September 27, 2006

Now that the bubble has burst and the meltdown has started, anyone practicing or thinking of doing Geo-Arbitrage?


HP'ers may remember this conversation from February, the idea of selling you overpriced sh*tbox in Arizona or California, cashing in at the top, putting the $ in CD's and moving somewhere real. Somewhere where homes didn't go crazy (usually the middle of the country, like Montana, maybe a town in Kansas).

Live the simple life. Stop working, or working so hard. Stop going to flipping Pottery Barn every weekend to buy more junk. Sell the Lexus and get a pickup truck. You get the picture.

So, anyone do it? Anyone regret not doing it by now?

I intend to do it, but that little city won't be in the US, it'll be over here somewhere. We'll see. Give me an internet connection and a phone line, and I'm good to go. Oh, and good train connections, so I can still get to symphonies, opera, the airport and the sea.

From the inspiring
Moments of Clarity blog, done by a guy who did just this, here you go:

On Geographic Arbitrage and Corn Fields

Thank you Rich Karlgaard http://www.life2where.com/ for helping me finally pull the trigger on the big move from the "skyrocketing coastal markets" to the flyover country. Reading Karlgaard's book "Life 2.0" and Po Bronson's "What Should I Do With My Life", have really helped me to grasp what it means to exit the California race for AM freeway position and enjoy a fuller life. Now, I'm taking my CA income and job to Des Moines Iowa.

We were able to spend some time there and my business travels keep me in the Midwest quite often and I've come to enjoy it. I realize that living there, snow, cold, etc. will be a shock for a while. But, as I frequently say to friends and family, "I don't know about you...but I tend to drive 2 hours a day to work inside an office after exiting a climate controlled car and then it's too jammed on the freeway all weekend long to actually go anywhere without popping a vein and I have 2 kids under 3....so what am I missing by moving to a different climate???"

As discussed in Life 2.0, we'll probably find a very nice house of roughly 2.5 X the size for about $250k. Yes, you can write a check for houses like that coming from CA. I wont but the thought of saying, "I'll write you a check right now if you take $25k off so I can go buy the Volvo instead of the Hyundai" feels nice.

28 comments:

BISTL said...

I bought a mini-farm in a neighborhood a few years ago. We could be self-sufficient, if needed. For some reason the restrictions prohibit having chickens or pigs. But, everything else is OK.
When the gov't pulls away the free money, the soccer moms and dads will be rioting in the streets. That might be a good time to keep quiet about surviving the next few years.

haggis said...

I'm in the process of doing it.

House in London - sold. Current residence - on the market (and thankfully not in the US or UK). Both were/are mortgage free.

I'd love the status house and luxury car. But I don't want to work another 15 years to pay for it. There are a lot of places around the world which offer a very nice lifestyle and lovely accomodation for a fraction of the cost of slugging it out in 'Type A' cities.

I'm 47 and the most important purchase I can make is time. All the other acoutrements of the consumer lifestyle are just fluff & stuff.

We all tend to worry too much about things and devalue experiences. It's the latter that count in life.

Cheers, Haggis

David in JAX said...

I have family in North Dakota and West Virginia. Each time I visit I really enjoy the slow paced, non-materialistic towns where everyone apears to be friendly and things are safe. Every time I leave I realize that my life would be better if I just stayed.

Anonymous said...

what do you think about costa rica?

Anonymous said...

Sold Florida condo & home in 2004 (not quite the top...but close enough). Now rent a $475,0000 (pre-bubble) waterfront condo in the summer for $1000/month and live on a 48' boat in the winter. Boat people are some of the nicest folks you ever want to meet and we're thinking about maybe doing it full time.

Low blood pressure at 51 said...

Here ya go kieth, from rural North Alabama where my biggest worry is drought and when it rains, mowing the 20 ac of grass. I have fun shooting snapping turtles in the pond, flying from my backyard airstrip, sitting on the porch looking at beautiful sunrises and sunsets.

http://www.ft.com/cms/s/90269eea-4d86-11db-8704-0000779e2340.html

Goldman Sachs now trading the re crash:

Anonymous said...

I turned my wife into a "SUGAR MOMMA" and she does'nt know it.
I spent 10yrs building a beautiful lakehome here in minnesota. (I'm a carpenter) And for 10yrs I caught hell from family, freinds and neighbors for not holding down a 9 to 5 job while I built it. I sold it oct/05 (lucky) for 525k. I cleared 400k and put it in the bank. Now my wife goes to work and I sit on the computer all day. Life is good. I gotta go know I'm baking some cookies. Bwahahaha

Anonymous said...

I moved 2 hours south of Washington,DC. Can't sell my property there, and prices are skyrocketing where I have moved. And the whole new job thing is a major challenge.

If you can keep the $$$$ job and leave the big city, great. If not, I would say its not worth it.

overdeveloper said...

I have been living the rural lifestyle since the 1990 crash. I work from home part time and do odd jobs for the city folk around here. I bought a foreclosure while losing money on my mcmansion.I still came out ahead in the long run and am much happier.

Unfortunantly everyone else found out about the area. We had no idea there would be 100+ little 10 acre ranchs down the road. Guess we should have checked but who would have thought it so far away from town. Must have been a corrupt county board back in the 1920's

Now about 20% up for sale. Many are spec homes and flippers. The rest I fear are people in over their heads.

The renters are already moving in as the speculators try to ride out the storm. I may pickup a few more foreclosures in about 2009. That's about the time frame that it took in the early ninty's to get the really good deals. Or I may look for greener pastures. Depends upon how much the area is degraded by the new wantabe cowboy's.

Anon asked about Costa Rica.

My brother had a deposit on a new beachfront place last year. He is the spur of the moment, adventurous type. He took my advice and went down there to check out the area. He immediatly cancelled the escrow. Roads and infrastructer are terrible. 3rd world in his opinion.

My advice is to spend some time in the location you are looking before buying. A full winter can really change your mind especially if you come from a coastal climate.
Once you leave your high priced areas for the sticks it can be hard to get back home. In a sellers market you can forget it. Of coarse I hear they will have some very, very, creative financing planned for our next housing cycle!

Anonymous said...

Here is good idea:
http://www.ar-realestate.net/agencysites/remaxfirstchoicerealestate/listings.htm

$ 32,000 El Dorado AR (Union County)
FRATURES LARGE EAT IN KITCHEN, FIRE PLACE, AND GLEAMING HARDWOOD FLOORS.
PITSA

Anonymous said...

Costa Rica is a bug-infested tropical sh_thole. Your house is either concrete and stone or it's termite food.

And as a "rich" gringo, you will be one of the first targets during any civil unrest.

hebrew house lender said...

Well said Haggis, time is the only real thing any of us have.
That being said, If the rest of you guys want to stay in the cities, and fight the third worlders, along with all the violent crime and drugs they bring with them, please feel free. Someone has to be there to keep it from really looking like a jungle after all. Better your kids than mine I suppose.

Anonymous said...

Wait a minute, that's my truck and shed!

Mammoth said...

This is an interesting topic. It seems that all of our modern conveniences and electronic toys are not providing us with the one thing which is most valuable - more free time. We all are running our tails off commuting to work, working the longer hours that our employers are forcing us to - and coming home at the end of the day feeling like a squeezed-out tube of toothpaste, and then rushing through our weekends doing the chores that we don’t have time for during the week.

And then one day we wake up old, and realize that we have have not lived our lives as we would have really liked to. Can you really ‘get away from it all?’ It would take some careful planning, plus getting yourself out of debt first before taking the plunge. You also need to reassess your priorities.

The pay in most rural areas is usually poor, and if you move 2 hours’ drive away from your job in the city because you need that high-paying job to pay the mortgage & new car payment, plus the gas needed for driving back & forth to work, you have only screwed yourself.

And if you think that you can just ‘live off the land,’ without a source of income, lotsa luck! Somewhere there is a happy medium between these two extremes. Getting rid of your debt, and reducing your spending by changing your shopping habits (do I really need that waterproof radio for the shower?) will reduce your need for a high income job.

Once you’ve found your rural paradise, plant a garden, raise a few chickens and maybe a goat, and learn how to preserve the food that you produce. Develop some skills that you can sell to the locals - welding, home repair & renovation, landscaping, etc. Get to know the other members of your community.

Read up on sustainable living. There is a magazine named, “Countryside,” I believe, that focuses on this topic. If any of you HP-ers reading this can share the web addresses of some sustainable living blogs or other websites, please share them with us here. (Don’t worry, Keith - you have a great blog going here and we won’t abandon you!)

Escaping the insane greed & consumerism of our modern society may just increase your overall happiness, and allow you to focus on what truly has value in life.

Anonymous said...

The following is a great website about one family who lives 'simply'. Click this link and go to the Essays sections for some great reading. It has really inspired me to do more reading and thinking about "simple living" aka "voluntary simplicity". Some of you may have visions of Amish spinning wheels and butter churns but it's not that at all. It's living in the modern world well within and below your means. Remember, being rich is not measured by how much you have, but how much you need. When you are on your deathbed, will you still be agonizing over getting the H3 instead of the H2? Or will it be because your children had to struggle with massive student loans for a dozen years because you blew their education fund on crap?

http://www.unconventionalideas.com/

Tony said...

Trying to unload the last of my homes, for a profit for a loss, who knows. Looking like a loss for now, but I'm heading for the hills of Tennessee, me and about half of the northeast.

NC/TN area is swarming with Northeasterners and half backs (people that moved to FL and hated it and moved halfway back).

Lower taxes, lower costs, slower pace, good bye Washington, hello TN

Tony

haggis said...

Mammoth,

Well said.

Cheers.

Anonymous said...

looks like everybody is leaving the good old U.S. of A. and moving to costa rica, etc. commom folks, where's patriotism here.

Patch Tuesday said...

Keith,

It's nice to dream about ditching it all and moving to dreamland, and I've done my share of reading about it, but it might be more realistic if you take a survey of the things that would be important to people in dreamland.

Such as:

1. Security

2. Medical Care

3. Infrastructure. Cell phone towers, high speed internet...

etc etc...

I've long thought the illegal immigrants have got it all wrong. Instead of leaving their homelands and coming to America to cut grass and change sheets, I've often wondered why they don't concentrate on creating little paradise communities in their own cheap countries that could cater to the retired middle class Americans. After all, the average blue collar worker can forget about Florida and the likes because of the pricing...

Patch Tuesday said...

Somebody wasted alot of money on NICOLAS P. RETSINAS' education...

He says first: Even with too-good-to-be-true mortgages, people cannot afford to buy homes that cost five times their income.

He then says: History tells us that housing booms are not eternal - that most end - enabling incomes to catch up with prices.

So, the Fed will allow incomes to rise five times to correct te bubble?

Patch Tuesday said...

Anonymous said: what do you think about costa rica?

Read about Panama instead. From everything I've been able to find, they are the best bet for anyone who's determined to do something unheard of, and cross the the Rio Grande in a southernly direction...

Currency is dollars, lots of incentives to retire there, and English is not unheard of

Squashblossom said...

Here is a site on rural transplantation (and many other things) I like to visit:

"prairie mary. Valier, Montana, United States. Born and raised in Portland, OR. BS in Speech Education at Northwestern University, ten years teaching English on the Blackft rez, four years married to Bob Scriver, five years as an animal control officer in Portland, MA in Religious Studies from the U of Chicago and MDiv from Meadville/Lombard Theological Seminary, ten years of ministry in the West, six years working for the City of Portland, seven years of retirement so far".
http://prairiemary.blogspot.com/

Also, this one, for going hawking vicariously in New Mexico on an autumn day, among other things:

"Blogging About: Nature, Literature, Paleo-history, Good Eats, Good Places, Pursuits of Happiness, Hunting, More and Worse..."
http://www.stephenbodio.blogspot.com

Anonymous said...

I'm in my 40's, but cannot wrap my head around such a radical change, even though I'm a little bored with the status quo. Cash it all in, quit work, and buy a farm because the economy *might* collapse? It's rational enough, but I'd be one of those people who fail to act in order to be certain. Fortunately for me, if it comes to that, I'm on good terms with relatives who own farms and I can more than earn my keep. In event of a collapse, there would be pros and cons to city and country.

47jim said...

hey tony,
tennessee, 10%sales tax. it does get annoying.

Chaps said...

I did it. Check out Mr. Smith's blog with my account on Sept 27 "Wheel Estate" at http://www.oftwominds.com/blog.html

midwesterner said...

I was born in southern IL, went to school in Chicago, moved to CA in '84, bought 3 houses along the way, the last of which I sold in Aug. '04 for $1.9M. I took $1.6M in equity, paid the taxes on $1.1M, and along with other liquid investments, I moved to rural south central MO. No mortgage. Seven figures of investment capital. My wife teaches at a local elementary school and loves it.

Life is good, folks.

Anonymous said...

Are there any blogs on International geographic arbitrage ? With full US, Brit and a 2nd class Indian citizenship I have options on where I can live by right.
I'd love to stay in the US, 6 months of summer and a few winter weeks for skiing in the Front Range of Colorado and the other 6 in NM say, but I don't trust the US government not to go down the path that all countries take in times of financial crisis - I remember the 50 UKPound limit on taking holiday money abroad that was imposed by the Wilson govt as part of the foreign exchange controls in UK in the late 60s - then in India there were daily newspaper reports of customs raids on private residences to confiscate gold, since simply owning gold was illegal till recently. As we lurch towards a resolution of this credit expansion boom bust cycle this will happen here too and I'm not waiting around to find out nor to fight to prevent these illiberal, squeeze the
prudent fiscal strategies. I'm just too old - besides I did my bit - changing my chant from "Maggie Thatcher, Milk Snatcher" to "The Blessed Margaret of TINA(
There is no alternative).

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