Author Topic: Losing Job - Sell or Rent out our home if we move  (Read 786 times)

jdhansen

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Losing Job - Sell or Rent out our home if we move
« on: November 21, 2020, 11:17:49 PM »
A summary of what has prompted this question. 

Since May of this year, I have had 3 individuals(2 coworkers, 1 supervisor) who decided they didn't like me and wanted me to leave and they initiated a campaign of cold-shouldering me and isolating me from the office.  As I wasn't reacting properly to that treatment in August they escalated to having one of them file a complaint against me for bullying and harassment.  After a month-long investigation, combined with a full trial in Civil Service System, I was cleared of the bullying and harassment charges and my false accuser was terminated on 11-6-2020.  I thought that was the end of it, but on 11-13-20 I was served with an intent to initiate termination of my position on the grounds that while the charges were false I had demonstrated unprofessionalism, inefficiencies, and unreliability over the same time frame (Saying that me fighting the charges caused the issues, very circular logic).  After reviewing the charges and realizing that I might win another appeal, but they would just keep coming after me I have decided to agree to resignation in lieu of termination. Protects my professional reputation and I walk away with 6 months of salary as severance.

So I am back in the job market and for my profession of procurement and contract administration, I will have to move to a new area to find a similar job.  While our finances are okay because between my DW and my Side gig(not going to be able to grow it to cover the missing income) we can cover all of our current expenses need to live, there won't be any way to save for that early retirement we were working hard to achieve.  Glad we had learned to save 50% of our income before this happened.

I'm a planner so my DW and I have been going back and forth on what to do with our home when we eventually move to wherever I find a position so I wanted to ask this awesome forum their opinion on the rent versus sale of our home.

Here is our information, we live in California and the home is a 3bed / 1 bath 1600 square foot home with solar panels newly installed and a large yard.

Market Value:  $400,000 (Based on the recent sale of a neighbors home which is smaller and doesn't have solar)
Original Purchase Amount: $150,000
Mortgage Amount: $1,210.46
Interest Rate:3.5%
Mortgage Term:30 year
Term remaining: 29 year 6 months
Amount remaining on mortgage: $227,393.26 (Refinance that closed in June taking cash out for Solar/Roof/add master Bath. Solar/Roof done, bath on hold cash in savings)
Gross Rents: Estimated at $2,300 no pets
Principal and Interest (the P&I of your PITI - should match with the above info):  $1,028.31
Taxes and Insurance (the T&I of your PITI): $182.15
HOA costs: None
Deferred maintenance notes: Water heater getting old, was going to replace with bath addition. Carpets need replacing and outside needs to be painted but otherwise in good condition.


So if we move out of the area, do we sell the home and start over, or could we keep it as a rental for additional cash flow while we get up and running in another area once that area is determined upon?  My thought is to make it a rental, use the case we have on hand to fix up the few repairs we need before we rent it out, and then enjoy the cash flow, but my plan could be off.

As I said, no immediate need to make a decision, and beyond the severance and current income, we have about $55,000 in liquid assets to use if we need to make a down payment on a new home or security deposit for a rental.

Thank you all for your advice.



Linea_Norway

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #1 on: November 22, 2020, 06:26:41 AM »
Sorry to hear what you had to deal with at work.

A rental house should be paying for itself. The realistic rent you can get, minus incidental vacacies, must cover all your costs including maintenance and taxes. You should calculate whether it is a good investment. Renting out from another area is more hassle, or more expensive if you need to hire a manager.
I think renting it out is only a good option if the house is indeed a good investment as a rental, or if you want to move back into it later and therefore want to hold on to this specific house. Otherwise I would sell it.

BikeFanatic

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #2 on: November 22, 2020, 07:18:51 AM »
I second Linea Norways comments, how awful to have to put up with that nonsense in your work environment! I feel for you.

Many places in the US are experiencing single family home shortages and prices are at all time highs, you may make more now on your home than what your neighbor got based on the rapidly rising costs. I know I got 35K over my already high asking price and I was surprised, but the demand was high and the buyers were very competitive. This was in late September 2020.

In this market I would say Sell, but I also have low tolerance for dealing with tennants and a second home miles away. You will need someone in the area to deal with emergencies. I personally do not like the headache factor, and you are lucky to have six more months of pay.

Dicey

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #3 on: November 22, 2020, 02:12:44 PM »
I have been through that kind of bullshit before and it is not fun. My sympathies. I'm guessing it will be very interesting to watch from the distant sidelines to see what happens next. I suspect they will not do as well as they think they will without you.

As to the house, I suspect you're in a relatively low-cost area of CA, based on the home value. Are sales in your area robust? If so, here is what I would be tempted to do. Since a 3+2 will fetch a higher price and you have the money in hand, I'd add on the bathroom, paint the exterior and do the other needed upgrades. I'd be tempted to replace the carpet with LVP. The sell the house and job hunt in earnest. I would DIY (if you have the skills) and work fast to get it on the market while inventories and mortgage rates are still low.

The profit from the sale of the house will be tax-free. Set aside a chunk of it for the down payment on a future house and enough to cover your rent for about a year in your new location, and invest the rest a la JL Collins.

I'm a landlord and I'm pro-rental property, but knowing what I do now, in your situation, that's the path I'd take.

If there is any chance of securing another job locally, my advice might be different, but you seem pretty sure that there is a move in your future.

SndcxxJ

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #4 on: November 22, 2020, 04:37:13 PM »
Honestly, I would hold off on making this decision until you know where you will end up. I would not self-manage a property more than 30 minutes away myself.  If it turns out you find a great job at the next town over you might not end up even moving.  I got the sense that you plan on finding the next job before selling anyway, so I would just focus on that and return to this question when you know where you will be. 

jdhansen

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #5 on: November 22, 2020, 10:46:13 PM »
I want to thank everyone for the feedback.  It is all great advice and it helps bring some calm to the chaotic thoughts that have been spinning around in my head over this time period.

@Dicey, I like your plan but may struggle to convince the DW to pull the trigger on spending the money.  There is comfort for her in having it all there while we are in transition, maybe when those plans are more solid she might come around on pulling that trigger.

And as much as it will pain me, I will have to tell my DW she was right as she said exactly the same thing that @SndcxxJ said as I posted the question. 

Again thank you all for the responses and I'll look forward to updating the question when things are more settled. 

Dicey

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #6 on: November 22, 2020, 10:59:31 PM »
I want to thank everyone for the feedback.  It is all great advice and it helps bring some calm to the chaotic thoughts that have been spinning around in my head over this time period.

@Dicey, I like your plan but may struggle to convince the DW to pull the trigger on spending the money.  There is comfort for her in having it all there while we are in transition, maybe when those plans are more solid she might come around on pulling that trigger.

And as much as it will pain me, I will have to tell my DW she was right as she said exactly the same thing that @SndcxxJ said as I posted the question. 

Again thank you all for the responses and I'll look forward to updating the question when things are more settled.
I'm not suggesting you spend it, just set it aside in case it's needed. I'm betting you will not need it. Think of it as keeping some powder dry. Believe me, it will alleviate a hell of a lot of stress, and a year out of the market for a small portion of your net worth is but a blip on your life's investment horizon.

jdhansen

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #7 on: January 01, 2021, 11:50:44 AM »
So just an update on this situation.

I was able to secure a new position at a lower cost of living area in California that is actually closer to family and will be paying me more to do the same thing I was doing before.  I guess life does have a way of working out.

After some soul searching and getting over the fact that we are leaving the first home we owned together we have decided to sell.  The plan is to rent in the new town for 6 months and then reevaluate if we want to own or continue to rent.

Any suggestions on what to watch out for when picking a realtor or transactions that may come up?

clarkfan1979

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Re: Losing Job - Sell or Rent out our home if we move
« Reply #8 on: January 02, 2021, 05:43:42 AM »
I have been through that kind of bullshit before and it is not fun. My sympathies. I'm guessing it will be very interesting to watch from the distant sidelines to see what happens next. I suspect they will not do as well as they think they will without you.

As to the house, I suspect you're in a relatively low-cost area of CA, based on the home value. Are sales in your area robust? If so, here is what I would be tempted to do. Since a 3+2 will fetch a higher price and you have the money in hand, I'd add on the bathroom, paint the exterior and do the other needed upgrades. I'd be tempted to replace the carpet with LVP. The sell the house and job hunt in earnest. I would DIY (if you have the skills) and work fast to get it on the market while inventories and mortgage rates are still low.

The profit from the sale of the house will be tax-free. Set aside a chunk of it for the down payment on a future house and enough to cover your rent for about a year in your new location, and invest the rest a la JL Collins.

I'm a landlord and I'm pro-rental property, but knowing what I do now, in your situation, that's the path I'd take.

If there is any chance of securing another job locally, my advice might be different, but you seem pretty sure that there is a move in your future.

I'm sorry to hear about your job. Don't take it personally. People are stupid.

Adding a 2nd bathroom might work. It depends on the cost. Get some quotes to add a 2nd bathroom and look at the comps. Make sure to pull a permit.

Definitely do all the cosmetic repairs. Replacing the carpeting and painting the outside are a must to get top dollar. Make it as clean and fresh as possible.