My financial situation:
-Took a shellacking in the housing crash (bought a cute starter home in great school district 13 years ago, you know what happened next)
- We both lost our jobs and almost lost said house. Now things are good. No debt + money in savings... (rapidly saving... 55k in savings and adding about 5k/month while business is good)
- House is now possible to sell at about 280k. We owe 239k. Needs a new roof and some cosmetic stuff.
Important to note:
*Our house was purchased with a HELOC that we need to get rid of no matter what
* Our location is just ok. Nice neighbors and good schools, but our lot is too small, no view except other houses and flooding is a small possibility (we are on the coast-- Sandy did not flood our street but it flooded 1 street over... elevation is 16 ft)... not our dream spot to stay put and we'd like a change.
My Options
- 1) Add a second floor to give a little more space, get rid of HELOC and improve value of the house
-Cost to build: 200k... would more likely end up 250k as these things go... that means we would owe $490k, and I don't think we can sell for that!!!
- 2) We found a house that we don't love in current form, but that checks off what we need in a home, and is in a lovely setting in a more established neighborhood that we do love (more expensive, but higher home sale prices as well). Most importantly, it is in a neighborhood with 20% more value than my current neighborhood. House is tired, but needs only cosmetic work to be a beauty. School district is the same. If we did cosmetic work, house has all of the features I want (except the walk to the beach part.. but then there is the view) and his on high ground in a wooded spot that is scenic (can't walk to the ocean, but we can just about see it through the hillside trees)
-We would bid no more than: 460k... + 20-30k to fix things... that means we would owe $490k, and it could be worth $525k
- We do have to still sell our current home, so that complicates things. Should I rent until a buyer can be found? We have the downpayment without selling, but I don't want to be saddled with a rental as an investment... it would be just a short-term solution.
-3) We suck it up, stay put, refinance, put that downpayment money into just fixing up our house as is, and then plan to sell it eventually... as long as we don't flood or have another market crash.
My Thoughts
So I am contemplating just putting in a low offer--house is on market for too much $$--to see where things fall. If my price is accepted, I have room to improve it and immediately make it more valuable. If seller does NOT accept, I go with plan #3 and hope the housing market doesn't crash again (this feeling of doom is in the back of my mind constantly, because it was so awful last time and I'm tired of feeling stuck in my situation). The more I think of it, Plan #1 is bonkers unless we are building a dream house, which we are not.
Do think I'm thinking of this correctly? What would you do in my situation, given that my goal is to make a sound investment that will grow over time, and that my current house can't accomplish that goal.