OK I need to get some advice on a tough situation I am in We have some choices we need to make immediately concerning our living situation. We can either:
Continue to rent our extremely expensive apartment for the next 3 months while my husband and my SIL flip a house in a very nice town that should sell quickly- his profit alone being potentially 90K if it sells for the asking price.
Move into the flip house and buy it off my SIL for a ridiculous low price ( it was an estate sale and my husband negotiated the house down 100k! ) Its the exact size we need and the only drawback is it's on a busy road, but we can fence it in easily.
The tough decision is walking away from 90K. We need this money in these tough times, and we can look for a house of our own once we have the 90k. The only unsure thing is if it doesnt sell right away, we pay for an overpriced apartment instead of just moving into the house right off the bat. ( our mortgage would be 1,000 less than our rent. yes, i know thats insane )
Please just let me know your thoughts. What do you think is more important, money or a house and living semi-comfortable, but obviously not as comfortable as we would with 90k in the bank.
Thanks for the opinions so far. To answer some raised questions: Our lease at the apartment is up, we were supposed to move out on sept 11th. My husband is a contractor, and is doing about 99% of the minor work that needs to be done to the house to have it flipped. The rest is outside companies ( new kitchen cabinets and a little change to the heating system to give central air to the home ) We are not in debt, but my husband's line of work isnt consistent- he is self employed so I only work to carry health insurance.. My thing is, yes the house is great- but what's the point of buying the house if my husband's work gets so slow we have to sell it because we can't pay the mortgage. Then we may have to sit on it then and hope it sells before the next mortgage payment is due. I highly doubt that will happen, but it always could, and im big into what if's when it comes to money. you can never have too much is what I like to say- especially since we are in a double recession.
My gut says sell it, and worse case scenario, we buy it off SIL in 4 months when our newly signed lease is up. But none of you have really gone with that idea so now im wondering if there is something im not seeing here. Also should mention- she closes august 5th and the fixes to the home should be done by labor day. The home is in a town where the school system is in the top 10 in the state. The house next door just sold for 659K. so it should sell no problem, which makes me even more jealous- we may never have the opportunity to live in this town otherwise! ughhhh. my husband says we can do whatever I think is best... but i just don't want to regret my decision later!
We are not using any of our money for the flip. my SIL has money saved up- she's a nurse who still lives with mom and dad. There is zero risk in us flipping the house- its in her name and her money, Because my hubbs is doing all the work she is splitting the profit down the middle, and he negotiated the deal in the first place
I think I would move into the house. Then you are not paying the rent plus you can still put the house up for sale when you are living in it and walk away with $90,000.
I'd live in it while trying to sell it. If you can flip it (fixing it up) while living in it, I'd do that to.
i say go with the house. you never know how long it would take to sell the house and you may end up having to sell it for less than you want.
what will you do with the 90k? If you take the house, especially at the low price you paid, you will be earning that 90k back as it increases in value. My fear would be that you would spend the 90k...... but on what and have what to show for it say in 5-10 years? I'd take the house............. Pay it off as quickly as possible and then feel secure.
UNLESS, you are in deep debt and need the cash to get out. I might take the 90k if that were the case, but only if you feel you can keep yourself from getting in debt again.
I would take the house that you just flipped....if it's the right size...if you can buy the house from her for $50K instead of spending $500K on it - do it...
The 90K would be nice...but you would still end up having a house payment...
Not walking in your shoes...but if those were my shoes? I would take the house that is right for my family and fence it in..
GOOD LUCK with your decision!!
I would buy the house. You can put down your roots!! And throughout the years you can fix it up and make it better than it is now, and sell it for a boatload more than you can now!! Think of the profits then!! And you would not be throwing your money away like you are now!! I shudder thinking your house pymt would be $1000 less than your rent. YIKES that would send me to the mortgage company very quickly!! Good luck on your decision!!!
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I obviously don't know your financial situation but moving into the house seems like a good option for you besides the busy street. Starting to get into the fall of the year where families who are looking for a new home have already found one or decided to wait unless your house is in the district that they want. IMO, move to the house, look for another if you don't like it & then you can still make a decent profit off it when the time comes to sell again. Good luck to you!
I don't know about the real estate market in your area - but the one in mine is very depressed - homes selling for up to 40K less than their sell price three years ago.
So, unless you are sure that you have a healthy real estate market, and that the home will sell quickly, I say move into it. Then save the 1,000 per month - that adds up quickly!
Whatever you do -
Good Luck
God Bless
You say that you need the 90K. Why? If you have enough extra money lying around that you can "flip" a house, then I would assume you are not in major debt. Yes, it's always great to have some money saved up for emergencies, or maybe you need to save for college or retirement.
Based on the information you provide, I would move into the flip house. Take your monthly savings (difference between rent and mortgage) and put that in the bank.
Remember, the 90K is not guaranteed. Houses are not selling right now. It may take a lot longer than you expect to get it sold. In addition, it's a buyers market so chances are you won't get the asking price.
I would buy and flip while your in it. You get the house for a steal, fix it up and build so much equity in it, and then if his work gets super slow you can sell it for I bet more than that 90K profit, especially with an added fenced yard. With $1000 off your current rent, do it! AND you can save $200-$400 a month just in case he does have no work and you do have to sell it, then at least you'll have some payments in savings until you can sell it. That seems like a good deal, $100K for a house that after you flip will produce 90K in profit and with time will probably produce more. The housing market is going to stay sucking for a while but it will eventually level out. And my goodness girl the opportunity to live in a neighborhood where houses sell for $659K for $100 THOUSAND, your crazy not to lol. DO IT! You won't regret it. Even if you HAVE to sell it, just by the sound of the neighborhood you will never lose money on $100K + the renovation expenses. You may not have an upfront 90K, but you will have a savings of $1000 a month now and a house in a good ritzy neighborhood with awesome schools for a steal. Plus $100K could be paid off rather quickly then you will be mortgage free in a ritzy neighborhood where it could sell and give you a 200-300K profit instead.
I would take the house! It's a lifetime investment and you will always be able to sell it anytime,like when the market is up for example. I think I'd quit chucking rent down a hole and invest my money in something that has to possibility to give me a return. Good luck whatever you decide!
Talk to your husband and set a goal for you want to be in five years. If you do this, the answer to your question will be obvious. We all have different goals, so the responses are going to be all over the place. As the wife of a once flipper, there is no such thing as a sure bet. You keep citing the 90K you will get at time of sale. Each month that house does not sell is more taxes and carrying costs that eat into your profit - not to mention that few houses sell at list price. You will also have closing costs - have those been calculated into your profit? It is all about finding the right buyer, so eventhough the house next door sold for 659K does not give any assurance that yours will do the same - especially since you have missed the seasonal market - family homes do not sell well after school starts and the holidays. My point is that you can not focus on 90K because you really do not know what the profit will be until it happens. In any case, hopefully you will be making a large deposit some time soon. Do you want to just keep it in the bank as rainy day money? Invest it? Find another home? It sounds as if you really like the flip house and at $1000 less per month, it seems like a smart thing to do, but if you don't have the financial stability to do it then you could be putting yourself into a larger mess. If it were me, I would wait for the flip profit, purchase a multi-unit property to live in where your mortgage would be minimal to nothing with a five year plan of moving out into my own house and keeping the rentals for profit. But that's me, the idea may not appeal to you. Good luck.
One of the parents at the dance studio I work in is a real estate agent. She said houses are selling for less than half of their appraisal values and she is not making any money due to houses sitting months and months.
In these times, which I don't think are going to get better very soon, I would go with a sure thing. You said the house was a potential $90,000 profit. What if it doesn't sell for that much, what if it sits and sits, what if it only has offers for much less, so much less that you don't make even $10,000?
I would probably take the house and run. If you are working then you will have some income and you know, by hubby's work schedule, that his job is sporadic and not dependable. I would make sure to get the best payment possible. If it IS too much then don't do it. If you cannot cover the mortgage with your pay check then don't do it.
BUT also, don't even begin to count on ANY money from the sale of that house. If you cannot afford a down payment then do another lease and save up more money, or buy another house and start doing that when he has time off. |
My niece and her hubby built their own house, he does construction and works year round at a Military base. His friends got together each weekend and they built it from scratch. They bought as they went as much as they could and took out very few loans.
She works at a bank so they were able to do their home loan very well. They have a huge home, several thousands of feet, and they have a very small house payment. Her payment is smaller than my sister's for a house that is less than half the size.
So, my advice would be to wait if you really can't make the payments on your steady wages and keep putting money in the bank to have for a down payment of land then start building yourselves.
I'd move into the renovated house!!
i would buy the house. absolutely.
Haven't seen the other answers, but here goes. Owning your own home is great and probably the way to go. I would rent at the high rate, gamble on the sale of the house and pocket the 90K and buy appropriately from there. Or, if that doesn't work immediately (or in the time frame you and your husband are willing to wait) buy this property, fence it, and buy again if that suits. Either way I would ditch the renting piece as soon as possible. Good luck!
If you buy the house, you become responsible for all maintenance, repairs, taxes. insurance, etc... Old homes always have something that needs fixed. Plus, when it is all fixed up, won't you want to decorate and furnish it? Do you KNOW your SIL will sell you the house at a cheap price?
I WOULD NOT FINANCE/RENT/LAND CONTRACT the house. You can not afford to take a loss and even the best renters can turn a nice place into a dump very quickly.
I vote buy the house from your SIL......at 1,000 less per month - you will be able to save up $ pretty quickly, and have plenty of breathing room. If you renew your lease - that is $6000.00 that you could've/would've saved, plus, you will have instant equity in the house.....and if your SIL got it for so cheap, then what makes you think you can sell it for so much more??
OK I am a little late, been off MP for a few days but this is an interesting question. It sounds to me like you don't love this house or the question would be easy. you love the town that it's in, and you need a house, but if you LOVED this house you'd want it. ANd having a cushion of somewhere near $90K is pretty appealing. You don't say how old your kids are and how difficult it would be to move, but maybe the best answer lies somewhere in the middle. Try to get the house renovations done before your lease is done, move into the house and have it on the market as soon as it's ready, giving up the expensive apt. Maybe arrange a "rent/lease" agreement with the SIL. At the same time start looking for the house you really want, so you can sell the flip house as soon as it's ready.
I am with you, the profit as a nest egg is quite appealing. Of course, if you invest it in another house when you find the right one you won't have it, but presumably you will buy an even lest costly house and reduce your expenses.
these things are complicated
I kind of think that you haven't considered another option. What if you hired a company to take the management and day to day running of the house on and rent it out. They would keep the money aside for repairs and maintenance and their fees and then you all would split the difference every month for years and years to come.
Another option would be to carry the mortgage for another family to move in. Do a complete background check and check their credit. If and only if they pass do up a 20 or 30 year mortgage and the interest you would make would kick butt.
