. What's happening now is different and while prices may cool a bit, they are not going to go down, at least in my part of the country. In fact, our prices in our county went up 15% last year because demand is waaaay higher than supply for single family homes. I am extraordinarily grateful to be typing this from a house I will keep and rent out while we do round two on our boat. We are middle class, not wealthy. If that describes you then you might consider keeping that house.

[RELENTLESS 1]

I have been in Commercial RE for nearly 40 years now. We invested with the goal of being able to cruise part time - which we are now doing. Some of the property we own is known as Single Tenant Net Lease (STNL) - e.g. Dollar Tree/General, Auto Zone, Starbucks, ATT/Verizon, Harbor Freight, and many others. Often these have 5-15 year leases with built in Lease Bumps, and no landlord responsibilities other than the roof. You don't need property management, on average they will produce an unleveraged 6% cash flow (8-10% leveraged) and as a Hard Asset will keep up with inflation. When you return you can sell it and buy a house or refinance and buy the house and keep the extra income. You can PM me if you have any more questions.

[FassettNation]

We sold our home 2 years ago to our son and daughter-in-law and it was the best decision we ever made. Granted we were happy to sell it to them but the market in that Neighborhood was booming. (Houston Texas area). Now we have been living on our boat and will retire in about another year. So we were discussing this same issue. should we buy something and hold onto it for when we are old and can't sail anymore and what we decided was to buy land in an area where we will be able to be happy after sailing. As we continue on our journeys we will begin planning the house and eventually have our little home out in the Hill Country. Land doesn't require all the upkeep and its value to us is that we will have something when we return. I hope that helps, and good luck with whatever you decide.

[mako]

@Fassett, just make sure not to buy the land and forget about it completely. It needs to either be completely fenced off, or grow very tall sharp nasty weeds, or both. Install lots of “Posted” signage.

Otherwise you’ll get people dumping and trespassing and squatting.

[nofacey]

Built boat, sailed it around the world over 5-1/2 yrs. My plan was to sell house, add to our stock investments……wife protested, volunteered to manage rental & maintenance while we were away if we kept it.
Stock performance sucked. House value almost tripled…wife was soooo right.

Hang on to the house, especially if rentals covers your costs.

[valhalla360]

Originally Posted by nofacey

Built boat, sailed it around the world over 5-1/2 yrs. My plan was to sell house, add to our stock investments……wife protested, volunteered to manage rental & maintenance while we were away if we kept it.
Stock performance sucked. House value almost tripled…wife was soooo right.

Hang on to the house, especially if rentals covers your costs.

Back in the 70's/80's?

Anyone who hasn't had good returns in the market over the last 20-30yrs is doing something wrong.

Likewise, 5.5yrs to triple the house value is one step away from winning the lottery. Not saying it can't happen but unless there is more to the story, it's wildly lucky.

[valhalla360]

Originally Posted by NYSail

If the resources are plentiful to buy when all done cruising then perfect. I have heard many cases where people liquidate and run out of money…… bad planning

If you run out of money and spend the value of the house, it doesn't matter if you keep the value of the house as cash or take out loans against the house
and keep spending until you go bankrupt.

On a different tack: Most people heading out full time cruising are in their 50-60's, will the old house chosen for the number of bedrooms for kids and school system still be the house you want when you return? Lots of people are in denial that physical limitations are quite likely the reason to return to land. Will you be able to afford to pay someone to mow the grass and do maintenance?

I've seen more than one house where people hung on after they could no longer do things themselves and couldn't afford the upkeep...by the time they sold, they lost a lot of value because it had become dilapidated. I'm sure people will go on about how they wouldn't do it...just like the folks I've seen it happen to would have said.

[nofacey]

Originally Posted by valhalla360

Back in the 70's/80's?

Anyone who hasn't had good returns in the market over the last 20-30yrs is doing something wrong.

Likewise, 5.5yrs to triple the house value is one step away from winning the lottery. Not saying it can't happen but unless there is more to the story, it's wildly lucky.

Left Victoria spring 2014, returned winter 2019…..so while I agree the market has done well over a 30 yr period, it wasn’t that strong a performer over the past while.
But you have me out on the house - we bought back in 2001 for $300k, it was worth $550 in $2014, and jumped to $900k in the past year…..an extremely common story around Vancouver BC and up Vancouver island.

But over the recent 5-1/2 yr period sailed, we benefited from a 63% increase in real estate value, while the TSX (I’m Canadian) increased by 13%.

Bottom line….keeping the house blew away holding the same $$ in the stock market.