Help us decide what to do. (tenants, foreclosure, agent, investment)

[Hobokenkitchen]

Do you ever feel like you can't see the forest for the trees? Well I think we're feeling a bit like that at the minute and could use some input.

RELEVANT BACKGROUND:

1: We move a lot. We've bought and sold a bunch of houses and most people think we're nuts... but we're used to it and find it far less stressful than most people.

2: Our most recent escapade involved us renting out our house and going around the world. We are presently renting a friend's house while she is in Florida for the winter. She arrives back May 1st.

3: Our house (which is paid off) has been rented to the same people for almost 2 years. They pay early, are self sufficient and keep the place immaculate. We make a lot of money on the rent. Their current lease is over July 31st which leaves a gap of 3 months between leaving our current rental and being able to move back into our house.

4: I am pregnant, due at the end of June... right when we are between houses.

5: We live in the city. Our house is awesome, but not very kid friendly. Lots of stairs. Roof deck, but no yard. Significant commute to work for my husand.

6: Our tenants have just told us they have signed a new work contract and have asked if they can stay for a further 7 months (starting August 1st - Feb 29). This would bring us a significant amount of cash.

OUR OPTIONS;

1: We have an offer on a short sale. It failed the septic inspection and needs work. Bank doesn't want to fix it due to liability issues and wants us to reduce our offer price to reflect the issues. We have reduced our offer (by more than they would like) and we are waiting to hear back from the bank whether our new offer is acceptable. Waiting for the bank takes forever. It feels like it is dragging on and on.
The house is much closer to my husband's job, is big and a bit overwhelming. The cost is a stretch, but easily do'able with the rental income.
Good potential for upside - especially with our revised offer price.

2: We saw another house we really liked on Saturday. It's not a short sale and the seller has the price too high. Taxes are $3,500/ year higher than the short sale taxes.
Even closer to my husband's work (maybe 10 mins door to door).
Also needs work. On public water and sewer (yay!). Best of the best neighborhood in slightly less upscale area than the short sale.
We have feelers out with the listing agent to see if the seller would consider an offer about 25% below list price. Probably unlikely, but we'll see.

3: Tell our tenants they can't stay. Find a temp rental for May - July (with a newborn). Give up the additional income, but would be ok because we would have our (significant) savings in tact and no mortgage. Deal with the fact that the master bedroom is on a different floor from the baby's room & that my husband's commute is long.

ALSO:

Not crazy about our tenants moving out end Feb as bad time to find a new tenant. Should we tell them they can stay but lease needs to run at least through March? If they have to leave before then, we could halve the price of the rent for them for March and still be finacially ok... but they would be paying for an empty house which I'm sure they won't be wild about. Thoughts?

ADDED COMPLICATION:

My husband has a good, steady job which he is bored with. He is a high level manager and has been applying for a year to other jobs with nothing better having come up. If he got a great offer, we would want to move to allow him to take it. Still, nothing has come up for a year, how long do we stay in a holding pattern?

[Okey Dokie]

A couple things struck me: they always say don't buy the best house in the neighborhood....so think about that re: option 2.

If the renters stay through February, I personally think it's kind of chicken**** to make them pay for an additional month just because you don't think you can rent it right away. You say the house is paid for. Your month to month expenses can't be so high that you can't absorb the overhead for one month? Besides, there's no guarantee it will remain vacant very long if you re-rent it. You say they've been excellent tenants. Why not treat them with the same respect they have given you as landlord?

[Hobokenkitchen]

Because I think it's very unlikely that it will only be 1 month. We may get lucky and find another renter quickly... in which case they would have no additional cost. But more likely it will be at least 2 months of vacancy costing us thousands. It seems a bad idea to me to go into something knowing in advance that would be the likely outcome.
They have been good tenants, but this is business. We will have a young baby at the time, no income from me and high expenses in a new house (assuming it works out with any of them). It would be do'able but very uncomfortable to have to eat more than a month of vacancy.

Appreciate the point of view on our second option. Think you have a good point. While it is by no means the best house in the fancy neighborhood, it's definitely one of the better homes in the area. I think it's out anyway. The seller's agent has indicated that the seller has received reasonable cash offers and rejected them. He was gifted the house by his parents 30 years ago, so I guess he is mortgage free and doesn't 'need' to sell.
We like the house, but definitely aren't willing to pay over the odds for it given the amount of work that needs to be done.

[fallingwater]

We have moved a lot ourselves. We are in our 5th house currently and talk about moving again in a few yrs after our son graduates. Moving a lot gets harder after the kids get older and start school. If you think a fixer upper is going to cause some cash flows problems I would rethink it. My husband and I renovated homes when our son was small and its a real hassle. You also lack the energy you had before the kids arrive. Just something to keep in mind.

Aside from that the biggest issue I see is that your husband is unhappy with his job. We went through this and after a couple of yrs of no job offers we decided we were meant to stay put so we put in an offer on a short sale. We waited months to hear anything. Then my husband got a job offer out of state. While we were contemplating this, our realtor called to let us know the bank was willing to accept our offer. So we had the major dilemma of staying put, renting out our house and going with the short sale OR taking the chance to move out of state, starting anew and renting out our house. We decided to make the move out of state.

We did not have a good time with our rental situation at all. You are lucky to have good tenants. We had one bad experience after another and eventually sold the house at a major loss to get rid of it. One bad tenant can cause a major host of problems. Non payers, people that tear up the house and other issues. We had to fix or replace things that were fairly new to begin with because renters ruined the stuff. Sometimes it was small things and other things were more expensive. We had one tenant take down a section of the privacy fence to burn it in the fire pit. Crazy stuff.

I think the biggest decision you need to make is if you want to remain mobile. Once you buy that second house its an anchor. Job offers always seem to pop up when you least expect them. So its either deal with the job or only consider something that would be close to where ever you are going to buy. You are in the nesting stage right now so it seems very important to get settled before the baby comes. I get that but I can tell you from experience the newborn stage is when children need the least. You just need the basics to keep a newborn happy. Food and shelter. You could live somewhere temporarily and do fine. Now would be your chance to make sure all your options are open, after a home buy and kids get older, it gets even more complicated. Good luck on whatever you decide.

[almost3am]

Originally Posted by fallingwater

My husband and I renovated homes when our son was small and its a real hassle. You also lack the energy you had before the kids arrive. Just something to keep in mind.

Big agreement on this. I did lots of reno work on previous homes, now with this home and three little kids I really don't feel like doing the reno work as much.

I think I would keep house hunting, and maybe look to sell your home now, but that is me. Long commutes suck, and to me it is even worse with kids...I like to see them and my wife wants my help.

[Squirl]

If it were me and I was pg and making great money on renting out the house, I would rent an apartment until March 1st that is convenient to DH's job. Think how easy it would be living in a cozy apartment with a new baby. No yardwork, the baby's room right next door, and DH's job nearby! If you buy another place now and he is sniffing around for a new job, you could wind up with a couple of houses in long commutes. During the time you are leasing out your temp place you can decide if you want to move back into the old house or rent it out. Maybe you just move back in from March thru June and lease it out at a more optimal time..... maybe you try and sell it. Long term, its not the right house for the new family set up.

[lovesMountains]

First of all, keep your "good tenants" - that's easy money in the bank.

Second of all, find yourselves a rental you can each agree on and get settled well before your due date. Sign a one year lease.

If by the time it's up your husband hasn't found that "dream job" that would take you someplace else, THEN go ahead and buy ending your "holding pattern".

Forget the shortsale, they are a PITA.

Just my 2 cents

[texdav]

I certainly wouldnt buy a second home if my husband was looking for new work in a new location. I know that I moved several times and made moeny and sold quickly each time in the past. But that isn't true now days.Most are not seeing homes as the wealth building investment that you can't lose on now.

[Hobokenkitchen]

Thanks all - this is all very useful.

The point about renovations is very well taken. If we could get in somewhere soon we could do a lot of the renovations before the baby arrives... but we may not be done completely by the time the baby is here.

I think we will give the bank for the short sale until the end of the week, and then kill it. It's just dragging on too long under the circumstances.

Re my husband's job. That is my biggest concern too. However, we both want to nest.
We have owned 5 houses in the past 9 years and lived in 3 rentals for six months or more as well as 2 short term rentals of a month a piece. It is a lot of moving and we are tired of it. I want to settle for a bit and DH feels the same way. The job situation is a difficulty for sure though. But how long do we let this uncertainty go on for before deciding to make it work where we are?
I am inclined to be as supportive of his job goals and wishes as possible, but at some point I want to know where we will be living for a while.

For the record all the moving has not been his doing - we have moved 3 times for his job (including one of the 6 month rentals), the rest have been non job related moves within the same area.

Ugh, I'm trying not to let this stress me out, but I want to know where we are going to live and be having our baby!

[Hobokenkitchen]

Short sale is dead. Agent and sellers are both mad at us for not accepting their terms. Sellers would rather let the house go to foreclosure than spend any money on it and bank won't negotiate further. I've been getting unpleasant emails from the realtor all afternoon/ evening.

Option 2 rejected our offer and countered so high it is completely out of the question.

There are no desirable looking rentals out there (that aren't up several flights of stairs) in our chosen neighborhood, in a budget we are willing to pay (below $3k/ month for a 2 bedroom).

We had to email our tenants this morning to let them know what is going on as they are OOT and we can't meet with them in person. No response from them yet.

We are going to be homeless for the birth of our child and everyone is mad at us. <<Hold me>>.