Author Topic: Bham Housing Conundrum  (Read 770 times)

Tig_

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Bham Housing Conundrum
« on: June 07, 2020, 05:17:03 PM »
Hey all,

My partner just got a job offer in Birmingham, AL and we've accepted it (he's been unemployed for a while and this is career critical training).  Pay is about $52k/year, 2 year contract.  We need to get down there ASAP.  Most folks rent, what we're seeing is $700-$1100, and so far we've only seen 4 places available in the neighborhood where we are looking.  (Employer has strong neighborhood preference, not requirement, but we'd like to live there as it would also be a walking commute to work and other reasons.) Future co-worker has seen at least one of the 4 places and said it looked like a dump... Most do not come with appliances and those need to be bought separately, adding another expense.  There's a few places for sale too ($50-$55k) but as it's only a 2 year stint and the economy is likely going to completely tank so we aren't too keen on the idea, but does seem like the rental market is doing ok given the lack of options and we hear things move fast... One property management firm in the area charges 10%-12%/mo rent to manage, but it would be a reach to get the 2% rule to work.  The house with the better location needs extensive kitchen and bathroom work. (Looks like someone ran out of money on an attempted flip.)

I have a house and job in Maryland where we are now.  House is in a cooperative with some rules, and I can't sell (for a profit) until this coming March (I also don't want to sell). I pay about $1500 for mortgage + coop fee (includes taxes) currently.  I'll be moving down to AL with him while my employer is doing remote work, but unsure how long this will last and we most likely will be maintaining two households for much of this two years with the full intent to return to Maryland after his 2 year contract is up.  Being in education somewhat, I'm guessing we'll be back in the office in some capacity with some frequency starting in August, but I really have no idea at this point.  Either way, most likely to try to get a graduate student to rent out a room to get some money there.

What thoughts do you have on this housing situation?  There's also the option to stay with a co-worker for a little while to look for a place to live, but since he has ADHD and it will be a heavy workload, we'd really like to get him into a stable location where he can make routines and not have to take a busy weekend to buy appliances and move again once work gets heavy and underway.  Should we suck it up and settle for one of the rentals even if it is a "dump"? Or even if it's $1100 plus needs appliances?  How horrible of an idea would it be to buy (potential to borrow the money from his parents and pay in cash...)? 

What other information am I leaving out?  How fast everything is/needs to move is really slowing my brain down.


ETA: House for buy consideration looks like it was bought in late 2018 for $13k and has been listed on and off since November.  My dad suggested coming in with a cash offer at 60% value as they might be motivated with COVID - and that we could easily get 2% for.
« Last Edit: June 07, 2020, 05:21:26 PM by Tig_ »

Valley of Plenty

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Re: Bham Housing Conundrum
« Reply #1 on: June 07, 2020, 06:27:25 PM »
Buying a house in a state you intend to spend only 2 years in seems like a less than stellar idea. I'd be interested to know more about the nature of this position your partner is taking. $52k/year seems like inadequate compensation for a job that requires you to relocate out of state. You say your partner has been unemployed for a while and this is "career critical training", but as a mustachian surely he could find comparable or better wages somewhere that doesn't require 2 years of relocation?

If you have to move, but plan to move back to Maryland after the two years are up, I would definitely try to rent out your current residence while you're away. Depending on what you can rent it for, you should be able to at least mostly cover the cost to rent in Birmingham.

Also, how is relocating going to affect your employment situation? You say your employer is doing remote work right now; is that due to COVID? If so, you can reasonably expect that working remotely may not be an option for the full 2 years.

Freedomin5

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Re: Bham Housing Conundrum
« Reply #2 on: June 07, 2020, 09:34:04 PM »
If it's only $50-55K to buy a place, and rents are going for $700-$1100 per month, I'd be inclined to buy. Monthly mortgage costs will likely be less than $700 per month. Plus, you can slowly fix it up over the two years, if you're so inclined, and then rent it out or sell it at a later date. Based on your post, it doesn't look like there are many listings for sale or rental, and you mentioned that things on the market move fast, so I'm guessing it should be pretty easy to sell/rent after two years?

waltworks

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Re: Bham Housing Conundrum
« Reply #3 on: June 07, 2020, 10:25:48 PM »
Wait, this pays $50k a year, and the employer has a "strong neighborhood preference" for where you'll freaking LIVE?!?

That's assistant manager at McD's pay, or bottom of the barrel entry level professional (ie, bank teller). If the employer is making their preferences for where you'll *live* clear... I'd be running away, fast.

That said, if you can really buy a house for $50k that will rent for $1000, and the taxes aren't crazy, I'd just buy a house. Hard to lose in that situation. I was not aware that there was anywhere left in the US that even hit the 1% rule, let alone 2%. Wow.

-W

theoverlook

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Re: Bham Housing Conundrum
« Reply #4 on: June 08, 2020, 06:19:57 AM »
+100% to what Walt said. It's both bizarre that the employer cares where he lives but also seems like a good deal to pay $50k for a house that rents for $1000. Even if you sell it at a net loss after two years you're ahead versus renting.

That said, maybe try to be sure your partner is going to be there the whole two years. It would stink for him to feel stuck and yet want out. An owned versus rented home might add to the stuck feeling.

Tig_

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Re: Bham Housing Conundrum
« Reply #5 on: June 08, 2020, 10:30:29 AM »
Thanks for these thoughts all!  The only way he wouldn't be there the full two years would be if he got fired... which is unlikely but obviously possible.  I left out a lot of details clearly for privacy, but he's not a bank teller or working at McDonalds.  It's a fair, standard salary for the work.

We would probably do an LDR for most of the two years, so not able to rent out my house fully.  As I mentioned, I expect to be required to report to the office physically maybe around August.

Now primary concern with the buying isn't financial, but more do we have the ability (time) to take on a rehab.  More things to think through.  Honestly, leaning towards renting this morning... 

dougules

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Re: Bham Housing Conundrum
« Reply #6 on: June 08, 2020, 11:18:45 AM »
Would you be willing to divulge what area it's in?  It sounds like it's in Bham proper and not one of the suburbs, right?

Birmingham is a little piece of the rust belt in the South.  Once the steel mills started closing, the city slowly started collapsing in itself, literally to some extent.  On top of that, you have massive white flight to the suburbs over the mountain that just left the city proper with very few resources and lots of poverty-induced crime.  These are the reasons you find such cheap housing there.  It's also the reason why the housing you will find is in such sad shape. 




Tig_

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Re: Bham Housing Conundrum
« Reply #7 on: June 18, 2020, 11:36:27 AM »
Hi all, just circling back to close this out.  We ended up getting a rental - I think the timeline and the workload associated with buying was just too much to handle right now.  West side of the city. The first couple of days were a little touch and go there just with the transition and making sure we called about utilities and got all the house and job paperwork done, but - we moved in! Today was SOs first day of orientation! Not at all unpacked really, but making strides, have my work situation all set up, and should be able to stay here with him until at least the end of July, possibly longer.

MayDay

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Re: Bham Housing Conundrum
« Reply #8 on: June 19, 2020, 05:39:52 AM »
I think that was a good decision. if he wants to focus on work, trying to rehab a house is a terrible idea!

I hope you enjoy your new city.

DW

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Re: Bham Housing Conundrum
« Reply #9 on: July 17, 2020, 08:40:14 AM »
Good luck. I've been in the Birmingham area since 08 and work downtown. Let me know if you have any questions.