Author Topic: Combining two families - keep the house and rent it, or sell?  (Read 2750 times)

trout14

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Combining two families - keep the house and rent it, or sell?
« on: December 04, 2014, 04:48:06 PM »
My fiancee and I are getting married in June. We currently both have homes, hers has very little equity and is smaller, so she and her two kids are moving into mine. My home is about half-way paid off, in a very desirable neighborhood and would be easy to rent. Right now, they are planning to move here, and we would all stay here for 1-2 years, pay off debt and save for "our" home. I am attached to the home of course, and had been thinking we should rent this house when we move to a bigger home that would better accommodate us all and  have a steady cash flow. Now I am thinking maybe it would be better to sell this one, and use that money towards a down payment and a quicker move. Looking for unbiased advice and people that may have gone through this before as well. I am also trying to be conscious of her and how hard it will be for her to leave her home. Thanks :)

Weedy Acres

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #1 on: December 04, 2014, 04:54:18 PM »
I would look at it from an arms-length perspective:  what's the house worth, what will it rent for, and does that make financial sense?  (see the 1%/2% rule).  If the rent is <1% of the current value of the home, then you should sell it and apply the proceeds to debt payoff or invest it elsewhere.

trout14

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #2 on: December 04, 2014, 04:59:39 PM »
House is worth about 300k, owe 170K, mortgage payment is $840/month. Rent would bring $1800/month minimum. There is no other debt, only the house.
« Last Edit: December 04, 2014, 05:01:44 PM by trout14 »

TerriM

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #3 on: December 04, 2014, 08:44:06 PM »
House is worth about 300k, owe 170K, mortgage payment is $840/month. Rent would bring $1800/month minimum. There is no other debt, only the house.

That's a pretty sweet deal.  I assume the property taxes are below $2-3K?

TerriM

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #4 on: December 04, 2014, 08:46:13 PM »
PS:  You said you have debt.  What kind, how much at what interest rate and how much do you have saved for a down payment on a new house?

Also, how much would you expect to pay for the new house, and how much would you get by selling hers?

trout14

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #5 on: December 05, 2014, 08:34:39 AM »
I am not sure how much debt she has, I am guessing around 20k. Selling her home, will pay down some of that, but certainly not all. That is one of the reasons I was thinking 1-2 years in my home, saving for a down payment and paying any remaining debt. Student loans and some credit card i believe.

New home in the $450k range most likely. At this time no down payment saved, again that would be the 1-2 year plan, vs sell mine and instant down payment after debt paid off that is.

Taxes are 2.5k on my home.

Thanks for helping me brainstorm this :)

Weedy Acres

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #6 on: December 05, 2014, 08:52:42 AM »
Those are horrible numbers for a rental (a $300K house should rent for at least $3K/month to make sense).  Don't make the mistake of looking at the difference between mortgage and rent and thinking you're clearing $1000/mo.  Because first, you'll have expenses with the rental.  And secondly, if you took the $130K you have in equity and invested it, you'd make a better return. 

Go ahead and live there as long as you want/need.  But when you're done, sell it and apply the proceeds to your new house.

frugaliknowit

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Re: Combining two families - keep the house and rent it, or sell?
« Reply #7 on: December 05, 2014, 11:49:07 AM »
From a relationship standpoint, I would advise your buying a house together.  If you move into your house your new wife will tend to feel it is "your house".  Creating a home together is very bonding and enhances commitment.  Just my $.02