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sinking house
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| posted by beautyqueen 66 days ago |
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How about a real problem for you financial wizards out there to consider. Bought a house at the top of the market in New York five years ago in a nice village 15 nins outside the city. Moved out of the house two years ago and finally rented it out after the house sitting empty for four months with no income to cover the hefty mortgage. Rent covers only 2/3 of the mortgage but with tax deductible mortgage interest it breaks even. Now the tenant is leaving and am now presented with a dilemma: rent again or sell?
Rent again: rental market is worse than resale market and though the rent is favorably low for potential tenant given the value of the house, it's still very expensive so it may take even longer this time round to find another tenant with bigger loss in income.
Sell: It's been reported that homes have lost an average of 15% in value in some areas in the US in just one year. It's not happening in New York but it's been dropping. Sell it and lose a huge chunk of cash? Wait it out but the cost in the meantime won't nearly justify any potential increase several years down the road. They are saying it will take at least another two years to see the trend reversed.
Any brilliant ideas?
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| posted by T Bone 66 days ago |
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What is the name of the Village?
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| posted by adfundum 66 days ago |
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Apart from the obvious "buying at the top of the market" quip...:
Shouldn't your decision largely depend on your personal plans for the future, rather than just financial considerations?
If this house is in the village were you intend to return/retire after your stint overseas, then keep it.
Rent it out again, and be grateful that your mortgage is at least partially subsidized, and wait for the market to recover.
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Even sick puppies need love...
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| posted by beautyqueen 66 days ago |
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The real estate market peaked 5 years ago so everyone bought at the top of the market and thought it would continue up.
As much as I love the house and village I won't be going back. Whereas there was a family now it's just me and it's a very large house (over 6000 sqf), lovely but almost 100 years old which means lots of maintenance. The best feature of the village is that it doesn't allow large businesses so we only have nice little mom and pop shops; the flip side is that almost all tax $$$ comes from residents to support all schools etc, as a result we have extremely high property tax that for my house at least is as much as an average US household income. So yes, I need to base the decision on financial considerations alone. I plan to get an apartment in the city and a much smaller house upstate later.
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| posted by tiger lily 66 days ago |
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ah, a dilemma indeed. I like to share my experience.
After I immigrated to Canada I still had my fully furnished house in North London. It was emptied for a few months and had got broken in from the back bathroom window, some Hi Fi equipments were gone.
I took a trip back to London and decided to let the place to a couple in need. Friends . They asked for low rent, I thought it would be beneficial for both parties, as they would treat it like home and I trusted their honesty and all .
The first year went ok besides that there was a dry rot under the floor board. I paid thousands of pounds to get that done and waived some rent for the period of inconvenience. My weakness had shown that I didn’t keep track on financial matters, they started paying arrear as they claimed to have forgotten . Was ok for me.
Later they did not pay all together for a few months. That was not ok for me.
I went back to London to discuss the problem I had with them. The house was in a total mess. They had a dog, the door ways were all scratched. The carpets were ruined …it was upsetting to see that. ( on the so called contract, no pets were allowed.)
I also discovered , the place was well lived by other members of their family together at one stage.
I had the desire to sell knowing that I would not go back to England, and London housing was going up. The woman wanted to buy the house but wanted a good deal and depreciated the price to under Market Value. Looking at the state of the house I reckoned I had to spend over 10 thousand pounds the least to get it redecorated to selling condition . With direct selling to her, I saved the agent fees too.
I weighted the outcomes.
In the end, she got the house. I got my relief . The woman was appreciative. The man was bitter with me. Good grief……..
Now thinking back I could have taken the house back . And waited for the price to go triple in just 2 years ( hadn’t anticipated it had gone up tremendously since.)
But at that moment I was not tough enough to move them as the woman appeared to be vulnerable . And I was both physically and mentally feeble to deal with the chores.
That’s it. I considered the experience one of my nightmares.
When the power of love overcomes the love of power the world will know peace.
-Jimi Hendrix
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| posted by keymaker 66 days ago (edited 66 days ago) |
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quote:
Originally posted by T Bone
What is the name of the Village?
Hahahahah...
you freaking TOOL!
I need people to buy high, sell low.
Caution: this post contains content that might lead to unrealistic expectation in real relationships. keep out of reach of immature people.
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| posted by Load Toad 66 days ago |
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quote:
The real estate market peaked 5 years ago so everyone bought at the top of the market and thought it would continue up.
'It's sheep we're up against' - The Housemartins.
Average by Intention.
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| posted by adfundum 66 days ago |
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BQ> Some of the things you mentioned obviously change the situation. To be clear; I was not trying to be sarcastic or condescending, but we're living in a town here that floats on real estate, and landlords/R.E. investors/developers here generally deserve very little sympathy.
Can't do the math for you, as I lack the background and knowledge. I'm sure there will be other voices here that can advise you with more authority.
It does sound like a catch-22 to me though. IMHO: If you sell now and take your losses, you'd need to buy again (the apartment you mentioned) pretty quickly to make sure you don't get shafted once again by a possible market upturn later...
Lily> I hear you, been there done that...
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Even sick puppies need love...
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| posted by Load Toad 66 days ago |
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Oh - sell the house - it's a grief magnet and you can take the cash and buy summat else.
Average by Intention.
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| posted by adfundum 66 days ago |
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quote:
Originally posted by Load Toad
quote:
The real estate market peaked 5 years ago so everyone bought at the top of the market and thought it would continue up.
'It's sheep we're up against' - The Housemartins.
Hong Kong is full of people who thought the bubble would never burst.
Anyone remember 1998 ?
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Even sick puppies need love...
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| posted by Paps of Jura 66 days ago |
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sell and buy something else soon after that you plan to live in
Dib Dob nib knob
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| posted by Zebedee 66 days ago |
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You don't mention whether you have positive or negative equity in the house, which can make the difference whether you decide to sell or not? If you have positive equity, even though it may be reduced from a year ago, my opinion would be to sell it, particularly if you're not making buckets on the rent and it is costing you from a maintenance viewpoint. If you have negative equity, it's a painful decision whether you can afford to bail out and stump up extra cash to pay off Mortgage?
I belief that property, in particularly US and UK, is in for a 5-10yr down cycle - a very general statement, that doesn't necessarily mean every property, as some unique property in unique locations will always hold their value. I think there is a lot more bad news to come, which may take 12-24 months to come out (former HSBC Excutive ELDON warning Credit Card Crisis is the next one later this year i.e. people been using Credit Cards to cover Mortgage Payments, which is only very short term credit - it just prolongs the inevitable), and even when it all pans out, it could be several more years before confidence is regained and things pick up. I find it amusing people seem to understand 15yr boom cycles and then expect 1-2yr turnaround to good times, not many people seem to understand 15yr down cycles that can suddenly creep upon us in 1-2yr period - these things can happen !
Whatever...
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| posted by AKA 66 days ago |
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set fire to it, and claim insurance
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| posted by beautyqueen 66 days ago |
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Set fire to it? That's a thought...except I do love that house and it's got some real nice history.
Zebedee, I have postive equity on the house but it pains to think with all things considered--the renovation cost etc--I will end up losing money. But you are probably right, I should put it on the market. I understand what you mean by down cycle but every expert is predicting that it will bottom out and stablize no later than 2010?
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| posted by Paps of Jura 66 days ago |
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Yeah but what does bottom out mean ??? way below what you paid for it or what ??
Dib Dob nib knob
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| posted by beautyqueen 66 days ago |
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Way below what I paid for? Thankfully not but yes for many people.
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| posted by blowfish 62 days ago |
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U're infact between a rock & a hard place.
US realestates is not going to go places for a while, if it were in Vancouver u could sold it ove many times.
Sometimes is better to cut loss & walk away.
Asbentee land lord seems to get screwed coming & going.
Only way to make such a big house work is rent it out as rooming house. But u need to carry AK47 to collect any rent.
Torch it is another option, but nowadays is not easy, Ins co are very very slick, they could deny your claim ask u to sue them.
Even the cops couldn't prove arson. Fighting with them on iffy case is less painful to hit your head hard against the wall.
Seems to be always that way, once u've walked the value do go up.
Wsh I had hang onto stuffs n Van too, it went up few hundred %. Slum area houses used to go for 200, now worth 600.
But when it comes down like a ton of brick I no need to duck either.
The US sub-prime market is turning uglier by the day, high oil prces added fuel to fire, the big 3 n Detroit are almost both feet in the grave, except Ford is showing some sign of life. GM & Chrysler are both having wild parties with Barbarians inside the gate. Is matter of choosing chpt 7 or 11.
Indians were circling all our wagons, all chanting their war dance, waving the Tomahawks.
We need John Wayne the Duke & Charleston Heston our modern day Moses / NRA president to lead us out of the sea of red ink.
Home of the 5,8 cylinder.
My bro has 3,4,6 cylnders.
Arrividerci Vancouver!
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| posted by blowfish 62 days ago |
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U're infact between a rock & a hard place.
US realestates is not going to go places for a while, if it were in Vancouver u could sold it ove many times.
Sometimes is better to cut loss & walk away.
Asbentee land lord seems to get screwed coming & going.
Only way to make such a big house work is rent it out as rooming house. But u need to carry AK47 to collect any rent.
Torch it is another option, but nowadays is not easy, Ins co are very very slick, they could deny your claim ask u to sue them.
Even the cops couldn't prove arson. Fighting with them on iffy case is less painful to hit your head hard against the wall.
Seems to be always that way, once u've walked the value do go up.
Wsh I had hang onto stuffs n Van too, it went up few hundred %. Slum area houses used to go for 200, now worth 600.
But when it comes down like a ton of brick I no need to duck either.
The US sub-prime market is turning uglier by the day, high oil prces added fuel to fire, the big 3 n Detroit are almost both feet in the grave, except Ford is showing some sign of life. GM & Chrysler are both having wild parties with Barbarians inside the gate. Is matter of choosing chpt 7 or 11.
Indians were circling all our wagons, all chanting their war dance, waving the Tomahawks.
We need John Wayne the Duke & Charleston Heston our modern day Moses / NRA president to lead us out of the sea of red ink.
Home of the 5,8 cylinder.
My bro has 3,4,6 cylnders.
Arrividerci Vancouver!
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| posted by Gimpmask 62 days ago |
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So the house is not really sinking then......
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Having testicles is like being chained to the village idiot.
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| posted by blowfish 62 days ago |
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if it were real sinking she could get ins to pay for it.
Real sinking Castle only exist in Monty Python.
Home of the 5,8 cylinder.
My bro has 3,4,6 cylnders.
Arrividerci Vancouver!
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