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Today, a couple shares how they used their 401(k) to buy a second home in South Carolina where they plan to retire for $36,000 less than asking.
The basics
Age: 61
Pronouns: She/her
Household setup: Married with two kids (one still at home)
Occupation: Tow company owner
Household income: $400,000
What was your home experience when you were growing up?
We both grew up in homes our parents owned. We got married while in high school and expecting a baby. We bought a house pretty early on and have been there 37 years.
Why did you start thinking about buying a second home?
It happened by accident. I have two siblings living in Greer, South Carolina. We visited the area to help my brother look at houses. Along the way, we fell in love with the area.
What were you looking for?
My husband initially wanted to buy land, but we quickly realized it would be too expensive to build. That’s when we switched gears and started looking at homes.
How many houses did you look at?
Our Realtor®, Christine Bartlett, went to 30 houses for us. Any listing we sent her, she would go check out and video it for us. She would also send listings that she thought we’d like.
Did you have any non-negotiables?
My husband wanted new construction. I wanted an old farm house with character. We both agreed that we didn’t want an HOA. We don’t like subdivisions where every home is the same and you can sit on your porch and reach out and touch your neighbor. Along the way, we also realized we wanted the primary bedroom on the ground floor, as we intend to age in place at this home.
How did you find this one?
My brother looked at it first but didn’t want it. I saw it because of him, and it piqued my interest, so our Realtor showed it to us via Facetime.
How did you know this was the one?
It was the best of both worlds—the home had all the “new” that my husband wanted but also the charm that I wanted—and love at first sight.
What renovations had the seller done?
It’s more like, what didn’t he do? The floors, brickwork, and doors are original, but almost everything else is new. The house has a brand-new roof and a new porch. The kitchen is all new, and so are the bathrooms (including two he added). The home was built in 1910, so it didn’t have central air or an HVAC system, so he installed that. There’s a new water heater, and he put in new soffits with fans. There are also so many thoughtful touches throughout, including six outdoor outlets.
What did you love about the renovation?
It wasn’t a flip, although the seller bought with the intention to sell. It took a year and a half to renovate, working with a designer. Nothing, from the vanities to the lights, is from a big box store. Everything is unique, chosen by the designer. One of the bathrooms has a dresser repurposed as a vanity. The mirrors are custom made.
Were there any downsides?
The house is three blocks from a freight yard, and trains run by the house every hour. But the trains don’t bother me. For 40 years, we’ve run a towing business. My phone rings at all hours of the night, and every call means I have to get up and go to work.
What were the negotiations like?
The home had originally been listed at $400,000, but the day before our Realtor toured the home the seller dropped the price to $385,000. We offered $380,000, but since the home only appraised for $364,000 and there was no other competition, we got it for the appraisal price.
Was the deal otherwise pretty straightforward?
There was an issue with the land. We’d done our own research and saw that when the seller bought the home, it was on 0.86 acres. But then when he listed it, it was only 0.43 acre. We found out that the seller had the land surveyed and split into two properties. Our Realtor found he was trying to sell it separately for $45,000. Right across the street is the town community center. We speculated that the center wanted it for overflow parking. If that had been the case, we wouldn’t have been happy here. We didn’t want it unless we got the whole property.
The land also had another home on it. The seller had gutted that structure down to the studs. It was nothing but an empty building. At first, I was telling him he had to take it away. My appraiser didn’t see any value in it. Thinking about it more, we decided to renovate it and rent it on Airbnb.
Where did the down payment come from?
We borrowed against our 401(k). It’s a four-year personal loan, and we pay it back to ourselves at a 9% interest rate—but we’re paying that interest to ourselves.
Is there any downside to this type of loan?
If you don’t make the payments, there’s a penalty.
What’s your plan for the house?
In about three to four years we’ll retire and live here full time. Until then we have given up all vacations—we are paying two mortgages, after all! We vacation at the house, visiting once or twice a month. When we’re not there, my family helps take care of the house. They live about 15 minutes away and bring in the mail and packages and mow the lawn.
What’s your favorite thing about the house?
My husband and I have been together since high school and have had a lot of time to talk about what retirement would look like. The wraparound porch with rocking chairs is something we’ve always wanted. We also love the small-town feel. Everyone is so friendly and involved in community events.
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