How to Free Up Cash by Moving

I've covered the issue of moving to save money quite a lot in the past (see these posts for details: More on Moving to Save a Bundle -- How One Couple is Saving a Fortune, Free Money Finance Top 10 Most Hated Posts/Themes: #2 Moving to Save Money, Move, Save Money, Become a Multiple Millionaire -- All in One Step), but this piece from Yahoo takes a bit of a spin on the same concept as it tells how people can free up some significant cash (and often upgrade their housing situation) by moving to another area of the country. Here are examples of how two couples did it:

• Manion had always admired Colorado's friendly people and landscape, and his wife has friends and a brother there. The Manions sold the home they had owned for just seven years for $925,000. They're building a new place in a gated community on three acres of land for $800,000; the extra will go into the kids' 529 college plans.

• Six years later, home prices had tripled. "We thought if don't do it now, we'll never do it," says Kathy Marks. With nothing else lined up, Greg quit his job, and they sold their place in Chula Vista for a profit of nearly $440,000. They paid cash for a 3,700-square-foot home on an acre of land in Oconomowoc, Wis., and also paid off their two cars.

Here are the basic economics of the issue:

1. People purchase a nice/decent home sometime back in the past.

2. Over the years, housing prices skyrocket, making a once "nice" house worth a fortune (think people who bought in California 20 years ago.)

3. They sell the house, move to a less expensive state, and get a bigger, newer house with more land for a fraction of the price.

4. They pocket/save/invest the difference.

Not a bad deal if it works out that way. Unfortunately, there's no guaranteed way to replicate this. Still, if you're in this situation (or maybe your parents are), it's an issue to be considered as you do your financial planning for the future.

Comments

[Lord]

The problem is they are overspending on that cheaper home. Spending so much one in these less expensive areas means it will be a very illiquid investment. It will be very difficult for them to ever sell it, and very difficult to get their money out of it much less any gain.