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Buy a house and travel RTW for 1 year to 18 months?


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Lost in Place
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  • Added on: May 12th, 2011
"Finding tenants with the advance knowledge that they're getting the boot in x months can be difficult"

I don't purport to know anything about the rental market in your area, but in my city (in Australia), the rental market is so tight and competitive that renters are glad for pretty much ANYTHING. My husband and I took our flat knowing we'd probably be kicked out in 2 years (3 years later and we are still here :P). So, to the OP, it really depends on the rental market in your area whether you'd be likely to get renters for a limited period of time (12 - 18 months).

"anyone who thinks that owning a home is an investment these days is stuck in a mentality that was only valid decades ago"
That's really not true. Over the broad scheme of things, houses will almost always appreciate in value. My parents bought a second house ten years ago and have not made a cent of profit on it (the rent covers the interest on the mortgage + expenses and that's it). But they WILL make a profit when they sell it as the value has appreciated so much (and will continue to do so). Home value changes so much city to city, state to state, country to country that you *cannot* make such broad sweeping statements. I understand America's in a pretty bad place in regards to home values right now, but it'll come out the other side eventually.

Some people are saying you're better off not buying the house because it will tie you to one location when you finish your trip. This could be a valid issue, if the area you're buying in is not likely to appreciate in value anytime soon. But if it is, then perhaps you could just sell again? It depends so much on the housing market in your area I don't think anyone can tell you for sure what you should do.


Holds PhD in Packing
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Joined: September 26th, 2007
Location: San Cristobal Mexico currently

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  • Added on: May 12th, 2011
It will almost always appreciate...true, with the keyword being "almost". However, when compared to other investments, particularly with the drawbacks of owning a house, they're not always the best choice for everyone and they're definitely not a good choice for someone who is going to buy their house then leave it almost immediately.
Traveling through Mexico and Central America starting in January '09. Hit me up if you want to meet!

mono loco

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  • Added on: May 13th, 2011
It is a big decision. Personally, I'd see it as an extra hassle having to deal with a rental property at home while traveling. Even with a property manager you're going to have to approve repairs, possibly arrange secondary opinions on those repairs, verify you're being paid, etc... To me it would feel like a burden I was always carrying along. But, saying that, I met several people while traveling that were renting property at home and seemed to be doing fine.

As for the friends and family that aren't supportive, I can almost guarantee once you're on the road they'll all be writing about how they're envious and "living vicariously through you". Most people (especially in America) don't understand that they have a choice to travel if they really want to. Society tells us we're supposed to get a job, get married, buy a house and settle down. To stray from that means there's something wrong with you. F@*% that - do what you want. The experience and memories you get from traveling really are priceless.


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Thorn Tree Refugee
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Joined: March 14th, 2011

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  • Added on: May 13th, 2011
Thanks for the responses. I read through them several times, and will continue so. It’s really giving me a good insight of what I want to do.
I live in California’s 5th largest city. http://en.wikipedia.org/wiki/List_of_la ... population
My folks bought a house in this city in 1994 for $114K, and sold it in 2003 for just over $300k. Course now home prices in this area are back almost to where they were at in the late 90s. Then again there’s a lot of foreclosures in my area, not record breaking like in Las Vegas or some of the neighboring cities further north where I live. I graduated from college with a degree that was really high in demand. My classmates were being offered jobs before they even graduated from college. Now in today’s situation, it’s almost the exact opposite, graduates in this degree can’t even get jobs because employers don’t have the funds to train someone without experience. I’m fortunate I have 5 years of experience now, but there’s no guarantee what will happen after I come back from this trip regarding finding a job.

Now I understand I shouldn’t try to feel pressured buying a house because most of my peers that I know are doing it, but at the same time I have to at least look into it.

vagabondette74 wrote:I vote don't buy. Your trip will change you. When (if) you come back, you may want a completely different lifestyle in a completely different location. Don't tie yourself to an area before you've experienced anything else.

Yeah that’s a really good reason, same situation for me, nothing is really tying me down at the moment. It’s almost I impossible to predict the future. Who knows If I wanna come back to this city when all is said and done from my round the world trip. I actually wanted to join the US navy after I graduated from high school because I loved the idea of moving every several years, and even then at that age I always dreamed of going to other places. That never happened, I went and got my college degree. Of course I still have plans to join the US navy, maybe after my RTW trip.

Income wise, I managed to save up $40k/yr for the last 5 years. That’s why I was considering at least buying a small house around $125-140k range and pay for it in full, so I don’t have to deal with mortgage payments. I was thinking of it as an investment. Then again there’s property taxes and insurance and utilities to deal with. For those who has already payed a house down in full and still travel long term, how will that pan out? I know you can pay bills online now, so figure that would be easy to take care of when I’m overseas.

It’s a hard decision, there are no guarantees I may get a job after I come back, I also have to make sure I have enough money to get back on my feet after I come back. Buying a house, even paying for it in full will surely put a strain financially when I finished this RTW trip. And like someone said, who knows if I even want to continue living in this city when all is said and done.

On the other hand not having to worry about a house, not having to put down a huge amount to buy a small house, and instead just traveling for a year to 18 months will leave me better off financially to get back on my feet. And I suppose it will leave doors open for choices regarding my future. I don’t know, I wish I could have it both ways  :D


Holds PhD in Packing
Posts: 267
Joined: September 26th, 2007
Location: San Cristobal Mexico currently

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  • Added on: May 13th, 2011
with $200k I could travel full time for the rest of my life and never work again. :)

*IF* you buy a house, you would be very foolish to pay it all in cash unless you get a *significant* (meaning 20-30% off) discount. Learn about leverage. With interest rates low you'd be better off just putting 20-30% down and making the mortgage payments (with a bit extra each month to pay down the principle). Tying up almost all your cash in a single asset would be a really bad decision. Don't put all your eggs in one basket.

However, I still vote not to buy the house. Particularly if you intend to continue traveling with the military. If you've always had the itch to travel I'd be shocked if you end up going back in living where you are now.
Traveling through Mexico and Central America starting in January '09. Hit me up if you want to meet!


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Extra Pages in Passport
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Joined: August 20th, 2003
Location: Edmonton, Canada

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  • Added on: May 15th, 2011
I'm seeing a lot of investment advice here, and I'm a bit concerned about it.

Don't try to predict markets. Saying "anyone who thinks that owning a home is an investment these days is stuck in a mentality that was only valid decades ago" is just as false as "odds are the house will have gone up significantly." Everybody has their own preferred asset classes, and "secrets" to success. But what worked for one person over the past 20 years isn't necessarily going to work for another person over the next 20 years. On the other hand, it might.

Make a decision that you'll be happy with whatever the housing market does. We are talking about just a little over a year...the amount that markets move in a year (in either direction) is probably not going to make a meaningful difference in your life 10 years from now.


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  • Added on: May 17th, 2011
jetlagged wrote:I was thinking of it as an investment.

If your thought process is that buying a home is an investment then renting is also an investment as it is often a better financial move to rent than to buy.

jetlagged wrote:That’s why I was considering at least buying a small house around $125-140k range and pay for it in full, so I don’t have to deal with mortgage payments.

Be careful here. If you own it outright and turn it into a rental than most income generated will get taxed. Whereas a rental with a mortgage is unlikely to generate taxes as ones income is offset with the mortgage payment, depreciation, etc. Now, while your traveling and have no income it's not such a big deal as your taxes would be minimal and not at your highest bracket. However, it's better to take the opportunity to convert your tax deferred retirement plans (401k, etc) into ROTHs instead. See here

Add even if it's not a rental, if you place fixed income investments in your tax deferred space over the long term the interest rates will probably increase (it'd be hard pressed to decrease) and be in excess of your tax deducted mortgage rates giving you an arbitrage opportunity over a large duration of your mortgage

jetlagged wrote:Income wise, I managed to save up $40k/yr for the last 5 years.

With 200K, and it was me, I'd be inclined to buy a 125K (or so) place and put 25K down. Then put 25K toward the trip. The remaining 150K I'd split 60/40 between stocks/bonds with the bonds ideally in tax deferred if you have any or any left after a ROTH conversion. That would make my asset allocation percentages inclusive of equity in property about 15/50/35 (property/stocks/bonds).

When I came home I'd sell off stocks/bonds as needed for short term money. Most likely this would involve selling stock and then re-buying them in tax deferred space by selling off bonds. But this would depend on many variables depending on whether they've increased or decreased in value or what my tax bands I expect this year. There would be other ways to do this.

I'd also be more inclined to buy a place that I could rent out a room to a friend or co-worker then I already have a tenant when I leave. And I'd expect it would also be a place that I would turn into a rental as I moved on in life (married, kids, moved, need bigger house, etc)

Anyway, I'd highly encourage you to post your question at Bogleheads. There are some really sharp people there who are capable and willing to provide much more insight then I have.


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Guidebook Dependent
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Joined: May 20th, 2011
Location: Surfers Paradise, Australia

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  • Added on: May 30th, 2011
I was in a very similar situation. I was 26 in 2008, I had been saving money to buy a house since I got my job in 2004. I decided I was going to spend that money on a RTW trip instead, told work my plans, said I don't want to quit, but I understand if you need to replace me. They said its ok, I went away for 6 months, came home the very last day I could according to what I told them, and went back to work 3 days later.

After travelling for 6 months I found it VERY hard to go back to real life. I saved cash living at my parents house for the next 8 months and bought the house I originally saved for. I lived there for 6 months, and still having problems appreciating the 9-6 life, I began negotiations with my employer to work from the road. We came to terms and I moved out of my new house to travel the world and work from the road. This was July 2010, I'm still out here.

Now I have a house back in California, and I have to deal with tenants and my mortgage from the road, which is not ideal, but you do what you can do make it work.

I absolutely don't regret spending the money on the trip, it was unreal, best time of my life. People said in 2008 the market had bottomed out, but I came back and it was an even better time to buy. Its unpredictable, so don't based your decision on that. If the market does go up, then you have to wait a bit longer and save a bit more before you can buy, so be it. Don't listen to your friends either, they'll be jealous if you go, and if they're not, they should be. Yes you can travel the rest of our life, but the type of travel you'll do changes, trust me. I still like to stay in hostels and go out and party every night, but its getting pretty weird when everyone else is 10 years younger than me. That can't last much longer, my travel style is going to have to change. Take advantage of your youth and do it now.
I also write about my travels and post photos in my Off The Beaten Path Travel Blog, come by and say hi!


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