[doctorknow]

My wife died a couple of years ago and I am living in a designer home (Iris) . I am thinking about selling since the market is good right now. However If I downsize I should like to buy a smaller home or cottage for myself and A second smaller cottage to rent for income. I am mortgage free so the sales price could possibly pay for the two smaller houses. Has anyone done this? What are the considerations?

[melpetezrinski]

I just sent you a private message.

[charmed59]

Originally Posted by doctorknow

My wife died a couple of years ago and I am living in a designer home (Iris) . I am thinking about selling since the market is good right now. However If I downsize I should like to buy a smaller home or cottage for myself and A second smaller cottage to rent for income. I am mortgage free so the sales price could possibly pay for the two smaller houses. Has anyone done this? What are the considerations?

Smaller homes, such as courtyard villas are very much in demand. In some villages they are selling for as much as the neighboring designer homes. If your Iris model is in a good location with a good lot such view lot or pool, or something else that makes it special you may be able to get a villa in that neighborhood for less, but I’m not sure you could get two for the price of that one.

To get two homes for the price of your designer you may have to move to a less expensive village.

I have two houses in the Villages I rent out short term. Both rent year round due to their proximity to a square, and one has a pool. I do take very short term (3 day) renters in the summer, and that helps keeping them full. It’s a lot of work, and after taxes, utilities, and maintenance it’s not a big money maker. But then again, the houses themselves gain in value, so when we sell them we will make a profit too.

Admittedly, I’m mostly holding on to these houses to downsize from our bigger house here in the Villages when the time comes.

[Malsua]

Originally Posted by doctorknow

My wife died a couple of years ago and I am living in a designer home (Iris) . I am thinking about selling since the market is good right now. However If I downsize I should like to buy a smaller home or cottage for myself and A second smaller cottage to rent for income. I am mortgage free so the sales price could possibly pay for the two smaller houses. Has anyone done this? What are the considerations?

I can't blame you for wanting to downsize and do exactly what you're talking about.

The only issue I see is that while the market is great if you're a seller, it's not so great if you're a buyer and in this case, you're a 2x buyer.

Maybe buy one, wait a bit and buy the second. The market is cooling down some and the Fed is meeting in September to discuss rates. If they start the climb off 0%, housing will cool significantly. Inventory is coming back and fortunately this market is nothing like the 2008 market, so while it may pull back some it's not going to bottom out.

If you're concerned about the excess proceeds evaporating in a down market, put the money in a Vanguard Prime money market fund and it will at least hedge against inflation to some degree. I'd put it in VTI, but I have a lot of risk tolerance.

I do own a rental property and it's not without work. If you want to make money, you have to do seasonal rentals. If you want to earn money easier, a yearly rental works, but you're not making nearly as much. Since you won't be carrying a note on it, that may be the route for a decent amount of passive income.

Good luck either way but I think your idea is solid.