Geographic Arbitrage Update

This week marks four months since I gave my early retirement notice to my job/career after sixteen years with the same company.  Substantially all of our time since then has been focused on geographic arbitrage – moving out of the high cost bigger city into an area with lower costs and a better fit for our lifestyle.

So where did we end up? I’m not ready to post our GPS coordinates, but we ended up near the coast in the US Southeast.  We debated between living on the coast, moving into the mountains, or moving to one of the mid-size cities located on I-85 between Washington DC and Atlanta, GA. Ultimately the coast wasn’t the cheapest option, but we’ve always wanted to live at the beach.  We also knew that after years of pain with home ownership, we were going to rent for at least a year.   We moved out of one of the largest cities in the country and the paradise tax to live on the coast wasn’t that expensive. 

The next few posts will probably go into more details likely go into the details of the move, downsizing, home sale process, and our decision between renting vs. buying at our new destination.  For now, this is more of a “where are we now?” update:

Why the US Southeast?

We’re originally from the area and getting closer to family and friends was important to us.  There were many years of missed events because I would move almost wherever my employer wanted me if there was a title and money involved.  This had good benefits to our financial statement, but the nomadic life had its challenges.  Like most other employees, we were restricted on vacation time and the process of travel took up a big chunk of our time (and money) when we wanted to visit.

Cost-wise Virginia, North Carolina, South Carolina, and Georgia were all pretty comparable.  Housing costs were a big attraction to this area, they are just generally cheaper in this part of the country.  Most of the expensive inputs into a house are sourced and manufactured in the area (timber, concrete, brick) and outside of Washington DC and Atlanta, there is still an abundance amount of land to build on.   New home development policies are generally reasonable and the combination of all of this keeps both rent and home ownership costs reasonable.  There was no overwhelming tax advantage between the four states and they all had similar options available through the ACA when it comes time to sign up for health insurance.   The combination of all these things narrowed us in on that four state block early in our search.

Reversing a Corporate Relocation

When we moved to my last location, I expected it would be a 3-5 year position and would eventually transfer again within the company.   Some opportunities did come up, but it would require a new three year payback agreement for the move expenses and the opportunities that came up were jobs that involved “fixing” something.  At that point I knew the transfer would be on our own dime.   There are no guarantees in corporate life and any relocation must be considered a one way ticket.  It was on us to figure out the move.

The House Sale

Our last home was more than twice the cost of any of our previous homes.  I valued a short commute and it resulted in buying a nicely renovated but sixty year old home in a neighborhood full of raise and rebuilds.   We loved the home, but I didn’t fully expect the adventure we were in for selling it.  I’ll be writing more about this soon, but…it was frustrating and not something we want to repeat.  Ultimately we came close to breaking even and shed ourselves of a three bedroom house that came with a near $16,000/year property tax bill.

The process was in the hundreds of hours between prepping the house for sale, keeping it in pristine condition before each of thirty showings, and loosing most of our Friday, Saturday, Sundays for showings.  Remove ourselves and our pets over and over from the house got old quick! 

The Rental Process

We narrowed our search down to two cities, one of which had a more challenging rental market than the other.  Once we figured out the more coastal area was near comparable at cost, we scheduled a trip to go find a rental.  I used Zillow and setup three appointments to see rentals.  The second house we saw fit us well and after some back and forth, the landlord agreed to go with us as a tenant.   So far we seem fortunate to find an individual landlord to rent from who owns five rentals he’s all lived in over the past fifteen years.   Once he picked us as renters our stress level was reduced some.

The Move

We priced out both a full service move and a do-it-yourself move.   I originally expected to do the DIY move, briefly considered the full service move, then ultimately came back to the DIY move.  The basics of the DIY were:

• We pack our own stuff, both tracking down stuff to pack on neighborhood sites and expensive trips to the home improvement stores
• I rent a 26ft Penske Truck to drive 1000+ miles.
• We hire crews to load and unload on both sides of the trip.

I haven’t tallied the final numbers, but we likely spent in the range of $3,500 compared to the $12,000 full service move.   That sounds like winning, but it didn’t feel that way with weeks upon weeks of working on this.  If it weren’t for the “lack of a job” thing, I would have paid the professionals.  Driving a rental truck for a day and a half and is not something I want to repeat.  

The Stress

Early retirement was supposed to be stress free, right?   The downside of Geographic Arbitrage immediately after retiring is there’s nothing really stress free about moving or selling a house.   We turned off the firehose of cash by quitting work and then felt required to save money every step of the way.  Here’s an abbreviated list of the life-stress caused by doing this over the past four months:

• Living in a house for sale:  If I were working (and in hindsight) we should have gotten an AirBNB in our neighborhood for Friday/Saturday/Sunday each of the listing weekends we were going to be in town.  We were selling a house with a decent price point and first impressions matter.  We felt the need to save the $300 – $500/weekend and this created an intense amount of stress.
• Not interviewing multiple agents:  I intentionally kept quiet about the move and thought the agent who represented us in buying the house did a good enough job.  With everything else going on I did not slow down and interview a number of agents and get references to talk to.   This left us with a constant feeling of “holy crap, our agent is getting this much money and hasn’t done anything!”   We were locked into a six month listing agreement and didn’t want to spend the summer/fall in our prior location.
• Purging:  It can feel good throwing away stuff and/or selling it on Facebook Marketplace, but the number of decisions are overwhelming.  Keep, throw away, or sell?  Keep, throw away, or sell?  Repeat.   
• Packing:  Once the house went under contract, we slowly packed boxes for two weeks then it completely consumed the final week.  Tracking down free boxes, figuring out what supplies to buy, and nearly ten trips to the home improvement stores was a grind.  The sense of urgency difference between my spouse and I also became a point of contention (she’s way more urgent and organized than I am, which I’m very thankful for)
• Driving the moving truck:  Every way I sliced the numbers, personally driving a 26ft moving truck 1000+ mules was coming out to being worth at least $2,000.   Between pickup, dropping it off, and the actual drive time, I estimate it took 25 hours of my time plus a few frightening moments on the road.  
• The slow leak of money during a home sale process:   Someone told me “Whenever a large sum of money is changing hands, there’s a line of people along the way trying to skim a little bit off the top.”  Boy did this ever hold true for selling a house.  “Its only a small percentage” or “This is a normal seller cost” were words that became the bane of my existence.  We worked damn hard for our money and having a couple hundred dollars at a time come out of the transaction over and over worse on us.  The process was such a grind we actually delisted the house before the final buyer came through and planned on staying for six months while waiting out our listing agreement and then firing our agent.
• Living outside of our normal/familiar routine for more than three months.   From the moment the house was listed in late April, our routine was broken.  Cleaning/exiting the house on short notice, packing away our home, then living in a state of moving for over a month wasn’t easy,  This comes on top of the normal routine breaking things such as changing grocery stores, gyms, and any professional service we see.  Having a crown come off a week into moving left us scrambling to find a dentist on short notice!

Wrapping Up

I’ve gotten the question of “how’s retirement” quite a bit over the last three months.  With everything going on, my response has been “I have no idea how I ever had time to work!”.    Now that we’ve finally parted with the house and completed the move, I hope to have a better answer to that question in the next three to six months.   In the meantime, this has given me a lot to think about in our FI journey.  Should we have tried Coast FI and moved to our final destination before we stopped working?  Did I work too long because of the number of opportunities that are already coming up to pull in money after we quit?   Now that I’m financially independent, will I be a full on person of leisure or will I take up hobby entrepreneurship?   I don’t know the answer yet, but will leave you with those thought from someone I’ve followed for years – Steve Adcock.   The fog is clearing and I see opportunities everywhere.