WARNING: This is just one big brain dump. I'm a bit numb and need to regain focus.
Let's just break it down into digestible chunks:
1) I broke up with my boyfriend of 6 years last week. We haven't set his move out date, but it'll happen in the coming weeks. It's heartbreaking, but it's the right decision.
2) 3 weeks ago management hinted that my company is possibly heading towards layoffs.
3) Need there be more?
I'm thinking of hiring a financial adviser to get me through the next few decisions.
THE HOUSE:
As it stands, I own a 1978, 3 bed, 2 bath, 1200 sq ft house with a pool/hot tub. Purchased for $280k, 10/01/04.
Mortgage: $214,470. 5.75%, 30 year fixed.
Equity Loan (obtained 05/2006): $41,260. 6.99%, 15 year fixed.
I cannot live in it alone,it's just too big for me to maintain, and the monthly bills would leave me scraping by each month...and I'm not going to do the roommate thing. I don't want to sell it as the market just bites right now and I would not only lose most of my original 20% down payment, but every other dime used towards improvements (carpet, appliances, landscaping) in the last 3 years. So the logical step is to rent it out. Actually, hire a property management company to do the dirty work as I am in no way ready to be a functional landlord.
BUT...the house still needs work. An electrician to install fans in 3 rooms, need a fence put up between my front yard and the neighbors, need to finish sprinkler install in backyard, need to add plants to both front and backyard (right now two big brown dirt patches), re-install carpet in one bedroom, and repaint exterior trim and garage.
The good news: I just received an unexpected $20,000 gift.
OK. So. Do I spend a good chunk of that money to do all the fixes I need to prep the house for renters? I doubt I could get $2025 monthly for the place (my minimum mortgage and home equity payments), but I am prepared to eat the home equity payment each month and have the place get rented out for $1620 (plus mandatory pool service...spent too much money renovating that thing to let some renter ignore the upkeep). Then go rent a nice, affordable apartment, and use the rest of the money to pad up my emergency account for any home repairs/unrented months/possible unemployment. Is it totally retarded to be renting out my house while I rent myself??? This seems the safer option.
OR, do I use the entire amount, plus sell off $21,000 worth of my stock portfolio, and pay off the entire home equity loan? I would still need to fix up the house pretty quick and wouldn't want to dip into my E-fund, so money would be pretty tight and I'd probably have to stay in the house longer, until I raise the funds each month to complete another project.
About my job. Yes, I could go find another, but I love love love my company and the people I work with. No definite layoffs, but I know we're going through a re-org, and my group might be affected. I know I'm being too sentimental about this as I could get more money at a new job, and also probably find something closer to home (my current job is 40 miles away...hello gas savings).
Ugh. It just seems so huge.
Massive, Scary Life Changes.
October 6th, 2007 at 11:12 pm
October 6th, 2007 at 11:36 pm 1191713787
October 7th, 2007 at 12:37 am 1191717429
October 7th, 2007 at 03:53 am 1191729223
You might love your job, but if your company is thinking about layoffs, they might not love you so much. At least look around and get your network going. Better to activate it now than during the whisper period and the 60 day notice period. And a few members of your network can give you good advice on the other pieces.
It could be me, but I think it is a bit retarded to rent it out and rent yourself. At best, I think its a wash - even if you get a renter to cover the mortgage, and you pay rent on your salary, you are in a more fragile position than before. Now you are dependent on you keeping your job and getting a decent responsible renter and your renter keeping his job.
A roommate is a scary option, I agree, but financially its the better one. The roommate can defer expenses and you are not paying twice. Perhaps a non-total stranger as a roommate?
Some of the projects you've listed can be yourself, and that might save a little bit of money. That does depend on physical ability and desire to learn to DIY.
October 7th, 2007 at 01:24 pm 1191763466
October 7th, 2007 at 04:37 pm 1191775078
Job Situation: My recommendation would be to keep your head down and stay focused on doing your job well as much as possible. Try to tune out the water-cooler chatter about layoffs. The company is going to do what it is going to do, and there may not be a lot you can do about it. Focus on what is under your control. What I would do is check your employee benefits handbook (if you have one) to see what sort of severance package you would be getting if you were laid off. Also, if you are not familiar with your state's unemployment compensation benefits, I would call that agency to find out what you could expect to receive if you were laid off, how long you would have to wait to receive benefits, etc. That way, you will have a clearer picture of where you will stand financially if you are indeed laid off. Finally, I would brush off (update) my resume and start networking with people in the field, but not actually apply for any new jobs yet (since you may end up keeping your job).
House Situation: This one's tougher to give adive on, not knowing where you are or what the situation is in your local market. As others have suggested, rethink the roomate thing ..... Is there a family member or someone from work who might be looking for a place to live? You said the place is too much for you to maintain; is that physically maintain, financially maintain, or both?
October 7th, 2007 at 07:42 pm 1191786159
Sorry, didn't mean to yell at you. It's just that people always think being a landlord is a no brainer where you can just sit back and collect checks. I wish it were that easy.
Anyway, Baselle is right - you're already in a property that you own. Why muck things up more?
If you really can't stand the thought of a roommate then you'll have to come up with some creative ideas to generate cash like maybe renting out your garage or boarding dogs for vacationing dog owners. Of course, these may or may not be viable options but one idea can lead to another so allow me to get the ball rolling. LOL.
Sorry that this is happening to you all at once. We've all been there. Good luck with whatever you decide to do.
October 8th, 2007 at 04:27 am 1191817634
The current cost of maintaining the house (mortgage, equity loan, utilities, services, maintenance) is $2600 a month. Add my personal costs (gas, food, pet, personal maintenance), and that's up to a minimum of $3000 a month. Which leaves $100-$300 a month breathing room. Which is way too close for me to sleep at night. The toilet that keeps threatening to leak, a broken lawnmower, the crack in my windshield...any one of those would leave me struggling.
The house is too big for me to maintain...I work 12 hours a day, no time to clean, come home and tend the garden, maintain the pool, and get projects done. It's just too big.
Selling would guarantee I lose a huge amount of money. Renting it out, then myself renting a small apartment ($900 a month plus utilities at a MAX of $150), seems to be doable.
And of course I maintain my emergency fund for housing issues such as fixes, evictions, maintenance. That's a given.
October 8th, 2007 at 03:30 pm 1191857426
October 23rd, 2007 at 03:18 am 1193109532
I hope things are working out so far.
If I was in your shoes, I would sell the house. To me, renting out is a "business venture" not a "safety net", and it sounds like you need safety more than venture right now.
But that's just me. Either way, please take care.