I currently have a house about 4000 sq ft on a lake in northern WI. It's about 5 miles from work and school, which is way too far since it keeps me from biking when I'm on call, and we have to drive much of the winter instead of walking.
We listed the house a month ago and haven't had a single showing. (our realtor said our list price was plenty low to start with, but obviously not, there is just no market for a house like that in our area right now) Our realtor let us know last week that a doctor who has signed a lease for two years in town is interested in renting, but not buying. I said we would be interested in renting, but he would have to at least cover mortgage and taxes, which are $2400 per month right now, and prefer a two year lease. (he is coming to see it tomorrow) The idea would be to get a lease from this guy and rent a place in town for my family with three kids. I've found a wonderful small 3 bedroom house in town just two blocks from school and less than a mile from work. I'm going to see it tonight. I could get a one year lease on that house, and we are planning to leave town next summer for someplace half way across the country. The house in town is $1100 per month, which I'd be happy with. (there is not much to rent in town, I could only find two places with 3 bedrooms in town)
The idea is that we would avoid both the mortgage and high costs of heating/cooling the big house for the next two years, as well as the cost of frequent travel into town which I calculate at $100/mo in gas alone. Once the two year lease is over we would hope that the housing market would be turned around enough in the area to sell quickly while still getting back what we owe or slightly more.
Right now we owe $364k and have the house listed for $399k. To get interest at this point might take dropping the house to $350k. I purchased the house 4 years ago for $450k, and have spend $50k+ on improvements. My plan if I don't lease the house is to drop the price by $30k now, and probably another drop down mid spring next year if there is no interest.
My question is whether I'm doing the right thing. Selling for anything less than $380 is a short sell, which is fine but nothing is selling in the area at ANY price, so I can't guarantee a sell by dropping the price even significantly. Would leasing for two years be a big mistake, especially given we are planning to leave the area next summer? I know that despite a lease things can happen and then I'm really out lots of money. I have the cash flow to tolerate that, but it would really suck obviously and drastically hurt savings. But worst case scenario we are spending the extra $1100 to live in town, and since we can keep the house costs lower by not living there and are spending less on gas by being in town, the end result would probably be less than $1000 per month loss until we sell.
I would put it in the lease that I would list the house in the last three months of the lease, so hopefully I could sell for what it is worth pretty quickly then, or even make a little cash since I'll be paying down the principle while leasing and hopefully the market will creep up a little.
Anyway, I'm not a landlord at heart, and have a lot of trepidation about this, hoping to get some feedback about my ideas and options, and advice for what to do or not do if I go ahead with the lease.