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Old 11-15-2022, 04:06 PM
 
Location: NYC & Media PA
840 posts, read 692,016 times
Reputation: 796

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I had posted up in the retirement about missing urban life, (we moved from Philly to a very popular lake in northern Michigan). Heres our situation and my dilemma.

We sold our home in Philly and made a $250,000 profit. We bought a vacant lot on lakefront for $625,000 and we're building a 2600 sq foot home and framed it ourselves. I put $130,000 down on the lot and used the remaining $120,000 to start the build leaving us with a $500,000 construction/land loan. We didnt have enough to finish so we pulled another $150,000 from bank with an interest rate of 4.75 thats locked in for 7 years. Overall we will owe roughly $650,000 and house (when done) will be worth 1.15-1.2 mil.

We owe about $50,000 in credit cards/unsecured debt.

Income wise I bring in month $5000 pension, $3200 new job and wife does about $3500. New mortgage payment will be upwards of $4000 because of rates/lake taxes.

I'm inclined to flip the place and buy cash out somewhere thats not on a lake. Wife is saying it will be a terrible move as that lakefront property will always outpace other homes.

My first dilemma is my feel of isolation (being outside of a city) seems to want me to push to sell the place, second dilemma is I cant stand the idea of a $4000 mortgage until I'm in my 80's.

Am I crazy to want to sell a house with this possible equity at the risk of never living it down with the wife.
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Old 11-15-2022, 04:43 PM
 
Location: Columbia, SC
10,966 posts, read 21,972,507 times
Reputation: 10659
My advice is simple. Don't be house poor. If she's worried about the investment and you can cash out, there are other areas you can invest that cash. But if you like the house, want to stay in the house, the payment is reasonable given your incomes if you aren't swamped by other monthly payments like the CC and car payments.

If you want to keep the house, and can swing it, put a budget in place to pay off the CC asap and any other debt and the mortgage is then less of an issue. Then start tackling the mortgage.
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Old 11-15-2022, 05:18 PM
 
Location: Bloomington IN
8,590 posts, read 12,334,693 times
Reputation: 24251
How long will you continue to work? How long will your wife work?
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Old 11-15-2022, 05:59 PM
 
Location: minnesota
15,840 posts, read 6,308,360 times
Reputation: 5055
That's a lot of money to pay for somewhere you really don't want to live. You said you told your wife you don't want the expense of Lakeshore. From your post it also seems like part of your concern is you'd rather be back in the city. Did you tell her that part of it? I wouldn't agree with my husband if he said he didn't want the expense of Lakeshore after we started building. I would just think he was getting stressed.
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Old 11-15-2022, 06:05 PM
 
5,954 posts, read 3,706,857 times
Reputation: 16980
Quote:
Originally Posted by lpranger467 View Post
I had posted up in the retirement about missing urban life, (we moved from Philly to a very popular lake in northern Michigan). Heres our situation and my dilemma.

We sold our home in Philly and made a $250,000 profit. We bought a vacant lot on lakefront for $625,000 and we're building a 2600 sq foot home and framed it ourselves. I put $130,000 down on the lot and used the remaining $120,000 to start the build leaving us with a $500,000 construction/land loan. We didnt have enough to finish so we pulled another $150,000 from bank with an interest rate of 4.75 thats locked in for 7 years. Overall we will owe roughly $650,000 and house (when done) will be worth 1.15-1.2 mil.

We owe about $50,000 in credit cards/unsecured debt.

Income wise I bring in month $5000 pension, $3200 new job and wife does about $3500. New mortgage payment will be upwards of $4000 because of rates/lake taxes.

I'm inclined to flip the place and buy cash out somewhere thats not on a lake. Wife is saying it will be a terrible move as that lakefront property will always outpace other homes.

My first dilemma is my feel of isolation (being outside of a city) seems to want me to push to sell the place, second dilemma is I cant stand the idea of a $4000 mortgage until I'm in my 80's.

Am I crazy to want to sell a house with this possible equity at the risk of never living it down with the wife.
To put it bluntly, you're in over your head (financially). You've made several poor decisions that have put you in the predicament that you're in. There's no need for me to list these poor decisions because I'm pretty sure that you're aware of them. The main question is "What can you do about it now?"

I doubt that's there's much of a market for selling a partially completed home since you're not a builder/contractor, so about the only reasonable option you have at this point is to finish the home and then put it up for sale.

I don't know what the market/neighborhood is like (pricewise) where you are building, but hopefully you aren't building the most expensive home in the area or you're going to be SOL. With winter coming on, my suggestion is to get the home enclosed and watertight (if it isn't already) and finish it by next spring.

On second thought, if you can get it about 80% to 85% complete, you could list it for sale with the provision that the buyer is to finish the interior (cabinets, floor coverings, appliances, light fixtures, bath fixtures, interior doors/woodwork, etc). You might even leave the landscaping for the buyer to complete.

You MIGHT find a buyer who would buy the house like this. If you can make a deal that would leave you in the same overall financial position that you were in before you bought the lot, then I suggest that you grab it. If you can't find a buyer for the partially finished house before spring, then I suggest that you go ahead and finish it ASAP and then put it up for sale and hope for the best.

If/when you do sell it, I suggest that you look for something you like that is priced approximately the same as the house you just sold. Considering that you're retired, you have no business going further in debt for a house especially considering that you didn't even have the previous one paid for. If you couldn't pay for a $625K house and own it free and clear at retirement age, you sure don't need to be building or buying a more expensive house!



Stern letter to follow.
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Old 11-15-2022, 06:16 PM
 
24,470 posts, read 10,804,014 times
Reputation: 46736
It looks like you and your wife need to sit down with paper and pen.
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Old 11-15-2022, 06:16 PM
 
Location: NYC & Media PA
840 posts, read 692,016 times
Reputation: 796
My wife is thinking I'm just stressed as well,,it just seems like were always in debt.

And sorry to answer the other reply, I want to work til I cant, just not full time and this house mandates that I work full time.

Quote:
Originally Posted by L8Gr8Apost8 View Post
That's a lot of money to pay for somewhere you really don't want to live. You said you told your wife you don't want the expense of Lakeshore. From your post it also seems like part of your concern is you'd rather be back in the city. Did you tell her that part of it? I wouldn't agree with my husband if he said he didn't want the expense of Lakeshore after we started building. I would just think he was getting stressed.
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Old 11-15-2022, 06:22 PM
 
Location: NYC & Media PA
840 posts, read 692,016 times
Reputation: 796
I love your straightforward answer. The major issue now is we basically staked out this house and framed it ourselves, my wife is going to be so let down if we have to sell, I'm almost going to have to go nearly bankrupt before she agrees. The idea of being in this much debt on the otherhand is killing me (probably literally).

Hindsight is 20 20 I guess, wish we had just stayed in Philly. Folks atleast are much nicer here but this project seems like its never going to end.

Quote:
Originally Posted by Chas863 View Post
To put it bluntly, you're in over your head (financially). You've made several poor decisions that have put you in the predicament that you're in. There's no need for me to list these poor decisions because I'm pretty sure that you're aware of them. The main question is "What can you do about it now?"

I doubt that's there's much of a market for selling a partially completed home since you're not a builder/contractor, so about the only reasonable option you have at this point is to finish the home and then put it up for sale.

I don't know what the market/neighborhood is like (pricewise) where you are building, but hopefully you aren't building the most expensive home in the area or you're going to be SOL. With winter coming on, my suggestion is to get the home enclosed and watertight (if it isn't already) and finish it by next spring.

On second thought, if you can get it about 80% to 85% complete, you could list it for sale with the provision that the buyer is to finish the interior (cabinets, floor coverings, appliances, light fixtures, bath fixtures, interior doors/woodwork, etc). You might even leave the landscaping for the buyer to complete.

You MIGHT find a buyer who would buy the house like this. If you can make a deal that would leave you in the same overall financial position that you were in before you bought the lot, then I suggest that you grab it. If you can't find a buyer for the partially finished house before spring, then I suggest that you go ahead and finish it ASAP and then put it up for sale and hope for the best.

If/when you do sell it, I suggest that you look for something you like that is priced approximately the same as the house you just sold. Considering that you're retired, you have no business going further in debt for a house especially considering that you didn't even have the previous one paid for. If you couldn't pay for a $625K house and own it free and clear at retirement age, you sure don't need to be building or buying a more expensive house!



Stern letter to follow.
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Old 11-15-2022, 06:24 PM
 
Location: minnesota
15,840 posts, read 6,308,360 times
Reputation: 5055
I would be stressed as well. That's really a tight budget that is going to require sacrifice in other areas. Your time is one sacrifice now and it could be something happens and you can't work. Tell her straight you think it's a mistake and you'd rather move back to the city. Even if she doesn't agree at least she is aware.
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Old 11-15-2022, 06:33 PM
 
7,061 posts, read 4,510,340 times
Reputation: 23080
I agree that you should sell. As soon as you can’t work full time you can’t afford it. You could get sick and end up in big trouble financially if the housing market goes down. You are too old for this type of risk. Downsizing is the smartest move in retirement.
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