Here's a topic I keep wrestling around in my head. I wonder if some of you can provide some guidance.
Like so many others, we bought a home in the NYC suburbs 3 years ago and it's now worth a lot less. It's an old home and needs updating and caretaking, but is generally pretty solid. It is around the corner from an elementary school and has a lovely backyard which is perfect for kids.
So how do we figure out what to do with it? We wouldn't be able to pay the mortgage on my one FS salary, so we'd need to rent or sell it before we start A100.
Do we put it on the market once I get on the register so that we can be sure it's sold by the time we start A100?
- This assumes my score is solid enough to ensure a quick call, which means trying to pass the Spanish test...
- This also means being prepared to move if it sells before we get the call.
- Do we go DNC until it sells??
Do we put it on the rental market now, to see whether there is interest and what we could get for it?
- I doubt the rental income would cover the mortgage, let alone the property mgmt fee. So how do we know whether the tax breaks even out the shortfall? Consult a tax expert?
What have you done, or what do you plan to do with your home??
Thanks for any insight.
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8 comments:
I recommend waiting until you accept the offer, before you list or try to rent.
Also, add the costs of fixing things if they break and months between renters.
We are still renting since the market wasn't that great when we left our house. The income doesn't cover the mortgage and we have had to pay larger sums than desired for repairs.
But two things are in your favor, tax deductions and free housing as an FSO.
As you get closer, I would interview some property managers and real estate agents to get their opinion on if you should sell, what you could rent for, and the probability of getting good renters.
Good luck!
I agree about waiting until you know for sure. I also think renting is an excellent idea. When we rented our house out in VA, our mortgage was never covered (close, but not quite). However, as Natalie said, the tax breaks helped, as well as free housing overseas.
Interviewing the PMs is also a great idea. I was all set to go with one who was supposed to be fabulous, but met her in person and realized it just wasn't right. Went with the other newer company, and the owner ended up introducing us to our current Realtor, who is fabulous.
Don't stress, it will all work out!
We had purchased a fixer-upper and had hoped to sell it and turn a profit, then the housing crash started (late Spring 2008).
We had been thinking of moving to the UK and, after putting the house on the market with no luck, decided we couldn't go. We wouldn't have been able to afford the mortgage because my husband's salary would have been in dollars and I would have been working on another graduate degree.
But, by July 2008, my husband had landed on the Pol register and things were starting to pick up with the FS. We decided to decrease the asking price on the house (with a smaller profit) and keep it on the market even though we didn't know what would happen with the FS. Our friends thought we were crazy - "Where are you going to live if you sell it?!" The thing was, at that point the market was getting worse and worse and we wanted to pay off the home improvement loan that we had taken out from my Dad. That, combined with the possibility of the FS, even at its most remote, seemed worth the risk.
We did end up selling the house in October and indeed, had nowhere to live. We moved in with my mom and step-dad for two months. It was challenging - a family of four taking over their space, but it gave us time to reasses. At that point, we decided to rent - things looked a little better from the FS perspective (although my husband was still ranked in the mid-50s). When he finally got the call in Feb 2009, we only had two weeks to pack up and get out. We were going 3 months at a time on our rental and had to pay for March (but we were at Oakwood all paid, so it didn't matter much). Suffice it to say - at that point we were so happy to be able to just move on and not have to worry about the house.
For us, it ended up being good to be prepared, but it did not come without its inconveniences.
There were a lot of people in my husband's A-100 class who were struggling to sell and said they had wished they had in advance, but it's not an easy decision. We played our cards and were lucky. If he hadn't gotten in, we would have been renting for probably a couple of years. After owning two houses, that wouldn't have been the end of the world, but certainly a change.
Not sure if this helps...
Good luck with whatever you decide!
Jodi
thanks, all! Your stories definitely help, bec it feels like we're the only ones with these crazy issues and it's good to find out we're not. I hope more people will comment!
Hmmm, I left a comment yesterday, but it doesn't seem to be showing up.
Don't do anything drastic until you accept an offer to start A-100. Being on the register isn't a guarantee of anything even if you have a great score.
I would, however, research what houses in your neighborhood are selling and renting for. Do you see a lot of for sale signs? Are there houses that have been for sale for a long time? Lots of people like Westchester for the schools, so it's great you're near one. But how does it compare to others?
It's always hard to know whether to sell or try to rent out your house. We haven't owned a house since 2004, and I don't see us buying another one anytime soon.
I'd base the decision on timing. If you get on the register and stay there a while, perhaps the real estate market will improve during that time. If not, finding renters might be the way to go.
We rent our townhouse out, through a property manager, while we're overseas. It doesn't quite cover the mortgage, but we get a tax break, and we know we have a place to go home to when we want to. Made more sense to us than selling in a down market.
Maybe talk to a property manager in your area and find out how much you could rent for and how good the location is for renters?
Good luck.
We're really superstitious. We waited until we got the call and then listed it - no need to jinx things, right? :)
But we fixed all the little things and did the realtor research beforehand. We also consulted with some PMs just in case the house didn't sell.
We weren't looking at taking a hit though. Our house ended up being a wash. We also weren't in an area that we planned on returning to in the near future.
Good luck!
I think it depends on a several considerations. First, is this your home (all caps, italics, with cozy fireplaces, roasted turkeys and where you plan on your grandkids to come visit you)? If not, could it be?
If you are not completely in love with it, then maybe the next line of thought is what the economics of it are. Is it worth hanging on to as an investment? If you sell it now, will you take a loss?
I definitely agree with the other commenters that it's worth meeting and discussing selling the house with real estate agents to get a sense of the market, as well as to meet with property managers to discuss renting possibilities as well.
I know a lot of people are hesitant to tell you to put the house on the market until after you get an A-100 invite, but in a lot of markets selling a house takes a long time so maybe that's not much of a risk (it's taken us 2 years to sell our home in Charlotte - your situation will obviously be different though), especially if you are confident of getting an invite this year.
One thing that might make it worth putting the house on the market now is that you will have no worries about the drain of a mortgage while FS'ing - and if the FS doesn't happen, it's not like you can't find another (and maybe even better) house to purchase.
Best of luck with the decision.
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