Hi all!
My husband bought a house back in 2008 (before I knew him!) and it has decreased in value substantially. I'm hoping you mustachains can help me figure out what the best plan of action is going forward with this.
The house is currently valued at about 80K (Zillow estimate, so take that with a grain of salt), and we owe 100k on it (at 4.9%). We do not currently live there. It is in a suburb that is far from where we both work, so we are renting a house closer to where we work and renting out the house. We have a good renter there now who pays exactly the price of the mortgage per month ($825), so it only costs us in repairs and other random expenses (like when a tree fell on it last summer!). The house we are renting is about $100 more per month, but I figure we make up for that entirely and then some in gas savings combined with the quality of life increase of not spending multiple hours per day commuting.
We currently have pretty good cash flow (about 7k take home/month), but I also have just under 60K of student loans at 6.8% that I'm trying to pay down ASAP. We pay about 1k/month on these.
I think we were hoping that the value would go back up so we could sell it, but it hasn't. We are also running into a number of complications:
1. I am hoping to go back to school this fall for my PhD. I will NOT be taking out additional loans to do this, but it will mean that our take home pay will decrease as I will be earning a small stipend. My husband is planning to find a job in the new city that pays about what he is earning now (he doesn't foresee much difficulty finding work in his field).
2. I haven't figured out where I'm going yet, but it will definitely be out of state/at least a 5 hour or so drive from where we live now. This means it will be harder to be landlords on this property. We could hire a management company, but this would cost us out of pocket every month.
3. We have been lucky with our current tenant, but we don't know how long he will be with us, and I'm skeptical about our ability to secure another good tenant. I'm afraid he will leave right as we are getting ready to move, and we will be stuck paying the mortgage.
Anyway, does anyone have any advice? I really don't want to do a short sale, but I also don't like the idea of saving up money to pay back the bank in cash, especially when I'd rather be paying down loans. We could keep on hoping the value will go up, but I don't know when/if that will be...
Also, there has been some talk about a developer buying up this land, but I don't know when that will happen or what price they would pay.
General headache all around, but I'd appreciate some of your genius advice!