I currently own a home with another individual, but they want out and off the mortgage. So it goes. They are willing to sell the house to me or place the home on the market. They just want this done yesterday.
I live in a great neighborhood and am close to work, friends, and fun. My job is stable, but I may consider another job in the next few years. I'd likely have to refinance to keep the house as I don't believe my mortgage can be assumed by one individual. It's in no way luxurious, but is worth approximately 3 times my annual salary of ~$80k. I'm not likely to see an increase in salary anytime soon. I'm open to renting out the spare room, but it's not necessarily an ideal home to share with a non-partner. It's an 1100 square foot home with 2 full baths. The house has a new kitchen, laundry room, roof, and windows. It likely needs a new furnace/AC in the next 5 years. The other major maintenance issue to tackle is a wet basement with some insufficient floor support. These are expensive problems that do scare me.
I'm currently maxing my 401K (457 actually) and Roth IRA and have a savings rate close to 60%. I'm 34. I have no debt and my investments are worth ~$200,000 (35,000 in taxable brokerage). I have roughly ~$10,000 in cash. My goal is to be FIRE at 46, but I'm not worried about working a bit longer for an improved lifestyle now. Travel and nights out with friends are my biggest expenses after housing.
Home Details
Value ~$225,000
Loan Amount ~$157,000 (13 years remaining on 15 year 3.125%)
Monthly Taxes and Insurance $400
Current Monthly Principal and Interest Payment $1250 ($~820 to principal)
Monthly Utilities ~$125 to $150
Money to buy out partner $10k to $15k
Associated Costs to buyout partner (wild guess) $2000
Monthly Minimal Maintenance $200
Approximate Rent Value of 2nd Room $500 to $700
If I sell the house now then I'm likely to have 30K and change in cash (after costs). I'd likely send all of the money to my Vanguard brokerage. I have a friend who will rent me a room in his very nice home for about $700 a month, but this would not be permanent (maybe 6 months to a year) and some stuff would have to go. He does not live in my neighborhood, but it is almost equally close to my work (~1 mile). If I were to rent in my neighborhood or similar walkable/bikeable neighborhood I'm guessing my rent will be close to $1000 a month for a pretty nice place. I could go cheaper and or live in a worse neighborhood and I'm somewhat open to that, but as a newly single person I don't want to be far from friends and entertainment options.
Keeping the house costs me at least 10 grand, but probably 17 or so, up front. I don't even have that much cash, but can come up with it. I have a few things to sell and can part with some of my brokerage account. I'm not comfortable adding any of this onto the loan. I could get a 30 year loan and drop my payment a few hundred bucks, but that wouldn't really change my savings rate. I guess my biggest problem with selling is that I'm not going to get this type of "deal" again. There's no way I cut bait on this house and end up in something comparable in the next several years. Renting will save me $800 (increased cost of mortgage and minimum maintenance) in cash flow, but $800 is going to the principal if I have a similar loan to what I have now. I know 800 added to investments a month is going to do a lot more than in a home, but some might consider it a hedge. It's also required savings and I'd be less likely to spend it. If I could find a good renter then I may even make the home a financial advantage. This is all under the assumption that maintenance costs stay relatively low. This could even become a complete rental at some point, but not any time soon as it wouldn't fetch more than 1300 a month or so.
Thoughts? What am I not thinking about? Should I keep the house? I need to figure this out by the end of the week. Thanks for reading.