We're moving and considering our options on what to do. We have a total of about 30K in debts from a student loan, a home equity loan, and an auto loan. We also have a home where we still owe the same amount as when we first purchased it, but the value of the house has increased by at least 50%. We both have good jobs and are able to pay down the debt that we owe at a rate of about 5-7K/yr. We are considering two options for our future finances. Which one is better?
A) If we sell the house, we could sell it for enough of a profit where we could pay off our 30K in debts, and still have enough money to put down 10% on a new house. The money that we are using to pay off debt would now become additional income for us. So we could be entirely debt free.
B) Keeping the house and opening it up for a rental property. We would have to continue to pay off our debt, but at a faster rate b/c we have a new source of income. This ~$500/mo could be long term after our debt is gone.
A or B?
2006-09-13 07:14:40 · 9 answers · asked by Bert S 1 in Business & Finance ➔ Personal Finance
Staying in the house is not an option for us. We are being relocated because of work.
2006-09-13 07:25:22 · update #1
I did hold onto my Residence and Rented it out through my Military Moves -- and it did provide me with the Benefit of having a house just about ready to be paid off totally when I Retired from the Military.
The DOWN Side of renting -- get a reputable Real Estate Agent -- so you do NOT have to mess with qualified renters -- they will take care of that for you. The Horror comes in when you have renters -- because no matter how well screened -- they will NOT take care of your property like you would -- and things break, doors get damaged, rugs get messed up, etc etc etc. So although it did help me to cover the mortgage costs while I was Stationed out of the area, I did have to cover maintenance costs, and repair costs, and the damage bills as well.
That is what you need to think about right now. Start by talking to Real Estate Agents in your area, to get a good idea of what the rental fee would be (and their fee also needs to be accounted for too). Figure out from them what the average expense they require of homeowners that use their services. This is all before you see the benefit of a rent stream of income coming in.
2006-09-13 07:47:45 · answer #1 · answered by sglmom 7 · 0⤊ 0⤋
A. I own two houses one of which I live in the other I rent. It is next door so if it needs repairs I don't have far to go to do it. If you can get out from under the other house and make a profit that is what i would do. Renting property is a crap shoot. You get good renters this time and a bunch of morons the next that do more damage then they pay rent when they decide to pay it and trying to evict someone is worse then pulling teeth and takes months to do legally.
Go with the bird in the hand and don't get into the slum lord business. They will call you all hours of the day and night when things break and if you hire a management company there goes your profit and you still have Taxes and insurance. And if they don't mow the yard guess who gets mailed the citation. You!!
Good Luck!!
2006-09-13 07:27:59 · answer #2 · answered by Anonymous · 0⤊ 0⤋
1. When work relocated me, they offered to pay the fees to sell my old house and buy another. Check into it as you might get more profit out of the house than you think if they pay 5-7% of a real estate commission...
2. Sell it, pay off your debt, put at least 10% down payment on the next house, but go for a 15 or 20 year mortgage on the next house for a better rate.
2006-09-13 07:29:33 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Try to forecast your net worth in 5-6 years in both scenarios. There may be a big difference. At the rate you are paying on your debts, will you catch up in 5-6 years? What is forecast for the housing market?
2006-09-13 07:31:31 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Do not complicate your life, if you can help it. Your careers should have priority. Looking after property on rent, especially when you are a long way away, is not easy and can be very troublesome.
Best is plan (A). Sell your house, pay of the debt and put as big deposit as you can on a new house.
2006-09-13 11:46:48 · answer #5 · answered by Anonymous · 0⤊ 0⤋
You shouldn't rent because it may cost you more in the long run in taxes. Perhaps meet with a CPA to discuss if it is a viable solution. However, if you have equity in your condo, there may be a way to use the equity to free up your monthly obligation and lower your payments. Or perhaps, it could even be beneficial to sell and buy another prop without HOA's. Speak with a mortgage consultant or if you'd like I am in CA and could help you too. Please feel free to email and we can discuss your options.
2016-03-26 23:28:17 · answer #6 · answered by ? 4 · 0⤊ 0⤋
I would say A. Renting is a tricky buisness (from what I hear) and you can always end up with renters who do more damage than they pay in rent. Be debt free (what relief, I wish I could do that) and then invest that extra money.
2006-09-13 07:24:11 · answer #7 · answered by brainy_ostrich 5 · 0⤊ 0⤋
If you really want to move, then sell and pay off those loans. If you don't want to move, refinance and pay off the loans, before interest rates go up again.
2006-09-13 07:22:00 · answer #8 · answered by Papa John 6 · 0⤊ 0⤋
read tips on real estate, debts, loans and much more on this site
2006-09-13 07:21:16 · answer #9 · answered by Anonymous · 0⤊ 1⤋