Author Topic: Rent a the lower part of the home.  (Read 1507 times)

carloco

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Rent a the lower part of the home.
« on: July 02, 2016, 11:14:59 AM »
Mustachians please help.  I may have been overlooking some details,  I greatly appreciate you'alls input.

my 14 y/o son and I live in a tri-level house.  The bottom part has a den, a bathroom and a converted garage into a rec room.  I don't use that part of the house.  It was occupied by my mother but she moved out in May.  Another issue is that I am going to  through marital separation.  The plan was to sell the house and divide the proceeds.  In our separation agreement we included money to pay for the Mortgage for a few months until we sell the house.

My soon to be ex stays at the house several times a week to help care for my son.  He is intense and need some supervision.  My job schedule includes 24 hour shifts 10 days a month.  Normally when I am on duty the wife stays with him/us. On the week that I work every other day, she usually stays on the days that i don't work as well.  We share meals etc. 


- I keep wrestling with different options and can't come to terms to what to do.

- It looks like that the house appreciated about 1% a year for the past 12 years.  We paid $187500 in 2004.

- Appraisal Fall 2015: 220 000,
                  balance:  148 000,
                payment:  $1712

New 30 year Mortgage: 175 000, payment $1000, balance after 4 years $164K  (equity= 46K + rent income) , at retirement 11 years: 131K.  (equity= 94K)


Option 1: I would refinance the house and cash out her portion.  We would draw a contract and then transfer the deed to me.  In essence buying the house the from her. 
 A 30 year Mortgage would be about $1000 per month.

I could then rent the lower level of the house that has a two big rooms and its own bathroom.  I posted an ad on CL for $650 and received about 5 inquiries in just one day. 

At 4 years if I am able to rent it continuously would be about 40K and after 11 years about 150K.

This way we wouldn't have to move for now and perhaps I could stay in the house until my son goes to college.  it has 3 bedrooms upstairs and the ex- can use that room we she is around.

Option 2:  Would be to just sell the house and use whatever is left to buy a place.  I am a little apprehensive because our house needs updating the kitchen and the lower floor bathroom.  I am thinking that it will probably sell for 200, minus the realtor fees etc.  I may only end up with about 20K.  I could use it as a down payment for another house.  The houses that I am looking are between 100K and 150K.  they are not that appealing.
 
Another issue is that I may not need such a place when my son moves out and goes to college.  It will be hard to break even on a place after 4 years.

 - 125K 30 year mortgage payment: $750, at 4 years I would owe: 114K ( equity= 30K) and at retirement: 92K  ( equity= 65K)


A elder friend that was kind enough to hear me said that he would concerned about my wife's financial predicament.  That such arrangement may be a big problem in the future.   My wife is kind and wants the best for our son first as we make this difficult situation less so.



 


juggleandhope

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Re: Rent a the lower part of the home.
« Reply #1 on: July 03, 2016, 11:09:54 AM »
sounds like a tough situation - lucky that you're able to work it out with mutual support.

is there a third option?

it does seem like if you need help supervising your son, and your ex is willing to come in and live there part-time, that you will need a bedroom for her - either in this house or another.  if that's true, you will need a 3 bedroom house.  Makes sense to avoid losing the $12K of realtor fees on this house (and the $12k of next house) if you can.  Renting out the bottom floor for income would also make a difference and give you options.  Do you have time to be a landlord, though?

carloco

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Re: Rent a the lower part of the home.
« Reply #2 on: July 03, 2016, 06:35:16 PM »
sounds like a tough situation - lucky that you're able to work it out with mutual support.

is there a third option?

it does seem like if you need help supervising your son, and your ex is willing to come in and live there part-time, that you will need a bedroom for her

There are 3 bedrooms upstairs.  And for now while I'm away at work she sleeps in my bed.  But she has her own.

I am in shock still.  Never expected this would happened.  I always thought that we would be able to work out our differences.

Now, when I go anywhere all I see is reminders of what my life used to be. 

Also, how she is not concerned about her future.  I am more worried for her than she is.   She quit her job as a teacher; worked selling cars until she was let go because she couldn't produce the volume they expected.  Now she is collecting unemployment and is not too concerned about it. 
That's why my friend thinks if we continue to live together it may become precarious in the near future.

sokoloff

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Re: Rent a the lower part of the home.
« Reply #3 on: July 04, 2016, 06:02:57 AM »
Selling this house and buying another like it isn't any part of a solution to your situation.

I can't exactly read through your text to see the underlying drivers of what brought you to this point (and don't need to; I'm just saying that you need to figure out what outcome you want).

If you want to more deeply separate your finances from your ex-wife, then by all means do the re-fi and buy-out.

If you want to more deeply separate your life from your ex-wife, in order to move on, that's going to be tough in your current situation, but will also be tough in any other situation as well, at least until your son leaves the home.

Renting the basement is somewhat separate decision from the above, unless you want to consider renting it to your ex, which sounds like a terrible idea for any number of reasons. In your mental math, I'd only count on half the income that you're counting on, to account for vacancies, additional utliities/repairs, etc. It's still money, but you can't model it as all income, no vacancy, no expenses.

Lmoot

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Re: Rent a the lower part of the home.
« Reply #4 on: July 05, 2016, 05:04:14 AM »
 Difficult situation in deed, I feel for you. Would the rent even cover property taxes and insurance for the year? Afree  the first few sets of tenants you might prefer to just get a smaller home that would cost the same without tenants.

carloco

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Re: Rent a the lower part of the home.
« Reply #5 on: July 05, 2016, 05:46:22 PM »
Yes, the property taxes are $1815 a year.

A young couple wants to rent until Jan 1st.  I think this could be a nice trial.