Home Maintenance

D and I had a really productive day yesterday. We were so into our garage door and surround painting, we managed to totally miss the men's French Open final and our talked about screening of X Men First Class.

The garage results are great, even though we are only at the first coat. We have a wooden garage door, so not only is it heavy but also requires a lot of prep -- scraping, sanding, filling, priming.

Managed to get a small sunburn at the back of my neck from it all. We were invited to a friend's house for dinner so it was great to get some good work in and not have to cook.

D's cottage spring cleaning went well. He worked extra hard this past week. I'm a lucky girl to have someone who is willing to do all that physical labour.

He told me that one of our neighbours up there discovered his well had run dry and was not a happy camper, to say the least. His is a 200 ft drilled well which translates into "expensive to replace".

I can only imagine how stressed I would be if it were me in his shoes. We had to replace our well 8 yrs ago because the pipe got clogged after a couple of decades but they just popped a new one in the same place.

Our next door neighbour had to try twice before finding water. I wouldn't want to find myself in a place where we had to consider a shared well situation. Not because I do not wish to help out a neighbour, but from a resale perspective.

I know I would hesitate to buy a property that had a shared situation, well or driveway, for that matter.

First Homes

I saw a great scene from my kitchen window the other day of the 2 houses we face. Both homes house young people who are just starting out on their lives. One couple just moved in and have no kids and the other couple just celebrated their first child's 1st birthday and mom has gone back to work after a year of maternity leave.

Our home is considered a sought after area (if you like old houses) due to the grand old homes, large ravine lots and mature trees. The big hold homes are built on land that are 3 - 5 acres in size vs the smaller homes on the side boulevards with the 24 - 30 ft frontage. So there is quite a difference. The closer homes are to the larger ones, the higher the price. These 2 couples moved in a few months of each other into their first homes that mirror each other in shape.

The scene I saw which put a smile on my face was of one husband coming home from work in the morning having worked nights as a plant electrician carrying his tool box and drop sheet up his front porch steps while at the same time, the new mom is walking down her steps with her ID card around her neck, going to work. Both contributing daily steps towards building their dream life.

Both people peacefully going about their business, oblivious to each other and me, who happened to have walked by my window at the same. I couldn't help thinking of how the cycle of life just keeps clipping along no matter what might be the current issue in my head. It was such an innocent scene to witness. And a reminder of how proud I was of my first home and how proud I was to come home to My Home.

Some Thoughts

There is a house nearby that has gone up for sale. From the mls pictures, I like it a lot. If I was in the market, I'd for sure look at it. It is listed for $60000 less than ours was listed at 3 years ago. It's also smaller but I've changed a lot in the last 3 years and the smaller size makes sense now.

I emailed the link to D and asked him if he'd be interested in moving. The answer was no. He has moved enough time in his life that he would be happy never moving again.

Then I started to think about housing in terms of cost per person occupying. When I divided our house purchase price by 2, the number that came up was less than what it would cost if we were to be buying homes separately in today's market.

Sure, I can find a house/apartment/town home/condo that costs half of what our house cost but would I want to live in the area where these homes would be found? So I concluded that we are doing OK with respect to cost per person housing.

Now, let's say our house cost $700000 and the 2 way split would come to $350000. I'm pretty sure I would think long and hard about taking on a solo mortgage for that amount. I know D would as well. Even if we could afford it, I'm thinking of how that level of debt would impact cash flow and lifestyle.

Following this logic a bit further, wouldn't it be prudent for couples to think about this when entering the housing market? Or better yet, spend double what the lowest earner can afford?

Berlin Real Estate

When we were nosing around the real estate offerings in Berlin, we found out some interesting things.

Less than 15% of Berliners own. So the sales pitch we were given was that Berlin is a great place to invest in. So much so, most real estate we saw offered came with tenants and you are guaranteed an annual yield of 5.5 - 6.8%.

For those of us who are interested in actually using the apartment, it took a bit of time to sift through the newer developments. We never found out exactly why owning isn't very popular.

My guess is that there are a lot of people who have moved to Berlin to find work rent first. We were told that banks require 30 - 40% down for a purchase with interest rates in the 4.5% range.

Berlin is also a fairly young city population wise with women making close to what men earn and at the end of the month, lots of disposable income. You'll need it if you are hoping to own one of those Maseratis!

There is a lot of value in Berlin real estate. The cost of an average 1 bedroom apartment around 55m2 would buy you a 20m2 apartment in Nice France. Property tax is differs according to the area of city.

The process of purchasing is similar to France as you'll need a notary as well as a lawyer and you will need to be present for the final signing. We feel Berlin would be a great and exciting European home base. The year round climate is also quite reasonable.

Big City vs Little City

As I have mentioned previously, we moved away from the "big city" to get away from the smog, the hurrying and the higher cost of living.

One of the sections in our national newspaper I frequent is the real estate one where they feature some of the recent "done deals" home sales in various parts of the city.

One such deal was in the area I used to live while going to school and where had I stayed, would have wanted to buy in. It is a pretty sought after location for families as it is close to a couple of well know public and private schools.

It sold for $722000. In order to afford it, the couple who bought it would need to gross approximately $12000/month, put $50000 down, pay $21000 or so in default mortgage insurance and be ok with $3400/month mortgage payment for 25 yrs. The mortgage rate is a 2.25%, 5 yr variable.

We are currently paying just over $4000/month total (regular mortgage and prepayment) so the amounts are similar. We'll get it done in a few years, not 25.

I guess we could afford something like that house above if we wanted to as cash flow wise, it can work but I wouldn't want to pay a mortgage til I was 63 yrs old. And another thing, it is half the house we currently live in and on 1/3rd the lot.

Everyone views value differently. If anything, I make more money not being in the bigger cities so the combination works well for me. For D, he would make more money in a larger city.

Big picture, there are a lot of options and combinations of options that can work in the favour of someone looking to get out of debt or the rat race earlier.

If more people thought outside of the big city box, did some math, maybe a smaller city lifestyle could work and the benefits of more time, better air, less traffic jams, less debt would be possible sooner.

Rental Opportunity

An interesting opportunity to purchase a duplex has come up. D stumbled upon it yesterday and took steps to find out more. He has this spreadsheet that calculates cash flow on rental properties and when he comes across one, goes through the exercise to see if it will work. Most don't until now.

The back story is that the seller owns a half dozen homes and because of a recent job loss and incoming baby, is selling a few of them to get some cash in the bank. There has been offers tabled but they have not been completed due to financing.

After speaking with my banker, D found out that even though the new mortgage changes aren't supposed to come into effect until April, it has already changed at our bank. They are asking for 20% down on rental properties and it cannot come from an unsecured source.

I have less of a mental block with the idea of owning a duplex vs. renting out the cottage as I am not living there. There is a high possibility we'll be making an appointment to see it.

What we know -- the tenants both are new as of last fall, so they haven't been there a long time. From the pictures, the house has been completely renovated with the wiring, electrical upgrades and plumbing upgrades done.

The kitchen and styling are all modern. It looks like something I would be willing to rent. That is important to me. I wouldn't want to be slum lord. And it is cash flow positive. We know what the tenants do for a living and that they wish to stay.

On paper would mean more another asset and debt even though it is supposed to "run itself". I have no experience with this -- D does though. Do we want another property? Or the potential work? Is this particular city a good one to invest in?

We would have to fund the whole show should there be total vacancy and how do we feel about that? It really means, how do I feel about that as I would be the one funding it. Could I do that and continue our current plans at the same time? I know I am not willing to work more for this.

If we are able to answer these questions, we'll know pretty well if this avenue is one we will continue to pursue or not. Plus we'll learn some new stuff which is never a bad thing.

Other Peoples' Money

D and I know someone who recently declared that they felt retirement savings and emergency funds are a waste of time and effort. They plan to circumvent the need for that by putting all their resources into income generating real estate. That will be their extra cash flow as well as what will fund them for the rest of their life.

As we are live pretty much the exact opposite of this person's ideal, their comment made me stop and wonder if I could do that and if holding a bunch of non income generating real estate was a bad idea after all. Maybe that was their way of bringing that to our attention. After all, why pay for something yourself when you can get someone else to do it for you?

Assuming that what people say is a product of where and what they've been through, I can say that this person's views have largely been shaped by their financial situation. They do not have any savings and owe at least $300000. So I can understand that the idea of savings may be so far away, it may not seem possible in this lifetime.

They are also in their late 30's. Two thirds of the debt is a mortgage and the property is a duplex that is income generating. Their plan is to keep buying more to the point where basic living expenses are covered.

What is difficult for me personally is the sheer timeline of it all. I think it would be neat to have some other people pay for my yearly living expenses but I do not believe I could handle how long it would take to accumulate a decent amount of money in the bank.

I can understanding the ego boost one can get from owning a bunch of real estate and having it paid for by people who are "working for you". Unfortunately I only seem to be able to see it from the "how little equity there is for a very long time" point of view.

I forget that savings isn't what they would like to have. They do not wish to bother with it. They live for today and am enjoying life to the fullest. What a different way of thinking. Living this way assumes a few things. That they will be able to get continued funding from the bank. That their job is stable and they will want to do it for long time. That they will continue to have tenants and be willing to manage all of their needs.

Even thinking of this scenario has challenged my requirement for financial security. I would like to get to a point where I do not need to worry about banks, mortgage rates or income. It is important to me to own real estate or other stuff outright. I also get a kick out of doing it with my own 2 hands. It gives me a real sense of accomplishment. That's probably both a control thing and a result of my upbringing.

Minimum Space Requirements

warning... long post!

I found out a vital piece of information from my financial advisor yesterday that has helped me make a decision about my spring tax situation.

After asking her to sell 50% of a stock to put it into my registered account, she told me that I could just transfer it laterally without having to sell and that amount would be based on the last closing rate and would be considered a rsp contribution. I did not know it was possible to do that.

In my mind, I've kept those 2 accounts as separate and not related so this move was a pleasant surprise. So yesterday, I made a $11575 rsp contribution! It's especially great as I didn't need to use any new money to do so.

The personal tax exemption is supposed to go up as well this tax year and I have a few small expenses in Dec. to input. Hopefully when the dust settles, I won't be out too much. Right now I still owe in the low 1000's. Oh yeah, I missed out on the private rim sale. Someone beat me to it.

I want to write about minimum living space today. Dave, the new co-blogger over at Canadian Dream, wrote this piece a few weeks ago and the concept of it has been rolling around in my mind since.

As you know, I have a thing for real estate and we own a 3 of them (1 outright and 57% of the other 2). When I read the comments to Dave's article, a number of people spoke of un-used space in their respective homes. It got me thinking.

D and I use every square inch of our houses (when we are there). How could that be when we are just 2 people?

In our main house (2880 sq ft), we have 3 bedrooms and 3 bathrooms and a very small basement, not really usable outside of a workshop as it is a very old house (1854). So our square footage is pretty much all above ground.

The main floor houses the kitchen a 3 piece bathroom (that D uses after his runs as I refuse to let him drip all over the house to use the upstairs shower), laundry, kitchen, living room (doubles as D's work area) room/dining room combo, study and sun room.

We hang out in the sun room and study when not eating, working or watching movies. The 2 rooms are completely different in feel and experience as is all the other rooms.

Upstairs is our 3 bedrooms. One master with en suite (mine), and another bathroom (D's). The 2nd bedroom is our guest bedroom/office. Mostly office as we very rarely have guests. I am typing in that room right now.

The other bedroom is our theatre room. It houses our TV (we don't pay for cable) and our projector. We like movies and concerts.

D and I spend a lot of time together compared to other couples we know. Luckily we like to do that and each other. When we work, we like to be separate.

If you were to come to my house, you'd see minimal if any clutter. When we moved here (from a 1000 sq ft townhome), outside of furniture and clothing, I had 7 or 8 bankers boxes. Since then I've reduced it to 2 (will probably all end up as recycling), mainly stuff from the desk I recently donated.

Our rooms have nice furniture and antiques but no trinkets all over the place. There are paintings on the walls, built in book cases in the study and a couple of rugs, my piano and that's it. I let the architectural details of the house speak for itself.

When we are at the ski condo (just under 300 sq ft) and D has to work, I cannot seem to be able to relax as well. I think it is because he is giving off a different energy when working that doesn't mix well with my relax zone.

Plus the noise when he is on a call etc. I cannot escape it as there is no place to go other than out. It is open concept. We live very small and it is cosy and simple. It is very easy and I do not miss anything when I'm there.

So what we are opting to do this year is have D work minimally during our upcoming holidays so that it will feel like holidays. This has meant using more of his paid holiday time to ensure it.

I don't want to live the exactly same way everywhere I go. For me, it would take away from the experience. I even fought having Internet there for that reason. Eventually I relented as it is very useful for checking flights and weather etc.

At the cottage (700 sq ft), we have no TV or phone or Internet. We are as unplugged as can be and love it that way. We have 2 bedrooms, the 2nd one more as storage as there is only one closet, a main living area with 2 couches, bathroom and kitchen. That's it. Not even a book case. We don't miss a thing when we are there either.

We've talked at length about how it would feel living full time at the cottage or ski condo and what we would be giving up. There is a very obvious cost difference with each one. I guess it depends on how anxious we are to fully stop working and move.

Right now we like being able to enjoy living in 3 very different places -- ranging from what I consider to be luxury to basic. We have learned a lot about ourselves in the process and are very grateful for being able to do this right now. It hasn't escape me that maybe the reason it is so easy to not miss stuff is because we know we are coming back to stuff?

Given the choice, D would keep all 3. I would be willing to sell everything and move out west right now. I'm not scared to start again and start small. I crave time more than anything else and I would have the luxury of time if I did that.

I say I because full time in that space with 2 people would probably drive both of us crazy. We would likely need to buy another unit for it to work long term. So I guess, I did end up answering the question of Dave's post. I need at least 300 sq ft for myself to keep sane.

Another Day

I over did it. Been doing too many calculations about real estate affordability and now my brain is in a knot. The last 2 days, I have gotten off the calculator, spreadsheet and I am now starting to get back to "normal". I would like to blame my state on the detox but I know better! There is nothing that can get me wound up better than myself!

I can honestly say that I'm done with it and if it happens, then I will know that it can done well and with minimal worries. If not, I have just identified a source of money that can be used for other causes. And I already have ideas there.

Well, it is the last working day of the month. So far, it is looking like I have bettered my income goal for the month but just barely. I'll know for sure tomorrow when the month end statements come out.

This is turning out to be quite the travel year for us. We are using up travel points and flight vouchers with expiry dates. Next year may not be as colourful as we would be starting from near zero again.

In a way, with the economical slow down, it is a great year to take time off. I don't feel as stressed doing so vs. other years when I'm crazy busy and I know I am missing out on business. With things slower, there is more flexibility and accommodation and breathing room. The other day, I actually got a chance to read through a whole research journal. That rarely happens.

On another note, I have noticed some of my colleagues displaying worried looks. When they realize someone is watching, that look goes away but I caught it. Because I do not have a close relationship with those I work with, I have no idea of how close to the edge they live at and what real effects this slow down is having.

Newfoundland

I'm back from Newfoundland. It was wonderful. To me, it has that even larger than life feeling. I loved it.

I followed my gut and made no appointments/meetings prior to my departure. My experience with Realtors up to now, via email and phone, left a lot to be desired so I decided I would just feel my way around on my own. (This was a solo journey)

As a believer of releasing things to the universe when faced with situations beyond my control, I was pleased when the proprietor of the Inn I stayed at connected me with a Realtor (they had worked together previously for the government) who he felt was the most honest person he knew.

So off we went, touring various areas and properties. Learned a lot and got a great feel for the different areas. Found out important things like, how far is it reasonable to drive, how nice is the drive, how it is possible to be in an area that is too barren, where the major service areas were and how different the geography can get even in matter of minutes.

Right now I'm in love with a few areas. One of which can get downright scary to drive to...and yup, I like this one the best...

Because of the last minute nature of meeting the right Realtor, we were not able to get access to all the properties that were available. But, we do have a plan in place to screen thoroughly prior to viewing.

Can you believe that ceiling height can be an issue? I never thought that would come to be but we saw a couple of places that were barely higher than 6ft. D is 6' 1''.

Other places were in very dramatic locations but the area around it had an abandoned feeling. I didn't like that.

One thing was consistent though. Any time a local person found out that I was hoping to make Nfld home, they just started beaming. The pride of the people there was contagious.

The search continues. To get what I would like may end up costing more than I had in mind. That may end up changing the timing of it all but what I know for sure is that the price of poker just went up.

Oops! & Downsizing

The bad news is I made some calculation mistakes on the newest spreadsheet. The good news is that the main house doesn't cost as much as I thought.

Since I've been on the relative cost bandwagon, my mind has been weighing our biggest expense decisions (houses) against the life value we glean from them. I'm still learning a lot --about myself and D and our priorities.

So, to correct my earlier post:

• the ski condo running costs is 70% of the main house


• our yearly trip to France costs the same as 1 yr of the ski condo


• the cottage costs 50% of the ski condo


• the mythical Nfld home would cost 55% of the main house and would get used the least

With our current retirement savings plan, D would work another 14 yrs until he was 55. I would work for another 10 yrs until I was 47, with the last 5 yrs dropping my Fridays if nothing happens with Nfld -- will continue with Fridays if purchase happens.

We would be able to afford to both stop work at that time should we wish and have enough money til I was 99 yrs old, assuming a 3% growth and 36% left over yearly for tax and savings considerations (27% if Nfld home existed).

We've been playing around with another scenario. What if we downsize?

Downsizing for us would mean selling our main house and cottage and moving to BC full time. We would live in the ski condo for 4 months of the year.

Now, things get really interesting. The area we would be living in for the other seasons would be cheaper to buy and can be bought outright without a mortgage. I am not talking about Vancouver here!

There are many other areas in BC that are beautiful and affordable. Heating costs would not be a major issue then as the house would be "closed down" for the winter.

The money left over from the sale of the cottage and main house would be a really nice supplement to our retirement accounts, such that D and I would be able to completely retire in 9 years.

There would be 49% and 38% left over each year for tax and savings considerations. That would allow for another journey abroad each year --perhaps a volunteer abroad vacation.

If we sell the cottage in the next few years, I would be open to buying in BC then -- perhaps even a rental property so that it can serve as long term supplemental income.

I've looked into getting licenced to work in BC. It will be more expensive than in my home province and I do not feel the pay off will be there as I am not planning to stay in one location for the entire year.

I'll stick to the idea of a seasonal fun job. Right now D is thinking he may want to continue working remote for a few years.

D's Rental Position

D Super Surprised me last night.

I brought up the idea of making a list of what to buy to round out the ski rental plan as we are planning to head into town today for a change of scenery and a break from 1 week of straight skiing.

He told me that he has decided to withdraw his rental proposals.

I was dumbfounded. I had made up my mind to give it a go for a year and see what comes out of it.

He had already made contact with a local cleaning service and negotiated a fair rate. Insurance is in place -- the policy has been paid for. He has spent a lot of time developing the website and calling all sorts of places and people. We've even bought 4 sets of comfy cosy linens back home in anticipation.

His reasoning?

He feels that the rental idea is a good one. BUT, it wouldn't be a great idea for us. US meaning more ME as he doesn't relish the idea of having to handle ME if I were to come back into either space to discover that there is a scratch on the wall, stain on the mattress and the "energy" of the places have changed.

He thinks that I will end up selling the properties because I will feel that they were no longer mine. And right now, we don't HAVE to rent them.

I cannot deny that I would have a cow if I found a red wine stain on my off white sofas at the cottage (it is decorated in a "Hampton" beach style"). AND I cannot deny that I am very sensitive to how places "feel" and how different people can affect the energy of a place -- even people I like.

On a positive note, we have learned a lot about the process and found out that neither insurance policy we had in place were ideal (even from a non rental perspective).

There are newer policies available we didn't know about -- policies that are more specific to cottages and ski condos. The upgrade to the more niche policies will cost about $450 more a year total for both properties.

I love that he knows me so well to know how I would be but I cannot help but feel like some high maintenance chick -- am still getting over the shock of his position.

A Pretty Big Glitch

We start this week with a glitch. An insurance related one.

It turns out that our current homeowners' insurance policy for our properties is just that -- for personal use only.

Usually, when I have to speak with a broker about insurance, I'm on the phone for 45 mins or more.

So I got my tea ready and was braced for a barrage of questions this morning about who we are renting to, will there be pets, what are your renters' favorite colours etc etc.

Well, surprise, surprise, the conversation halted in under 2 minutes. Simply put. They do not offer that product nor will they defend us should something go wrong. You will have to find a different insurer completely.

I must admit, I was aghast. Of all the scenarios, I did not expect this one.

Our insurance is with a group insurer, the biggest one in the country for professionals in fact, but I guess in this case, that's not enough.

D is not giving up on his vacation rental dream. He is going to contact his friend, the insurance broker for advice and quotes.

Brain Tangle

Sometimes, OK, most times I put an unreasonable pressure on myself to come up with solutions to made up problems.

For example this Nfld property idea I have.

• My rules for the puzzle is that it must be paid within 9 years (used to be 5 when we were on the accelerated pay out plan) so that we can be totally debt free.
• It has to be funded out of my "dream" account thus not disturbing any other savings plans.
• All costs of running of the property has to be paid by me as it is my little pet project.
• What property can fit all of the above criteria?!

So that is what I've been tangling up my brain cells over. D thinks I'm out of my mind.

You Just Never Know...

D is pretty confident that he can get the cottage up and running, ready to be rented in 2 weekends worth of work.

The 2 weekends I will be away, to be exact. He wants to manage this project completely by himself (though I make my opinions freely available...).

Since we've known each other, he has taken the role of my right hand man, literally. He is great with keeping things running. I like putting things in place but am not so good with the upkeep so I am excited to see what he comes up with.

He gave me a glimpse of the rental website. Looking good!

In the "it's a small world" category, Heather, who commented on my rental income post, whose full name is Heather Bayer, is the author of Renting Your Recreational Property for Profit. She also runs a cottage rental agency in Ontario.

We read her book a year ago or so! I pulled it out and re-read it. It's full of wise advice from seasoned cottage owners.

That goes to show ... You just never know who is reading your blog!

Rental Income

Last fall we rented a small apartment in Nice, France for some close to end of year r & r. This property was new to us and we were both impressed with the location and design of it. For a 45 square meter apartment, it had most of what we would want should we be in the market for such a property. I would love to own one like it but at close to $550000 euro (area comparable), I think I'll have to pass!

D took the opportunity to bring up a topic again -- extra income. Why don't we rent out our cottage and ski condo? If someone like our Nice apartment owner can do it, with such a valuable property, we could rent out our much less expensive ones too!

I hadn't given it any thought until now. This past weekend, D approached me with a "rental proposal" for both properties. I took a look at it and I will admit I'm not as opposed to it as I was a year ago.

My biggest issue has been the amount of work it would require, having to remove my personal items (thus making it feel less like mine), having to make sure it was spotless (no magazines strewn all over the coffee table), sharing a place where I go with others (I like having hideaways).

Unlike most cottage owners around us, we do not invite people to come up (Honestly, we are not anti-social! We just prefer to entertain at our main house!). In fact, only a handful of people (non blogging!) even know of their existence! I like heading up when I feel like it and I like the option of changing my mind if traffic is particularly bad or the weather isn't too good. If I schedule things, then I "have" to go and for me, that defeats the purpose of owning in the first place.

Since I've started blogging and after reading many other blogs, I've warmed up to the idea of adding rental income to our lives. Our vacation properties are natural to consider as we already have them. The cottage is paid for and the ski condo is 40% owned. We are considering the possibility of renting them out to people we know once or twice max per month.

I have to admit that I'm having fun dreaming up how to run things. Basically I'd want guests to be able to enjoy the area like we do. We'd supply linens and towels and a guest area info booklet. I'd have a great time drawing that up. We'd design a website likely from a free source like Blogger or Wordpress. I'd have fun taking the pictures. It will force us to finish the odds and ends that are currently on the "things to do list".

Working out the logistics of key, money, linen/towel exchange has been trickier. What if our friends from out of town want to rent it? We'll need to price out courier costs for keys. We can store several sets of clean linens/towels on site. It isn't as much an issue for the cottage but the ski condo is 3/12 hrs away by plane so a lot of planning will be needed.

Start up costs will be in the range of $600 dollars for both properties. This would cover things like extra pillows, mattress and pillow protectors, some new pots and pans, rubbermaid containers for clean linens, a couple of dressers, paint, gas bbq (we go rustic at the cottage and like using a charcoal bbq but from a fire hazard and insurance perspective, I think most people are more familiar with propane) and increased insurance.

Preliminary searches for comparable cottage rentals in our area shows $650 - 850 for a non waterfront 2 bedroom up to 4 people occupancy. Our cottage has no neighbours on one side nor at the back and is a stone's throw from the water. And for a ski in,ski out, village center 2 person condo $665 per week is the comparable.

We are thinking of charging $550 per week for the cottage and $450 per week for the ski condo. There will be a higher per night pricing for anything less than a week. We priced lower for skiing as we feel it is our way of supporting the "ski bum" lifestyle! As for the cottage, we know of a number of younger families that would be able to consider a cottage rental at that price. Is that bad business?

We looked at what it would cost should we enlist with a management company to handle both rentals on our behalf. Fees aside, for us, it seems easier to control occupancy vs. having to "apply by the year before" to the companies for times we'd like to use. As I said, I kinda like flexibility.

So once everything is set up, running will hopefully not be too work intensive. We would be doing the cleaning ourselves but will be asking everyone to please leave the properties the way they found it. Those who know us, will know of our standard of living and that they would not be renting "dives" nor would we like to walk into our places looking like one either.

D sees it as an opportunity for a win win situation -- to provide vacation opportunities at a couple of neat spots for a fraction of the cost and for us, if we make enough to pay for our trips out west and season passes, or our annual trip to France, that would be awesome!

Would you consider doing the same if you were in our shoes? Are there other things we need to consider? I'd appreciate any input!

Hot off the Press!!!

The mailman has just delivered the property assessment for our BC ski condo.

I'm not aware if this system exists in different forms around the world but here in Canada, most provinces have an assessment procedure for property based on market value. Despite what they try to say, this assessment does get used in the calculation of property taxes.

We've already received the ones for our home and cottage and one for the condo has been highly anticipated. (yes, I need to get a life...)

The BC assessment surprised me. There was a letter in it stating that for the first time, due to the current market challenges, they are listing both the "value" of your property as of July '07 and the "value" as of July '08 and if there is a difference, they will chose the lower of the 2 values to calculate taxes.

How progressive is that?!

Well, our condo, which we purchased in May '08 was assessed 17% less than last year. So our property taxes will be lower this year! (current taxes $420/yr)

The lower assessed value doesn't bother me as we have no intention of selling for a very long time. It is just paper value.

My home province wasn't so generous or progressive. Our cottage didn't fare as "well" from a cost cutting perspective. It was assessed 30% more this year (current taxes $952.56/yr). Our main home was assessed 17% more (current taxes $2781.36/yr).

So the decrease in the BC taxes will help offset the other 2.

How did you fare in your property assessments? Is it used to calculate property taxes too?

How much does our Life Cost?

I don't usually post on Sundays but if I don't get this out, I'll be fine tuning the thing until I give myself a headache.

What I've been working on is a calculation of how much we spend each year. It sounded simple until I got started. You would think that with my spreadsheet, it would be easy but it wasn't quite the walk in the park--considering this is THE number you need as a jump off point for retirement planning!

I have a ballpark figure in my head but have never bothered to actually tally up how much I spend on clothing each yr, the other "smaller" things etc. So that bugged me.

Finally, here is what I came up with.

To Fund our Life as we are currently living -- $ 64868 / Yr

(3 properties, 2 trips skiing, 1 trip to France, 2 cars, work expenses, entertainment, eating out, lessons, utilities, food, extra income tax etc.)

To Fund our Life with no mortgages -- $ 45428 / Yr

(we have accelerated mortgage payments and plan to have the smaller one completed in 4 yrs and the larger one done in max. 6 yrs)

To Fund our Life with no more work -- $ 38866 / Yr

(our work involves paying parking, association and licencing fees as well as liability insurance --all of which will be a non issue at this stage of our life -- we will likely save on clothing as well)

In reality, I'll likely continue working 2 days a week because I enjoy it -- which will mean that we would not be needing to draw on any savings to fund our "retirement".

My current guideline had forecast a retirement "income" of $ 45000 / year. So we are not off by too much. We will likely build in a larger margin.

None of our retirement savings goals (more in future post) requires us to sell any of our properties. I want that to be decided if and when we no longer wish to use them, not because they are part of our money pool.

We have been fortunate that the cottage has almost doubled in market value (even in the current slowdown -- we bought it for a tremendous deal...) and this would be the property that would be chosen first to sell as it will likely be the easiest and quickest to sell.

As you, my readers know, I have a huge love for real estate. My personal philosophy of property purpose is one of life enhancement. I am not in it to flip. Ours are homes that are well used and allows us to live uniquely due to its location and living environment.

That is why they have never been rented out. That is also why I don't worry about how the real estate markets are doing because I do not plan to sell for a long long time. At this point, the only useful info I gather is with respect to where else would be a great place to buy!

Winter at the Cottage

I had a relaxing weekend up north. What I like about wintertime at the cottage is the silence.

In late fall, we shut off the well water, attempt to drain out the pipes (this is our first year doing it ourselves), and survive on big jugs of municipal water provided by our friendly township. It makes me feel like a pioneer.

We have 3 large water containers that we haul out to the public taps (they keep it heated with heating cables so that it works throughout the winter), fill them and voila, water to drink, cook, clean and bath with. We boil water to mix with the cold water and fill our camping "shower bag", hang it from the shower head and water comes out of a nozzle/hand held sprayer. When we are done for the weekend, we just pour some plumbing antifreeze into the kitchen and bathroom drains.

So what about the toilet, you ask? I'd like to say we use an outhouse but we don't have one (we have a septic system) plus I'm not sure about freezing my behind... Really, the only reason we are able to use the cottage in the winter because we have a couple of year round streams on the property.

In fact, a selling feature for me was that you get to walk across a mini bridge over the stream in order to get to the cottage! So, what it means is that with a couple of buckets tided to some rope, you can get water to pour into the toilet tank for flushing!

The first winter, we employed the crawlspace heating system (so that we could keep water running) that was set up by the previous owners and almost fainted when the hydro bill came. So we had to come up with a far more economical way to make it work. I kinda feel like I'm living a bit of the "Little House on the Prairie" life without the prairie.

Heating is taken care of by a thermostat controlled gas fireplace (with blower) and baseboard heating in all the rooms. Because the cottage has insulating technology from the 40's, it does take about 1 1/2 hrs to get to 70 degrees F. So by the time we unpack, make the bed, vacuum, read the Friday flyers under an electric blanket, it is warm again.

So what do we do up there? There isn't a land line, internet or tv. We do a morning run to a couple of favorite bakeries to buy donuts and meat pies, tour the local harbours to see if the ice flows have come in yet, lunch at a local diner, decide on what we would like for dinner, read a lot, walk along the beach, reflect on our week and catch up on sleep.

I'm consistently amazed at how content I am up there.

The $78500 Wedding that Didn't Happen

My post yesterday talked about not choosing to put on a wedding but instead fulfilling a lifestyle goal that was congruent to what we would like to have in place for now and during retirement. It makes sense to us to do this while we are both working, getting to enjoy it now vs. saving all the money and doing it later. That's the essence of middle way.

We call it our $78500 wedding (and honeymoon) that is really a Ski Condo! In reality, it is a hotel room with a kitchen. We didn't spend enough to get what people envision as a "ski condo" but we spent enough to get into the game.

Yup, we bought it this spring, shortly after we were married and this Christmas and next spring will be the first seasons it will be integrated into our lifestyle. We will be spending enough time there to justify seasons passes. One of our goals is to teach skiing as a dream/fun job when we are retired and living as ski bums out west during the season.

To integrate an out of town/province property into our lives involves a lot of budgeting. There are flights and transfers to consider. Additional condo fees and property taxes to pay. Plus extra gear so that you don't have to lug large equipment back and forth through the airport.

I can only speak for my own experience but the condo we bought happened to be fully furnished in colours and style of furniture we like. We went out back in the spring to buy extra things ie. new sheets, comforter, some more kitchen utensils, non perishable foods/pantry items etc. The previous owners used it as their second home and never put it into the rental pool. The personal touches and the care they took was palpable.

This was a property that wasn't listed on the mls and we didn't realize it was available until we showed up. It ended up being the first place we saw and I took to it immediately. I place a lot of weight on how a place feels--a gut feeling. There were 2 others that I had thought would be perfect, judging from the pictures and amenities but the feel was totally wrong--cold and chaotic. That goes to show that one cannot judge without being physically in the space.

The price was higher than we had originally had in mind. (I would not have spent $78500 on a wedding!) We were hoping to be in the $65000 range (ok, I would not spend that either...) but the spot we chose was worth recalculating and budgeting.

Using the same mental philosophy as with the cottage, we asked ourselves similar questions.

How much is this place going to be used? How much will it cost to run? Are there any special assessments coming up that will cost thousands? Is this something that is going to be a real estate investment? What is the outlook of the area? How long will it be before you will need to upgrade/renovate the place?

I plan to ski 3 - 4 weeks a year, over 2 visits. My husband will likely spend more time as he has the ability to work remote. (jealous person here typing...) We plan to use it in the summer to but it would be in the form of a road trip. The condo fees include heat, electricity and water. For us that means $137/month. Property taxes are $420/yr.

The condo has an attached commercial unit that brings in significant income each season so that it helps pay for special assessments like the one currently tabled whereby the wood siding is being replaced at a cost of $200000. We are not buying it to flip. We are hopefully going to be in good enough health to be skiing into our 90's.

The area and resort is growing. Their strategic plan is fairly aggressive and broad in scope considering it is not in the the same league as Intrawest. We didn't want to be in that type of resort because for us, it is too commercial. We are there to ski, not to be seen. Finally, I cannot see needing to paint or redecorate for a very long time, at least 10 years.

One other important point for us is the aspect of getting to and from the condo. We did not want it to involve a car rental nor a crazy long transfer. A lot of resorts in British Columbia are hours away from an airport. That is something you should think about seriously if you are considering a purchase.

In the winter time, roads can be treacherous within mountain ranges and I personally do not feel experienced enough to drive 4 hrs on those roads especially after a 4 hr or so flight. Our spot is about 45 mins away from the airport and we pay $75 per person return to take a van shuttle service that knows when you arrive and a person is there to meet you.