Author Topic: Seeking thoughtful perspectives on selling house and renting instead  (Read 1777 times)

mskanjani

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Hello all. Appreciate you reading this.

I bought a house in early 2013 not too far from Boston. It was a short sale so I got a good deal. Currently, it is a sellers' market: my house will list for about 100K more than I bought it for 5 years ago and will likely sell at that price as inventory here is low. I have put in about 30K worth of repairs/updates.

When I bought, I hoped/imagined that we would be here for a long time. But five years in, I fear I was wrong.

I am a single parent, I work full time (professor), and I homeschool my child. Even though the house is in pretty decent shape, it still needs work and I have completely run out of energy to do it. I have a lot to juggle, don't enjoy yardwork or home maintenance, and wish I didn't have to spend so much time doing it. Moreover, the thought of ceaseless maintenance and repairs over time gives me serious and unrelenting anxiety.

I've been contemplating selling and moving back to a rental for several years. What has kept me in the house is the fact that given the low purchase price, my monthly cost for mortgage, taxes, and insurance is lower than renting in the area (renting will likely be between $300 and $500 more per month-- eastern Mass is expensive.)

I make enough that the additional rent won't really hurt me but as a lifelong frugal saver, it pains me that I'd be paying 500 bucks more per month and it flies in the face of all the homeownership-is-better doctrine with which I grew up. I like making rational choices based on reality, not emotion. But my emotions go in both ways here. I don't want to make a poor financial decision but I'm not sure that ignoring my stress at homeownership is the best choice either.

I'd value any insights you all have. Am I ridiculous to sell and rent? Have any of you sold homes to return to renting? How did that go? Thanks for reading.

waltworks

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Well, if you have $100k in equity, then that'll be generating more every month (invested in the market) than you're paying in rent vs. mortgage. If you have more equity than that, even better.

There are of course downsides to renting but financially it's not just going to be throwing money away. I wouldn't worry so much about that aspect and concentrate on making your life less stressful/more fun. That sounds like it might mean renting instead of owning.

-W

sokoloff

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If your house is making you dread it, that's a factor.

As you state you want to be rational about the choice, consider using the NYT rent vs buy calculator. It has some limitations, but it's generally pretty good.

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

mskanjani

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Thank you, waltworks, sokoloff, and Malkynn. I appreciate your perspectives, possibly because I was hoping you would say the things you did and confirm my underlying feelings while still seeing things in a balanced way. I wasn't thinking as much about interest on the invested 100K, stupidly... One of the things that has been interesting about this has been confronting my own biases and understandings about how things work and about how I *should* feel as opposed to how I actually feel. It's good to know we never have to stop learning.

Malkynn, it sounds like you're in a good situation and your explanation of your considerations was particularly helpful as it really got at a number of important things.

Thanks again.

afox

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Not sure how close you are to death but one thing I have been thinking about lately is whether I want to own or rent in retirement.  I see a major problem with owning in retirement in that I cannot spend the equity in the house in any easy way.  If I were to sell the house and rent for last 10-30 years of life I could actually spend the equity.

Plus: In essence the landlord is a service employee of the tenant.  Luckily for tenants, most landlords put a very low dollar value on their time or else rents would be really high. 


Jrr85

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Hello all. Appreciate you reading this.

I bought a house in early 2013 not too far from Boston. It was a short sale so I got a good deal. Currently, it is a sellers' market: my house will list for about 100K more than I bought it for 5 years ago and will likely sell at that price as inventory here is low. I have put in about 30K worth of repairs/updates.

When I bought, I hoped/imagined that we would be here for a long time. But five years in, I fear I was wrong.

I am a single parent, I work full time (professor), and I homeschool my child. Even though the house is in pretty decent shape, it still needs work and I have completely run out of energy to do it. I have a lot to juggle, don't enjoy yardwork or home maintenance, and wish I didn't have to spend so much time doing it. Moreover, the thought of ceaseless maintenance and repairs over time gives me serious and unrelenting anxiety.

I've been contemplating selling and moving back to a rental for several years. What has kept me in the house is the fact that given the low purchase price, my monthly cost for mortgage, taxes, and insurance is lower than renting in the area (renting will likely be between $300 and $500 more per month-- eastern Mass is expensive.)

I make enough that the additional rent won't really hurt me but as a lifelong frugal saver, it pains me that I'd be paying 500 bucks more per month and it flies in the face of all the homeownership-is-better doctrine with which I grew up. I like making rational choices based on reality, not emotion. But my emotions go in both ways here. I don't want to make a poor financial decision but I'm not sure that ignoring my stress at homeownership is the best choice either.

I'd value any insights you all have. Am I ridiculous to sell and rent? Have any of you sold homes to return to renting? How did that go? Thanks for reading.

A few thoughts:

(1) you can have your equity in the stock market, or in the boston real estate market.  I'd probably prefer the boston real estate market, especially with leverage, but there's probably no "right" answer there without the benefit of hindsight. 
(2) Owning instead of renting gives you an inflation hedge against rental prices in the area (which probably are going to continue to see steady growth?)
(3) The extra $300 to $500 per month for rent could also be used to avoid doing any work around the house and to build up a house repair fund, so if you just don't like having to do the work yourself but don't mind contracting it out, that doesn't seem like a bid deal.
(4) There will be transaction costs associated with selling (both agents fees and time associated with moving).  And then you have the potential stress and/or costs associated with not being able to lock in a long term lease.

I would say it is a no brainer to rent just based on your personal preferences, but (1) I would guess there is a decent chance your stress re: maintenance and care of the home would be replaced with stress regarding whether your lease will be renewed, whether the pricing will be the same, etc and (2) I'd be a little more hesitant to give up ownership to rent in a strong urban market just because my assumption is that it's likely rent will continue to go up at or above CPI.   


mskanjani

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"The main benefit of being part of this community is to have your assumptions challenged and to think about things from angles you may have been selectively blind to. Its a great place to help sniff out your own biases and process things a little more thoroughly." (Malkynn)

I agree, Malkynn. I've looked for years, not been a poster, but this site has helped me immeasurably. I've come to see my biases more clearly, though overcoming them is still not simple.

Afox, barring something horrible, I'm nowhere near death, thankfully. But I hear you. My elderly parents are still in their home and won't give it up. But it's a lot for them. On one hand, given that they both grew up during the depression and are thrifty and excellent/skilled at maintenance, I think it may be helping them "stay young" by problem solving, etc. On the other hand, you can't stop aging, broken bones, bodies that will do what they do. One of the things I've realized, though, is that I'm not them. Much as I admire them, I don't get the joy or sense of satisfaction that they seem to get from homeownership/working on the home. I'd rather do my more research-oriented work, as lame as that may be.

Jrr85-- your points are absolutely what I've been vacillating on. I'm not actually in Boston, but in a bedroom community about 20 miles away. Still, prices are rising and property values keep going up. That weighs heavily on me. I like my neighbors and I am okay with the neighborhood (good things and bad things.) Friends have suggested hiring people to take care of things, which totally makes sense, especially given that it would likely come close to the additional rent. The problem is that doesn't take care of long-term anxiety. For example, we have had two "once in a generation" winters in the five years since I've owned my house, both of which required significant work/outlays of time and/or money on my part. I don't see things getting better, just more unpredictable, weather-wise.

I've contacted my old real-estate agent and am going to list it. My plan for the day actually involves re-painting all the little spots around the house where it's been nicked and dinged. It may not end up being the best financial decision and JRR85 is right: I'm likely to find new stressors renting. But for now I think it's time to try something different and honor my nerves. And next time around, I'll have the knowledge of ownership this gave me. I will have very different priorities. Thanks again, all.

Dicey

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To @Malkynn's point: $30,000 60 = $500/mo.

To @afox's question: we own rentals in a retirement community. All of our tenants are former homeowners who were done with homeownership. They are great because they know how to take care of houses and call us immediately if anything needs attention. One tenant sold their home to free up their equity to live on and rented the same floor plan from us. One key point is that all of our properties are in like-new condition and we keep them that way. Many LL's do not.

2microsNH

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mskanjani, I relate to your feelings of ambivalence and anxiety about home ownership. Like you, I am an academic in northern New England, and have had to let go of the story I'd been sold about home ownership. When a long-term relationship ended 10 years ago, we sold our log house and land and I started renting an apartment in the small college town in which I work. The process of letting go of our house and land was very, very difficult... somehow it felt retrogressive. I felt shame. Now I'm in my late 40s and continue to rent an apartment I love, and I save over 30% of my gross income in various retirement accounts. I do not miss the travails of home ownership in the least. I see myself renting indefinitely, or buying -- with cash -- a very small house on some land when I retire.

When I read your posts, I read that in your gut, you want to rent. I encourage you to go for it!

mskanjani

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2microsNH-- Thank you! I am so happy to read a post from someone with a similar experience. You are right-- the emotional part of leaving the house is kind of surprising to me. It does feel retrogressive. In addition, my parents helped me quite a bit when I moved into my house and now, when I look around, I see their hand/contribution in every room. They have had some serious health downturns in the last few years and I think it feels a bit like letting go of the house is letting go of pieces of them.

I am glad to hear you've enjoyed renting. It is comforting. And it sounds like we share a similar plan for retirement. I appreciate your comment very much.

Cassie

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Re: Seeking thoughtful perspectives on selling house and renting instead
« Reply #10 on: May 16, 2018, 04:52:41 PM »
If you like your house except for the work have you thought about hiring out the yard work and maintenance?

Slow2FIRE

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Re: Seeking thoughtful perspectives on selling house and renting instead
« Reply #11 on: May 16, 2018, 06:43:17 PM »
The only negatives WRT renting is that there really isn't a great way to background check the owner of the home and if you have pets, finding a rental is much more difficult.

We had a nightmare scenario of a landlord that refused to do maintenance until we sent 5 day / 10 day notices by certified mail.  Ever go without hot water for a week?  Really sucks.  How about no A/C for a week in the 120 degree Arizona summer when you work from home?  Then they stopped paying their mortgage and we were planning on investors scooping the house up at foreclosure and kicking us out (the investors that stopped by with their contact information offered to give us a little money for our trouble rather than go through an eviction process).  Finally, they got caught up on their mortgage and went back to failing to maintain the house properly so we were able to break the lease based on the legal protections in the ARS...now we will have to file a lawsuit to get our security deposit back.  Such a headache (ever try to make arrangements to move a 4 bdrm household in less than 10 days to include finding new housing?)

Now, trying to find a new rental -> none of the landlords in the state we are moving to want to accept one cat and one small dog without excessive fees ($500 per pet and non-refundable, plus pet rent and all on top of ordinary application fees and security deposit).  So frustrating that we just decided to outright purchase a home instead (and based on 8% stock market returns or less per year and 2% inflation or more per year over the next three years we break even after three years by purchasing inclusive of all transaction costs with a 20% downpayment and a 15 yr loan). 

JLR

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Re: Seeking thoughtful perspectives on selling house and renting instead
« Reply #12 on: May 17, 2018, 08:22:13 PM »
I found it a tough transition to move from being a homeowner of 8 years to a renter again.

We enjoyed being able to make small changes in our own home, like being able to change a light fitting. In one of our rentals one light switch turned on 6 lights. If it was our own home we would have changed this.

The rules might be different in your area, but where we live inspections are made every 12 weeks. I didn't enjoy having a stranger come in every 12 weeks and 'inspect' the house to make sure we were taking care of it.

I hated the fear/stress of how long we would be able to stay there. Our first landlord sold the property after 9 months. The owners of rental #2 decided the wanted to move in themselves after 5 months. When rental #3 was sold after 2.5 years we decided to purchase our own place again, not only because we wanted a greater feeling of stability, but also because each time we had to move our rental options were only what was available on the market at that point in time. In our case we would have to pay $50 a week extra to get something comparable to where we had been, as the market was a bit 'hot' at that time.

Dicey

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Re: Seeking thoughtful perspectives on selling house and renting instead
« Reply #13 on: May 17, 2018, 11:32:09 PM »
I rented for over a decade before buying. I had great landlords and the apartment had great bones, but they wouldn't let me do a thing to the interior, which was a total drag. Green flocked wallpaper, anyone? The best thing about being a homeowner is that I can do what I want, when I want. Love, love, love it! Also, having my own laundry that I can use whenever I want is still a thrill, nearly thirty years later.

Slow2FIRE

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Re: Seeking thoughtful perspectives on selling house and renting instead
« Reply #14 on: May 18, 2018, 06:43:57 PM »
Just want to balance out my horrible experience and say:

In 15 years of renting, I only had horrible property managers twice for a total of 2 years.  One of those property managers didn't actually become difficult until it was time to move out (national investment group) while the other was an accidental landlord that should have just sold the place as they have no clue how to run a real estate business.

Otherwise, we've had one amazing property manager/landlord team over a 2 year period and the rest were unremarkable (which is a good thing in that nothing bad happened and nothing good happened, we just paid our bills and when something failed they fixed it).