The Dark Side of Downsizing

Let's get this out of the way right now. I'm a hypocrite.

When Laura and I sold the house last year and rented a small one bedroom suite, I thought it was for the duration. I actually believed that we would rent for the long term - years, decades even. But things change.

Both kids are cycling through Vancouver again  (not a bicycle, an airplane) and would like a place to land for a few days. This and the ability to host anyone comfortably overnight - or several nights - has led us to look for a bigger place.

Another Home

The search for something comfortable led us to a couple of rental suites, and several open-houses for new construction. Our thinking was to find a rental unit in one of the more desirable places. Maybe even convince someone we know to buy it and rent it to us (good luck).

What we found was that buying a 2 bedroom condo was less expensive than renting one. Especially one we'd want to live in. There was a great New York Times article that quantified the rent versus buy conundrum.

We found a new unit in a concrete tower - one floor, two bedroom, new construction that solved all the issues we have today. Underground parking, room for guests, relatively small, and rentable if we decide to travel for a year.

The Dark Side

We decided that, although we could buy outright, it doesn't make sense. Our investment income today is, more or less, funding our lifestyle. We like the ability to work when we want, and to travel when we want. It's kind of living an ideal.

We would do this deal if we could invest a minimum amount of our nestegg dollars, mortgage the rest, and not worry about servicing the debt - mortgages are now at record lows, and our investments are earning more than a mortgage would cost.

Here's where things get interesting/frustrating. Banks aren't set up for people like us. Banks want people with regular paycheques. Not people who earn as little as we do, and take money from their savings whenever they need some. Even if the number they have access to is several times the value of the home.

I could explain all this in a few seconds to someone that approves mortgages, and they would see my logic. But you no longer meet with the people that say yes or no. You meet a "mortgage specialist". Which basically means that they take all your information and send it to Toronto for a decision. Kind of like someone at Jiffy Lube if your oil change took place 3000 miles away from where your car was (no disrespect for the oil change guy at Jiffy Lube).

This will likely force me to leave the big banks and find a local credit union who makes decision in the Lower Mainland. I'm pretty sure they would see the win-win here.

The lesson in all this is that while the vagabond, irresponsible lifestyle is attractive, it's not understood by the mainstream. I knew that, but this is the first time I've been unable to easily get around a "rule".

I know, I know. This is clearly a first world problem.