Author Topic: renting out a room/other options  (Read 802 times)

warmastoast

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renting out a room/other options
« on: February 22, 2020, 08:20:59 PM »
about to get divorced and I may well end up with the house.  Property in our area is exploding thanks to some very large tech companies opening new offices/campuses within 5 miles. 
mortgage is just under 50% of the current value but it is a bigger house than I need just for myself and some extra income would be good.
ideas/options:
mortgage payment with property tax is about $2.5k per month.
If I rented the house out it would get $3.5 ish per month
If I rented out a room I would probably get $700 per  month - I'm not averse to this. I don't know what the tax situation would be though.
Or, should I sell? 
$300k with no mortgage would place me further out of the city than I really want to be, if I bought somewhere but if I bought to rent out then that would give me $2k per month rental income and the house/townhouse would appreciate in value but probably not as much as the original house which is in a prime location for families and where no new houses are being built.

help to clarify thoughts would be appreciated.


former player

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Re: renting out a room/other options
« Reply #1 on: February 23, 2020, 04:40:03 AM »
Hello.  Sorry to hear about the divorce.

In your position I think my first question would be: what do I want my lifestyle to be, and is my former marital home the best place for me to live that lifestyle?  If you have kids that's a good reason for staying put, but if you are newly single and without kids is a prime family area really where you want to be?  (Also, is it where someone wanting to rent a room is going to want to be?)

Generally speaking single family homes do not make the best rentals - the upkeep is a bugbear and value to rent may not make sense either, although this depends on your locality.

spartana

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Re: renting out a room/other options
« Reply #2 on: February 26, 2020, 02:45:49 PM »
I agree that you need to look at what kind of lifestyle you want - both current and future - rather than just finances. Do you like where you live and want to stay there? Are you ok with funding and doing all the household maintenance and repairs solo on a bigger house? How much would having a roommate impact your life? Do you plan to FIRE fairly soon and live there afterwards or would you move then? If you rented out the place are you ok.with a long commute twice a day? OK with being a landlord and all the hassles and expenses that incurs?  Would you be able to rent or buy a new place that would be low enough? Etc. Those kinds of questions are probably equally important to the financial questions.

If it were me in your situation I'd sell and rent a room or a small apt close by my work and invest the house sales proceeds. Or sell and downsize to a place that was minimal work and expense to upkeep, but not a huge commute, and then get a roommate. However if I loved the house and area, or was tied there for some reason,  then I'd keep it and get a roommate or 2.

This is what I did after my divorce. I bought ex-DH out of his 50% share of the house equity (he was moving out of state anyways), got a couple of roommate to offset expenses and loss of DHs income, and stayed until I FIREd about a year or 2 later. I had several pets (including 2 new 2 month old puppies) and uprooting didn't make sense for me. Once I FIREd I eventually sold and moved to a smaller less expensive place. If I didn't have all the horde of pets or wasn't planning to FIRE soon,  I would have sold and just rented somewhere cheap for awhile.


JLee

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Re: renting out a room/other options
« Reply #3 on: February 26, 2020, 02:53:02 PM »
$700 for a room on a $3500/mo house seems low.  I have a ~$3200 mortgage in a fairly HCOL area and market rate is ~$1k.