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Old 08-12-2021, 06:27   #16
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Re: Real Estate Stake While Cruising - Are you in or out?

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Originally Posted by steffan View Post
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.
Not in the USA:
- property tax is applicable to the property not just the house. Even worse, in most areas, there is a reduced tax rate for your primary home. If it's property without a house, you don't get that reduced rate, so even though it's worth less, you may wind up paying just as much tax as someone who owns a similar property with a house on it.
- If you have property with no building, you are trading a risky rental profits for no rental profits.

Yes, there are risks investing money in the market but assuming you don't get into day trading or other silly schemes, there is minimal work and over a longer term, the volatility risk tends to go away.
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Old 08-12-2021, 06:32   #17
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Re: Real Estate Stake While Cruising - Are you in or out?

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I would still do the same again as property prices go up and it is a better investment than a boat.
If you need the money to buy the boat, I agree it's a poor financial option and there is a big risk in not having an exit strategy if cruising doesn't work out.

I'm assuming anyone who is considering this would have enough to buy the boat and keep the money for the property (or the property itself) outside of other financial considerations...so it's really a question of investing by default in a house or investing intentionally.
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Old 08-12-2021, 06:40   #18
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Re: Real Estate Stake While Cruising - Are you in or out?

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Originally Posted by valhalla360 View Post
Not in the USA:
- property tax is applicable to the property not just the house. Even worse, in most areas, there is a reduced tax rate for your primary home. If it's property without a house, you don't get that reduced rate, so even though it's worth less, you may wind up paying just as much tax as someone who owns a similar property with a house on it.
- If you have property with no building, you are trading a risky rental profits for no rental profits.

Yes, there are risks investing money in the market but assuming you don't get into day trading or other silly schemes, there is minimal work and over a longer term, the volatility risk tends to go away.
We're not looking in the US for the land, and the parcels we are considering are capable of generating some farm income, although probably just enough to cover the taxes. Purchase price would be <10% of networth; the rest of our money is invested in equities, etc. anyway. I will say that the taxes on the land we built our current house on, which is in the US, went from <$50 a month to >$400 a month when the lot was developed.
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Old 08-12-2021, 07:12   #19
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Re: Real Estate Stake While Cruising - Are you in or out?

am still in the aspiring cruiser category (grief, this taking forever) but have been lining up my ducks to cruise... getting there...

from what i can tell, there isn't just a housing bubble in the US, there is an everything bubble everywhere (in the West), which put differently means that what we can buy with our currency is going down at a rapid rate. it also seems that we are in for some persistently high inflation.


--- so to the question of what to do?

this was one of my biggest questions as well, and for a while. i had a big, cumbersome place, huge overhead and taxes, not worth it to rent. so i sold it and got a bolthole smack dab in one of the nicest areas of the capital (location, location, location-style).

this way i have an address, a place:
-to put some things i'd prefer to keep longterm (so storage),
-with very low overhead so can lock-n-leave - (building works are paid by all owners)
-in super safe area (for me, if i'm old there) with no flooding or flash flooding or other natural disasters (knock on wood!)
-that will never require a car (if i do end up there): mass transport and walking, cycling - everything close by
-that i can always sell if i find i want to be elsewhere. my play is the it should hold its value so that i can count on being able to get a bigger place elsewhere later on, if that's what i choose.
-it is also located in the same city as my two uni-squirrels, so it will be easy to see them when i'm in town.

this is the solution i found that made enough "cruising" sense for me.

hope this helps.
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Old 08-12-2021, 08:20   #20
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Re: Real Estate Stake While Cruising - Are you in or out?

I have question on my mind about having a Very nice lakefront house on Lake Talquil , Florida that is paid for.
1. Can I do a 1031 exchange for a Catamaran without paying Capital Gains on the sale of the house and it is my primary resident.
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Old 08-12-2021, 08:34   #21
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Re: Real Estate Stake While Cruising - Are you in or out?

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Originally Posted by steffan View Post
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.
We could do this but it is not part of the plan. We have land that is in a timber valuation so the taxes are very low. Less than $20 a YEAR for 5ish acres. The state has similar valuations for farm land.

Property tax can be a problem. When we bought our land, the valuations were on the low side because the county was doing valuations every seven years and we were at year six of that period. Property values had gone up greatly in six years because the area had grown. When the county did the property valuations again the tax bill went up, I think it at least doubled.

Raw land can have management issues as well. Not like a house though.

If we manage to pull off Boat Plan A, sell everything and go cruising, we don't know where we would end up after swallowing the anchor. Most likely near kids but who knows where they will be in the future.

We have another boat plan to sell what we own, buy a smaller place, most likely a condo, and then go cruising. There are a number of problems with this idea. One place we like, the condo is just not quite right design wise. The area is busy and a bit noisy and I don't like noise. The place does have lots of positives but the few negatives, so far, are out weighing the positives. We have found another place that might work but the cost and expense seems to out weigh the huge positives.

At one of the places we would have the option to build our house but the current cost of materials, labor and labor shortages would increase the cost of the house so this is not a likely option either.

The reality is the place we have now has the best balance of what we want. Which makes it kinda hard for us to sell.

Another metric on where to live is health care. Our area has some of the best hospitals and doctors in the world. The places we have looked at buying a condo/house to keep while cruising are NOT near medical facilities that are as good. While the family does not have serious health issues, we have had our share of problems, and have learned the hard way to go to the best medical providers possible. Moving to a place that does not have that level of care is a problem.

Later,
Dan
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Old 08-12-2021, 08:54   #22
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Re: Real Estate Stake While Cruising - Are you in or out?

So I have had a couple friends when I was in Pensacola that sold everything including their vehicles then went cruising.

One lasted 3 months then came back and started looking for a car first.

The other last 6 months then called it quits.

So it may be a good idea to cruise for a few months before selling if that is your plan.
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Old 08-12-2021, 09:12   #23
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Re: Real Estate Stake While Cruising - Are you in or out?

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We are getting ready to go cruising again and I'm curious how many of you full time cruisers have maintained a stake on land or have you just cashed out and will worry about it when you return? Our biggest worry is if we sell is inflation (due to COVID money printing) and not being able to afford to get back in the market when we decide to be lubbers again. I am taking early retirement (55) and our problem is we have too much equity tied up in our home. We have been looking at downsizing but the market is so picked over (and IMO, overvalued), I am almost at the point that we just sell, go cruising and cross our fingers that some sanity will return to the housing market.
Kevin, I think this is a very real concern. If you sell your house now, will you be able to buy another when you return? Perhaps you can sell your house and buy a few cheaper properties to rent while you're out cruising. This way you have a rental income, somewhere to live when you return and your assets will keep up with housing market inflation. Personally, I only invest in land that I can build houses on to rent. I have never been lucky in the stock market. Owning a number of houses is a very safe and profitable investment (at least here).
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Old 08-12-2021, 11:28   #24
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Re: Real Estate Stake While Cruising - Are you in or out?

I'm with Anders and the stock market. If you sell your home you will have to deploy the funds somewhere (check for capital gains taxes) and a few broad based ETF funds makes sense. The best part is no headaches with renters, upkeep and maintenance costs, all of which will diminish your cruising enjoyment.
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Old 08-12-2021, 13:30   #25
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Re: Real Estate Stake While Cruising - Are you in or out?

Two years ago we sold the farm bought a boat and a small rental type unit in a great position. Provisioned and set sail for Pacific islands. Then covid happens and we were prevented from leaving Australia or the threat one might not get back in ?
After a years sailing, with no sight of open borders to cruisers, we returned to land. The purchase of the unit saved our bacon as it had near doubled in the year. Without it we would not have been able to re-enter the property market.
As previously mentioned the road behind is far longer than that ahead, so plans are to buy another boat and set off soon as situation changes. This time a power boat. Definitely leave a property behind.
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Old 08-12-2021, 13:46   #26
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Re: Real Estate Stake While Cruising - Are you in or out?

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Originally Posted by thomm225 View Post
So I have had a couple friends when I was in Pensacola that sold everything including their vehicles then went cruising.

One lasted 3 months then came back and started looking for a car first.

The other last 6 months then called it quits.

So it may be a good idea to cruise for a few months before selling if that is your plan.

There is that. I've seen a lot come back. One couple left three years in a row, never making it more than 20km.

We'll keep a property, somewhere. Nice break from the boat. But it sure as heck won't be in NY; four years from now we're gone, and no looking back. Whether we buy property elsewhere before or after doesn't really matter.
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Old 08-12-2021, 16:03   #27
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Re: Real Estate Stake While Cruising - Are you in or out?

Since you’re looking for opinions, I’ll throw one in.

Sell and downsize to a small, 2 bedroom apt with near- zero exterior upkeep (hence apt or townhouse). Find a location desirable for short term rentals. Since you’ll be out cruising for months at a time, get it on the AirBnB market with a cleaning crew and manager.

That way you have a home to return to by just blocking chunks of time, your income per day will be much higher than with long term, and you reduce the risk of deadbeat tenants.
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Old 08-12-2021, 16:25   #28
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Re: Real Estate Stake While Cruising - Are you in or out?

Mako,

That is an interesting idea.

Are there professionals who do the marketing and manage cleaning?
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Old 08-12-2021, 16:51   #29
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Re: Real Estate Stake While Cruising - Are you in or out?

My understanding of the situation in Australia is:
You don’t pay Capital Gains Tax on your principal place of residence (PPR) when you sell. (Your PPR is usually your own home).
You can rent out your PPR for up to 6 years without incurring Capital Gains Tax issues.
You must include any rent in your tax returns but can also claim any appropriate deductions.
If you live in your PPR before the 6 years are up then you can rent it again for another 6 years without CGT concerns.

So, for those in Aus, it would make sense to rent out your own home and live off the rent.
The odds are that you’ll make a trip home more often than every 6 years and then you can head off again.
When you do swallow the anchor, you can sell your PPR, pocket 100% of the profit and buy where you want to.
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Old 08-12-2021, 17:55   #30
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Re: Real Estate Stake While Cruising - Are you in or out?

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If you invested $320g it in a stockmarke fund matching the performance of All ordinar
ies acummulation index 20 years ago you would now have $1724800.
https://www.noelwhittaker.com.au/res...et-calculator/
Yays......however I can literally stand on a piece of real estate and piss on a tree, the stock market is just traded numbers, not worth pissing on.

That said.....I do well in that arena as well, but not with primary funds.

Your accounting would not account for rent received over 20 years either.

Oh, and I have no funds in aus any more...an added bonus.

But of course the stock market is absolutely hassle free, no problems, no worries.....unless an investment goes south....but yeah.....thats never happened before.

I stick to my original statement, you have to try REALLY hard to lose money on real estate.

It's proven to be true in my experience, and thats enough for me, thats the point I was making to the OP.
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