A Tale Of Two Houses and A Condo

As we left Phoenix to spend August in Colorado,

our first stop Pagosa Springs, we were surprised at how emotional we both were as we drove away, what we were doing finally felt real. We reflected on how nice it was to get out of the heat but also on one of the hardest decisions we had to make, what to do with the San Diego house we were living in.

When we met, Ann owned a condo and Ian owned a house, both in San Diego. Since we started living together, Ann moved into the house and we rented out the condo.

Our initial plan was to rent the house while we were gone for the year. But upon further reflecting we realized few things:

1. The thought of embarking on this trip while paying two mortgages made us nervous. Yes, the rents would cover both mortgages, but what happens if one or both properties go vacant.
2. When we come back to San Diego, we were planning on moving into the condo and not the house for a variety of reasons. The condo is less expensive and given that travel will always be a part of our life, leaving a vacant condo would be more secure were we to continue to travel for an extended amount of time.
3. Both properties have stairs so neither provides a good age in place location.

We talked about selling the house, selling the condo, selling both.

After looking at all of the numbers, we ruled out selling both since we wanted to be able to move back to San Diego, and with the high cost of housing, that might not be an option if we didn’t keep one property.

If we sold the condo, there wouldn’t be enough to pay off the house after all closing expenses.

If we sold the house, even after closing expenses we would still have enough to pay off the condo with money left over. So that’s the option that we decided on.

The next question was what to do with the extra equity after paying off the condo. We didn’t want to invest it in the market because that’s where our 401K’s and IRA’s are and we wanted to remain diversified into real estate.

We tossed around a few ideas including buying a second condo in San Diego but settled upon the idea of buying a rental house in a community, Sun City Grand, where Ian’s parents live outside Phoenix. It’s one of three retirement communities built in close proximity to each other: the original Sun City, Sun City West, and Sun City Grand. Sun City Grand is the newest and we think that it’s the nicest. It’s also the most expensive with single family houses starting around $185K, compared to $140K in Sun City, and $150’s in Sun City West.  Upon further reflection, it also provided some nice benefits:

1. All the houses are single story with live in place features such as grab bars in the showers, extra wide doorways, etc.
2. The community has been immaculately maintained even though it was built 20 years ago.
3. We could purchase a free standing single family house for less than we could purchase another condo in San Diego.
4. The property taxes are less than a condo in San Diego.
5. The HOA’s are quite reasonable, $1370 a year compared to $300+ monthly for condo associations.
6. It has great recreational amenities including 5 pools, 2 huge gyms, and tons of clubs for any hobby or interest.
7. The overall cost of living is lower in Phoenix than San Diego.
8. The ROI on buying a rental house here wasn’t great but it was good enough.
9. If we need to be available to help Ian’s aging parents, we would be able to without impacting their freedom.
10. In addition to renting the house full time unfurnished, we would also have the option of renting it out furnished during the snowbird season (3-6 months from November–April), more than covering our travel costs during the winter and summer. Which means that we could live in the property rent free during shoulder season.

So that’s what happened! We closed on our new property 30 days after selling our San Diego house!  The final twist was that initially we were planning on renting the Sun City house out furnished during the season and taking all of our furniture from the San Diego house there. That way we could avoid having a storage unit. But after running the numbers, we could get a little more income if we rented it long term unfurnished. However, when we went house shopping, the house we ended up choosing is already furnished. So for 2017-2018, we are going to try renting it out during the season and see how that works out. A benefit is that it provides us a place to live if something goes wrong, or if we just need a break, during this trip.

Ian & Ann