28 Feb 2015
An awful lot of people concerned about the upcoming difficult future think that you should have a large property somewhere way out in the rural areas of the country. This can certainly be a worthwhile goal: after you have dug yourself out of debt, built up your emergency food storage, learned a lot of skills, got in shape, and did everything else you should be doing and if you can pay all the bills for the place you live in now and for the place way out in the woods that you only visit from time to time.For most of us, this is unlikely. Having a second property that you are paying for that you don’t actually live in? Pretty damn expensive and who is going to be minding the store when you aren’t there? I have friends with a beach house and that second property, while a very nice getaway, also eats money and life energy. A second property has its own set of bills just like your main home does. Taxes, utilities, HOA or other residency fees, and, until you pay it off, a mortgage. Plus you have to wonder what is happening to the property while you aren’t there. Burglars? Vandals? Storm damage? Fire? Burst water pipes in the winter? Everything that can happen to your main home can happen to your second property and you may not be there to keep a small problem (missing shingles on the roof) from becoming a big problem in a hurry (wind storm tears off remaining roof, house is flooded by rain, contents of house ruined).
The other problem with a second getaway property is how do you get there? If the city you live in is being evacuated in a panic because of, because of, well! the mind boggles! Fire, terrorists, riots, pandemics, earthquakes, hurricanes, make up your own list. If you’ve ever tried to leave town when every one else does, like say Friday afternoon on a three-day weekend, then you know how much time you’re going to spend sitting in traffic with the rest of the sheep.
Buying a second property to run to, hundreds of miles away, demands very careful thought. Can you afford it? Can you handle the additional work? Can you trust the caretakers or neighbors (whom you barely know) to take care of the place and call you if there is trouble? Can you get there, with your family in a hurry? If you do manage to get there, escaping the burning city, will the neighbors who don’t know you from Adam welcome you with open arms? All points to consider.
But if you live on your 500 acres in the wilderness and take an active role in your community, then this doesn’t apply to you. You already made it. You make enough money at whatever job you do to pay for everything. Hopefully, you are not commuting three hours a day to said job as that is time that could be better spent. Commuting time also increases drastically when everyone else is fleeing the city, so you are back to the problem of how do you get to your property way out yonder.
I believe, very strongly, that you should own your home and that it should come with land. The ideal situation is one where you have a single-family house, i.e. with no shared walls, and a tenth of an acre or more of land, on up to whatever you can afford, in a small town, and a commute to your job of less than half an hour one way. This is an achievable goal, with the benefits of a bit of land, some security, and without being isolated from family and friends. Since you have to live someplace, why not focus on making it the best it can be?
As an aside, one of the benefits of owning your home free and clear is that it is harder to lose your house. If you are having significant cash-flow issues and you own your house, you can risk dropping your house insurance. You can delay paying your property taxes. The state doesn’t foreclose nearly as fast over unpaid property taxes as a bank will over an unpaid mortgage. I don’t recommend either of these options; they can make other problems down the road even bigger.
My father firmly believes that you should go into retirement with a paid-for house, no debt of any kind, a paid-for late model car, decent health and money in the bank. This way, you have a margin for error when bad things happen to you. The house you choose can strongly determine whether or not you can pay it off early and meet this goal. Select too much house and you will never be able to pay off the mortgage ahead of time and still meet the taxes, insurance, and utilities, and pay for all the maintenance, and pay off all your debt and have money left over in savings. A house you can afford means, eventually, a place to live that you don’t pay for, other than the usual things: taxes, insurance, and utilities; all of which you have to pay for a rental as well as the place you own.Of all the housing types, a single-family home is the best choice. I’m not keen on townhouses and row houses and duplexes and other arrangements where you share walls and roofs with other people. If the neighbors have roaches, you have roaches. If the neighbors have wild parties, you get to share every single minute of them, whether you were invited or not. If the neighbor above you teaches tap dancing classes or the one alongside gives tuba lessons, you get to practice right along with the students. Their neglected portion of the roof means you can get water damage. Their mold is your mold. Their termites are your termites. Their rodents, pets, and children become your varmints, critters, and annoyances. If the neighbor neglects to clean their dryer vent and their house catches fire, so does yours. In the last four years, a building in the apartment complex across the street caught fire, destroying not only the apartment it originated in, but at least a dozen others.
I understand the benefits of townhouses. They make good use of land. They promote density, meaning more services within a walking distance. Townhouses mean you still get a little land for food growing and privacy. Sharing party walls means sharing heat in the winter. They tend to be more affordable than single-family residences. You have close (very close!) neighbors who might be willing to keep an eye on things in the neighborhood, neighbors ready to help you when you need it.
I’ve shared walls and hallways and other communal spaces and I really like a single-family house better. Townhouses and other communal-style houses can be much more affordable, but careful house hunting can compensate for this. As with single-family housing, there is a lot of variation in townhouses in terms of age, quality of the building, tenor of the neighborhood, rules and regulations; all the usual things. A townhouse may be your best compromise in terms of housing costs, commuting time, and some yard space, while being located in the ideal small town that you can’t afford to live in otherwise. So shop carefully.
The ideal place: Small-town living
The ideal small town has services like a hospital, decent schools, grocery stores, some retail shopping for essentials, library, churches, banks, all the things you need for daily living. You know your neighbors, they know you. You participate in the community via church, school activities, local government, scouting, whatever you and your family like to do. You can walk or bike to a lot of what you need to do, locally. You spend your money locally, keeping the community more economically healthy. A healthy community, of which you and your family are a known and valued part, goes a long way to being stronger and more resilient in an uncertain future.
Having a short commute means that you have more time to spend on the things you need and want to do, and more money left over. A short commute also means that you have a prayer of getting home if you are forced to do it on foot. Very few of us are up to walking more than ten or fifteen miles in a day. If your job is much further than that from your home, you may want to think about how you would get home if you couldn’t use your car. So closer is better.
So if you are starting out or thinking about relocating, this is what you want to look for: a single-family house in a decent school district (if you have children) with some land and services nearby that is within 20 miles of the main jobholder’s job.
How do you find such a dream property? You start with a map. Purchase or print one out that has a small scale, i.e., local or county level versus the entire state.
Take your map and put a pin into it where the main job is located. Now using a compass, draw a 20-mile radius circle around the job’s address. Use the distance scale on your map to get the circle size correct. Start looking for property inside this area. A 20-mile radius circle is 40 miles across, giving you potentially hundreds of square miles of houses to choose from.
If you must have two jobs to bring in enough income, then draw a 20-mile radius circle centered on each job location. Your target area is where the circles intersect. If they don’t intersect, then either draw bigger circles until you get a joint area or one of the two job holders should consider changing jobs so as to spend less time commuting and more time living. If you are in this position, you should also seriously consider your living expenses and what can you cut back on.
Your long-range goal should always be Financial Independence. Cut back, cut back, cut back and use the second job to pay off all the debt. Then, when your household is debt-free, use the second job to build a fat cash stash. When you reach this position, it’s time to think about ditching the most-hated job.
Next Week: Zeroing In on Your Dream Home