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I value your advice

May 9th, 2011 at 01:11 pm

My DS#1 will be out of college a year from August and DS#2 will finish high school next June and will be going to trade school for a year. Realistically, we can downsize our house pretty soon. I thought of something last night that I want your advice on. My friend who lives in Ireland will be renting her house permanently as of September. The house is located in the same town we live in and in a beautiful area of town. She would probably rent the house to us for $1600K a month + utilities. It is a very nice house with pool and all. Would it be ridiculous for us to sell our house and rent hers for a while until we find something to downsize to? Our mortgage is $1,771 a month, but does not include property taxes and insurance which are an additional $750 a month. We would be saving approximately $921. The only thing I mind is that we would no longer build equity for ourselves. Would you trade off the savings vs. building equity for a while? Our house would probably sell for $350K net to us and we owe a little over $234K on the mortgage. We paid $324,500 in 2003.
Please let me know what you think of this.

3 Responses to “I value your advice”

  1. monkeymama Says:

    I'd do it!

    What equity? Wink
    Actually, in California I have seen real estate shoot up/down $100k overnight. Literally. So, I would personally have more concerns about losing equity/getting priced out of the home market. Even in today's market. (We plan to downsize too, once our kids are out of college - or somewhere in there).

    That said, I think my concerns are unique. For most of the rest of the country, I don't think real estate tends to be quite so volatile. Even while renting, you can keep an eye on real estate and plan for your next move. For the most part, I really doubt you will be missing much equity. But a better opinion may be found from people who live in your region. I do think real estate is a very regional thing - and hard to give advice not knowing the real estate in your area.

    Anyway, if you are saving $750/month - that might be worth more than any equity gains.

  2. creditcardfree Says:

    I would do it!

    The money you are saving could be saved and considered equity growth. Assuming your house value stays the same, look at the amortization on your mortgage to see where your balance would be when you would go to sell. Likely you can easily save the difference your equity would have increased while you rent for that period of time.

  3. -Jerry- Says:

    I guess a lot of this decision leads directly out of whether or not you could sell your current place, because that can be a volatile market! Still, if you had some insurance that the place would sell, and you would be saving a grand a month, then it might well be worth it... especially if you like the house for rent.

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