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My feeling exactly..
I also evaluated "worst case scenerio" and if that can work, then anything else will work..
In other words in this situation...
What if house prices drop & mine doesn't sell..
What if you bought the second property, then put both on the market to rent at premium rates ... while also leaving your current house for sale (or even a lease-option). You could incorporate whatever rental conditions you would feel comfortable with on the second property, but, would probably need to offer at least a one-year lease (postponing your Plan B move for a year). This would seem to increase your probability of maintaining a healthy cash-flow and limited risk ... with multiple options.
That would scare me to death..I would have it on the market now..
Its somewhat scary, but construction is fickle and I can easily control the pace of the construction during the finish and trim phases....they move slow and lots of input is needed...the last 30% of my contract isnt due until acceptance.
I also could quite easily qualify for a loan if I needed, we are building with cash, and I am confident that if I did not sell my first house, I could rent it very fast....but Im in Houston, and Im in a very very hot area of Houston.
I just see very little incentive to have cash right now....Real inflation, including food/gas, is through the roof - and if you can use today's dollars to buy something that will keep pace with inflation -then you will really be far ahead of the curve.
I would not fear renting your other house and then re-listing it for sale at the expiration of the lease. Just pre-screen the heck out of your incoming tenant, and since you don't need the money for the new house, go ahead and move....you can deduct dollar for dollar against your income the lost income for a month or two of vacancy as a rental...plus there are lots of other tax advantages to rental properties.
If you do sell and then have to get a rental, what are you going to do with the cash that is more productive than a rental property? That should be the real question you ask yourself....Stocks - very risky right now, bonds? Also risky...savings accounts? - dont keep pace with inflation...I've asked myself this question over and over and over, and I really don't have an answer other than rental property or also in my case cattle...but that is an option not available to most.
If you do sell and then have to get a rental, what are you going to do with the cash that is more productive than a rental property? That should be the real question you ask yourself....Stocks - very risky right now, bonds? Also risky...savings accounts? - dont keep pace with inflation...I've asked myself this question over and over and over, and I really don't have an answer other than rental property or also in my case cattle...but that is an option not available to most.
Great post-election point The thought of pulling some stock $ out and putting it into the house that could produce rent income is attractive right now..
The thought of renting out the current house doesn't feel right...
It's a finicky old house...
Well filter needs cleaning often,
pool equipment is complicated...
and so on...
I have worked my butt off for a year to get it repaired and staged to show & sell..
Don't really want to go backwards in that regard...
Renting out a room or two could be an option though..
In that case I would still keep it furnished & be here daily to keep it clean & ready to show.
Then I would have the other house to have my privacy when I want it...hummmm
I have done what you are considering but many that have, have gotten in trouble. With harder numbers (values, income, etc.) it is impossible to recommend what you do.
I suggest if you are uncomfortable and counting dollars (I think you are doing both), that you back off and wait to purchase. There will be more "ideal" homes for sale at a later time.
I have bought a second house without having sold the first one every time I bought a new home. The first time I used a swing loan to help me with the down payment on the new place. The second time third times the old house sold on the first day it was listed, so no problem. The last time I got enough of a bargain on the new place that I felt I could go for a year without selling the old place and still come out even. Your situation sounds really good to me, but only if you could carry the extra $600 per month for several months (plan A), but as you've stated, you could rent it out as plan B. The problem with plan B is that when the first house sells you would then need to find a place to live while someone else was enjoying your new place (and hopefully not abusing it).
I suggest if you are uncomfortable and counting dollars (I think you are doing both), that you back off and wait to purchase. There will be more "ideal" homes for sale at a later time.
Hope this helps.
I think you are right...
I may not sell til spring and may want a whole different thing by then.
I think that is the biggest problem at this point..
My house shopping has sorta evolved and this house seems perfect
right now , but before I sell I may realize something else I want ...
The other factor is that its just me (widow & empty nester) so doing a temporary
apartment after mine sells & while house shopping will be very easy & doable..
Financially it works but having 2 homes to maintain seems too much right now..
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The thought of pulling some stock $ out and putting it into the house that could produce rent income is attractive right now..
