Author Topic: Moving. Should I sell my home?  (Read 2177 times)

BizCasual

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Moving. Should I sell my home?
« on: January 01, 2014, 12:52:24 AM »
Hello fellow Mustachians!

I知 new to the blog and the forum, and am looking for some expert advice on a question that I can稚 seem to wrap my head around.

I currently own a home in Irvine, CA and recently accepted a job that will require me to relocate to the San Jose, CA area.  I purchased the home in Irvine for $625k and owe around $400k on the home @ 2.875% interest on a 15 year mortgage that I just refinanced into in the beginning of 2013.   Agents in the area are telling me that I can get around $650-670k if I try to sell it today. 

Additionally, my new employer, as part of the relocation package, is willing to pay the closing costs of selling the home and buying a new home.

What I知 trying to figure out is if it makes sense for me to:
A)   Sell the home in Irvine and buy a home in the Bay Area (where prices have increased pretty significantly in the past year)
B)   Keep the Irvine home and rent it out (the home would likely rent for ~$2800, which would leave me ~$1500/month cash flow negative after expenses including a property manager, but net positive when taking accrued equity into account), then rent in the Bay Area for the foreseeable future (a big chunk of our cash is tied up in the current home and in retirement accounts)
C)   Sell the home and buy a different investment property (and/or other investments)

The factors that are throwing me for a loop are that
1)   It may be silly, but we locked in a great loan and I知 not sure if I知 giving something up by selling. 
2)   I知 having trouble with the idea of leaving the 吐ree money from my new employer on the table, if I don稚 sell my current home and buy a new one in the Bay Area.
3)   I have no experience as a landlord, and doubt the best way to learn is from 400 miles away
4)   My wife and I value the idea of owning the home we live in, though prices versus rents in the Bay Area don稚 seem to make the numbers work. 

Any advice on how to weigh all these factors?

Am I foolish for even considering buying a home in the Bay Area, even if we池e planning to stay for a while?  Should I look past the intangible benefits of owning?

Thanks in advance for your help!  Looking forward to hearing some mustachian advice.

gooki

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Re: Moving. Should I sell my home?
« Reply #1 on: January 01, 2014, 01:11:48 AM »
I'd only retain ownership if you intended to return to the home in the next 5 years.

Khan

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Re: Moving. Should I sell my home?
« Reply #2 on: January 01, 2014, 01:45:35 AM »
I have three comments

A: What's the closing costs of selling the old home worth?
B: 250k, invested returning 7% yearly, yields 350k in 5 years.
C: Bay area pricing is insane, I grew up just outside of San Jose, and i'd never buy into that housing market. **** that.

chasesfish

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Re: Moving. Should I sell my home?
« Reply #3 on: January 01, 2014, 05:47:09 AM »
Does "pay the closing costs" include them direct paying the real estate commission?

I'm going through this right now and the relo company direct paying the real estate agent makes this a no-brainer.  That's 6% of the sales price tax-free

Blindsquirrel

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Re: Moving. Should I sell my home?
« Reply #4 on: January 01, 2014, 10:31:20 AM »
 Sell the house. If it is cash flow negative and 400 miles away you do not want to feed the alligator every month. Taking taxes, insurance, and repairs it is a poor investment.

BizCasual

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Re: Moving. Should I sell my home?
« Reply #5 on: January 04, 2014, 12:57:04 AM »
Thanks for the advice all.  Really appreciate the help.  I guess selling the house really is a no-brainer, and I'm really not ready to be a landlord.  The 6% broker fees will be covered.  Great point @chasesfish that this is tax-free money.

Any other thoughts out there about buying a home in the Bay Area in 2014?