Time to stay in a home (financially)?

Well, we are moving and have put the house on the market. If we would have rented the same home for $1400/Month we would have spent $58800.

After we sell it, if we get what we are hoping it will have cost us around $90200.

So living in our home (and selling it) will cost us an extra +/- $31400.

My last 3 homes that I have bought made me some money due to the housing bubble and selling much higher than I bought for. Obviously this isn’t the case this time around.

I do not see the bubble coming back either. So, here is my question assuming stagnant-mild appreciation. How long does a person need to stay in a home to have it make financial sense?

The situation has changed. Most likely you bought at an all time high. Now you would be buying at a low. If you plan to stay for 5 years I would buy again. I can’t imagine he prices are going to drop much more than they already have. Also interest rates are about as low as you are ever going to see again. Housing is starting to improve around here. I am thinking about buying and flipping houses. The market seems to getting close to be able to make money doing it again. Good luck

Rather then sell your home are you in a financial situation where you can rent it out? Housing will turn around. It’s just a matter of when. I will say I don’t think it will ever be what it was several years ago, but it will come back from where it is today. Maybe your currant house will rent for more then your future house?

Actually we bought at “the bottom” in 2009. Housing price drop slowed then but obviously didn’t stop. We listed the house at the same we paid for it in 2009 and it is priced to move.

I have considered the rental thing but I have had rentals before and that is something I really don’t want to mess with again.

I agree with Brian on this one.

Housing is slowly coming back. Don’t give up!!

I bought my home right at the start of the decline in 2007, but I bought a duplex.

I’ve had my fair share of shi**y tenants, but you just have to weed through them.

I highly suggest using a property management company. They can completely manage the property for you and just send you a check, or at the very least they can find you a qualified tennant.

I used a property management company to find my current tennant, because craig’s list just wasn’t cutting it. I’ve had the same tennant for almost 3 years now and I can’t say enough good things about her.

Being a landlord does come with some possible BS, but when you consider the fact that I can live in my own home for way less than I would pay in rent, and it ends up being the best decision I could’ve ever made.

Last but not least is once you start renting, your home becomes a business and everything from the management fee, to lawn care, and snow removal become a tax deduction

I don’t believe we as a nation will ever see the “bubble” as big as the 90’s. Over time homes have traditionally been a limited investment, averaging under 3% return up through the early 90’s. 200% flips and people gouging people…well that will do a housing market in quick (hence today).

Your value is in the land, if you have a piece that is worth holding that’s where the money will come back. Houses can be built again and again.

As another said, rent if you can (and want to be a landlord). Invest the rest, try to average 7% return…something simple as a Roth can give you that today.

What kind of roth do you have where you get 7% today?

A big part of all this is we are not in a day and age of staying at a job long term. I haven’t had the same job for more than 36 months yet in my career and I have been at this for 13 years now. There are always bigger and better opportunities around the corner (or at least there were). This time around was an unforeseen layoff.

I don’t plan on staying at my new location for more than 3-5 years.

I wonder how the numbers (and feelings) will change when Obama gets rid of the mortgage interest tax credit.

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What kind of roth do you have where you get 7% today?

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I made 13% ytd on mine

If your there 3-5yrs. I think I’d still buy a home because of the interest rate. I’d also maybe buy in what is the median buy/sell price range of that town. Maybe consider a repo in that price range. Hopefully when you sell again there isn’t as great of a loss and maybe a profit.

Was that was originally set up in the 80s or was it setup in the past year?

Assuming I read your posts correctly, you’re listing your house for the same amount that you paid in ’09, yet by your estimates it cost you over $31k more than renting a similar home?

No offense, are you sure about the numbers that make up those totals? There are a lot of factors to consider in what seems like it should be a simple comparison.
For instance, did you subtract the amount that you got to deduct on your income taxes for interest expenses, and did you remove various insurances that are typically added to mortgages and add rental insurance to the rental side of the equation? Property taxes are often included in mortgage payments, could these be being double counted? Did you add maintenance expenses and home improvement costs (assuming the improvement costs didn’t add to your home’s value if you are selling it at the same price you purchased it?)

As you no doubt know, the payments for the first years of most long term loans are almost all interest. So yes, if you anticipate relocating every three years, renting can make sense.

As to selling this home. If you’re staying in the same area and it’s being done to reduce costs based on your rent/buy cost estimates you may want to have someone take a second look at this with you. Depending on how your mortgage is structured, if you look at your mortgage payment schedule you will generally be building more equity in the next few years than you did up to this point.

Good luck.

Dan

Insurance would be a wash. We would have rental INS and have no extra insurances on the mortgage. Mortgage INS is for suckers IMO. We put 20% down and avoided the mortgage INS.

We are not staying locally. We are moving 120 miles away.

We just refi’d the mortgage 12 months ago in anticipation of staying long term. Then my boss decided to bend me (and my co-workers)over and make our lives “stressful”.