Category | Monthly | Comments | Annual |
Salary/Wages for earner #1 | $7,635 | $91,624 | |
Salary/Wages for earner #2 | $2,917 | $34,999 | |
Pretax Vision/Dental Ins. | $36 | $427 | |
Healthcare Flex Savings Acct. (FSA) | $208 | $2,500 | |
FICA base salary/wages | $10,308 | $123,696 | |
401(k) / 403(b) / TSP / etc. | $764 | Room to increase? | $9,162 |
Employer Match | $305 | $3,665 | |
Income subject to IRS tax | $9,545 | $114,534 | |
Life/LTD Insurance | $52 | $621 | |
Paycheck income before tax | $9,493 | $113,913 | |
Rental real expenses | $765 | $9,178 | |
Rental depreciation expense | $267 | $3,200 | |
Rental taxable income | -$1,031 | -$12,378 | |
Federal Total Income | $8,513 | $102,156 | |
Federal tax | $995 | 2015 rates, MFJ, stand. ded., 2 exempt. | $11,940 |
State/City tax | $232 | Guess, using 6.00% * Fed. Taxable | $2,785 |
Soc. Sec. | $706 | Assumes 2 earners paying | $8,467 |
Medicare | $149 | $1,794 | |
Total income taxes | $2,082 | $24,985 | |
Add Health + Daycare reimb. | $208 | $2,500 | |
Untaxed Income | $2,234 | $26,808 | |
Income before other expenses | $9,088 | $109,058 | |
Monthly Average Expenses: | |||
Mortgage | $591 | $7,094 | |
Rent | $1,998 | $23,976 | |
Property Tax | $78 | $941 | |
Home/Rent Insurance | $85 | $1,024 | |
Cable TV | $183 | $2,196 | |
Car Insurance | $151 | $1,812 | |
Car Maintenance, Registration, etc. | $50 | $600 | |
Charitable contributions | $20 | $240 | |
Christmas/Holidays | $25 | $300 | |
Clothing/Shoes | $25 | $300 | |
Computer (paper/software/etc.) | $10 | $120 | |
Dining (Pizza, Restaurant, etc.) | $200 | $2,400 | |
Electricity | $10 | $120 | |
Emergency Fund | $250 | $3,000 | |
Entertainment | $50 | $600 | |
Financial Fees | $5 | $60 | |
Fuel/Public Transport | $250 | $3,000 | |
Groceries | $700 | $8,400 | |
Hair Care | $10 | $120 | |
Household; Maintenance | $75 | $900 | |
Internet | $70 | $840 | |
Medicine (OTC + Prescription) | $75 | $900 | |
Miscellaneous | $100 | $1,200 | |
Pets | $100 | $1,200 | |
Phone (cell) | $225 | $2,700 | |
School Tutition/Books/Etc. | $20 | $240 | |
Sports/Recreation | $200 | $2,400 | |
Subscriptions (paper/magazines/etc.) | $20 | $240 | |
Non-mortgage total | $4,986 | $59,829 | |
Loans: | |||
Southwest Rewards Visa | $1,493 | $17,916 | |
Student Loan | $55 | $655 | |
Personal Loan | $449 | $5,393 | |
Truck Loan | $616 | $7,387 | |
Other tax-advantaged investments: | |||
Roth IRA | $385 | Room to increase? | $4,615 |
Roth 401k/403b | $515 | Room to increase? | $6,174 |
Total Expense | $9,089 | $109,062 | |
Total to invest | $0 | -$4 | |
Summary: | |||
"Gross" income | $12,021 | $144,253 | |
Income taxes | $2,082 | $24,985 | |
After-tax income | $9,939 | $119,268 | |
IRA+401k/403b/TSP/457 (Savers' credit) | $1,663 | $19,952 | |
Living expenses | $5,664 | $67,970 | |
Non-mortgage loans | $2,613 | $31,351 | |
After-tax investable | $0 | -$4 | |
Time to FIRE?: | |||
Extra income after RE (pension, SS, etc.) | 30000 | /year | |
Time to FIRE | 10 | years | |
Safe Withdrawal Rate | 4.00% | percent | |
Real return on tax-deferred investments | 1.50% | percent | |
Real, after tax, return on taxable investments | 1.28% | percent | |
Current Savings | |||
Roth + HSA | $74,000 | ||
Projected Savings at Retirement | |||
Taxable | $290,319 | ||
Tax-deferred (e.g. trad. IRA/401k) | $137,288 | ||
Roth + HSA | $201,354 | ||
Total projected stash | $628,961 | ||
Projected Expenses in Retirement | |||
Non-loan, non-work expenses | $59,829 | ||
Annual non-tax retirement expense | $59,829 | ||
Income taxes | $3,937 | ||
Total | $63,766 | ||
Total loan principal due at FI | $77,715 | ||
Stash needed for retirement @4.0% SWR | $921,867 | ||
Need $292,907 more. |
Filing Status | 2 | 1=S, 2=MFJ, 3=HOH | |
# Exempt. | 2 | ||
Earner #1 | Earner #2 | ||
Ages | 26 | 30 | |
# of earners | 2 | ||
Total Income | $102,156 | ||
Std. Deduct. | $12,600 | ||
Act. Deduct. | $12,600 | ||
Exemption | $8,000 | ||
SL int. (approx.) | $148 | ||
AGI | $102,008 | ||
MAGI | $102,156 | ||
Taxable | $81,408 | ||
1040 Tax | $11,940 | ||
Saver's credit | $0 | ||
Tax after n-r credit | $11,940 | ||
Child Tax Cred. | $0 | ||
EIC | $0 | ||
Net Tax | $11,940 | ||
Monthly | $995 | ||
Mtg. Int. (approx.) | $4,926 | ||
State tax | $2,785 | 6.00% | |
Prop tax | $941 | ||
Charity | $240 | ||
Item. Deduct. | $8,891 | ||
Version | V7.06 |
Loans: | Orig. Prin. | Orig. Length | Curr. Prin. | Yrs left | Rate |
Mortgage | $113,320 | 30 | $104,755 | 26 | 4.750% |
American Express Credit Card | $2,000 | 0.0833333333333333 | $0 | 0 | 15.000% |
Southwest Rewards Visa | $4,422 | 8 | $4,422 | 0.166666666666667 | .000% |
Student Loan | $5,500 | 10 | $4,933 | 8 | 3.150% |
Personal Loan | $25,000 | 5 | $13,012 | 2.5 | 2.990% |
Truck Loan | $35,206 | 5 | $15,659 | 2.16666666666667 | 1.900% |
I'll give a short answer to a long question.
At present you are paying the mortgage and receiving nothing. If you rent for $750 and pay 10% fee you net $675 less the $756 it cost you = you lose $81 per month. You are behind $972 per year. Factor your value of $125,000 over 27.5 years (depreciation) is $4,545 depreciation. Don't think of offsetting against depreciation because depreciation is a "non-cash" expense. You get to count it but it doesn't help you in a loss situation. You can't take a passive loss against earned salary unless you are an "active participant". If you can qualify as an "active participant" (carefully read ALL of the instructions for form 1040e) you can offset the loss against salary (but only for a time before the IRS takes notice).
You might want to consider renting now to reduce your outflow of cash and periodically re-evaluate. Most insurance companies get "concerned" insuring a vacant house.
Edit. Your house isn't producing a positive cash flow. Sitting empty it is costing you $9,072 per year. If you cannot sell it at break even, and don't want to sell it at a loss, try to minimize your loss. What does the management agency say your house should rent for?
1. The real answer is "what is going to let you sleep well at night"?
2. If the property qualifies as a second home (you need to check the rules) you can deduct the mortgage interest against your earnings but not the home owners' insurance. If you have rented it then you've started depreciation and you will eventually have to "recapture" that even if you are not presently taking because it is an "idle" property (not earning rent).
3. Who told you $925 is the fair market rent? An agent or a web-site? If it is an agent, why haven't they found you a tenant?
4. What is going to let you sleep well at night? This is perhaps the most important thing for you.
If it has been sitting empty since July then $925 is not the fair market rent. Fair market rent is closer to the $750 that two people have offered you.
What are recent comps in the neighborhood? And are comps going up or down? If down, would reprice it at 10% below recent comps and be done with it. If comps are going up, then it is probably worth renting it at $750 for another year or two and seeing if the market gets better.
Looking through Zillow, I see a lot of houses for sale and rent in your square footage range for $125k and less. What I don't see, however, is your house. That makes me wonder if your agent is doing the best marketing job. The house is on Realtor.com, so it is on MLS.
It looks like the money you put in went into bathrooms, flooring and stainless steel appliances. The updates are nice, but they don't improve the house as a whole. There are still a lot of updates to be made. Not much you can do to fix the floorplan. The living room size is a huge impediment to a sale.
Unless the military or another major employer has plans to increase personnel in this city, I would look to cut my losses and move on. It's clear that the house is not worth $125k or you would have had offers. In your shoes, I would look carefully at a current market analysis in the neighborhood to see what is selling and the sale prices for those properties that sold. I would drop the price to the point where the house would sell, even if I had to bring money to the table. Unless employment in the area is slated to increase dramatically, I don't see the argument for holding on until the market improves, because only demand from new employed folks will overcome the current oversupply. You will bleed until the market turns, assuming it does, if you don't sell.
The house that sold for $125k is a single story that is larger and has an enclosed patio room. Your lot size is not helpful to your sale because the yard is not landscaped. Buyers see a project, not extra space for the kids and the dog. One story houses also generally sell for more per square foot.
I would be all over that broker if my agent were terminated and I was not told. It sounds like they are making little or no effort to sell your house, and the listing has almost 5 months to go. Once you get them to cough up a current market analysis, I would decide about dropping the price. $119,000 with a $3,000 closing allowance might overcome the living room and yard objections, but look at the comparable sales as if you were buying the house and then decide.
Fortunately you have a relatively high income and you can absorb the loss.
The broker and the property manager don't seem to be doing the job for you, and I think I would have a pointed discussion with both of them. However, I see a number of houses in your zip code for rent in the $700's, and as you get close to $1,000, the houses are newer and nicer. Without a solid knowledge of the area, my guess is market rent for your house is under $900, and the $750 might be reasonable.
In your shoes, I would take the loss and get this one sold. Some people do well by buying a house at each duty station and converting it into a rental when they are reassigned, but unless you are assigned to a strong housing market with a diversity of large employers, the strategy has a good chance of failing at some point.