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Is there a ready market for you to rent the house? I have seen houses that take a year to find a decent tenant.
Are you a hands on landlord? If so, how will you be a landlord from 1,000 miles away?
I am a very handy when it comes to home remodeling I went to a trade school and worked for myself for over 10 years before getting into IT about 13 years ago and working for corporate america. I have not hired anyone to work on any property that i have ever owned except for H VAC. Before I moved form PA to NJ this past march and rented out the PA house. I remodeled both bathrooms down to the studs all new plumbing pipes and fixtures. I upgraded the electric to 200 amps and installed a new hot water heater plus lots of other small repairs and a complete interior paint job. In the last 5 years in PA I have installed new kitchen and hardwood floors throughout the house. I replaced the roof, all new vinyl siding and windows and some stucco work too. I don't foresee having any problems or maintenance issues for at least another 5 years with the PA rental house
To clarify things I do not need money for a down payment. All of my current mortgages have a fixed rate under 5%. I already own/mortgaged my house in Florida keys its worth at least 210k and I owe 102k on it. the PA house is worth at least 200k and I owe 112k on it. The NJ house is worth at least 300k. its in Marmora NJ just off route 9 its about 2.8 miles till you step foot on the 34th street beach in OCNJ. The NJ house was inherited from my beloved aunt. she went to the great big gig in the sky in July of 2013. She has estate debts of 20k plus she still has a mortgage for 36k on the house. I will need to pay approximately 35k in inheritance taxes as a class D beneficiary. The inheritance tax has to be paid by July 1st. I have the cash to take care of that if it comes down to it. I figure I need 90K to own the NJ house free and clear.
If I keep the NJ house I would most likely remortgage the NJ house and pay off the Florida keys house and maybe do a little remodeling on the interior of the Florida house. If any money was left over I would buy a boat to park out back in the canal in florida. The NJ house is still in the name of the estate till I obtain the inheritance tax waiver. the current mortgage company would allow me to assume the mortgage. I am also the executor and sole beneficiary of my aunts estate so there is no lawyers involved in settling the estate.
I also have over 100k in 401k retirement funds.
My train of thought is do I keep the houses in PA and NJ as rentals till I retire in about 20 years and sell them to add to my retirement funds. I could also envision becoming a "snowbird" living in Fl for 6 months and NJ for the other 6 when i finally retire but that seems a long-shot.
If it matters I make about 55k a year in corporate america plus a little side money doing remodeling work with some personal friends aka self employed contractors that need some help on big jobs every now and then.
I just wonder what makes the most sense financially sell it now and pay off the Florida mortgage or collect the rents and hope it all goes well. If I am in Florida and something breaks I could always have contractors i personally know repair/ fix any emergency problems but they are not cheap. I also know their will be routine maintenance like roof replacements siding windows and painting. gutters and such that will need to be addressed in the future. Being 1300 miles away could be a problem if someone doesn't pay the rent so I would have real estate companies handle the rentals once i am out of state which also will eat up 10% of the rent collected. Its a matter of collect $3400 a month and after expenses wind up with a having to pay about $600 a month to live in the Florida Keys versus sell the NJ house and be debt free on the Florida house and still having a small profit coming in from the PA rental. What to do I was looking for a reason to do one or the other but both seem viable to me!! This may just come down to a coin toss best out of three! thanks for all the good advice. I had no idea about the NJ exit tax.
I have dealt with long-distance investment properties and they can be a PITA. Sell the two properties up north, reinvest in FL. Not necessarily in the Keys, but you could deal with investment properties in FL and there are still good buys in REO properties there.
On the one hand, you stated that you inherited the NJ house...then on the other you stated that the house was still in the name of the estate. So I take it that you are in line to inherit the property, but the transfer hasn't taken place yet.
Of course, this complicates things in regards to the principal residence exclusion (if I recall correctly, it won't apply at all unless you live there at least a year; 2 years for the full exclusion of up to $250K), but you should have a stepped-up basis on the house, valued at the time you receive it. So if you sell the house soon after, you will likely not have a capital gain to be taxed. I'd still recommend selling and investing the money elsewhere.
You also said that an attorney is not involved...so it might be wise to consult with a tax attorney or at least a CPA to review your tax situation. You shouldn't rely on your own knowledge (assuming you're not a tax professional)--or that of anyone from an online forum--to deal with important tax considerations, especially with an estate.
Like you, I did nearly all the renovations on my former rental properties. I can't imagine trying to manage the rentals from afar. I really don't think it's worth the hassle--and potential problems--to keep your northern properties as rentals. I know that I sure wouldn't.
Sell the NJ property and increase your contributions to your IRA and 401k to the max.
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