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The price of not full-timing

As we consider the goal of having a home base, we’ve been tallying up the cost of this little luxury. This may be helpful — in reverse — for those of you considering full-timing in an RV, to see how much you’ll save if you sell your house while you’re out, like our friends Bobby & Danine.

Petey gave us an article that appeared in the Wall Street Journal, March 12, 2007, by David Crook, entitled, “Why your house isn’t the investment you think it is”. You may be able to find it online but I think you need a subscription to read it. The essence of the article was that houses are inefficient or even bad investments. Although people think they make money when they sell, in most cases they actually lose money when the cost of maintenance, taxes, insurance, and interest are factored in. Mr. Crook calls the check you get when you sell “a partial rebate” of what you spent, not a windfall or profit.

I looked at the numbers for our last house and found he’s right, at least in our case. It looked like we made money on our house, but we actually lost money. We actually would have been better off not building on the land we bought, renting for the eight years we lived in the area, and then selling the land — no kidding. For most people, it turns out, houses are something you buy because you want one, but from an investment standpoint you’d be better off putting money into rent and a mutual fund. It varies a lot from one local market to another, of course.

This naturally dampens our enthusiasm for having a “home base”. Financially, it’s pretty darned risky to plunge back into the real estate market when we don’t expect to be here for more than 7-9 months per year. It’s a huge luxury compared to the lightweight and inexpensive lifestyle of full-timing in the Airstream.

Our “housing” expenses, as full-timers, amount to $400-600 per month, plus an amortized $500 per month for the trailer itself. That includes our campgrounds, utilities (water, sewer, and propane), and maintenance. We don’t pay property taxes, or for garbage pickup, electricity (except this rare moment while we are staying for more than a month), cable TV, lawn mowing, Home Owners Association or condo association dues, etc.

This stuff is probably ho-hum to you, but we’ve been on the road so long that all of the expenses associated with owning a house seem outrageous to us now. Since we sold our house two years ago, we have become used to putting money in the bank account and having it stay here. I had forgotten how invisible forces seem to suck it all out when you have a house to feed.

So why buy? There are a few reasons still left:

1) We have a child. She is doing wonderfully in our homeschooling program and we love the time together, but we’d like her to have more friends and at least a test of traditional school for a year or two. We never intended to be full-time travelers forever.

2) Health care. Continuity of care is important when you have any sort of chronic illness. We’re pretty healthy right now, but there have been a few things to remind us that this can change. If one of us gets really sick, we’ll want to park somewhere and deal with it. Having a home base makes that easier, since we’ll already have known physicians and facilities to go to.

3) For people who are only going to full-time for a short period, hanging onto the house may be the smartest choice. The cost of selling (broker’s fees) and the cost of re-acquiring a house (closing costs, market appreciation) can be more than the cost of just keeping the old homestead.

4) Satisfaction of ownership. Sometimes, you just want to have a “nice” house and feel like it’s really yours. If owning a house is a big part of your self-image and makes you feel good, that’s a reason to have one that transcends financial matters. But I’d recommend that frequent travelers or full-timers be honest with themselves and acknowledging the house for what it is: a luxury, not a financial decision.

Renting is also a good option. In our case, renting an apartment or house would probably be cheaper than buying for the short term, so a big part of the buy/rent decision will be our willingness to commit to the area for several years, at least. Having an Airstream to let us travel (and spend summers in the cool northeast) makes that commitment easier.

This is a work in progress … we’ll let you know how it goes …

3 Responses to “The price of not full-timing”

  1. Michael Young Says:

    Rich,

    Home ownership is a consumption decision, not an investment decision. The WSJ article didn’t call it that, but that’s how economists classify the choice.

  2. Leigh Says:

    I love reading about where you guys are in life right now. I got massive anxiety after we put the deposit down on a year rental!

  3. Doug Says:

    I read this post the other day and the idea stuck with me, processing the idea in the back of my brain ;)

    The notion of ownership versus renting is 100% a choice, but I have a hard time believing that ownership is always money losing. I think the problem in the US is that people tend to buy/build more than they need (I am included in this). That’s the part about living on the road, it’s only what you need.

    Small footprint homes that are built with sustanable materials or materials that are super energy efficient accomplish two goals, keeping the amount of consumption to only what you need (land, materials, purchases, energy).

    I think if I were going to buy in the SW I would be looking at a smaller home but with the principles of an RV. I would also include a solar electric and hot water system to limit the amount used.

    Good luck house hunting. I’m a firm believer that having a home base is important. Where else will you be able to store all your toys. :)

    Doug

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