Author Topic: Should I sell, Rent or Stay?  (Read 2266 times)

Kaplin261

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    • Michael Foutz
Should I sell, Rent or Stay?
« on: March 19, 2015, 11:59:11 AM »
My wife recently got a new job $92k a year and outstanding benefits. However the new job is three times as much daily commute as her old one.

The new commute is 28 Miles and 30 minutes of driving each way.

We own our home and have 12 years left on a loan that the interest rate is only %2.9 ( We refinanced 3 years ago to a 15 year mortgage). We really like the neighborhood, we love our neighbors on our small col-de-sac. We have put a lot of time and and a little bit of money into the home.  The complaints are is the commute to work, the area around neighborhood is not really bike friendly and the closest park is 5 miles away.

There are homes we like that are bike distance for my wife. If we bought another house I'm not sure the mortgage market is the same as it was 3 years ago when we refinanced. Our credit is the same, might even be better. I like the idea of knowing we only have 12 years left to pay off the mortgage, we really don't want to reset and go back to 15 years. My commute to work changes as I am a technician who travels to different sites, so its not really a factor in the decision.

House is worth $208k
We owe $156k
Annual House hold income $124k
No other debts
$150k in 401k
$20k in Savings
$8k in Checking
$5k in IRA
Prices of homes we like near her new employer are $160k-190k

What would a Mustacian do? Rent out our current home and buy a new one? Sell our current home and buy a new one? Or do we stay put and eat the high cost of the commute?


waltworks

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Re: Should I sell, Rent or Stay?
« Reply #1 on: March 19, 2015, 12:08:56 PM »
Unless it'll rent for ~$2k/mo, sell the house and buy one you like close to her work.

If she is making $92k/year, that's roughly $45/hour. Assuming that's how you want to value her time, it's costing you/her almost $500/week to commute, not even counting gas/depreciation/etc which is probably ~$100/week on top of that.

Forget your 12 years left thing. Want 12 years left? Get another 15 year and pay off 3 years worth in a chunk. Done. Interest rates are a tiny bit higher no, but still crazy low. You can choose to save a thousand bucks a year in interest if you want, but that's an order of magnitude less than you'd save by moving.

-W

bizzy

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Re: Should I sell, Rent or Stay?
« Reply #2 on: March 20, 2015, 08:56:46 PM »
Hello, I am in a similar situation. I bought my first house 1200 sqft 5 years ago and wanted a bigger house. So I bought my new home two years ago which is 3400 sqft and now I have to drive 33 miles instead of 15 before. My driving time home is now double and now I want to move back to the same city as my first home. I rent out my smaller home and I am considering moving back to my smaller house to be closer to work and my parents.
Bottom line, my opinion is that renting out your hose will cause a lot of stress that you had no idea that could exist. Especially since that is your house that you love and lived in it. My first year when I rented out my house I could not sleep since they were not taking care of my house. I did my homework to get a good renter but it went bad. Eventually I got a good renter now and things are a lot better. But boy did I loose sleep and my stress was through the roof. I would recommend either stay or sell and buy another house instead of being a landlord.

Kaplin261

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    • Michael Foutz
Re: Should I sell, Rent or Stay?
« Reply #3 on: March 21, 2015, 05:38:01 AM »
Unless it'll rent for ~$2k/mo, sell the house and buy one you like close to her work.

If she is making $92k/year, that's roughly $45/hour. Assuming that's how you want to value her time, it's costing you/her almost $500/week to commute, not even counting gas/depreciation/etc which is probably ~$100/week on top of that.

Forget your 12 years left thing. Want 12 years left? Get another 15 year and pay off 3 years worth in a chunk. Done. Interest rates are a tiny bit higher no, but still crazy low. You can choose to save a thousand bucks a year in interest if you want, but that's an order of magnitude less than you'd save by moving.

-W

Whats the formula you used to get $2k a month? I estimate $5000 interest a year. I have always did my own handyman work so I would continue to do that. I installed a brand new HVAC system 6 months ago,  IMO is one of the most expensive fixes for home under 2k sqft.The roof looks like it has about 10 years left. I need to replace a couple pieces of siding and maybe paint the exterior in a couple years. So maybe $1k a year in repairs.

I think i read on one of MMM's blogs %1 of the homes value should be the monthly rental price. I don't see that happening for this neighborhood. Zillow value on home is $191k and rent estimate is $1.4k how ever my home is in pristine condition with lots of upgrades so I feel we should be able to rent for $1.5k - $1.6k.


The math in your hourly wage formula you used was incorrect. If she makes $45 a hour the commute would cost her $225 + millage 28x2x5= 280 x $0.50=$140 However the new residence would still have a commute it will probably be a car commute of 4 miles and 8 minutes of driving. 4x2x5= 40 x $0.50= $20 .  Wages 8x2x5= 80 minutes or 1.33 hours x $45 = $60

Savings of $165 for her time, $120 for milage. Her yearly working weeks including holidays and 4 weeks of vacation is about 46 working weeks so 46 x $165= $7590 + $5520 = $13110 x 10(Years left of work)=$131,110

Selling the house would cost us a %6 realtor fee of $12k plus moving expenses of probably $2k

waltworks

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Re: Should I sell, Rent or Stay?
« Reply #4 on: March 21, 2015, 08:30:24 AM »
Go read up on the 50% rule and 1% rule and come back.

-W

Whats the formula you used to get $2k a month? I estimate $5000 interest a year. I have always did my own handyman work so I would continue to do that. I installed a brand new HVAC system 6 months ago,  IMO is one of the most expensive fixes for home under 2k sqft.The roof looks like it has about 10 years left. I need to replace a couple pieces of siding and maybe paint the exterior in a couple years. So maybe $1k a year in repairs.

I think i read on one of MMM's blogs %1 of the homes value should be the monthly rental price. I don't see that happening for this neighborhood. Zillow value on home is $191k and rent estimate is $1.4k how ever my home is in pristine condition with lots of upgrades so I feel we should be able to rent for $1.5k - $1.6k.


The math in your hourly wage formula you used was incorrect. If she makes $45 a hour the commute would cost her $225 + millage 28x2x5= 280 x $0.50=$140 However the new residence would still have a commute it will probably be a car commute of 4 miles and 8 minutes of driving. 4x2x5= 40 x $0.50= $20 .  Wages 8x2x5= 80 minutes or 1.33 hours x $45 = $60

Savings of $165 for her time, $120 for milage. Her yearly working weeks including holidays and 4 weeks of vacation is about 46 working weeks so 46 x $165= $7590 + $5520 = $13110 x 10(Years left of work)=$131,110

Selling the house would cost us a %6 realtor fee of $12k plus moving expenses of probably $2k