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August 18, 2008
Selling My House
Hi!
Kinda need some advice here...
My husband and I are contemplating selling our 4 story (duplex upon duplex) building. we live on 14th street close to 7th avenue. We bought the place in 2003 for $850K and put about $30K worth of work into it. We have about $600K left on the mortgage, so ideally we stand to walk away with about $600K in cash from the sale.
The house is in very good condition with many amenities.
Anyway, we are finding it harder and harder to make ends meet and we feel this might be a good time to sell it. Frankly, we feel we could have a better quality of life if we didn't own and simply just rented in park slope.
Just wanted to know your thoughts. I know everyone's dream is to Own - but am seriously not feeling that way now as we simply can't afford having a life.
Thanks!
Comments
Have you considered selling and buying a smaller place, perhaps an apartment that requires less upkeep? I ask because we just left Park Slope and bought an apartment further out due, in part, to the relentless upward trend of rents. I suppose they could go down, but if your concern is a financial one I think it might make more sense to lock in your housing cost with a mortgage on a smaller place instead of subjecting yourself to the whims of landlords and the rest of the hassles of the Brooklyn rental market.
Also, look around at what apartments of the sort you'd like to rent are renting for *now* - not, say, what your friends pay who have been in their place 3 years. I thought my rent was expensive until I started looking at other similar places - turned out we were wayyyy under market for where we were - we were just lucky that our landlord liked us!
Posted by: hangonsloopy2 at August 18, 2008 1:57 PM
As husbands are fond of saying, "there's no harm in looking." Check it out, talk to a broker, see what they think you could sell it for, and run the numbers. Ultimately, owning a house is something people do to make their life better and not worse, and if owning is making yours worse, get out. Since there is a fair amount of money at stake, maybe it would make sense to speak with a financial advisor. For a fairly small cost relative to the total transaction, they could show you what your financial situation would be like owning vs. renting, the real info you need to make a good decision. In the end, if you feel more comfortable renting, then do that. My biggest fear is that you may not like what's on offer when you look at rentals.....
Posted by: slopenick at August 18, 2008 2:17 PM
eff what 'everyone's dream' is....if owning doesn't make sense for you at the current time them sell.
You're young and flush with cash, just preserve and invest it wisely. The hardest time doing anything is the first time....you'll be back.
Posted by: moreteasir at August 18, 2008 2:19 PM
There is nothing wrong with admitting that you can't afford something. Whether you own a smaller place ( a 4 story home is a lot of work, especially if funds are tight) or you rent until you are in a better financial situation - you have to do what works for your family, not what anyone else wants.
Posted by: Mrs. Limestone at August 18, 2008 2:26 PM
That's pretty good advice. I don't know if you have kids or how much space you require. Also don't know what you monthly nut is (I'm guessing you're paying around 4k for mort., plus taxes, utilities and upkeep: so around 5k a month? Offset by rent of what?).
If your goal is to have more spending money but still stay in PS as a renter, you might have difficulty doing so if your monthly cost to own after taxes is 3k or less. Seems like any 2 bed rental is going to be around that or more.
If you're not too concerned with keeping as much of your cash liquid as possible, you might consider buying a 2 br in Prospect Heights. Seems like I've seen some nice ones for under 700k. If you put down 400k, your mortgage would be around $1700 a month; so depending on what your maint. is you could wind up with a monthly after tax cost of 2k or so.
Posted by: Bolder at August 18, 2008 2:26 PM
ahh - thanks to all so far
it's really a big weight on our heads as I feel torn as to what's the right decision for us is.
Hangonsloopy2 - we ran the #'s and unfortunately we couldn't remain in PS or PH if we bought a condo as our mortgage would be high and we wouldn't have a tenant paying more than half that mortgage.
MY father had passed away and left me with a nice inheritance, I did the responsible thing and bought a house with the money 5 years ago, however am having my doubts as to how I can keep this going.
I agree too - we should talk to a financial advisor and invest the majority of the proceeds wisely!!!
Posted by: gemini10 at August 18, 2008 2:47 PM
This is a odd post. Why dont you sell and move to a cheaper neighborhood? Its your decision to live in PS where real estate and everything else is highly priced. Had you invested your inheritence in a less expensive area you would be all set. Now you will loose all the money because you paid all that interest on your mortgage over the years...
Posted by: nybk01 at August 18, 2008 3:14 PM
nybk01- how do you figure I lost money when I will be walking away with over $600K in cash as the house can easily sell for 1.2 million and I bought it at 850K with a $230K downpayment? I say that's a pretty good return.
The one thing we know for sure is we want to stay in PS. My husband grew up here and we know this is where we would like to raise our own kids. I think I made a wise choice by buying a house in a nabe where I will make a solid return on my money, had I invested that money for instance as you suggested in a less expensive nabe, I probably would have a tougher time selling my house
Posted by: gemini10 at August 18, 2008 3:32 PM
Hi there gemini10,
Would you be willing to post your email so I could contact you off-list? We are actually in the market for a house in PS, and we like the location of your house, the budget sounds in the right range for us, and we are very well qualified buyers. It could also be mutually beneficial to cut out the broker (you save a bundle on commission). We'd love to know more about the house!
Thanks -
Posted by: Miss Muffett at August 18, 2008 3:49 PM
Miss Muffet -you can contact me at christineb1975@hotmail.com
Posted by: gemini10 at August 18, 2008 4:58 PM
Gemini10, not really. Housing sales in Bay Ridge are still pretty strong thanks mostly to the fact that you can find a large, comfortable, move-in-condition home for sub-seven figures here. Know who's buying them? People much like yourself -- homeowner's from trendy, hyper-expensive neighborhoods who still want to have a nice house and a bunch of cash in the bank afterward.
Posted by: Steve at August 18, 2008 7:13 PM
I don't quite understand. Are you having trouble making ends meet with your current mortgage? Are you renting one duplex? I trust that you are. I guess I am not seeing how it is going to be less expensive to rent than to pay half your mortgage. If you do not rent half than how 'bout it?
$1.2 minus $850k is 350k not a 600k return. So you have paid down 20k in principal and have 600k left. You are going to have 600k liquid. Your rent is probably around $3500/ month. I
f the house is really too much to bear than perhaps you can rent it (both duplexes) and use the some of the money to live outside the house to see how it feels. It seems like you could easily put close to $3500 into rent and you would nothing to show for it. (I know- there are property taxes and other costs). But wait, if you are splitting this rent with a tenant and are paying 1/2 or even $2000., you will have a hard time finding rent that cheap.
If you feel absolutely certain that you do not want to live in the house, sell tomorrow because the housing market is getting worse everyday. If you are unsure- stay with it. You have a house that will, in the long run, be a great investment. If you move and decide to rent, you could buy in a couple years at the bottom of the market and actually benefit from this troubled economy. My only advice in that scenario is to be very careful with your 600k. Put it someplace very safe.
Good luck to you.
Posted by: superstooper at August 18, 2008 8:55 PM
If your money is stretched too tight any emergency or loss of a job for an extended time would put you in serious debt and you'd be left with no equity in that house. I've always owned not rented most my adult life even in my 20's and yet still I absolutely believe it's better for people to rent and put savings in a savings account (or in your case not spend the $600K), than be overextended financially owning a place.
Posted by: traditionalmod at August 19, 2008 9:53 AM
Gemini10 I'm with Steve on the benefits of housing in Bay Ridge (I am biased of course). It would be easy to find a beautiful limestone in a convenient area for $800,000. Put down $550k, have a nice small mortgage of $250k, pocket the $50k difference and own a home to yourself without dealing with tenants or having a landlord raising your rent.
Posted by: setancre at August 19, 2008 11:34 AM
Traditionalmod: I agree with you wholeheartedly. I rent rather than own and put the extra $$ that it would cost me to own in savings. It is very comforting to know that if things go upside down in my life I have a rainy day fund and my biggest exposure is getting out of my one-year lease (for an easy-to-rent apartment). I strongly believe that the culture of ownership has caused a lot of people to make bad financial decisions in the past few years. Renting comes with a lot of freedom. With prices where they are, it is a lot easier to meet traditional financial goals as a renter. Everyone has just gotten so caught up in the myth of home ownerhship.
Posted by: lechacal at August 19, 2008 11:42 AM
My 11:42 was of course not helpful to the original poster. Gemini10, if I were in your situation I would go ahead and sell now. The market is not good, but it could be a long slide down until it hits a bottom, and it may be better to bite the bullet and get out now while you still have a choice than sell into the bottom when you no longer have a choice.
Posted by: lechacal at August 19, 2008 11:57 AM
Of course you could always buy something for cash in Staten Island =)
http://newyork.craigslist.org/stn/reb/803398984.html
Posted by: setancre at August 19, 2008 12:02 PM
Thanks so much to all of you for posting and giving me SOUND advice - Seriously - I appreciate this all so much!
Also, thank you to all who emailed me off the board inquiring about the house and sharing their personal stories - if I do decide to sell it will be in mid-late Fall. - I will keep in touch
Posted by: gemini10 at August 19, 2008 1:30 PM
Another possibility would be dividing the building you currently own into two condo units. You'd have to consult with a lawyer, which wouldn't be cheap, and--if you like your current tenants and they are viable financially--you'd have a built-in probable purchaser. I think you'd get a decent return--but it would allow you to stay in PS.
Posted by: Minmin at August 19, 2008 1:54 PM
Minmin- that's a VERY interesting idea - I never thought about that...
hmmmm - will def. contact my lawyer and see what would be involved.
Posted by: gemini10 at August 19, 2008 2:17 PM
If there be 2 duplexes, why not sell 1 duplex for $600k & pay off your mortgage. Make sense, no?
Posted by: PropJoe at August 19, 2008 3:27 PM
Beware of the condo coversion. I thought it would be a good idea as well, and am just finishing one that was started in 2005. It was an absolute nightmare and cost a fortune.
Posted by: egypt at August 20, 2008 10:42 AM
I just bought an 1898 Victorian in Bay Ridge for under 1 Mill...I have a huge back yard...big enough for an inground pool that we will put in next Spring!
Posted by: nybk01 at August 20, 2008 12:21 PM
Egypt--If you don't mind, could you give us a ballpark figure on how much the "fortune" was in your condo conversion"? Also, what made it a nightmare? Was this just the lawyer's fee or did it involve any renovations as well. I don't know anybody who did this in NY, but I do know people in California who bought as "tenants-in-common" and then did the condo conversion. I would think that that could be a trickier situation, since both 'T-i-C' would probably want to maximize their investment. Gemini10 already has an apartment in her house, so renovation costs would probably be minimal.
Posted by: Minmin at August 20, 2008 8:48 PM
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