This is part two of my parent’s retirement story. Click here if you would like to catch up on part one. Their story has inspired me to aim for early retirement and I hope that it will inspire you too. Now I want to talk about housing and how it has figured into their story. There are two parts to this story — housing pre-retirement and post-retirement. This post focuses on the pre-retirement part of things.
There is a large element to housing that is personal and emotional. I would like to think that every housing decision we have made has been all about logic but I know it is not true. There is a lot of ego and psychological junk tied up in where we choose to hang our hat every night. If it was just about logic and utility, the concept of curb appeal would not be necessary. We would all live in plain boxes. Or maybe it is just me that has a lot of mental angst tied up in our house. I talked about this in Life in a McMansion. As I look back over my parents housing and real estate decisions I can see how they benefited by avoiding emotional attachments to their houses. They have no problem telling me on a regular basis that we should sell and move on. I gasp and ask, “But what about the children?”
Yes, I somehow survived moving a lot as a child.
We lived in a number of houses while I was growing up and we moved when it suited my parents or when there was an opportunity they could not pass up. My husband on the other hand lived in the same house until he left to marry me. It brings an interesting dynamic to our relationship and our views on housing. Just warning you as this will likely come up in a future post.
If at first you don’t succeed…
My parent first foray into real-estate was a failure. Their starter home was in a new development and the builder went bankrupt after they had moved in. Houses that were half-finished and left to decay. The houses that were finished were taken back by the bank and since they could not be sold because of the condition of the development they were turned into short-term rentals (think — crack houses) and the whole place started to look like a scene from The Walking Dead. My Mom tells me that it was not uncommon to find chickens running around the front yard.
Before there were hints of something rotten going on in the development my parents had realized they would like to be closer to extended family and had started building a new (modest) house on some land they had bought from my Grandfather.
When it came time to sell the house in the subdivision from hell, it was clear it was not going to happen. In the end, my Dad walked into the bank and handed over the keys. I think that this would have destroyed most people or at least made them gun-shy about home ownership, but they recovered. I asked my Dad about his trip the bank and he said, “Not the best day of my life, but what else could we do.”
My parents moved to their new house while it was still under construction. They did as much of the work on the house they could do themselves. They did bring in trades to do the work that was dangerous or was required to pass the building inspection but most of it was built with their own sweat. In the beginning the they did not have any power in the house. The power company brought the power to the edge of the property and left on outlet attached to the hydro pool. My Mom would get up in the morning and march to road with the electric frying pan and make my Dad breakfast at the roadside and my mom would wave at people as they drove by. I don’t know if that would be legal these days – but they made it work.
We did eventually get electricity and my parents finished the house but after a few years (and a few babies) it was just too small for us and and not build an addition, they decided what they really wanted was waterfront property. We moved.
Sweat Equity Pays
My parents bought a series of houses that were all in serious need of tender loving care. Extreme TLC in some cases. I can’t tell you the several times I have walked into my parents latest purchase and looked at them and said, “What on EARTH have you done?!?” They have this gift of being able to see beyond the surface and into the investment potential of a property. They make sure the house had good bones, is in the right location and they are not afraid of investing sweat equity to bring out a property\s full potential. They can see diamonds in the rough.
When I was a teenager, my Mom bought some inexpensive lakefront property (sounds like an oxymoron doesn’t it) and they decided to build a cottage/cabin. Again, they built as much of it they could do themselves. My Dad drew up the blueprints. You might remember from part 1 of this story that my dad has a grade 10 education and has no drafting experience. He spent hours working on those plans. The bulk of the building materials they used were “reclaimed.” I remember that the roofing was made from a recycled above-ground pool. The cottage had character and was a masterpiece by the time they were done. It looked like something out of a storybook.
The equity from both their home and recreational property made a difference when it came time to retire. I understand that they are “Boomers” and were blessed with a positive real-estate environment and that my generation and the ones that follow may need to think about real-estate and housing in a different way.
But I think there are lessons in their story.
They did not let a failure deter them. After the first real-estate fiasco, they could have thrown up their hands and said “Well that’s it for us,” but they didn’t. They kept going and didn’t let that setback define them.
Sweat equity pays dividends. They got more out of their houses than they put into them. It was hard at times, a bit chaotic living in spaces under renovation, with a bunch of kids but it paid off. Take advantage of opportunities that others miss. My parents could see the potential and profit where others could not. I also believe people overestimate the amount of work needed to fix up a house and vastly underestimate the upkeep of a new house.
Housing matters. It takes up a good chunk of our income, regardless if you are a renter or a homeowner. We all want to live somewhere we love but we also need to be pragmatic. The housing choices we make during our working years have a significant impact on our retirement.
Where do my parent’s fall on the Buy vs. Rent debate?
There was a time where they felt renting was a waste of money. They don’t any more, but I will talk about that next time. Their post retirement housing story is even more interesting. I promise.
P.S. As I write this my parents are travelling (frugally) in Wales. I’m a little bit jealous.