12 Replies Latest reply on Jun 5, 2015 1:36 PM by JerryD

    sell home now or rent it

    dmitche2

      We bought our current home in 2006 right after selling another in 2005.  With market values down and the improvements we've made, we will lose about 50%.  We are living in Florida and want to move to Idaho to be near family.  One problem is that the same home in Idaho is about 20% more than it is in Florida. The second problem is the cost of moving.  The longer we stay here, the older everyone gets, so we've decided we need to move now.

      I'd like to know if you think we should just cut our losses and dump our house at a lower than market value, or should we rent it out until the market improves. If we rent this house, we'll have to rent in Idaho as we won't have the money to buy a new home without getting a mortgage. We are living on a pension and have some money in cash and stocks, but we don't know if we should touch any of that either.

      Your advice is appreciated.  Thank you.

        • Re: sell home now or rent it
          Chrysalis

          Yes, this problem is happening to lots of people now-a-days. It sounds like you are wise enough to realize that your quality of life and your desire to be near family are more important than money. You feel you need to move now, not 5 or 6 years from now if/when the Florida real estate market is better. That's your most important decision and you appear to have made it.

          As for the rent/sell decision-- I, personally, am terrified of having to pay for housing after I retire. I want to own my home outright before I retire because if I can't pay my rent or my mortgage I can get evicted. Then what?  If you need the money out of your current house to get other housing up north, I guess I would sell, take the loss on the Florida home, and pay cash for something small (even a condo). Then you could put the whole thing out of your head.

          If you rent out your Florida home there is no guarantee your home would appreciate much in the next few years. With so many homes available for rent now, I don't know if you would be able to charge a high enough rent to pay all the expenses of the home. There would also be the hassle of overseeing a rental long-distance. A property manager could help, but that adds to your costs.

          • Re: sell home now or rent it
            Marian
            I agree with the other comment on your decision to rent for income, or to sell decision.  However, before you make a rash decision, sit down with an accountant and see what kind of tax benefits there are to you, to rent, and be abel to deduct various expenses, and even to deduct cost of airfare to Florida to check on property, which may be nice in January
            • Re: sell home now or rent it
              painter33
              One observation - be careful about renting the house you own.  We had to rent our house when we moved out of state to a new job, but were able to buy another by cashing out some retirement savings.  Our tenants have been awful - professionals who believe the world is owed to them - and we can't wait until the lease is ended so we can put the house back on the market.  Renting a house present headaches even though it helps to defray the costs.  Tenants can also do enough damage to cause large expenses before you can put it on the market; security deposits don't always cover the damage and trying to get them to assume any responsibility is difficult.  "Normal wear and tear" can cost quite a bit to return to normal, and tenants see things much differently than the homeowner. 
              • Re: sell home now or rent it
                RalphB
                Take your lumps and sell it pronto.  Being close to family while you are still physically fit  is far more important than the dollars you'll lose.
                • Re: sell home now or rent it
                  Little E

                  I am currently renting out my home in another state (I moved for a new job) but the costs of being a landlord are overwhelming. The cost of landscaping, insurance, snow removal and taxes are s major source of stress. I want to ask my tenant to pay more rent and/ or cut down on services (for instance, he called a snow removal company on multiple occasions to shovel out his car, vs. doing it himself) but I don't want to be a jerk. Does anyone have advice?

                    • Re: sell home now or rent it
                      jkom51

                      (to Little E) I believe as a landlord you are responsible for reasonable egress on your property. You cannot assume a tenant has the health or the time to shovel snow. But much depends on your rental contract and how your state/county view landlord/tenant disputes. Have you talked to your attorney about this? There is no point in being a landlord if you don't know your rights and responsibilities under local law.

                       

                      ++++

                       

                      I'll say this to the OP - if you are going to be a landlord, in the long run it can be an income-generator. BUT:

                       

                      - the only ones I know who are successful at it (I live in CA where rentals are highly prized), are either skillful DIYers or can afford to hire a rental mgmt company. You cannot ignore rental property, unless you want to be a slumlord.

                       

                      - Someone needs to be available/on-site for emergencies. If you can't afford a mgmt company, then it's you. Out here it's a hassle to go 25 miles across the Bay Bridge - a "normal" 15 min by car can take up to 1-1/2 hrs if there's unexpected trouble, and more and more often, there is. Are you going to fly across country to deal with issues?

                       

                      - I wish someone had told us that a smart landlord keeps 6 months of equivalent income aside as a cushion. This is what you use for repairs, cleaning services (no, I did not like washing windows on a 3-story bldg!), and the $$$ buffer for when the property stands empty, which it will in-between tenants. Figure a minimum 2 mos for the period after a tenant moves out but before a new tenant can move in.

                       

                      We were on a shoestring budget and just could not afford the time and expense of the property. It was a lovely bldg, but in the end we gave it up to our silent partner and simply walked away. It's worth easily $1.5M now....but no, I don't regret it. For us it would have just been a slow, continual drain. Our partner had the $$$ to withstand the rough spots - we did not.

                       

                      It doesn't sound like you do, either. If I'm correct, then don't strain your finances. But make sure moving is what you want to do. My sister was all set to move to Boston to join her son - literally, she was already packing boxes. She was lucky she decided to delay selling her house by exactly one month, when her son called with the news his employer had been bought by another company and he was moving across the country!

                      • Re: sell home now or rent it
                        JerryD

                        Although I doubt that I would be a very good landlord since I am not very handy nor am I very patient, I did look a bit into rent-to-own situations a while back. I don't know if it would work well for rentals since the tenant has little to nothing invested, but due to your remoteness from the property could you investigate rental contracts that require the tenant to provide his own services like snow removal, grass cutting, calling per-selected and vetted handymen to perform essential tasks, etc.? This could avoid some of the nuisance calls and unexpected costs.

                         

                        Maybe for a few bucks cheaper and a more strenuous tenant review process and reference checking, you could find a long-term and more responsible tenant. As I understand the situation, these days there are quite a few ex-home owners that know how to maintain a house and for some incentives may be willing to take them on. Heck, maybe you could  even consider rent-to-own.  GOOD LUCK!!!!   :-))))