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I own three houses in the Seattle area. I've been living in this house for just over a year and plan on moving out of it in 10 months, either back into one of my other houses currently used as a rental, or into a new house.
I try to stay in each house for at least 2 years before moving so I can sell it if I want to within the 2/5 year IRS rule. Beyond this, I would either have to move back into it to meet the 2/5 use test, or 10-31 exchange it, which is preferable because there is no depreciation recapture tax.
I'm trying to buy another house now before rates go up anymore, and before the next summer frenzy. But this would either 1) force to me move now 2) force me to rent it out for a few months, possibly 7 months by the time I close and find a renter 3) let it sit empty until I move into it...
Issue with #2 is that it's better for me to live in it first before converting to a rental, for tax reasons. If I rent it out first and then move into it, there is a portion of non qualifying use.
The other options are to wait and just move back into another/older house, or...focus on short sales? They take months, I would know I've bought one before. They seem to be the best deals. Little competition since most people won't touch them. So I could contract 3-4 short sales and see which one actually pans out in 6 months. This reduces my time until the move, and can tolerate having it sit empty for 3-4 months. Last but not least, I will actually buy below market due to the fact that it is a SS.
Thoughts? Or perhaps there is another alternative I didn't consider? Like I said, I could just move back into my other house. The market is supposed to dip slightly in a couple years again, but not like last time. I could just wait for another market dip and pool cash to go on a buying frenzy, but interest rates will be higher, and housing prices tend to rise with interest rates due to inflation.
I own three houses in the Seattle area. I've been living in this house for just over a year and plan on moving out of it in 10 months, either back into one of my other houses currently used as a rental, or into a new house.
I try to stay in each house for at least 2 years before moving so I can sell it if I want to within the 2/5 year IRS rule. Beyond this, I would either have to move back into it to meet the 2/5 use test, or 10-31 exchange it, which is preferable because there is no depreciation recapture tax.
I'm trying to buy another house now before rates go up anymore, and before the next summer frenzy. But this would either 1) force to me move now 2) force me to rent it out for a few months, possibly 7 months by the time I close and find a renter 3) let it sit empty until I move into it...
Issue with #2 is that it's better for me to live in it first before converting to a rental, for tax reasons. If I rent it out first and then move into it, there is a portion of non qualifying use.
The other options are to wait and just move back into another/older house, or...focus on short sales? They take months, I would know I've bought one before. They seem to be the best deals. Little competition since most people won't touch them. So I could contract 3-4 short sales and see which one actually pans out in 6 months. This reduces my time until the move, and can tolerate having it sit empty for 3-4 months. Last but not least, I will actually buy below market due to the fact that it is a SS.
Thoughts? Or perhaps there is another alternative I didn't consider? Like I said, I could just move back into my other house. The market is supposed to dip slightly in a couple years again, but not like last time. I could just wait for another market dip and pool cash to go on a buying frenzy, but interest rates will be higher, and housing prices tend to rise with interest rates due to inflation.
How much stock/equities do you have? Diversify a bit - that's an awful lot of Seattle area RE!!!
NONE. I did well swing trading successfully for quite a while many years ago, even during the recession, but lost a lot of money speculating in other ways. I have been learning for the past few years that in the long run, it's hard to go wrong with index funds. Vanguards VTSAX and VNQ (REIT instead of bonds) are what I'm considering, but not in this market. Real estate here is still below peak, while stocks are at 200% of pre-recession levels. Plus I'm still not over my fears of losing it all in the stock market. At least with real estate, there is always value in the land.
How much stock/equities do you have? Diversify a bit - that's an awful lot of Seattle area RE!!!
Seconded. Yes, the markets are up since the recession, but if you are waiting for another recession like the last one, no one will be able to afford your rentals either. The market is seasonally flat right now -- if I had idle cash, I'd ladder in a basket of index funds.
Seconded. Yes, the markets are up since the recession, but if you are waiting for another recession like the last one, no one will be able to afford your rentals either. The market is seasonally flat right now -- if I had idle cash, I'd ladder in a basket of index funds.
So no one rents during a recession? That's a broad statement to make. I was a renter during much of the recession. So were many others. Not trying to be funny, just broad statements that are inaccurate are not helpful in making a decision.
Not trying to be funny, just broad statements that are inaccurate are not helpful in making a decision.
The idea that there's "always value in the land" is a broad statement that isn't always accurate. There's all sorts of land around here that is worth close enough to nothing that people won't take it even with back taxes removed.
The idea that there's "always value in the land" is a broad statement that isn't always accurate. There's all sorts of land around here that is worth close enough to nothing that people won't take it even with back taxes removed.
That is a generalization that is accurate, with few exceptions, such as SOME areas of Detroit. Saying no one is going to be able to afford my rentals as if everyone in society who rents suddenly goes and lives in the street is not. All the investors and institutions that bought rental properties by the thousands didn't buy them so they could sit empty and lose money. People were and still are renting those.
But again, none of this helps. It was a broad and inaccurate statement, which doesn't lend itself to a good "fact" to make a decision on. Back on topic.
That is a generalization that is accurate, with few exceptions, such as SOME areas of Detroit. Saying no one is going to be able to afford my rentals as if everyone in society who rents suddenly goes and lives in the street is not. All the investors and institutions that bought rental properties by the thousands didn't buy them so they could sit empty and lose money. People were and still are renting those.
There are many exceptions. It has happened throughout the rust belt. It certainly doesn't require everybody who rents to suddenly go and live on the street. All it requires is for about 10% of the jobs to move to a different part of the country.
As for the institutions buying rental properties by the thousands, I don't see why we're supposed to assume they're any smarter than the institutions that were buying loans on properties ten years ago and went broke in 2007.
I'm not saying these factors determine that you should not buy a house, but they are certainly not off topic.
If you are looking to diversify a bit but feel your strong suit is real estate, why not look at a duplex, triples, or fourplex?
This would give you a nice income stream, would not involve the whole living there for two years business that seems a bit of a problem now.
The son of a friend of mine did that for years. He preferred triplexes and fourplexes as there wasn't as much of an income drop while he was looking for new tenants.
He looked for rundown ones that were headaches for the owners. He fixed them up, did his best to rent to hospital personnel as he found they appreciated clean, updated homes, paid on time, and often referred friends when they left.
He would sell them from time to time. Though I think a couple time he traded a fixed up duplex for a rundown triplex. Tax reasons I suspect. But usually he kept them, refinanced from time to time and used the equity for other purchases.
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