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Old 10-06-2014, 07:17 AM
 
3,455 posts, read 4,785,983 times
Reputation: 7002

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What a crazy plan. You would be insane to either rent or sell your home. If you try to rent it, you will barely cover the mortgage and insurance when someone is actually paying. They may not pay and then it will take you months to go through the eviction process. That is when the home will most likely be foreclosed on assuming you can't cover the payments and expenses yourself. If you do cover them and manage to keep the house, you will need at least $10,000 to fix all the damage, replace the carpet and repaint just to be able to try to rent it again.

As for renting a townhome, you will be lucky to find one to rent where your rent is very much lower than your current mortgage payment on your home. You also are just throwing that money away and not building equity in anything.

What is so hard about maintaining a little bitty 1/2 acre anyway? The part of my land that I maintain as a lawn is 2 acres and it isn't that much work. Reduce the complexity of the landscaping if it is too time consuming.
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Old 10-06-2014, 09:05 AM
 
51,583 posts, read 25,500,783 times
Reputation: 37759
Quote:
Originally Posted by lg1985 View Post
Hello,
We currently own our home near Birmingham, AL. We've lived in the home about 3 and a half years. We are expecting our first child. i am thinking about being a stay at home mom for a few years. After looking at our monthly and yearly expenses, staying in this home with no changes is not an option. When we bought this home, my mother and sister were supposed to move down to this state and live with us (mom is disabled). Shortly after signing, my sister had other plans.

SO, this house has always been too big for us. 1/2 acre lot. 4 br, 2.5 baths....worth 175k according to zillow. During the summer it says 180's.

What do you think is best option? What things are we not thinking of?

Selling: after commission, we will walk away even, IF we sell for 175k. Baby due in March.

Refi: we would maybe save $100 per month. Maybe. But we would still have to pay all the upkeep and added expenses. Landscaping is so much, we can't keep up with it. This house is too big for us even with a child on the way. Plus, lots that can go wrong and saving only $100 per month ....no wiggle room.

Renting: too many chances? What if house gets damaged beyond our ability to financially afford to repair? Plus we want to rent a place ourselves. Pay down the mortgage, still be able to deduct during tax season, and pay cheaper rent in a townhouse or small garden home, and not have landscaping or higher utilities. Anything we are missing?
With a baby due in March, sounds like you are trying to minimize your expenses and time commitments.

You've had a positive experience renting out a previous home and wonder if this might be a good option for you.

It might, if you get the right tenants. You might end up in a much better market several years from now with more equity.

You also might end up with a lot or repairs, months when you paid the mortgage, and a market that has gone downhill.

It's a gamble.

The next several months are not a great time to sell a 4 bedroom home. Most families are settled in by fall. But you never know. Selling in the spring would be better, but you will have a brand new baby then.

Any chance you could remodel part of your home into a separate apartment? You could offer a reduced rent in return for several hours a week of mowing and blowing, and the extra income would help with your expenses.

If you want low-cost, stress-free, ready-to-go-at-any moment life, then spiffy the place up, put it on the market.

I would also encourage you to start right now lowering your expenses. Get low cost cell phone plans. Republic Wireless has a $10/month, unlimited talk and text in our area. See if there is something like that in your town. Get rid of the cable TV, cook at home (the crockpot may turn out to be your best buddy), figure out how to get by on one car... Get those expenses down to where you can live on your husband's salary.

I know that many parents decide that two incomes are needed these days, but there are a lot of parents who figure out how to make it work on one income. Homegrown kids are worth it.

Good luck.
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Old 10-06-2014, 10:05 AM
 
Location: Birmingham, Alabama
2,055 posts, read 2,551,584 times
Reputation: 3547
lg1985, we are in essentially the same boat, except we have all the babies we are gonna have for now. We've been in our home for a good bit longer than you, but I'm at a juncture as to whether or not i want to keep paying into it. Little to zero appreciation, and it's ready for some maintenance. Expensive maintenance. And I am SURE, I do not want to be in Alabama at this time next year. There again, I've been saying that since 2011....So....I'll be interested to follow your thread. Mine has slowed down, but you are welcome to read some of the very thoughtful replies..


http://www.city-data.com/forum/perso...ling-home.html
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Old 10-06-2014, 10:06 AM
 
1,334 posts, read 1,657,293 times
Reputation: 4232
Default Sell

Quote:
Originally Posted by lg1985 View Post
We do want to rent after whatever choice we make. We are just not good homeowners.


If you don't like owning even when you are living in the property, you sure will find it unpleasant being a landlady, especially with a new infant to care for. Simplify your life and sell it.

We may not even live in Alabama in another few years. TH or small home. Would we have to get renters insurance if we rent TH? Is that typical?[/quote]

You don't HAVE to get renter's insurance, but depending on the value of your possessions, it might be a good idea.

Also, last year, we brought out 3 realtors. One wanted to list at 189. One at 185 One at 175. That was April last year. With all the uncertainty, we held off. Definitely a seasonal market here. Definitely not a cookie cutter home. Truly a says 197k....wow. not sure about that estimate! What other sites are accurate?[/quote]

None of these sites are accurate. Their estimates are all delayed by several months and are based on flaky algorithms. You can come up with a fairly good idea of the value yourself by looking at the current MLS asking prices for properties similar to yours and then applying the listing-to-sales price ratio. But the best estimate would come from an appraiser or experienced real estate agent.
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Old 10-06-2014, 10:08 AM
 
Location: Birmingham, Alabama
2,055 posts, read 2,551,584 times
Reputation: 3547
Quote:
Originally Posted by dijkstra View Post
What a crazy plan. You would be insane to either rent or sell your home. If you try to rent it, you will barely cover the mortgage and insurance when someone is actually paying. They may not pay and then it will take you months to go through the eviction process. That is when the home will most likely be foreclosed on assuming you can't cover the payments and expenses yourself. If you do cover them and manage to keep the house, you will need at least $10,000 to fix all the damage, replace the carpet and repaint just to be able to try to rent it again.

As for renting a townhome, you will be lucky to find one to rent where your rent is very much lower than your current mortgage payment on your home. You also are just throwing that money away and not building equity in anything.

What is so hard about maintaining a little bitty 1/2 acre anyway? The part of my land that I maintain as a lawn is 2 acres and it isn't that much work. Reduce the complexity of the landscaping if it is too time consuming.
Why such a huffy attitude with the OP? She's looking at all her options and coming here to vet out some of them. Come out from behind the computer screen, or from behind the wheel of that big bad Dodge Ram pick up, and have a normal conversation in a respectful way.
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Old 10-06-2014, 10:35 AM
 
Location: Chicago area
18,748 posts, read 11,711,598 times
Reputation: 64054
I'm wondering what your closing costs would be? Will you be able to break even or will you have to bring money to the table to pay your realtor their commission? It's a difficult situation to be in especially since you have little or no equity in the property. I'm hoping you bought at the bottom of the market and just need to hold on a few years to make a profit? Can you work on your husbands days off? It's not much of a life but it's something to think about doing for a few years until you have enough equity to move on. I wouldn't recommend renting the house because of the capital gains you may have to pay when you sell the property and the aggravation of it. I know which option I would take but you need to find one that will work for you. Best of luck and congrats on your new bundle of joy.
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Old 10-06-2014, 11:40 AM
 
3,455 posts, read 4,785,983 times
Reputation: 7002
Quote:
Originally Posted by ashpelham View Post
Why such a huffy attitude with the OP? She's looking at all her options and coming here to vet out some of them. Come out from behind the computer screen, or from behind the wheel of that big bad Dodge Ram pick up, and have a normal conversation in a respectful way.
Didn't intend to be huffy....just giving my opinion. It is a crazy plan that will blow up. I can't understand for the life of me why people sell their home and then turn around and rent for around the same monthly payment. It is such a bone headed move. I bought my home as soon as I had steady employment; did a 15 year fixed mortgage and paid it off 3 years early in my early 30's. I never have to pay a mortgage payment again if I so desire. I can add on, remodel, borrow against it to build another and then rent it so the renter is paying for my new home.....there are so many possibilities. There is no reason most everyone couldn't do the same if they just applied some logical thinking.

Even if your home doesn't appreciate at a decent rate, you are still building equity instead of building equity for someone else by renting.

Btw, I wouldn't have a Dodge Ram or any Chrysler product for that matter. lol
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Old 10-06-2014, 01:20 PM
 
Location: Tonawanda NY
400 posts, read 572,168 times
Reputation: 705
You are better off selling it before you guys end up getting behind on your bills and end up in foreclosure. You are not losing anything if you don't make a "profit" from the sell but open yourself to more options later by keeping your credit in good shape. I have seen too many couples end up homeless, bankrupt and later divorced because of situations like this. They purchased too much house too early, then the baby comes and cut down to one income. First they get behind on the credit cards, utilities get skipped a few months at a time, then the car note and insurance are paid at the last minute, then the mortgage payment gets cut into to cover the car so husband can get to work. Remember you are going to be buying extra items that are very expensive like diapers, formula, all the baby stuff that is a must and over priced, new clothing, shoes for yourself and constantly growing baby. And it is very hard to find quality rentals when you have bad credit these days.

Go smaller with less responsibility and focus on the baby and saving as much money as possible, if you can.

Don't even toy with the idea of being a landlord, it's not worth it. You would be putting your financial security in the hands of others with nothing to back you up if something turns their lives upside down. Don't take that gamble with the hope of cashing in on a few thousand in the future, IF the market picks up like you think it will. Find the best realtor in the area and get it on the market as soon as possible. And never trust those online price estimates, they are almost always wrong.
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Old 10-06-2014, 05:07 PM
 
Location: Portland, Oregon
10,987 posts, read 20,460,366 times
Reputation: 8256
If I recall, earlier in this thread, you anticipate leaving the area in a year or two. Another good reason to be a renter.

Sell the house.
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Old 10-06-2014, 09:04 PM
 
4,567 posts, read 10,595,579 times
Reputation: 6725
What do you pay now?

If your paying $1000 for a mortgage now, aren't rentals right around the same price? And when the rental prices go up, you will be in worse shape financially than you are now.

Last edited by 399083453; 10-06-2014 at 09:28 PM..
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