Hello!
I posted this question on the ERE forum board as well, but I thought that the more insight we got the better! :)
My name is Sam. I'm a 25 year old 6.5 month pregnant woman living in Fort McMurray, Alberta (Canada) with my husband. We have this big looming dilemma that we could really go either way on. So I thought maybe some outside perspective would help me make a decision.
The Dilemma: Our house- to sell and pocket cash, or to keep?
Stats:
Purchased in: July 2011
Price: $545,000
Amount Invested in home beyond down payment (legal basement suite, and upgrades on main floor): $50,000
Estimated current Value: $700,000
Monthly Payment: $2,400 (for mortgage), $3,200 for mortgage, insurance, utilities, maintenance, etc
Monthly rent from Basement suite: $2,300
Net monthly living expense- not including mortgage paydown: $900
Current amount owing on home: $500,000 (approx.)
Other things to note:
- If factoring in mortgage paydown, we're basically living here for free
- We live in Fort McMurray, which is a boom/bust city
- We're planning to live here until 2015, at which point, we are open to moving back to Ontario
- A one bedroom (putting a nursery in our room) apartment in Fort McMurray is usually at least $2,000/month
- We couldn't qualify for another mortgage right now because we got this house at a time when we were both working full time jobs: Now my husband is finishing his teaching degree, and I am self-employed... we couldn't qualify for ANYTHING
- My husband did most of the work on our house
- We really love it, and it has a large backyard
- If our basement is vacant it makes a HUGE difference in our monthly expenses...
- We may have an opportunity to get a GREAT deal on a basement suite in a friend's house (to rent) for $1500/month, but there's no full kitchen
So my thoughts
- I was hoping to sell in April- and cash out on our investment. I don't feel comfortable having so much of our wealth tied up into a house that depends on the Oil Sands industry. I'm not saying that I think that real estate won't appreciate in value over the next few years... I just don't want the whims of the market to determine our net worth (Plus, we already have another $50,000 invested in a rental property here).
- Some people say that the market is only going to get better here, but I'd be more then happy to realize a $100,000 profit (tax-free) in just 2 years- whether the market spikes after we sell or not
- Family and friends have pointed out that we'd be leaving a place that we love, with a large yard, and plenty of space (3 bedrooms- 2 of which we rented out until recently) at a point where we've JUST had a baby... Perhaps biting off more then we can chew.
- Theoretically, we could cash out on our house, and our other investment here, and be left with $200,000 (after lawyer fees, paying off existing debt, etc)- this is amazing for a young family like us, and is equivalent to $667/month indefinitely assuming a 4% withdrawal rate.
Anyways, what do you guys think? Preemptively... I know that $545,000 is a huge price for a house. But we bought it knowing that it was perfect for putting in a basement suite, and as an investment.