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Need some perspective, short term vs long term

slugbug 1,379 568 September 12, 2015 at 07:44 AM
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Last Edited by slugbug September 12, 2015 at 07:46 AM
We have a ~100 year old duplex that we bought as our first home after getting married. We bought it for $45k instead of going more into debt for something that looked closer to our 'dream' house. We spent another $15k updating to 200 amp electrical service, updating the kitchen & bathroom on our side, and putting in new furnaces. I spent a lot of time replacing the old electrical wiring and water supply systems.

We got the place paid off, then moved to a better school district a few years back when our older children got to school age. We thought about selling the duplex, but decided to keep it for rental income. We got our current house for about $60k from HUD - had previously sold for over $100k back around 2000. However, we also had to put about $25k in repairs into the place. We liked it at first, but don't like the fact that it has 4 levels. (lots of stairs, difficulty keeping temp. uniform) We find ourselves wishing for more privacy, a few acres, etc. (this place has about 1/5 of an acre)

We refinanced our present house about 2 and a half years ago, going from 30 year to 15 year mortgage. At the time, this seemed like a really good idea because of the very low interest rates, plus the idea of paying a lot less interest. However, our mortgage payments went from about $430 to $870 (includes our property taxes) a month, which has put our budget under some stress, and is difficult to do some months.

Presently, we owe $66k on our house, and we are building about $300 in equity every month. We could just stay here and have our house paid off in about 12 years, while continuing to get rental income. That might be the smart thing. However, I don't think we would really be happy with that. My 2 older children will be teens soon, and I realized they will only be living with us another 7 years or so. For a few years I've talked about possibly getting a place with a few acres, but if we don't do it soon, the kids will never have memories of 4-H, livestock, a huge garden, etc. This means something to me, because I grew up on an 8 acre farm that was a remnant of the land my Great Grandfather farmed. I have a piece of the tree he carved his initials on up on a shelf in my garage. My kids would like to have sheep, treehouses, etc.

My wife is convinced that we need to stay here until this house is paid off - that we can't move until then, meaning that it isn't possible until our older 2 kids are moved out, basically. I think that we might be able to sell the rental unit, though I am not sure how people come up with a fair value for a rental property. I'm also not sure if that is the smart thing to do, since it was supposed to fund our roth IRA's for retirement - not become the deposit for a small 'farm'.

We don't have much of any $$ saved up right now because we pumped a lot of it into repairs of the rental property after a tenant had to be evicted last year. We also had a lot of car repairs, and bought a 'new' used car for my wife. Those things combined ate up most of the $20k we had in our emergency fund a year ago. With the south side rented out at $650 a month, and me currently working on spackling & such on the north side, (my sister rented there at ~ 1/2 normal rent until last month, long story) I'm pretty sure the duplex would give us $1,000 a month, so things would be looking up soon. However, it would take years saving that up before we would have enough for a down payment on any of the places I've seen that have ~3 acres or more near here.

Are there alternatives that anyone can suggest that might allow us to get moved sooner without having to give up the rental unit? The smart thing financially would probably be to wait and save it up, but I'm not sure it is the best thing for our family in this case. I wish we could just swap our current place for a place in the country, or sell this one and move right away, but I'm not sure how that would work out.

I've looked at several properties that had 2-3 acres, ranging from $40k to $75k. However, most of them were bank owned, and they wanted cash. Our duplex would probably only sell for about $45k to $50k - less than the $60k we have invested in it, and not a good sale price considering that it can give us $12k a year. Houses similar to our place here in the suburbs have been selling for about $85k lately. We currently owe $66k, so we have almost $20k in equity built up. If we sold both, we would have about $65k cash, but no place to live, which also doesn't work out well.

This would be a simple mathematical problem if not for a) needing a place to live right away after selling, and b) the time factor - kids are growing up, & will be driving before I know it....

If I want to get moved sooner rather than later, can you suggest any alternatives that I might not have considered? Thanks!

2 Comments

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#2
Aahhhh....wall of text!

TL;DR, what are you asking for? Spare us the tangents, please.
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#3
Have big emergency fund. You will sleep better at night.

Keep all properties you have cause transaction costs (realtor fees closing etc) always get less money at closing than you expected.

You inly go thru life once make sure you njoy the trip.

Don't write so much. No one wants to read war and peace.
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Last edited by tennis4789 September 13, 2015 at 01:10 PM
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