Geo-arbitrage Your Housing

Note: This is the first in a series of Housing alternative articles.  They are intended to get you thinking “outside the box.” Not every alternative will work for everybody.

Geo-arbitrage is a big word you may have heard thrown around in various ways over the last few years.  It basically means do things where they are cheaper (my definition.)  Where I have heard it most is when US companies send jobs overseas where workers are cheaper.  Retirement may be your time use this idea to your advantage.

Is Moving to a Less Expensive Area an Option?

The same 3 bedroom townhouse that is 1.5 Million in New York City might be $100,000 somewhere in the Midwest, or even less.  For most of us our jobs have dictated where we live, and those jobs were usually near big cities that tended to be expensive.  Since in retirement you might not be tethered to a job you are no longer living under that constraint.  You might be able to keep that same standard of housing for one quarter the cost by making a move.

The Internet Helps!

There is one more big change that helps make housing Geo-arbitrage possible.  That is the growth of the high speed Internet.  The internet opens up countless income opportunities and makes communication with friends and associates around the country or around the world easy.

What is Important To You?

Try making a list of what is important in where you live.  Do you need public transportation?  Is shopping at a mall important or do you usually use Amazon anyway?  Is it important to be near family and friends?  If so do you have to be 10 minutes away or are weekly or monthly visits OK?  Next rank your list items in order of importance.  Are some deal breakers and others just “nice to haves?”  Consider what new activities you might like to do but your current location makes difficult.  For example maybe you live in a city but want to take hikes in the mountains.  Start investigating possibilities and see how they match up to your desired budget.

Maybe a Nearby Move?

Taking advantage of less expensive housing at a different location doesn’t have to mean moving across the country.  This is especially important for people with family connections that don’t want to move too far away.  In many areas real estate costs are still determined by how close you are to major cities.  This is a left over from the pre-internet world where everyone had to commute into a factory or office.  Often a move a half hour away can make all the difference.

Keep An Open Mind

There is a lot more to living somewhere than just cost.  You have to like the area and at least some of the people!  Does the area have the kinds of activities you care about available?  Keep an open mind here too.  Maybe there are even cooler things in the new location if you bother to explore.  One obvious option is can you rent for six months or a year and see if you like it?

If moving in a less expensive area is not possible all the time can you do it some of the time.  Maybe you live in an area that is popular in the summer months.  Could you rent out your house during the summer while you travel or live in a less expensive area?  Could you share a space part of the year in an expensive area and spend the bulk of your time in a less expensive area?  One of the goals of this blog is to help you think outside the box.  Geo-arbitrage is one of those areas where you should let the creative juices flow!