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My husband and I are breaking up (mutually, with no issues that would make this more confusing than it already is) and I'm trying to decide what to do with our house. He is planning on moving out by the end of October and I already have an apartment somewhere nearby. The house could sell for probably $260k, and the amount left on our mortgage is $190k. I'm trying to decide whether to refinance and rent the house out through a company or just straight sell it. I have no experience in any of this, but here are my thoughts: It'd rent for around $1600. I have enough in my bank to cover a few months of mortgage at $1200/month if it didn't rent right away. I know the mortgage amount would change with a refinance, but I feel like I'm not using the online calculator correctly... The rental company I'm looking at takes 8%, so $128/month roughly, leaving me with a profit of around $270, assuming it isn't vacant. Other houses in the neighborhood have rented/sold very quickly, so I don't anticipate a problem either way. I also expect the house prices in the area to continue to rise based on location. We bought in in 2016 for $218k and nothing in the city sells for that anymore, with new townhouses starting at $250. Our freestanding house with a big backyard is pretty desirable either way. I know refinancing fees are a thing, but I have no idea how much. I've asked Wells Fargo and they haven't responded yet, but I'm assuming a few thousand dollars? If we sold it, I'd guess we'd each get $20kish each, which could pay off my student and car loans. That'd be nice, but they aren't currently breaking the bank (Currently playing combined $300+ on them/month) and I feel like keeping the house is a better investment. I guess otherwise investing whatever I'd get could also work out, but I have no experience with investing besides in retirement. Ex is okay with either plan and doesn't have a specific amount he'd want if I refinanced and bought him out besides, "whatever is fair." I can't see myself moving back into it - I never intended for it to be the last house I ever owned and am actually kind of looking forward to looking for a new house in a couple years now that I know what I want. The company I'm looking at is https://www.spmtrianglerentals.com/wake-county-property-management Are there any big things I'm missing or haven't considered? There are so many estimated numbers and unknowns (how long will it take to rent/sell?) that it makes it tough to think about.
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Aug 7, 2019 17:04
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| # ? May 3, 2024 23:18 |
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If you were attempting to refinance the property you would likely need the divorce to be finalized, and qualify with the full Principle + Interest + Taxes + Insurance + Association dues on your own. You may be able to offset some of the added expense by having a tenant lined up, but they will also be calculating your current rent payment in your qualifying figures. Also probably worth mentioning any potential spousal support of child support would not be able to be included in your qualifying figures, since you very likely wont have 6 months history of receiving the income. gtkor fucked around with this message at 18:28 on Aug 7, 2019 |
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Aug 7, 2019 18:24
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Divorce won't be finalized until early next year (thanks, archaic NC laws!). Everything would be roughly 40% of my after-tax income assuming mortgage doesn't change much, so qualifying might be a little hard but I have a really good credit score. No HOA fees, spousal support, etc. The mortgage company does factor in rental income when assessing if I'd qualify for a refinance? That doesn't seem very safe on their part.
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Aug 7, 2019 19:03
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Koala Food posted:Divorce won't be finalized until early next year (thanks, archaic NC laws!). Everything would be roughly 40% of my after-tax income assuming mortgage doesn't change much, so qualifying might be a little hard but I have a really good credit score. No HOA fees, spousal support, etc. It would require a lease agreement, which depending on how quickly your management company could put one together would be possible prior to close. You would likely need to have the first payment made to you either on or prior to the first payment due date of your mortgage. If you wanted to go that route, it would likely make sense to be in communication with the management company sooner rather than later, to allow for a realistic timeline of when you could get a tenant in there.
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Aug 7, 2019 19:38
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Sell it. Your lives will take you in different directions, and you don't want to be trying to manage a rental when you've both left town in 5 years time. And you won't want to deal with discussions like "The house needs a new boiler" when you aren't together anymore and both have things going on in your life.
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Aug 7, 2019 19:39
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you are thinking about continuing to entangle your life with your ex husband in return for $1,620 per year minus whatever maintenance and repair expenses you have on the house assuming that you never have a vacancy are you loving out of your mind
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Aug 7, 2019 19:52
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Would you approach your ex-husband to purchase a house to rent, splitting the income? Doesn't that sound insane to you? The only thing making this make sense in your head is the emotional inertia you have that's tied to this particular house.
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Aug 7, 2019 21:34
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Apparently I either left something out or worded it wrong. I'd be buying my exs share out and be the sole owner. No splitting income or anything
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Aug 8, 2019 00:25
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hey congrats your idea isn't stupid for THAT reason any more but: you are going to be a landlord in addition to your day job for $3,240 per year less maintenance and expenses. maintenance and expense estimates are usually estimated at 1% of value (rule of thumb, probably less accurate at the low end of the market like your home) - so figure you are netting $800/year over a long time horizon at best. Your $20K lump sum will earn better than that. If you have a definite time horizon in which you plan to return to this home maybe that tips the scale. Put it this way: would you pony up $20k cash for an investment that netted you roughly $800/year?
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Aug 8, 2019 01:23
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KYOON GRIFFEY JR posted:hey congrats your idea isn't stupid for THAT reason any more but: you are going to be a landlord in addition to your day job for $3,240 per year less maintenance and expenses. maintenance and expense estimates are usually estimated at 1% of value (rule of thumb, probably less accurate at the low end of the market like your home) - so figure you are netting $800/year over a long time horizon at best. Your $20K lump sum will earn better than that. If you have a definite time horizon in which you plan to return to this home maybe that tips the scale. This is assuming the value of the property is decreasing by the mortgage principle? Not saying this is a great idea, but this excerpt is misleading.
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Aug 8, 2019 02:27
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KYOON GRIFFEY JR posted:hey congrats your idea isn't stupid for THAT reason any more but: you are going to be a landlord in addition to your day job for $3,240 per year less maintenance and expenses. maintenance and expense estimates are usually estimated at 1% of value (rule of thumb, probably less accurate at the low end of the market like your home) - so figure you are netting $800/year over a long time horizon at best. Your $20K lump sum will earn better than that. If you have a definite time horizon in which you plan to return to this home maybe that tips the scale. But it's still probably a bad idea, because landlording sucks. My experience was that using an agent is even worse than looking after it yourself.
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Aug 8, 2019 15:23
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Landlording can be lucrative, but its best to look at it as a second job and have an aim of building up a stable of properties and managing them yourself in the area you live in.
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Aug 8, 2019 16:08
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If you could theoretically get $270/mo from renting it out, versus saving $300/mo from paying off loans, then the better course of action is to save. Not to mention I wouldn't recommend landlording unless you've got time for a second job.
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Aug 12, 2019 11:00
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1. Buy out ex. If you want to landlord and keep the house, you need to buy out your ex. You don't want to co-own property with an ex, even if you're good friends. 2. Commercial mortgage: you'll most likely pay more in interest (maybe 50-100bps) and need 25% down. 3. Make sure you can afford any repairs without effort, and long term vacancies. 4. Make sure you have a big pile of cash just in case.
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Aug 13, 2019 03:53
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| # ? May 3, 2024 23:18 |
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Sorry to hear about your divorce. Even when it's mutual and amicable I know it is still stressful and complex (I haven't gone through it personally, thankfully, but I've seen it up close with some people close to me). Anyway, for this here's the factors I'd consider, roughly in order of importance:
If it were me, I would spreadsheet this out a bit. Start with the student/car loans you could pay off with selling the house today, and add up month to month how much interest accrues in those if you pay them down at the rate you have been. See how much it adds up to, month by month, for the next 5 years. That's the "dividends" you get for the option of selling and putting the cash towards your debts (negative interest or whatever), and what's nice is these numbers are pretty firm. Next, in a column alongside those months, put the sale price of your home and have it appreciate by some factor (start with using whatever rate you've been experiencing for the home). Next a column of how much rent you expect to get per month, and next a column of how much is left over after mortgage, and next how much principle is left at the end of that month. With this you get a very coarse formula for seeing how much you get out of renting, and can compare it to the "dividends" you would have had if you had instead sold and wiped out debt. You can also include a column for "what if I sold in this month?" that looks at sale price minus loan principle (don't forget commissions/taxes/etc!) to see what you can exit with after you're done renting it. It will probably look really favorable, because the numbers for selling and wiping out debt are pretty solid but the numbers for renting have a lot of what-if's that we haven't added in yet. Market swings, tenant reliability, and house maintenance should be worked in to the sheet to pepper it with some doses of reality. Then you can work out things like "how does it look if over time the price rises 5%/year, I get 85% of expected renter money, and maintenance costs average to $200/mo?". You can then play it out with those different factors to see what it would take for a good return, a lukewarm scenario, a disaster, etc. To paraphrase the saying in business that goes something like "sales can make up for a lot of sins", to me renter income is your biggest driver (or killer) of this idea. If you can reliably get 133% of the mortgage every month--over years--then a lot else has to start going wrong for it to not be worth it. Not to mention you can use the excess to overpay the mortgage, or pool for repairs, etc to compound the gains for when you finally sell. If however the rent is less reliable (rent price lowers, time with no renters, renters who fall behind, etc) then everything else might need to go really smoothly for this not to end up a costly investment. Bhaal fucked around with this message at 00:34 on Aug 20, 2019 |
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Aug 20, 2019 00:23
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