life planning/real estate advise

[tenax]

I"m with you, Sean..i'm a pretty versatile handyman and the wife thought it no obstacle to having a rental place for me to do the work (what she calls "a boy job") but it sure was a consideration for me as i didn't want service calls at all hours and such from renters. i use a property management company who take care of many situations like this, have trades if needed contacted. unless it's between 9pm and 6am, as specified by me, they will contact tradespeople directly but i get the deduction for the "contracting" of them. the price varies considerably for property management companies so be forewarned if you go this route to get good references and ask questions. but get a good company, and it really does make the rental proposition painless.

[sunofthebeach]

Thanks for all of the information so far.

I guess I do need a financial advisor. I cant really figure out if I can even make the larger mortgage payment and I certainly cant predict what my housing situation will be like in 12 years with the new house.

To add some more information.

The real estate boom is over, there are a lot of houses on the market right now. Last month was the first month the market experienced a decline in price. 15 months ago, houses sold in less then a week now there are many listings that are 90 days old.

I am sure that in 12 years my neighborhood will give me a low quality of life. I don’t think staying is an option.

Maybe I am just getting old and teenagers with loud car stereos that dress like thugs annoy me more then it did 10 years ago.

I don’t know.

[tenax]

sounds like your average college renters

[Jeffski]

You should never have a mortage payment that's almost half of your monthly income. I would highly recommend staying put. I just think selling your house in a slow market is a bad idea especially when you're looking at buying a more expensive house at a higher interest rate.

[Jeffski]

BTW, how bad can the neighborhood be if it has $400,000 houses in it?

[sunofthebeach]

BTW, how bad can the neighborhood be if it has $400,000 houses in it?

My $400,000 house is 2300 sq ft brick front no basement on 1/3 acre. 1200 sq foot town houses go for $200,000 and the older 820 Sq ft Split foyers go for $330,000. All of the houses are way over priced, but they keep selling.

The mansion I plan on buying will probably be a 2600 sq ft house with a basement on an acre.

The cost of living here is outrageous.

[dawndenise]

I strongly second Poconos' advice to talk to a couple of financial and legal professionals.

Renting out your primary residence and then selling it at a later date has significant tax consequences, depending on when you do it, especially since you say it has appreciated 100%. Even with the neighborhood and town going downhill, you may still have an "a s set" that's appreciated substantially whenever you do decide to sell.

Go talk to the pros.

[sunofthebeach]

You should never have a mortage payment that's almost half of your monthly income. I would highly recommend staying put. I just think selling your house in a slow market is a bad idea especially when you're looking at buying a more expensive house at a higher interest rate.

The numbers were take home. After paying the mortgage I would still have $4000 left. I think about when I first bought the house in 1992 I had a 30 year 8% mortgage. It took all of 2 take home paychecks to pay the mortgage and the family had $1600 left over each month from the other 2 paychecks to spend. We were house poor, but we got throught it. It seems like it will work on paper, but I have $5000 left over every month right now after paying the mortgage and I can't seem to save much money.

The slow market seems relative to me, I may get 10 to 20 thousand less selling my house, but i should be able to make in up when I buy another house.

I change my mind on what I am going to do every couple of hours or so.

[SeanB.]

Well, if you aren't in a big hurry you could try a little experiment. Figure our how much your new payment would be, with taxes and insurance. Then, when you make your current mortgage payment, put the additional amount aside in a separate savings account. Do that for a few months and see how comfortable you are with the higher amount. After three months, you'll either have some extra money toward a down payment, or a little extra savings.

One thing to consider though, is how much money will you end up spending on private school if you stay put? Whatever amount that is, would have to be factored into your planning if you want a real cost comparison of staying versus moving.

As far as not saving too much of that extra 5k a month, you know the saying..."People spend what they make." If you have more of your discretionary money already committed to something like a better house in a better neighborhood, or private school, that's just money you won't be blowing at the mall or on other more frivolous things. JMO, but the money I spend on my kids, always seems to give the best dividends. I don't think you could go wrong making some sacrifices to provide a better home and school environment for your kids.

Good luck with whatever you decide. BTW, what part of the country are you in? Here, south of Houston, a 300k+ home will get you into about a 3,000 sq ft home in some pretty nice neighborhoods with good schools, amenities, etc.

[sunofthebeach]

Good luck with whatever you decide. BTW, what part of the country are you in? Here, south of Houston, a 300k+ home will get you into about a 3,000 sq ft home in some pretty nice neighborhoods with good schools, amenities, etc.

I am about 20 miles from Washington, DC.

I hope to capitalize on the high cost of housing in aout 12 years when I retire and move to a different area where I may be able to get a house for $200,000.

That is a good Idea to live like I am making the mortgage payment to see how it feels.