Author Topic: HCOL Case Study: Rent or Sell  (Read 1133 times)

syracusefan

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HCOL Case Study: Rent or Sell
« on: January 28, 2020, 12:15:38 PM »
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« Last Edit: January 31, 2020, 11:39:03 AM by syracusefan »

nkt0

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Re: HCOL Case Study: Rent or Sell
« Reply #1 on: January 28, 2020, 12:20:58 PM »
I think this often comes down to the question: Do you want to be a landlord of two units? Seems like you've already been a landlord with the second unit, so you have some experience, but moving away from the building will mean changes in your daily landlording duties. Now you will need to manage the property remotely (or pay someone else to do it for you).

If these are considerations you're okay with, then keeping the property seems okay. If not, sell and use the $$$ somewhere else.

syracusefan

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Re: HCOL Case Study: Rent or Sell
« Reply #2 on: January 28, 2020, 12:38:50 PM »
We love being a landlord right now.  As you point out, we live upstairs so it's very easy.  The drive from the new neighborhood is approximately 50 mins so shouldn't be too much of a hassle.  To answer your question, yes I think we could handle landlording 2 units.

We could in theory hire a property manager but that would cut into the margins. 

affordablehousing

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Re: HCOL Case Study: Rent or Sell
« Reply #3 on: January 28, 2020, 12:59:40 PM »
We were in a very similar situation. We moved 75 minutes away, kept our duplex for nostalgic reasons, and so far, have been fairly comfortable with the amount of work it's been. financially it has been a big help and a major win to keep renting, at least for the 3 years until you need to consider the cap gains situation. That said, the few times we've been called into action have been VERY stressful. I suffer from needing to do EVERYTHING myself, so if you are better at outsourcing and releasing control, that's best. The one factor I've found that we didn't consider, is that we are very home-centric family. Our new house has been the object of much attention, and that has greatly lessened the emotions I thought we'd have pining for our old place. It sounded like you have more practical considerations, but if there are emoitons involved as well I wanted to describe the happy coincidence of us being less focused on them.


waltworks

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Re: HCOL Case Study: Rent or Sell
« Reply #4 on: January 28, 2020, 01:37:56 PM »
I'm going to go a different direction with this.

If your local area is as up and coming as you think, the schools are probably fine. I know, I know, they only got a 4 on GreatSchools or some crap like that. That's because there are actual middle class (or even poor! gah!) kids attending them, not because they actually suck (probably). Now, if your kids are going to get stabbed for not joining a gang, different story. But according to you this place is gentrifying so that's probably not the case.

If your kids are Harvard material, a mediocre elementary/middle school won't hurt anything. Likewise if they're not, it won't hurt anything.

So to get Jane and Johnny into a "better" school, you plan to:
-Spend an extra hour every weekday commuting to work. AN HOUR A DAY!! Gee, I bet you could do a lot of fun and educational stuff with them that would be more valuable for your kids than a "better" school in that time every day...
-Drop a cool million bucks, give or take, on a different house.
-Maybe spend *even more* of your free time being a semi long-distance landlord.

I think you should sit down and decide what your goals are. In your current place, at your current income (setting aside whatever other spending you do, a case study would be a great idea) you are ideally situated to be FI very, very fast.

You are throwing away a LOT for this "better schools" thing. You're losing time with your family, a crap-ton of money, and of course some of your irreplaceable life from having to pay for all of this.

It had better be worth it.

-W

Jon Bon

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Re: HCOL Case Study: Rent or Sell
« Reply #5 on: January 29, 2020, 11:14:06 AM »
I think Walt has it here.

The buy or sell on this one is really irreverent. The numbers could go either way. Its not a terrible rental so you could keep it, or sell it and get to keep a portion of the gains tax free.

I think you need to ask yourself what is best for you and your family. What is going to make you happy? Are you too concerned about keeping up with the Jones? Do you feel like you are slumming it living in a half house? To me this is not a financial decision but a happiness decision.

Good parents make good schools right? Giving a damn about your kids education is what gets them a good education right? No idea about how good/bad the school is but if its mediocre I would think the kids are probably going to do just fine. I think you should give us more information about your motivations not because we want to know (we do) but I think it would be good for you to write it out, get it all down so you can make the best decision for you and your family.

Personally I would think a LONG time about increasing commute time AND increasing housing expense. Probably the last two things in my life I would change/increase given the choice. 






ShastaFire

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Re: HCOL Case Study: Rent or Sell
« Reply #6 on: January 29, 2020, 01:04:01 PM »
I'm with waltworks and Jon Bon - you have a pretty good situation.  If you can manage well in a duplex with your kids and the schools are pretty decent, I think your moving idea falls into the lifestyle inflation category.  That longer commute sounds soul-sucking...

waltworks

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Re: HCOL Case Study: Rent or Sell
« Reply #7 on: January 29, 2020, 01:48:53 PM »
Full disclosure here: I live in a stupidly expensive house that prevents me from being FIRE and will for quite a while. I live in it so that I can have my kids grow up in a place where they can freely roam around anywhere they want, I can take the free bus for 5 minutes to go ski, and the whole family can enjoy the mountains and basically never have to drive anywhere.

I'll probably keep working 20 hours a week for the next decade, if not the rest of my life, but that's ok because it's basically my hobby anyway. I pretty much never say no to a school play, helping with the science fair, or just eating popcorn and reading Harry Potter all afternoon. So it works for us just fine, though it's not financially optimal.

Going skiing more easily and my kids catching frogs all summer are pretty silly reasons to have a million bucks tied up in a house. So if you can't sleep at night because junior isn't at a school where the elite send their kids, and you love your job, then by all means, move.

-W

syracusefan

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Re: HCOL Case Study: Rent or Sell
« Reply #8 on: January 30, 2020, 08:19:17 AM »
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« Last Edit: January 31, 2020, 11:39:33 AM by syracusefan »

waltworks

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Re: HCOL Case Study: Rent or Sell
« Reply #9 on: January 30, 2020, 08:59:33 AM »
It does not sound like you are really on the right forum, IMO. You may want to look at RE specific investing forums (ie Biggerpockets). Folks here are pretty focused on NOT working until 65.

You get to make your own choices, obviously. I'd be bummed as a kid if my parents left me with a nanny all summer and only saw me on weekends during the year (but they gave 100% on those 2 days! LOL). I'd be bummed as a parent to live that way. And no way would I want to work at a job where I miss my kids and have to commute for, to make $300k+ a year until I'm 65. Gah! What are you going to do with all that money when you're old?

But again, that's me (and most of the folks on this forum). If what you love is your job, then that's what's going to make you happy. Your nanny can text you fun pictures from the pool club.

To answer your original question, given the context: it doesn't matter at all. Keep it, sell it, you're making $300k a year and rising for the next 30 years. The house is a rounding error.

I think you could stand to be more creative when thinking about your future, though. In a few years, you'll have enough to move to somewhere super cool (ie Durango, Bozeman, all over New England, BC, etc, etc) and enjoy that suburban/small town experience, all the free time you want, and schools that are just fine. You could work, or not, or put your talents to use to make the world a better place/volunteer.

Or you can keep working for the rest of your life. Pulling into your driveway after a week of work to relax for the weekend in your suburban home? Are you trying to bait us?

You're aiming too low, my friend. Life is bigger than you've imagined it.

-W
« Last Edit: January 30, 2020, 09:17:19 AM by waltworks »

Jon Bon

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Re: HCOL Case Study: Rent or Sell
« Reply #10 on: January 30, 2020, 09:19:53 AM »
Well I am not going to sit here and tell you to send your kids to a bottom 25% school. Would they be just fine? Probably? But I get not wanting to bet your kids future on a "probably" So yeah a private school at 50k a year is freaking insane. Moving to avoid 50k a year for what 10 years of tuition is likely worth it.

Outside of the school thing Ill leave the rest of your post alone. Sounds like you want to have a typical rich person life. So you be you!

syracusefan

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Re: HCOL Case Study: Rent or Sell
« Reply #11 on: January 30, 2020, 10:56:14 AM »
It does not sound like you are really on the right forum, IMO. You may want to look at RE specific investing forums (ie Biggerpockets). Folks here are pretty focused on NOT working until 65.

You get to make your own choices, obviously. I'd be bummed as a kid if my parents left me with a nanny all summer and only saw me on weekends during the year (but they gave 100% on those 2 days! LOL). I'd be bummed as a parent to live that way. And no way would I want to work at a job where I miss my kids and have to commute for, to make $300k+ a year until I'm 65. Gah! What are you going to do with all that money when you're old?

But again, that's me (and most of the folks on this forum). If what you love is your job, then that's what's going to make you happy. Your nanny can text you fun pictures from the pool club.

To answer your original question, given the context: it doesn't matter at all. Keep it, sell it, you're making $300k a year and rising for the next 30 years. The house is a rounding error.

I think you could stand to be more creative when thinking about your future, though. In a few years, you'll have enough to move to somewhere super cool (ie Durango, Bozeman, all over New England, BC, etc, etc) and enjoy that suburban/small town experience, all the free time you want, and schools that are just fine. You could work, or not, or put your talents to use to make the world a better place/volunteer.

Or you can keep working for the rest of your life. Pulling into your driveway after a week of work to relax for the weekend in your suburban home? Are you trying to bait us?

You're aiming too low, my friend. Life is bigger than you've imagined it.

-W

Ha, thanks for the post.  I'm walking away from this feeling like a bad parent.  And yes you're right I guess i may be posting this to the wrong forum.  Ironically, it was this forum that steered me in the direction of purchasing my multi-family in the first place.