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View Full Version : Renting vs selling


Minniebees
02-27-2010, 09:19 AM
I figure you guys will have some great financial input here. :)

We own our home, and we're moving this summer to a new state. We're military, so we can't stay. Our mortgage is about ~1/6 of our income, and where we are moving to has an insanely cheap cost of living, so we can carry 2 mortgages if we have to. When we bought the house we put just over 100,000 of our own cash down.

If we sell it now, we will lose about 50,000-70,000. But we're not upside down on the loan, so we will still walk away with some money.

Or we could rent it out and sell it once the market pops back up. I have some concerns about renting it. I'm OK with taking a loss every month on it, in fact I've read that this is ideal for when you do your taxes. I would need to pay to refinance the home, because we have a 3 year ARM, plus the interest rates are about 2% lower than they were when we bought it. What if the renters don't pay? It's not as easy as just kicking them out, most states have laws protecting tenants. What if they destroy the house? What if the market doesn't come back? What about Capitol Gains Tax, when we do sell it?

Is it better to take the loss now and unload it, or is it better to hang on to it? Dh wants to wait because he thinks the market will come back eventually, and in the mean time we will have someone else living it in paying the mortgage. Having so much debt makes me nervous, though. Dh's job is about as stable as it gets, he can't get out of the Navy until 2022. And with promotions and time in service our income only goes up. :thumbsup:

Is it difficult getting a mortgage if you already own a property? We have excellent credit and no debt aside from the house.

What is the financially smart thing to do here?

Dawndelion
02-27-2010, 09:29 AM
It sounds to me like renting might be the right thing to do. Especially if you think that you might possibly end up back where you started at some point. Since you will be renting long distance, I would check into how much it would cost to hire a rental agency to deal with things for you, I know that's what my Navy friends did when they were relocated from Virginia to California, but were hoping to end up back in VA.

Minniebees
02-27-2010, 09:42 AM
We'll never be back (thank God!), so we'll never live here again. It's not a possibility at all because dh is specializing in newborn ICU and there is no NICU here.

A property manager will take 10%. But I think it's worth it so I don't have to deal with anyone, lol.

It's funny, with renting you either hear the really positive stuff, or the really bad. My IL's renters burned their house down, my sister's IL's had to spend 30k redoing their kitchen. But then the people across the street have been renting for years and haven't had a single problem. You just never know, you know?

Scarlet
02-27-2010, 11:01 AM
I would rent it out , preferably to military. As for getting a second mortgage, call USAA, they are so understanding and accommodating when it comes to special military issues.

kocho
02-27-2010, 11:07 AM
I agree that a rental agency is the best way to go. My sister and BIL bought a house in Tennessee. Then of course BIL got stationed overseas for 3 years. A rental agency takes care of everything. Being a military town means there is no shortage of renters and it has worked out well for them.

marcia
02-27-2010, 07:54 PM
where is the house... if it is big enough, i would be willing to rent it or do like a lease to own type thing :giggle:

my best friend transferred here in the 4th grade. they were here till our freshman year. he dad retired here, but couldnt find a job. (dont ask, you need to know her mom)
anyway, he used to be a pilot, then he trained new pilots coming in (army)
so he was able to find a job with TWA, but they had to move to witchita.
so they kept the house here and rented it out. bought a house in witchita (mom wouldnt "stoop" to the level of renting)
when TWA was bought out, he lost his job. so they sold the house there and moved back here.

i know you said there was no way you would move back, but i would rent it out and see how it goes. if you hate it, you can always sell the house later.

Minniebees
03-01-2010, 08:13 AM
where is the house... if it is big enough, i would be willing to rent it or do like a lease to own type thing :giggle:

my best friend transferred here in the 4th grade. they were here till our freshman year. he dad retired here, but couldnt find a job. (dont ask, you need to know her mom)
anyway, he used to be a pilot, then he trained new pilots coming in (army)
so he was able to find a job with TWA, but they had to move to witchita.
so they kept the house here and rented it out. bought a house in witchita (mom wouldnt "stoop" to the level of renting)
when TWA was bought out, he lost his job. so they sold the house there and moved back here.

i know you said there was no way you would move back, but i would rent it out and see how it goes. if you hate it, you can always sell the house later.

Hey, I used to live in St. Louis! :) I lived in South County (Mehlville) and a dinky S IL town that no one has ever heard of. My parents both were born in raised in S St. Louis as well. I've got loads of family there.

There really is no chance that we will be back. For one thing, since dh is military we have lived all over, and we can't keep a house everywhere. :) And if we could choose where to live, we would never choose here. The air and water here is making my kids sick. Dh also needs a large town or city to work in, even if he did get out of the military. We're lucky that he has a job with a great civilian equivalent, and neonatologists are in great demand, but he has to live in a major city or a very large town.

Our long term plan is for dh to finish this fellowship in Texas, maybe get stationed overseas for 3 years just because it would be fun, and then go back to San Diego and stay there for the rest of his career, and perhaps retire there. Dh thinks he would rather get a place on the N CA or Oregon coast after the Navy. Maybe work a few months a year in San Diego, and then spend the rest of the year in our beach house. He'll have his retirement from the military, and a neonatologist with a lot of experience makes well over 200,000 a year, so he could work a few months a year and make enough for us. :) We really don't blow a lot of money.

So, anyway, bottom line is we're never coming back. I'm going to talk to some property managers today, and talk to a mortgage broker today, too. I very briefly talked to a bank a month or so ago, and they said we'd have no problem getting enough of a mortgage to cover a decent house in Texas, but it's time to start crunching some real numbers now.

I guess we should take the jump and rent it, and hope we have a good experience.

tcmt81
03-01-2010, 08:20 AM
If it were me, I would sell, esp. since you aren't upsidedown on the loan. Less headache and stress, and the market may not recover much for a long time either. I would not assume that it is going to recover soon. I would be very worried about renting a place out and not being able to check up on it, you know.

minneapolisite
03-01-2010, 08:27 AM
I have two military friends (a married couple) who bought a house in every US city they were stationed in. Now they have 3 rental properties spilling money into their savings account and live comfortably. They're only in their 30s. If you can handle it and are willing to spend money on a management company to assist you while you are out-of-state, it doesn't sound like a bad idea to me.