Wednesday, August 27, 2008

Answering a Reader Question

In response to my post last week jb asked a couple of great questions: "So do you ever plan to rent the upstairs? Or why not just sell it and get something that you really like and is YOURS?" Thanks for asking jb! Here's the scoop:

I am currently renting the upstairs apartment. As I mentioned, the house is split up - 3/4 is the owner's unit and 1/4 is a one bedroom apartment. I do presently have a tenant in that apartment who is on a one year lease. In the past I have written about working on that apartment for her - fixing her refrigerator and toilet, for example. Her rent is $550. However, that money does not go into the "Getting Nine Hundred" pot. That money was planned into the budget - the $900 I need is over and above it.

The scary thing about having a tenant is that you just don't know how long they are going to last - even if they are on a one year lease. Leases have been broken before and will be again. If that should happen - I will need to get $1450 a month over and above my regular salary!! That's one of the many reasons I do what I can to make sure that I am a good landlord to her.

So, why I don't sell the house and get something I really like? Well, that is a little complicated. The house was up for sale from January through shortly after when I moved in. I moved in June 30th and I took it off the market the first part of July. Why?

Because in order for it to sell, I would have to take a fairly large loss. The house is in very good condition except for one thing - the paint. It is an old wooden Victorian built in 1847. It is a gorgeous but unfortunately, the former owners did a rotten job of painting it and now it looks as my mother so delicately put it, like an "eyesore." The paint is flaking and peeling everywhere. First impressions are everything and anyone looking at the house is going to notice the paint. Even if I price the home low knowing what it needs, a buyer is still going to try and under bid me - and frankly, I can't blame them - I would do the same thing! However, I have no interest in selling it for less than the mortgage amount. In fact, I'd like to go so far as to make a profit!

On top of that is the current market - things are stagnant right now. Housing everywhere is difficult. People are trying to hold onto their own homes rather than buying new. My house is in a great location; it is an area that is actually growing. It also has tons of features that make it a great investment, but in order to sell I am going to need to do a couple of things:

1.) Wait out the market a bit. My area is one of the few in the country that has a positive outlook in a few years, but still it is going to take some time. If I want to walk away without owing money, I need to wait for things to settle down with the housing market.

2.) I need to get it painted. I was fortunate enough at my garage sale to meet a painter who I would like to hire to do the work - but I just don't have the money right now. It is going to cost me $6,000 approximately, and I don't have it. However, if I stay in the home for a year or so and build up some equity, I will be able to take out a home loan for the amount and get the work done. This will be a case where spending $6,000 will effect the selling price by $10,000 or more.

Both my lawyer and my realtor recommended this plan - give it a couple of years, get it painted, then try to sell it. When the professionals you hire give this kind of advice what can you do, but take it?

I will say just one more thing on the subject. Trying to sell a home is stressful. So is moving and getting a divorce. When I moved in, I knew I was going to need time to unpack and get settled. Knowing that at any time there could be a showing was just too much to add to my already full plate. So, for the time being my goal is simply to make the house as much of my home as I can and wait and see what the next few years might bring.

Read More about Me and My House:

House Painting

Remodeling for ReSale

House Blues

Housing Woes Across the Country:

Home Prices Drop by Record Amount in Second Quarter

Photo of houses for sale and let by: I See Modern Britain


JB said...

Thanks for the in depth answers! So I'm guessing you have some savings to fall back on? What's your plan if you don't happen to reach your monthly goal one month?

Dawn said...

I can handle a few bad months with savings, but not too many!