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Renting would be a nightmare. If you think you have maintenance issues now, wait to you have a tenant in your home.
We rented out a home that was in great shape. We used a property management firm. The tenants broke nearly everything in the house. We replaced the stove, the microwave, the disposal... A year later, the house was a wreck. Holes in the walls, floors had to be refinished. We didn't renew the lease and sold the home. Great decision.
BIL rented out their home. Tenants cut and sold the trees on the property, never paid rent, and moved out with not only the refrigerator and W/D, but the wood stove.
Renting would be a nightmare. If you think you have maintenance issues now, wait to you have a tenant in your home.
We rented out a home that was in great shape. We used a property management firm. The tenants broke nearly everything in the house. We replaced the stove, the microwave, the disposal... A year later, the house was a wreck. Holes in the walls, floors had to be refinished. We didn't renew the lease and sold the home. Great decision.
BIL rented out their home. Tenants cut and sold the trees on the property, never paid rent, and moved out with not only the refrigerator and W/D, but the wood stove.
I hope that so many people who can't sell there home for anything other than a loss read this post and understand that renting is not quite the panacea that so many believe it to be. Sure, the cash on cash looks good...but the accounting, maintenance, and management issues make renting for most people a nightmare waiting to happen.
To the OP...start with a plumber and an exterminator. Do Not Do anything else....sealing this, or replacing that, until you understand what is going on.
You don't say where you are located, but you did say the house is on a slab. You could have frozen the pipes this past winter, or there is other structural damage in/under the slab (hence the sewer pipes from the toilet are backed up (yes, all the way to the second floor) and the water doesn't shut off even at the main shut-off) which will need to be dealt with. Kaching. You also have ceiling repair, plumbing repair, carpet replacement, and lord knows what else. If the walls and insulation are soaked, which is likely given what you "know" is 2.5 x 8 feet of wet area, you likely have WAY more problems fixing where the water has been. More kaching.
Without knowing anything about your house/neighborhood other than what you have stated, don't count your chickens yet. I can imagine, from what you have told us, that you MIGHT get out of the place for what you purchased it for, AFTER you fix the myriad of challenging issues.
Once you have estimates for repair of ALL of the problems, contact your homeowners insurance and see how much of the bill they will cover. It is going to be extensive, and any help they can provide will be appreciated.
One step at a time. At least you know what you are going to be doing for the next year. However unpleasant, and expensive.
Once you have estimates for repair of ALL of the problems, contact your homeowners insurance and see how much of the bill they will cover. It is going to be extensive, and any help they can provide will be appreciated.
A better idea would be to read your policy. If it specifically excludes leaking pipe damage there is no reason to call them. A simple phone call will be logged as a claim, and a buyer who runs a CLUE report or checks insurance rates on this house, this issue will come up. All insurance companies share this info.
IIRC, most water problems are considered flooding and aren't covered under regular insurance. Call a plumber. This appears to be outside your expertise.
Owning is better than renting. If you factor in the next few years at a standard appreciation of 2.6%, fairly standard, it becomes clear that owning is generally better. If it wasn't, landlords wouldn't do it.
That PMI on your mortgage is stupid given the loan to value ratio. Can you get it refinanced into a different type of loan? Perhaps refinance into a 15 year since you already have part paid off. With the LTV you could avoid PMI and have a lower rate. Your monthly payment probably wouldn't increase much, but you'd be building equity dramatically faster since a higher interest rate and PMI are two ways to throw money down the rain.
PS. I'm not saying it is stupid of you, I'm saying that very few loans would require PMI given that LTV, so if you can get a new mortgage you may save a substantial amount of money that is now being wasted on purchasing an insurance policy that protects someone other than you.
the PMI is required as part of FHA loan until you are down to about 80% of loan left to pay. Perhaps if I had the down payment required for conventional loan at the time, I should have done that.
I looked into refinancing when rates were in the 3% range and was told due to the new rules (date when I purchased the house after cut-off to qualify for older, low PMI.. so refinancing would result in new higher PMI because I bought my house like 2 months after the cut-off they've established.
I'll have to find out if I can get a refinance w/o PMI thru conventional loan, coming from FHA loan.
Call a plumber. It may be that the seal under your toilet is leaking and needs to be replaced. It may be the pipes are broken. Won't know until you take a look. Why the toilet is overflowing would be worth investigating.
Call an exterminator to deal with the rodent problem. Sealing the house might be an excellent move. Be sure to ask for a termite inspection. Termites loooove damp wood.
Call a handyman to get an estimate on fixing the water damage.
Call a real estate agent and ask for an honest assessment of what your house would sell for in your market. Zillow, etc. are often not accurate.
Sit down with an accountant/tax person and look at the numbers.
You need more information before you can make a decision on which way to go.
Being debt free and free of home maintenance issues may such a relief that it would be worth it.
Living closer to work may be worth it, even if you're living in a smaller space without a yard, etc.
Get the place fixed up. Get some accurate advice on your financial situation. Evaluate what you would be comfortable with.
One plus about not owning a home is that this frees you to accept a transfer or another job.
Please let us know what you decide and how it works out for you.
Thanks alot everyone, for advice like the above, which seems very sound and sensible as next steps.
A better idea would be to read your policy. If it specifically excludes leaking pipe damage there is no reason to call them. A simple phone call will be logged as a claim, and a buyer who runs a CLUE report or checks insurance rates on this house, this issue will come up. All insurance companies share this info.
Had already made mistake of calling them before posting, unfortunately. Did not file a claim but did explain the situation and said I'd call back after I've spoken w/ a leak detector or plumber and am sure.
How does one access a CLUE report (their own home's) to see if this non-claim call shows up from AAA?
A coworker of mine said his sister had a water leak due to washing machine connection being improper and it soaked into downstairs ceiling.. he said insurance didn't just cover the damaged part of carpet but the entire room's carpet and sounds like they paid all expenses.. it wasn't a broken pipe that was the issue though..
>>Why are you still on FHA? Look at a low or no cost conventional
I didn't have the 20% down when I bought the house and may not have qualified credit wise or was on borderline at the time.. My credit has gone up since 3+ years ago, but I don't know if switching to conventional now would still require some hefty amount up front or not.
>Initial sale price was 173, took a loan for 169 now 159 paid 10k down down payment, 4k went to fees, you >paid down 10k in principal. The other appreciation is inflation, there is nothing wrong with taking your >money off the table and renting. Just curious, how much would your rent have been if you just had rented >closer to work?
When I was renting near work, I was paying about $1100/mo for a 2 master bdrm, 1car unconnected garage below. It was a reduced price for that year, and not sure what current rent is for the same. Right now, I pay $1201.xx a month in principal, insurance, PMI, county tax, plus another $69 for HOA dues.
I spend about $150-200 a month in gas, mostly driving to/from work (26mi each way, about 40 mins drive each way, or nearly 1.5 hours a day commuting).
So as I see it, let's say $150/mo in gas for work, 1.5 hours commuting, $69 in HOA dues, $71 in PMI until I pay down loan to 80% of original value = $290 / mo that could be applied to other things.. plus 1.5 hours a day that could be used doing other things...
>If you do rent it out, you'll probably need a professional manager that knows who to call when things go >wrong.
I'm leaning towards not renting it out, because I've heard stories about people using management companies and the headache may not be worth it.. in other words, maybe for the risk adverse, the risks may outweigh the potential gains of renting (having someone pay off the mortgage).. due to the unforeseen... natural or otherwise...
>The HOA is non profit, they are collecting money for a reason, electricity, insurance, savings for repairs, >stuff you do anyways when you own a house, but you don't have a separate account that it goes into.
My HOA is $69, they maintain public areas like the lighting, trees not belonging to any particular house, writing people up for violations, maintaining a certain look and feel to the community (you have to get permission to make significant changes - like cutting down a tree out front or what not).
>I'd talk to a lender to see how much more a $100,000 house would cost you. Between getting rid of PMI >and a lower rate, it might be much less than you think. Plus you'll be saving on gas, you might be able to >save more money by using your new found time effectively like clipping coupons, cooking more, etc.
Agreed.
Quote:
Originally Posted by thelopez2
You will not be happy being a landlord with plumbing problem. You might want to get a camera run down there to see the problem, but once you do, you'll need to fix it. A camera inspection in Los Angeles can run from 150-300, but I think they also rent the equipment. The only true way to locate the leak is to break the walls and ceiling to patch them up, the camera will see clogs, toilet paper, roots, dips in the pipe and cracks. Someone with a moisture meter might narrow down where the leak is but you already can see it.
If there is water above your kitchen, that water will flow down to the kitchen even when the main is shut off. Sometimes main values stop working well and even when turned off, will still let water flow.
Why are you still on FHA? Look at a low or no cost conventional
Did you consider your tax refunds on your calculations, but I generally agree with you methodology.
You need a handy man, you don't want that water drying in the walls and ceiling.
Make sure your family members aren't flushing other things down the toilet even though they are called flushable, they aren't pipe friendly.
Initial sale price was 173, took a loan for 169 now 159 paid 10k down down payment, 4k went to fees, you paid down 10k in principal. The other appreciation is inflation, there is nothing wrong with taking your money off the table and renting. Just curious, how much would your rent have been if you just had rented closer to work?
If you do rent it out, you'll probably need a professional manager that knows who to call when things go wrong.
If you want to sell, you'll probably want to take care of as much termite dames a head of the inspection, usually a handyman can take care of superficial stuff, don't give a buyer a reason to ask for money back.
The HOA is non profit, they are collecting money for a reason, electricity, insurance, savings for repairs, stuff you do anyways when you own a house, but you don't have a separate account that it goes into.
I'd talk to a lender to see how much more a $100,000 house would cost you. Between getting rid of PMI and a lower rate, it might be much less than you think. Plus you'll be saving on gas, you might be able to save more money by using your new found time effectively like clipping coupons, cooking more, etc.
Thanks alot everyone, for advice like the above, which seems very sound and sensible as next steps.
You may want to get bids from a couple small general contractors about repairing all the above. Many small general contractors are very knowledgeable problem solvers. Our neighbor found his through a list of recommendations from his coworkers.
Thanks all. I called my insurance company and everything is being dealt with in what looks to be the proper way. The water damaged areas are being dried and dehumidified, and my hotel stay is being reimbursed. They will be replacing parts damaged and even carpeting. It looks like the issue is the toilet tank, based on the insurance guy that stopped by.
Thanks for all of your good inputs.
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