We bought a starter home in 2000 and were financially forced to stay through the boom in the mid-2000's. Now we are being forced to sell because my hubby is being relocated to CO. So we aren't as in control of the price and time frame to sell as I'd like so the sale price will be lower than I'd hoped. The house was listed yesterday.
To make myself feel better, I whipped out, my trusty calculator and some financial records and starting crunching numbers. I made a column of expenses we've paid over the last 11.5 years of home ownership that a landlord would typically handle: mortgage, taxes, closing costs, titling, surveys, exterminators, repairs, replacement windows, new roof, appliance repair and replacement, plumbing, etc. Figuring out how much we paid into the mortgage was tricky becasue I often paid extra principle. I decided to include that and the regular payments since I would be subtracting our equity later in this equation.
So now in column A I have the entire expense of "being my own landlord" for the past decade.
Assuming we sell for our asking price(which is aggressively priced, moving in 5 weeks!)I figured what we would pay to our realtor with a bit of padding for small things that might come up/paperwork and such. So I subtracted that from our asking price and then subtracted our mortgage balance.
Now in column A I have our true cost of living here that can be compared to renting.
In column B I figured the cost of renting a similar house in our area for those years. Rents have gone up about 40-50% in the 12 years or so since we last looked. Much of that is increased property taxes, not appreciation. But anyway, I did my best to estimate based on when ours went up.
Looking at the two numbers side by side I feel MUCH better about our "low" asking price. It seems so glib when people say "At least it's better than renting" but in our case it is very true. Overall, we will walk away from this house having paid 50% of what rent would have been.
If we get our asking price it will be a hair under 2% yearly appreciation/inflation. In fact, we could give the house away for $50K and still come out ahead of renting. And as I'm writing this, I just got a message from the realtor with our first showing appointment. Yay!
Anyway, I'm rambling but my point was that things don't seem so scary or overwhelming when I sit down and run the numbers. Never go anywhere without a calculator! ;)
