Author Topic: To Buy our rental or move again and Rent  (Read 2513 times)

MMMintraining

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To Buy our rental or move again and Rent
« on: January 15, 2014, 01:42:47 PM »
Okay another housing dilemma. Long story short: My husband and I have been married 5 years, have three kids ages 4,2, and 2 weeks. We have known buying was not a good thing to do right out of college so we have rented and moved 6 times these five years in the same city. My husband was finishing his degrees and just finished his Masters in Computer Science.

My husband has a job with the govt as a programmer making 80k a year. We have about $70k in student loan debt (we borrowed extra while he was an intern at said job working only 10-20 hrs while getting masters. This enabled me to stay home.) We also owe 10k on a 2007 mini van but own my hubbys car-2006 Kia sportage. We have 4k in credit card debt but planned to pay that off in the next few months.

We just want to be settled. We knew we wanted to move out of state eventually but quickly realized we have no idea where, my husband does not have a dream job yet he wants to pursue and we haven't been to many places in the US. So our thought was let's stay a while and visit places, get in a better place financially then move. But the owner wants to sell this house too now as he is going through divorce/possible foreclosure (was behind before we rented-we just didn't know). The house is appraised at $210 at least but owner owes $225 so he may try to short sale since he is looking to file bankruptcy possibly anyway.

Should we buy? I am just so tired of moving every year and with little kids. We just had a baby and the thought of gearing up for another move in town in 4 months with no guarantees of that being longer than a year either-well, it drives me crazy. And I should mention that the rental market is very high where we live so our mortgage would be less then the $1500. And believe me- we looked at 40 houses before we selected this one.
« Last Edit: January 15, 2014, 01:47:33 PM by MMMintraining »

Cheddar Stacker

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Re: To Buy our rental or move again and Rent
« Reply #1 on: January 15, 2014, 01:59:57 PM »
I'm picking up that you are assuming if the landlord sells you will have to move? If that's what you're thinking I can understand the concern, but it's very possible you could continue to live there. If the bank forecloses they would still appreciate the rental income. If the residence is sold, there is a strong chance it would be sold to another real estate investor and they would likely be happier retaining the current tenant for a while.

If you aren't settled in for the long haul in the job, I wouldn't tie yourself to a property. I think you need the mobility right now more than you need to settle into home ownership. Let the job sink in for a year, then re-assess. If you have to move in the mean time so be it.

Stick to the original plan: "So our thought was let's stay a while and visit places, get in a better place financially then move." Don't let your landlords financial problems become yours.
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lackofstache

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Re: To Buy our rental or move again and Rent
« Reply #2 on: January 15, 2014, 02:09:49 PM »
I hate moving. I lived in 1 house until I moved from my parent's & while in college lived in 3 places & 2 since. The last being the home we purchased 2 1/2 years ago. That said, if you want to buy and it makes sense, sure, go for it.

The reasoning, here, however seems to be that you might have to move again so you'll just buy the home you're in. I wouldn't use that as any part of the reasoning to buy this home. If you were going to buy a home soon, had the money saved AND loved this house, then I might see it differently.

aj_yooper

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Re: To Buy our rental or move again and Rent
« Reply #3 on: January 15, 2014, 02:12:47 PM »
If you have a lease, you do not have to move until it is done.
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MMMintraining

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Re: To Buy our rental or move again and Rent
« Reply #4 on: January 15, 2014, 02:15:51 PM »
He wants to put it on the market, to avoid foreclosure, so if that happens, then yes we would be moving. The owner thought he could a short sale if we were interested and if not, then he would put it on the market once our lease is up.

 My husband has been at his job for 2.5 years. Though it isn't his dream job he will be with them till Sept 2015 (govt contract) BUT he can switch to become a staff member in another area as a permanent employee. He has many connections and all have said-we can get you another job when the time comes.

The thing is we do KNOW that it is going to take a lot longer than a year to be debt-free, and it will take more than a year to visit places (traveling is expensive) we might want to live, and we know that it will take longer than a year for my husband to figure out what he really wants to do. He actually has always had the entrepreneur bug and has some current side projects he is working on too.

One year's assessment will have us at the same job, the same financial debt minus some, and with a 7 move under our belt and then possibly the 8th if the next rental changed, etc.  As for the house we are renting, we LOVE it. The neighborhood is one of the very few green places in our desert city, close to a park, has room to grow for our family, centrally located to everything, well kept up, good neighbors. We would buy this house out of all others in our city hands down.

We were both born and raised and wanted to get out of here ASAP just because we wanted a bigger city, more to do, etc. But we have realized that maybe that is not such a good financial decision since we have no reason other than "try something different and it is what we have always wanted". We would still LOVE to move eventually and preferably to NYC, Washington DC, or Boston, or Silicon Valley but we understand that those places are not within our reach anytime soon and not a good move financially. So then our thoughts switched to  well why are moving-again? We have a good job, low-cost of living and a great community.

MMMintraining

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Re: To Buy our rental or move again and Rent
« Reply #5 on: January 15, 2014, 02:16:48 PM »
If you have a lease, you do not have to move until it is done.

Yes, our lease is up April 30th 2014.

Cheddar Stacker

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Re: To Buy our rental or move again and Rent
« Reply #6 on: January 15, 2014, 02:31:15 PM »
So you love the house - great. It sounds like you've decided to stay in you city for a while - great.

It sounds like your rent is $1,500 and monthly cash payment would decrease if you purchased the house - great. This could free up some capital to pay down other debts, but it could also backfire when the furnace, roof, water heater need to be replaced.

If you do purchase, you don't necessarily have to purchase for the $225K or $210K the landlord wants. In fact, the bank likely wouldn't let you purchase for more than $210K based on an appraisal. Do whatever you can to reduce the purchase price.

Have you talked to a banker about getting a mortgage? It would likely be a lot easier to do if you had a small down payment. I know it hurts to have $4k in credit card debt and you plan to pay that off right away which is a good idea. However, and I'm struggling to type this because it's counter-intuitive, you might want to consider letting the balance carry over if it means you can save $4K in the same time for a down payment and/or closing costs on the house purchase. In your specific case, this might make sense.

I normally would never suggest that, but if you're dead set on getting the house and it's the right move for you long-term, it might be the only way a banker would finance the deal for you.
Indecision may or may not be my problem.

MMMintraining

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Re: To Buy our rental or move again and Rent
« Reply #7 on: January 15, 2014, 02:47:15 PM »
Haha, funny you should mention the roof, furnace, water heater etc... The roof is actually new having been replaced in 2009, and our poor Landlord who lived here before us for only a year...has had to pay for furnace, swamp cooler, plumbing and a few other misc fixes. So those are all new too.

We could save the 4k and perhaps even get a bit more. We don't want to make a bad financial decision either moving or staying. We had planned to move to NYC, the Cali, then Ohio, as soon as the lease was up in May. But then we crunched the numbers in for NYC and Cali and realized-OUCH and our good friends live in Oh but is moving across the country a good idea when we don't know where we want to live, work, do etc.? So then we started thinking...perhaps for now the best financial and emotional move was to stay. We started thinking that moving was something we have always wanted to do but sometimes getting in great financial shape means doing things you don't want to-like staying and in the meantime-we have a great setup!

So you love the house - great. It sounds like you've decided to stay in you city for a while - great.

It sounds like your rent is $1,500 and monthly cash payment would decrease if you purchased the house - great. This could free up some capital to pay down other debts, but it could also backfire when the furnace, roof, water heater need to be replaced.

If you do purchase, you don't necessarily have to purchase for the $225K or $210K the landlord wants. In fact, the bank likely wouldn't let you purchase for more than $210K based on an appraisal. Do whatever you can to reduce the purchase price.

Have you talked to a banker about getting a mortgage? It would likely be a lot easier to do if you had a small down payment. I know it hurts to have $4k in credit card debt and you plan to pay that off right away which is a good idea. However, and I'm struggling to type this because it's counter-intuitive, you might want to consider letting the balance carry over if it means you can save $4K in the same time for a down payment and/or closing costs on the house purchase. In your specific case, this might make sense.

I normally would never suggest that, but if you're dead set on getting the house and it's the right move for you long-term, it might be the only way a banker would finance the deal for you.

LynnM

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Re: To Buy our rental or move again and Rent
« Reply #8 on: January 15, 2014, 02:52:19 PM »
If there is a chance you will stay in the area for at least another 2 years and this home meets your needs and would be less than rent, before making a final decision either way, talk to a loan officer about what it takes to qualify, the debt-to-income ratios, etc., and if there are any first-time homebuyer programs in your area that would allow you to buy with no down (even though it means mortgage insurance and fees added to the loan balance).  You should be able to do this without them running a credit report so it won't ding your credit with an inquiry.  Then talk to a realtor familiar with the area who is used to short sales (many are now), and they should be able to help you determine a decent value to offer for the home.  Even if it is considerably lower than seller expects, there is no harm in making an offer that you would be comfortable paying if you decide you'd like to stay.  The bank may reject it, but then you'll have truly narrowed down your options and can plan on moving.       

TomTX

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Re: To Buy our rental or move again and Rent
« Reply #9 on: January 17, 2014, 06:28:40 PM »
Buying a house is EXPENSIVE. While it can be cut down, figure that close to 10% of the purchase price will be lost to parasites*. 6% to the realtors. 1% to title insurance, 1% to the bank for loan origination. 1-2% in various inspections, fees, etc.

If you spend $200,000 on the house a whole $20,000 vanishes. You write a check for $200,000 and the seller (or their bank) get $180,000.

*Okay, the inspectors aren't parasites. Mostly. 90% of realtors are only useful because the get you an MLS listing.
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