This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.

My wife and I are not fussy about where we live.  We picked out our current house by its size (the smallest available) and cost (the most reasonable we could find).  Location-wise, we have no real attachment to the city.  Most of our friends live at least an hour and a half drive away and our families are closer to two hours each.  Our cost of living is probably higher than it has to be, but the employment rate in the city we live in and the area around it is high enough that if we lost our jobs (for whatever reason) we wouldn’t be without work for long.

We don’t own the kind of house that will appreciate significantly in the years that we live in it, we’re hoping to recoup the interest expense that we’ve paid, and perhaps some of the cost of improvements we have carried out.

Just because we won’t have significant capital gains doesn’t mean we can’t turn the sale of our home into some decent money.  Because we don’t really have  preference where we live, we can move wherever is cheapest in the province or country.  Around the province there are houses available that have comparable square footage to our current home, costs less than half of what our house does and would allow for us to pocket considerable cash on the sale.

The downside with buying these houses is that, even if the home itself is in good shape it is generally priced for the marketplace it is in.  If there is an oversupply of houses, causing prices to go down, it usually means that people are exiting the area rather than entering it.  Fewer people may mean less social options and infrastructure, especially if you’re moving into a really depressed area.  I’m not too worried about this, as long as the water would keep coming out of the tap and I can get electricity.

What I am more interested in is the added boost to my retirement savings if my wife and I were to use this method.  If my current home is sold for $200,000 and I can find a place to live for $100,000, that’s somewhere around 2 or 3 years of investing that I don’t have to do (allowing me to retire that much quicker).  For people with no real roots, this plan seems to have merit with us and would be worthwhile to take into consideration in the future.

How far away would you move to be able to retire a few years later?  Are you attached to the city or town you live in enough to pay these added years?

2 thoughts on “Arbitrage”

  1. You only have a $200K house in Ontario? Which part of Ontario? That helps a lot in saving for your retirement. I’d be willing to move to a new and less expensive town myself. I would want the town to have some parks, shops, beach, trails… Having a night life is not very important to me. Therefore I think I could live in a small town that had a small downtown area. Exactly how much could you do without? What can’t you do without? And what hobbies do you have to substitute lack of social options / infrastructure?

  2. We are the same, no real attachment to the city except for my career. Although I’ve only lived in Ontario a short time I look at the MLS often. I’m shocked to see the price difference in houses but realize it all has to do with the area. There are plenty of cities around that are decent sized and the prices are reasonable IMO. I would love to have acres of land and no neighbours. All we care about is like you, water and electricity and nearby shops.

    We live in a house that we bought 3 years ago now that was below what the banks offered and we should be mortgage free by early next year. The house we bought was priced below market value due to simple roof, carpets, etc. Houses in our small-med neighbourhood go from mid 300’s to a million dollars with a majority in the higher end. The prices are ridiculous to be honest.

    We are only in our 30’s and if we could find a home that we really love in the future,we would move. I’m still trying to get more experience with my career first but I am keeping my options and eyes and ears open. Retirement early, sounds good to me! Cheers Mr.CBB

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