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The new empty-nester

This is one of those posts like I used to do, with life events and observations. Little or no transport content here, so if that’s what you’re here for, you can skip this post.

We moved into my current house back in 2005.

It was what I could afford at the time. I prioritised position over size, and so it wasn’t a big house, but it’s in a good spot, near the shops and the station.

Fifteen years later I still like it here, but space has become an issue as my sons have grown older – and live here full time – not half the time as they did for many years.

Plan one

Financially it was looking like a house upgrade might be possible, so late last year I started looking for something a bit bigger; perhaps a little closer in too. (For me, rail access is a priority, but I’d also love to live back in tram land.)

There was one good prospect that I enquired about early in the year. Good size in a quiet street close to tram, train and shops. It had passed-in at auction last year, but frustratingly the agent refused to play ball. It was leased out to someone until mid-year, but the agent basically refused to arrange an inspection. Until recently it was still listed on the web sites, but seemed unlikely to sell. I don’t understand this. It doesn’t seem like a great sales strategy.

Plan two

As I kept looking, my thinking evolved. My sons are now in their twenties. They won’t be living at home forever. Does it really make sense to upsize, only to downsize within a few years when they move out? Each move costs tens of thousands of dollars. That’s like burning money.

One of my aims has long been to help my sons into home ownership themselves, would it make sense for me to stay put, but buy another, smaller place, initially to rent out to a tenant, but they could move into it down the track, in a few years, when they’re ready?

They could pay rent to help make it financially viable. We’d all get more space. And at their age it’s probably good to spend some time moving out and managing your own household.

Nearby would be nice so we could catch-up regularly. Other factors would be similar to buying anything – a good location, close to amenity including public transport – and hopefully a place that will appreciate in value nicely so down the track if we want to sell it, it works well financially.

A flat/apartment? Lowest cost but some noise and privacy issues. And the newer ones are tiny. Small bedrooms adjoining a combined living/dining/kitchen space. It might be okay for a couple living together, but I’m personally not a fan.

A house in the area we wanted was out of our budget.

A villa/unit? A bit more costly than a flat, but if we could stretch to that, better on noise and privacy, particularly if few/no shared walls.

(I wish real estate web sites could properly distinguish between units and apartments. The differences don’t seem complex to me. They all involve common land, but in my book, if different residents are above each other, it’s an apartment. Otherwise, it’s a unit.)

On the market

So then, the plan was an investment property which my sons could take over later and rent.

We lined up finance, found a villa unit in a nearby suburb and after looking at it a couple of times, I went to the auction (which at the time was permitted on-site).

The property passed-in, but I was the highest (only) bidder and got to negotiate with the vendor – with us sitting in different rooms of the unit, communicating via the agent.

On the day we couldn’t reach an agreement – not even at the top of the quoted range, which if you’re wondering, is legit – it turns out the reserve price can be set on the day of the auction to be higher than the quoted range.

But the next day we got there.

So we bought it. Brick, 1960s. Two bedrooms. A small rear courtyard. Separate kitchen and livingroom. Lock-up garage. A zone 1 suburb, just over ten minutes walk to a station and shops. (There’s even a car share pod nearby.)

Watching a couple of subsequent auctions nearby to this one, I think we paid a fair price, though we’ll need to do some repairs.

Jeez property is expensive in this town.

Hopefully the vendor is happy. I think I’m pretty happy.

Plan three

Meanwhile… COVID-19 had hit, and like many people, I began working from home all day every day.

A small house feels smaller when everybody’s there all the time. Maybe not quite 24/7, but close to it.

Having the desks and computers out in the open was a positive when the kids were younger, to keep an eye on their online activity. It’s less of a positive when trying to work all day.

What if instead of renting out the new place, my sons moved straight into it when we got the keys? I did the sums. Perfectly workable financially if they pay some rent.

The big move

The purchase was in June. My conveyancer recommended a minimum 60 day settlement, though in retrospect we could have easily pushed it down to 45 as finance had been sorted out beforehand. No matter.

We took possession last week. Ahead of that, we arranged to get in and do some measurements, and also get a building inspection done – ideally that would have happened first, but it was good to get a report highlighting issues that need urgent attention – principally some issues with the roof. (The inspectors also found a newspaper from 1964 under the unit, confirming its age.)

The boys had started accumulating goods, which is why for a while on many of my home video calls, I had whitegoods peeking out from behind me in the background! (Though looking like a vicar is just poor choice of clothing.)

After we got the keys, the boys didn’t want to to waste any time, and decided to move on Friday. (Moving house is permitted under the current restrictions.)

Some lessons I learnt from all this:

  • Refinancing can mean substantial monetary savings over time, but it seemed harder this time round in terms of paperwork – perhaps thanks to COVID-19 meaning I couldn’t see the mortgage broker in person so they could just flick through the documents and get me to sign in the appropriate places.
  • If you originally had a fixed interest rate term, make sure it’s actually finished. Unexpected break fees are not fun.😐
  • When they say you have unconditional finance, don’t believe them. Until the money is handed over, there are always conditions, even if it’s just Yet More Paperwork.
  • If you gift your old couch to your kids, be aware the replacement may take some time to be delivered – especially if it’s being manufactured – especially during a pandemic. (Supporting local manufacturing has its pros and cons!)

The next phase

I’ve got mixed feelings. I’ll miss having my sons around. But it’s exciting for them to be branching out on their own, and I’ll have more space, and the freedom to play music that they hate around the house more often!

You always hope you’ll do things well. Parenting especially. There are some things I’d do differently a second time around, but the main thing is hopefully I got them off to a good start.

For everyone, this will be a year to remember. But for me, even more so. August marks a landmark birthday (no party due to the pandemic), the tenth year since my Dad died, and my kids moving out.

My family is lucky to be in a position to have these types of options. There are people out there suffering financially from the pandemic. There are people struggling under the weight of working from home plus home education, in smaller homes than mine.

But it marks the end of an era for me. A new phase. Exciting times ahead.

Update 19/8/2020:

Update 6/9/2020:

9 replies on “The new empty-nester”

Hope the new arrangements work out smoothly for you all. COVID-19 has really brought things into perspective for us. We bought last november, a 1970’s three storey walk up in Armadale – we love the area but no way we could afford a detached place any closer in than say Oakleigh, but we also wanted to stay within our financial means. We love our apartment, it has a lovely outdoor common area too which is unique to these types of blocks, the kitchen is seperated form the living area, bedrooms on either side of the albeit short hallway. Then COVID hit and my partner and I have been working in our living room for 5 months. Had we known all this may happen, we probably would have gone for something larger, further out. Our biggest life financial decision rocked by a pandemic, who’d have thought!

In any case, we are fortunate to have what we have, and still really love our place. We’re now setup with me in the living room and the othe rhalf in the spare bedroom, so TCs are a bit more manageable now!

Great post. I would like to be in a position to be able to do the same for my kids in years to come. And nearby so they dont have too many excuses not to visit regulalry!
Right now though I am eternally grateful every day that we have a decent backyard and enough rooms in the house to balance home schooling with both working from home. Its challenging enough as it is, I cant imagine 4 of us in one small space.
All the best with the transition. I would live to follow your reflections over coming months on how you are going.

Congratulations on becoming an investor.
Buying a property in the first half of 2020 maybe not the best time since property prices are going down, but that’s out of your control now.
How are your sons getting on together? I don’t know any brothers who have moved in together – they normally fight too much!

Sounds like a good thing to do. Your third property now, you tycoon. I know two lots of younger brothers who lived happily together, plus our Brother Friends. And a happy 40th! whichever day it is.

Just a quick answer as to why real estate websites don’t distinguish between Flat/Apartments and Units/Villas – is because that terminology seems to be peculiar to Victoria. In NSW, a Flat, Apartment and a Unit is the same thing, with “Flat” being an almost obsolete term. What Victorians call a Unit or a Villa is called Strata Plan house if it’s single storey, or a Town House if the residence has two storeys. If Australia got it’s terminology nationally consistent it would make it a lot easier.

Smart thinking to look to your future needs and stay put and move the boys out! Property transactions cost a motza and it’s really very dead money. The new property sounds great, being a 60’s build it’s likely bigger than newer stuff plus likely better quality too. Good move for all by the sounds of it, congratulations!

@realstretts, I’m not sure anybody would have foreseen what would happen this year!

@roger, my sons get on really well. As for real estate prices, there have been predictions for six months now that prices would take a big dip – it hasn’t happened so far, but in any case sometimes you need to stay focused on the long term.

@Andrew, third yeah. It’s a bit embarrassing to be honest. But what I’ve found is essentially if you can scrabble together the money for the first, pay it down and/or have it appreciate in value, the banks are only too willing to lend you money for more.

I come out of this thinking that more needs to be done to help first home buyers, and some of the rules making things so favourable for investors need to be dialled back.

@albert3801, thanks – that makes some sense. Sounds like the real estate industry needs to work at this. Scrapping the term “unit” would be the first step. After that, it becomes easier – assuming other states aren’t completely out of line with Vic/NSW!

@Anna, the place does need some work, but yes it seems pretty solid!

I miss not being able to get the tram to work every day. Living in Caulfield North I used to prefer getting one of the 3 different trams into the city even though it was quicker to walk to Caulfield Station. Also helped my rent was so low I could afford to live there when I was not working. Probably up above $300/week now for the same flat.

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