by Michele | Jan 23, 2013 | Preparation Stage
How would you like to live here? Too bad, it’s already rented!
As of January 16, Dan and I are the proud owners of our first rental home and even in just a week we are starting to get a picture of the ups and downs involved. On the upside, we already have most of the repairs finished that we wanted done before having a tenant moved in. We were also pleasantly surprised by the great response we had to our Craigslist ad. Within 2 hours of first posting the ad, we already had people calling and filling out rental applications online. In fact, we had 10 showings in the first 3 days which was enough to find multiple candidates that we were fairly confident in renting to.
One of the candidates seemed like a great fit for us. She was an elderly retired woman (let’s call her Mary, not her real name of course) with two handicapped grandchildren that she cared for and received monthly payments from the government on their behalf, in addition to a decent pension. Mary also had lived in her last two locations for almost 10 years each, which sounded pretty darn good to us. Older woman with guaranteed income and longevity? Perfect! We let her know that pending a reference and credit check we would be interested in moving forward with her application.
During the course of our research into becoming landlords, multiple individuals recommended to us that previous landlord references were one of the crucial screening calls to make. With this in mind, we prepared to make a few phone calls. We noticed that Mary hadn’t written down her past landlord’s number, so we gave her a quick call to which she responded that she didn’t have it on her but she would call us right back with it. After waiting a couple of hours and not hearing back, Dan decided to try to find the number himself using her listed address. Luckily, he found a full listing provide by the city housing authority of all of the owner/property managers for each rental unit including name and phone number. However, we needed to call Mary back anyway to get a few more pieces of information and this time she gave us her landlord’s number herself.
We called the landlord with the number she provided and he gave her a raving review. Never late on payments, grandkids don’t cause any problems, just everything perfect. However, there were a couple of discrepancies that didn’t quite pass the stink test. First, Mary had written on her application that she paid $525/mth at her current address and the landlord said $1200. Second, she claimed that her reason for leaving was that the landlord was selling the property but the landlord was very emphatic that they didn’t know she was moving and how disappointed they were in losing her. Finally, the name and number of the landlord didn’t match what was on the city spreadsheet as the legal contact, and the number was only 1 digit different from her personal number (which also happened to be from a different area code then the local one). We had Dan’s brother double check the owner of the cell phone number – he works for a local cell distributor – and found that Mary was the owner of the account.
Now I’m usually a pretty relaxed person and don’t get angry too easily, but this situation really rubbed me the wrong way. I mean, seriously? You’re going to give me a fake phone number and have your family lie to a prospective landlord? We don’t know why she lied to us, whether she didn’t have the other landlord’s number or was intentionally hiding problems she was having, but to us it doesn’t matter. She will not be living in our house under any circumstances. Luckily, we had a second choice tenant whose credit check showed exactly what she told us it should and her landlord’s name and number matched the spreadsheet and also happened to be a former mayor. Somewhat more legit.
It is easy to see how people who own businesses can become cynical very quickly. Most people just want to do the right thing, but some really are trying to take advantage of you. The important thing is having a healthy balance of faith and skepticism about other people, so hopefully you can determine which is which. And remember, if it stinks…it’s probably fishy.
by Michele | Dec 21, 2012 | Preparation Stage
In any major venture in life, honest and objective evaluation must constantly be part of the planning. That is especially true for us as we try to make decisions regarding our finances and how best to provide for our dream of cruising. When we first started making plans for cruising, we estimated that we would require approximately $1000-$1500 per month for basic necessities and boat maintenance. Using this estimate, we calculated that we would like to have around $70,000 in hard savings in addition to whatever money we decided to use for a decent boat. That would give us a very comfortable 4-5 years of savings that gave us plenty of options for continuing just by adding small amounts of income from scuba diving and other odd jobs.
Then came the wait. Three to four years starts to feel extremely far away when you are constantly reading and learning about how amazing that life could be, and when the cruising experts all say to go cheap, simple, and as soon as possible. And so, we decided to move up our intended departure date to the fall of 2013. We would sell our house and use the equity to buy a boat, and hopefully save enough money to have only two years instead of five in reserves.
That brings us to today, when the honest evaluation comes in. Our house has sold and we are six months into this phase of saving. At closing, we will be receiving around $40,000 from the equity of our house. We have also saved just under $10,000 in additional cash for our kitty. It might sound like a lot to be sitting on, but we’re honestly a little less than excited about it. If you’ve ever been boat shopping, you will note that there aren’t many family friendly boats on the market for only $40,000, especially if we want to do more than coastal cruising.
After the long, hard look at our money, we’ve decided that we need to make our money work a little harder to be able to meet our goals. The way we plan to do that is by purchasing two houses immediately which we will rent out to increase our monthly income while cruising. We will live in one while saving our kitty and rent the other as soon as possible. If all goes well, we will add 2-3 more by the end of the year. The much lower mortgage payment will also allow us to save more every month towards our goals.
While our new plan may not get us on a boat in the next year, we are very confident that it will give us much a higher chance of success and that still within the original time frame. What do you think about our new plan? Let us know in the comments below!
by Dan | Dec 5, 2012 | Preparation Stage
Last Thursday Michele and I received the call that we had both hoped would come, but had nearly given up on… a legitimate offer on our house. The offer was over 9% less than our asking price but at least we had some action! Let me back up a bit… We had grown disheartened at the numerous showings, followed by exceptionally minimal second showings, followed by a complete lack of offers. “The street is too busy,” “loved the house,” “buyer showed interest,” “great kitchen!” were all followed by a noted lack of action on the buyers’ parts. With that in mind, you’ll understand why we were excited to get any offer (even one that was almost 10% lower than asking price). We had talked about the price and had settled on 93% as our lowest acceptable price, definitely in range for this buyer. Our goal was 97%, however. After a few tense rounds of negotiation we were able to come through with our exact goal… right on the dollar.
We now are faced with weeks of inspections, tests, and (hopefully not) the possibility of more negotiations over any requested repairs. Our house is in exceptionally good condition so any requested repairs are most likely nit-picky (that doesn’t sound biased, does it?). Thankfully we were able to get the buyer to agree that no repairs would be made as a result of these inspections.
We looked at each other once the last counteroffer was accepted and Michele said what we were both thinking, “Now what?” We had been focused so much on getting our house sold that we hadn’t thought about the actual possibility of it selling. Crazy, I know. Now we are at a cross roads. We can find an acceptable apartment for a couple hundred dollars less than we were spending on our house, providing a decent boost to our future cruising kitty. We can also purchase a “starter/rental” house and spend almost nothing, we’re talking less than a normal car payment here, per month. The second option saves money over time but is also the riskier option. We would have the opportunity of renting the house after we are done with it, or selling it and (hopefully) making a profit. There is, of course, that nagging possibility that it wouldn’t sell or sell for less than we bought it for. Either way the bottom line is we are making progress.
by Michele | Nov 7, 2012 | Preparation Stage
Well Election Night has come and gone, and once again we all chose a president. The real question now is so what? While it’s nice to hear what a candidate is “planning” to do, what we really need to know is how their policies are going to affect our everyday lives. Unfortunately, it is almost impossible to find good concrete information about how US policies affect our future plans. We have been trying to find better information about what our status will actually be once we move out of the country essentially as nomads.
Here are a few of our most pressing questions:
- Where is our legal “residence” once we no longer live anywhere specific?
- Would we have to pay state income taxes in addition to federal if we aren’t a state resident?
- Through which state/city do we do our absentee voting, and where do we have our ballots sent?
- How is the federal health insurance mandate going to affect us? Does it apply if we aren’t living in the country?
- How do we maximize our tax status to use the system to our advantage while we are living on interest only?
- Do we have to pay capital gains tax on the sale of our house if we don’t “reinvest” it in another house? (This one we have answered now: only if we sell our house for more than $250,000 more than we bought it for. In our dreams.)
- How do the new overseas banking regulations affect us?
The difficult thing in finding the real answers to these questions is the fact that every cruiser is different and most policies aren’t exactly written with roaming nomads in mind. And while both of us are fairly confident in our abilities to read and understand legal contracts and other important documents, we aren’t very comfortable with basing very serious decisions on our own knowledge of tax, immigration/emigration, and healthcare law. I mean have you ever tried reading raw tax code? Not recommended for the living.
by Dan | Oct 24, 2012 | Preparation Stage
No, it isn’t a shark. It’s a spoonbill from Mermet Springs.
You might have noticed a new check on our To-do List… With a second trip to Mermet Springs in three weeks, I’ve finally earned my PADI Divemaster certification. It was quite a relief to finally be finished, to be honest. Kyle and I had been working nearly every weekend since May… taking tests, completing practical exams, assisting pool classes, grading quizzes and tests, guiding tours, assisting with student training dives, and anything else a dutiful dive shop slave does.
We will definitely still be doing most of those things, but at least the rush is over. We didn’t want to say no to any opportunity to complete a part of our certification requirements due to the fast approaching winter (and no diving for the warm blooded… water so cold your head wants to explode isn’t fun). Each time I assist with new students I am amazed at how far I have come in such a short time. From worrying about not banging into the coral/rocks to flawlessly floating through a submerged Boeing 727, I’m a much better diver than I was a year ago when I was in the Caribbean. I love being able to help students discover diving and improve their own skills.
I still have much to learn about diving and teaching diving, especially as I hone my skills for the instructor class, but it feels great to have attained professional diver ranking.
So where do I go from here? The eventual goal is for scuba to be able to provide some supplemental income while we are cruising. The best way to earn money in scuba is instructing and leading dive tours. As a divemaster I can already lead dive tours, but I am severely limited in the independent instructing I can do. Next up are the Instructor Development Course and the Instructor Exam.
We are normal (well ok, not so normal) people that have a dream to see the world and live life as it was meant to be. We both have successful careers in the healthcare industry, even in this terrible economy. We want to break free of the current cycle of trading time for dollars and dollars for more and more things we don't need. So, we have decided to forego the fruits of our economic success and "retire" well before we are 30 and set out to see what is over the Horizon.