Have you considered purchasing this house, selling your current home, and renting something small and inexpensive for the time it takes to fix up the "new" house? That way you'd be reducing your financial exposure. If you only plan on staying in the "interim" house for a year or less, you'll spend a LOT of money on transfer taxes and RE commissions -- it's highly unlikely your "interim" house would appreciate enough in one year to offset these costs.

I must not have made myself clear.

We bought house #1 35 years ago. It's paid off. While our RE taxes are high, all it costs to live here is basically taxes, insurance and utility bills. #1 is currently about 5 miles from DH's work, his office is moving in June and will then be within walking distance.

House #2 will be our eventual retirement home. It's actually in such good shape, that it needs very little work--hardly even any cleaning. It's in unbelievably good shape, and so well kept. But it's at least a hour from DH's work (much more during rush hour).

One of the reasons we want the overlap is that we really need to fix up--in order to sell--house #1. After 35 years, it's comfortably lived in, reasonably maintained but definitely needs a bit of sprucing up to sell. We estimate, that doing the work ourselves (and finding that as senior citizens we don't move as quickly as we once did--LOL) the work will take us about a year. By then, by many estimates, the current housing depression may be starting to sort itself out. If we buy #2--we'll probably spend weekends there, and work on #1 during the week.

Renting just isn't in the budget. Paying the mortgage on the new house is going to stretch us to the limit, I'm afraid. And selling right now, isn't nearly as good an idea as buying--given the financial climate. Nor do we want to rent out either house, because we can't afford to fix the kind of damage many renters do (my sister is a landlord--that is NOT for me--LOL).

I do appreciate your input, though--and understand what you're saying. I just don't think I explained exactly why we wanted to temporarily hang onto both houses.

Hi, what people do is put in an offer 'conditional on the sale of our present house', and then work like heck to sell yours asap. Conditional offers may not be looked on too well by sellers unfortunately, but it doesn't cost anything to try, and if it is accepted, and you get lucky selling yours quickly, you'll have a new house! Do go over everything with the realtor (of the new place) very well - they'll know how to handle it. I do suggest though, as you probably haven't house-hunted in a very long time, that while the place you now want to buy looks so good to you, is it at all possible that you don't realize how many newer homes also may have a lot of similar features, and that you could even cheat yourself by not looking at more (regardless of what happens to the current one)?

azzalea there is no magic wand that will give you everything you want the way you want it to play out. If you don't want to sell your current house now, then yes, you will be stretched thin if you purchase the second house since you don't want to rent out either place. Your choices include:

* Begin fixing current house for future sale hoping second house is still around when you get to the point that you are "ready"
* Buy second house, live frugally while fixing current house for sale and put it up asap instead of at your leisure (and hubby commutes)
* Keep current house and rent it out until you are ready to sell current house (and hubby commutes)
* Rent out second house while readying current house for sale
* Purchase second house and list your house asap (and hubby commutes)
* Lucy's suggestion above (and hubby commutes)

None of which you seem to want to do. There are many choices here, just not choices you would like.

So, here's few questions: Exactly what do you want to fix up in the current house before you put it up for sale? How much extra do you think these fixes will be worth? Will the value of the fixes be enough to cover the taxes and utilities for a year on the current house? Or, are the fixes just for a quicker sale? And, if the fixes will add a disproportionate amount of equity to your current house making them necessary, what about contractors (painters at the very least) to speed the process along?

It sounds like you're OK (albeit a little stretch) owning both houses at the same time, and I think your plan sounds OK, assuming you can carry both houses for a while in case you have problems selling the first one.

But xamsx has a good point - will the additional money you get for fixing the house up be more than the amount you'll spend on a year of taxes and utilities?

Also, it sounds like it would cause a hardship for you to actually live in house #2 while your DH is working because of the commute. What happens if house #1 sells quickly?

As someone who is EXTREMELY picky about features of a house, I know how hard it is to find a house with all the things you want. I know in one case I looked at 80 houses before I found "the one". But it's hard for us to know if there are other houses in your market with all the right features.

I must not have made myself clear.

It was a little hard to follow because you were going to purchase the retirement house now, work on it to get it ready for when you are ready to retire but living in it now doesn't work for you. You didn't mention that house #1 needed work to sell. It also sounds like you may be over extending yourself. You say it is expensive right now with the one house, what about the mortgage and everything else you'd pay on house #2?

For one, living in house #1 & working on it is a pain, especially if you have kids. By the time you finish painting one room, go to the next, the 1st room needs touch up.

2) what if something happens to your DH and is out of work? We don't like to think of those things but I am proof that it happens as mine fell from his tractor trailer in October & was out of work 2 months.. but he was lucky as someone he used to work with is currently on life support for the same fall & they are trying to get the wife to pull the plug. It has been rough to say the least for us after finally finding a house & having it built.

I'd also feel better if you looked at many houses to see what is out there before jumping on the 1st one.

I was confused as well. If you can afford both homes, then go for it. But since it will be a financial stretch, keep in mind that the extra commute for your dh will result in a large increase in the cost of gas for him to get to work. Gas prices are going to rise even more. Make sure you add that into your budget to see if you can still afford house #2 while you fix up #1.

Personally, I'd wait the two years and then go buy a house. Situations change. What seems perfect now, may not be what you really want in two years.

It sounds like you have reached a point in your lives where you are nearing a well deserved retirement. Many would love to be in your position of having your home mortgage free. I know you've fallen in love with this other house. I could offer several financing options but, instead, I'm going to offer this advice...

Don't do anything that will risk your retirement with only 2-3 years to go! That's not enough time to recover. You are at a point in your lives where investments & financial risks should be moderating. Hanging on to your principal & keeping it growing ahead of inflation isn't an easy task in today's economic times. Off soapbox.

And, with that...I wish you the very best in whatever you decide works for both of you as a couple.

/tricia

If you can really afford it & HAVE to have it, I would go with xamsx's option #2: "* Buy second house, live frugally while fixing current house for sale and put it up asap instead of at your leisure (and hubby commutes)"

What I question is wanting a retirement home with more than one level! I'm just a young-un @ 50 - haha - but had some ankle surgery a few years ago & what it taught me was that I would only retire to a single story house.

With that in mind we found & bought ours a month ago. Two hours from our current house, our work and both sets of parents. It was exactly what AND where we wanted & it was the first that we looked at too!

Got an unbelievable deal from an estate (a little over 50% asking price - but heirs were in their 60's & didn't want to deal with it at all) and are on the 5-10 year plan to have it fixed up & ready to move into full time. In the meantime to make it enjoyable as a weekend place, we've primed EVERYTHING white - it was a dark paneled, yellowed ceiling 1960's house, but with a ton of windows, on a beautiful lot at a small private lake & are putting in "new" solid oak kitchen cabinets (the whole set scored from a high end remodel found on craigslist for $250), new tile flooring (closeout at Lowes @ 4 per tile) & ooops paints. We can change everything later if we want to - but right now we're going for clean & cheap!

I understand your objective - wanting to live nicely in a much less expensive way in retirement. Good luck!

Another thought - it's a great price for the house now, but how will you feel in a year if the prices continue to go down and you are stretched financially for a home that is now worth less than when you bought it?

Olga, not only that but it's a double whammy if both houses decrease in value.

I forgot to mention in my last post... I might think to call out a few agents to see what they say for house #1 & selling it now verses fixing it up, and exactly what they would fix up and what they value would be after doing it; in the current market of course as no one can predict what it will actually be worth later on.

All good points you make.

But looking at the big picture, housing prices are down right now, and projected to start going back up within the year or so (at least by the experts I've heard)--so economically, it makes sense to buy now, while things are low. And believe me, this is a GREAT price for this house. They've already dropped their asking price $15,000 in the past month, alone. Interestingly, where we currently live, the housing prices have actually RISEN even though, they're dropping most other places, so we do live in a very secure area as far as RE value--that's definitely something we've factored in--and it's an area with some of the best schools around, another great selling point, no matter when we sell.

Re: risking retirement $$$-- I see that as one of the big reasons FOR buying now. One of the 'fixes' that the government has used in the past for the kinds of economic problems the country is having now is inflation. If they do that this time--which is quite likely--we'd be much better off having our money working for us in real estate, rather than sitting idly in the bank, losing value every day. Then, in a couple of years, when we sell house #1, at a good, market-based price, we will most likely really come out ahead.

We can afford to carry both houses for a few years, IF we live frugally.

And, I wonder--does it make any difference to your answers to this question, if I tell you that the money we're using to buy this house is NOT our retirement money, or our family savings? If's 'found' money--money I've received as a prize, and from an inheritance.

I think you're trying to rationalize buying a house you fell in love with way before it was time to go shopping.
And I said that with a smile!

Fix your old house up while you live in it. At least get it ready to go on the market before you even start looking for a new house.

If you think it will be a stretch to own both houses at the same time, it will be impossible. There are always things that come up that haven't been factored in. You're in a good situation financially, so don't screw it up by falling in love with the first house you see.

You are living on one income, and likely a small one at that. No criticism intended- my husband is a blue collar worker, too. But it would be very easy to become over extended and get into a mess that would twart years of retirement planning. You are just this close to retirement so I would play it extremely conservatively at this point.

azzalea: "But looking at the big picture, housing prices are down right now, and projected to start going back up within the year or so (at least by the experts I've heard)--so economically, it makes sense to buy now, while things are low."

Yes, but that is exactly what the so-called "experts" were saying almost two years ago in 2006. At that time, they said the "housing downturn" would continue into early 2007 and then prices would start going back up by the 3rd or 4th quarter of 2007. Then it became, prices would stay down for all of 2007 and the turnaround would begin in 2008. Now, the turnaround is projected to be 2009 (as you stated in your post). Something tells me that by this time next year, the "experts" will be saying that the turnaround will occur in 2010 and that once again, now (of course) is an excellent time to buy.

I wouldn't base any financial decisions that would stretch your budget to the limit, on what experts are saying about when to purchase a house.

Azzalea, at the risk of dragging in a parameter you haven't mentioned, if you feel very strongly that buying the second house is what you should do, is there a way you can bring in more income? Again forgive me for presuming but I wouldn't think that at 58 YO you have young children, so what are the options for you taking on some kind of job temporarily? Even if you work via a temp agency or at a relatively low level you could count on more money for the next year or so till you are ready to sell.

Ann

Ann, that is an option, and one I'm seriously considering. I do some 'free lance' stuff that I'd sort of let go the past few years, because of taking care of my mom. And I spent several hours just today, doing some work on spec that hopefully will bring in some serious $$$ On the other hand, I'm the one who has the free time to work on the 2 houses, so if I do go out to work now, the overlap time is much longer.

There's one other thing I guess I neglected to mention. This is NOT the first house that's crossed our path. I've been looking online, and doing drive-by's for the past year (in this area, other areas of our state, and in other states). This is the first house we actually went through because it literally is the ONLY house out of thousands that met our requirements.

Azeala: It sounds like to me that if you pass up this second home and it gets sold you will be kicking yourself. If you feel that you can afford both homes, then do it. My older did the same thing and she has two homes now. She is fixing up the new one in NC on weekends, while they live in the one in N. Va. They took their house off the market last year bc they had hardly any showings. In the meantime she lost her job and had to find a new one, which luckily, she did. All after she bought her second home.

You have had some good advice on here. But ultimately you and your husband will have to be the ones to decide. If this money is not your retirement money than it sounds like you can afford the new home as a vacation home for now.

Good Luck

I like Ann's idea as well. If you can budget yourself effectively and can carry the costs, I would go for it. It seems as though you love this house and you wouldn't want to lose it. If you got a part time job, then you wouldn't have to live so frugally! If this home's price is truly a great price, then it would be worth it. When the market starts to rise again, you will have equity in your house already if it's not already paid off from the sale of your current home.
Good Luck!

Several things really bother me about buying a retirement home *before you retire*.

I don't like the financial stretch, especially during a Recession. We don't know where the country is going. As many as 150,000 jobs in the financial sector may be bye-bye in NYC -- where that sector accounts for a third of all jobs. The adjustable rate re-sets have yet to reach their peak. The coming elections may rattle a lot of crockery. Consumer confidence may not rebound fast. It was slow to recognize economic realities! Also, I don't know how secure your DH's job (or pension, if thre is one) may be, in this time of layoffs in many industries. There is also a health issue that only grows as we age.

I don't like the extended commute over a long period of time. Yes, there will be additional gasoline costs, but it's the TIME apart that is most insidious IMO.

There's too much time between buying and selling. You can't know what you'll get for your present home many months down the road. It does sound like the two markets are different -- but that is probably a constant. (In my area comparing year over year: In highter markets there have been half as many sales but for more money per sale; in lower markets there have been slightly fewer sales but for less money per sale.) The home you are looking at has been reduced, but it's not in foreclosure, being sold at auction. (That's when I might say, "Jump!". I'd also say, "Rent out one house!")

Finally -- IMO the 'dream' house might be a dream house for a large family with kids. It's way too big to be my dream in retirement. How long will you have kids at home? How are the schools in the new location? If you DO have a flock, they'll probably soon be out of the nest. You wouldn't be the first homeowner I've known to buy the dream FAMILY home right when the kids start leaving.

sounds very similar to what we did last year.

I will be retiring next year - we want to retire to a smaller town (we are on the ouskirts of Houston TX) - we found the 'perfect place' and went ahead and purchased it....it is too far away from my job to commute; I need to do a lot of cosmetics before putting the current house on the market (and it isn't paid for like yours is).

We are currently a one income family as my DH is dealing with a very nasty cancer (for the last year). What is making my situation do-able is I have a grandson living in the 'new' place and paying me rent.

If you feel reasonably comfortable doing this and have the means to improve your financial situation enough to not be too confined financially for the nexst 2 years, I'd do it in a hearbeat. I do hope you have at least one bedroom on the ground floor.

carolyn

First off, thanks to all who have commented.

Chisue--to answer some of your concerns. My husband's job is VERY secure--bill collector for the local utility company. More work than ever these days. He's been eligible for retirement for the past 3 years--he can retire any time, with no notice. Also, his pension is secure. Because he's already retirement-eligible, even if he were to get laid off, he'd be able to collect his pension.

He won't be commuting over an extended period of time. That's one of the big points for keeping both homes for a year or 2. We'll live mostly in the 'old' home (walking distance from his job), with me going back and forth a few times a week, and we'll head to the 'new' home on the weekends. At most, Dh will only be commuting a month or 2 or so.

As to the market--prices in our town are STILL going up, not down. There are very few homes for sale in my neighborhood, because it's extremely desireable and even in this climate, they're selling and quickly. House behind me just sold in 8 days, and they had several buyers bidding on it--got what they wanted, no problem. Of course, no one can predict the future, but traditionally, even in rough real estate times, my neighborhood has held it's value and been one where homes sold quickly and easily. Another good point.

I'm not sure where your assessing the house we're looking at as 'large'. It's smaller than the one we have now. First floor only has: small living room, no dining room, small laundry, decent kitchen, 2 smallish bedrooms and one that's too small to really use as a bedroom, so it will be my craft/computer room and an adequate, but by no means large bathroom. Only reason this house sounded large was that the basement is totally finished and has another bedroom, a large family room and a small office--which really looks more like a closet to me.

someone else commented they hope there's a bedroom on the first floor. Yes, it's a rancher and everything necessary is on the first floor. Basement will be a nice 'extra'--and will be a great place to entertain when the whole family is over.

Now, the update:

We have gone back and forth over the numbers and find that there is a way we can buy this house fairly comfortably. Of course, we'll be cutting back a little--but that seems a worthwhile sacrifice.

We returned for a second look Thursday evening. Were just as entranced as the first time, even with the few (very few) flaws we found. Friday morning THEIR agent called chomping at the bit, to see if we were making an offer (think they're anxious?). By mid-afternoon,we did submit an offer. And by Friday evening, I'd gotten a pre-approval for the mortgage from our bank, even though the property is a little out of their usual geographical area.

Basically, if this goes through, for the next year or 2, we'll have a year-round-home and a vacation place. Not really that unusual. Lots of people do. When I was growing up, everyone had a summer home 'down the shore' My sister still has vacation house we had when we were kids (and talk about a BIG house...)

You're not in NJ are you? If so, are you comfortable saying the towns?