Old house or new house

Discussion in 'Financial Cents' started by oil pan 4, Jul 25, 2017.

  1. oil pan 4

    oil pan 4 Monkey+++

    The old house is paid off, 2 small bed rooms and 1 I would call normal, a small full bathroom and a real small bathroom with shower, on a half acre and on the edge of the city.
    It could work.
    Would be perfect to ride out another 2008 economic down turn or marginally worse since it's paid off and the taxes are less than $300 (yes three hundred) per year and I can continue to hoard money and buy gold and silver.
    Worse thing about it is it has easy access to a major road, makes it easy for crack heads to steal stuff.
    I want to keep it and rent it out since it's only worth 20,000 to 25,000. And as a economic shtf fall back.

    The new place is a pocket listing, belongs to a friend of ours. We may have up to a year to get it. So no rush.
    The worse thing about it by far is it's cost is $180,000, it supposed needs a lot of work and I haven't seen it yet. I just hate the idea of owing the bank that much money again.
    But it seems has everything going for it other wise.
    A big house 4 bed rooms, 2 full bathrooms, on 20 acres, has a well, it's out of town, might be able to shoot guns.
    It's just me an my wife at the moment and it looks like our family will be growing here soon and that size is perfect for the proposed expansion.

    If it doesn't need a tremendous amount of work and its as far out of town as i think it is I am probably going to get it.

    What do you think?
    Last edited: Aug 5, 2017
  2. Mindgrinder

    Mindgrinder Karma Pirate Ninja|RIP 12-25-2017

    If you can rent out the current place for the majority of the mortgage payment on the new place - seems like a no-brainer.
    (provided it's not going to cost you huge $ to fix up the new place into "livable for now" condition.)
    Obviously you should get the well tested and determine if you can make some side $ off the acres.
    Any wood you can harvest?
    Right climate for apple or nut trees for 2nd generation?
    Far enough out of town to legally hunt on?
    Stuff like that comes to mind....

    Best of luck! In my AO - $180,000 wouldn't even get you a card board box on gravel campsite.
    Last edited: Jul 25, 2017
  3. DarkLight

    DarkLight Live Long and Prosper - On Hiatus Site Supporter

    $180k to include 20 acres? That would be hard to pass up. I'm on. 1/8 of an acre now in suburbia in a 2400 sq ft 5 bed 3 bath two story and comparables are $195-220k.
  4. Ura-Ki

    Ura-Ki Grampa Monkey

    hard choice my friend, but I agree with Mindgrinder, the new place seems to have a lot of good going for it, and the old place could help off set the mortgage some what! With a planned addition, your going to run out of space pretty quickly, and is the current AO even suitable for that? JMO
    sec_monkey and Tully Mars like this.
  5. Merkun

    Merkun furious dreamer

    Is this an income property, or a plan to relocate? From what I can figure, you are fairly well set up where and as is. Methinks if you are moving, testing concrete mixes is apt to end.
    sec_monkey and Ura-Ki like this.
  6. Dunerunner

    Dunerunner Brewery Monkey Moderator

    Being a landlord is a PITA. Good renters are rare.

    That said, you have to do what you feel is best for you and yours....
  7. oil pan 4

    oil pan 4 Monkey+++

    The current, paid off, small house in the city would become the income property.
    But it's only only rentable for $500 to $700 per month.
    This place on 20 acres would be the primary residence.
    But that does give me an idea. I could potentially add a rental property to that 20 acres.

    The 2 properties are separated by maybe a 30min drive.

    I have already had renters trash a property in my 2012 financial reset.

    I think for the place we own in town I would, prep the place for renters, rip up the old carpet, put down water tight flooring, insure it for renters, have the renters cough up first month, last month plus $2,000 security deposit.
    If they can come up with that then they might be worth taking to court for damages.
    Last edited: Jul 25, 2017
  8. techsar

    techsar Monkey+++

    Taking on such a large loan at this point is IMHO rather risky....now if you were to pay cash, it'd be a different story :)
    sec_monkey and Ura-Ki like this.
  9. Merkun

    Merkun furious dreamer

    Agree, tho' the risk is mitigated somewhat depending on equity. That said, cash on the drumhead is a superior negotiating position.
    sec_monkey and Ura-Ki like this.
  10. Tevin

    Tevin Monkey+++

    I don't know if the new place is a good move for you or not because I don't know your situation.

    However, I can say as someone who does all my home repairs and upgrades myself, buying a house that "needs a lot work" is not for the meek nor the poor. This is especially true if you are employed full time.

    Any house that is more than 10-15 years old is going to need some kind of major fixes unless the previous owner was extremely meticulous. Very few homes other than new construction are "move-in ready" and need zero work.

    Even if you are handy, you'll still need the time to do everything. I just finished remodeling a half bath. Totally gutted and replaced everything, floor to ceiling. A full time pro could have done it in 7-10 days. It took me a little over three months, and that was with a relative coming over to help a few times! I do have a "real job" so construction work was limited to evenings and weekends and vacations. The good news: I saved several thousand dollars over what a pro would charge.

    If you DIY any large projects, accept that the place will be torn up for a long time unless you are retired or can otherwise commit the hours without interruption.

    I personally enjoy home improvement stuff, but having time to do them is a huge issue for me.

    Secondly, being a landlord is not a casual hobby. Don't simply expect to collect a check every month and let things roll. The place will still need the same upkeep it does now unless you plan on being a slumlord. If you are a DIY-er, count on double the work since you have to take care of your own house too. If you are not a DIY-er, then count on double the expense. Then you have the drama of screening new tenants and dealing with them if they cause problems.

    The $25,000 value of your current home gets you two thirds of the way to a 20% down payment on your friend's place. You might want to look into that.

    Good luck.
    Capt. Tyree and sec_monkey like this.
  11. Tully Mars

    Tully Mars Metal weldin' monkey

    Be sure to include in your rental contract that you reserve the right to do spot inspections to insure the property is being properly taken care of. Also include that should you find that the tenants have used your property for illegal acts or have otherwise trashed said property you reserve the right to shoot them in the head...

    99.9% of renters are a royal PITA and are not worth it. I understand hedging your bets, but I would lean more towards selling your existing place and using the money towards your new one. 180 for house and 20 acres ain't bad at all nowadays. First see what needs to be done to the new place and go from there. You may want to check into contractor loans or construction loans that allow you to act as the general contractor. There are several advantages to doing this if it is doable in your case.
    Ura-Ki and sec_monkey like this.
  12. oil pan 4

    oil pan 4 Monkey+++

    We have a large portion of the down payment without selling the current place.
    It's just that was not what I was planning on doing with my money I had been saving up.
    Ura-Ki, sec_monkey and Tully Mars like this.
  13. Airtime

    Airtime Monkey+++

    Get the current place appraised. Good chance its worth far more than you think.
    Tully Mars, Ura-Ki and sec_monkey like this.
  14. oil pan 4

    oil pan 4 Monkey+++

    I'm in the ghetto and that's what the city thinks it's worth.
    The local authority tends to be very optimistic when estimating home value for tax purposes.
    I bet if they wanted to expand the road in front of our house and eminent domained us they would probably pay half that.
    Tully Mars, Ura-Ki and sec_monkey like this.
  15. sec_monkey

    sec_monkey SM Security Administrator

    keeping the existing property as a backup is a great idea :)

    however as everybody has said rental properties are a yuuuuuuuuuuuuuuuuge pain in the neck especially in a not so great area

    yer better off sellin it :) [winkthumb]
  16. Motomom34

    Motomom34 Monkey+++

    Is this where I say congratulations? If so, exciting news!

    Now regarding the house situation. I would find out 100% what a lot of work consists of. If you & the Mrs are expecting a bundle of joy, home construction with an infant in the house is challenging. I have been there, done that and it was not a happy time. IMO get rid of the house that is paid off. You stated it was in the ghetto. Is the ghetto getting better or worse? Sometimes neighborhoods turn around but if it looks like things will continue to depreciate then get out before it is a loss.

    The home your friend is selling sounds wonderful but really big. Huge house and lots of property to maintain. @Tevin was correct-
    And even those meticulous homes still need a few thousand put into them. Roofs, windows etc. only last for so long.
    Tully Mars, Ura-Ki and sec_monkey like this.
  17. oil pan 4

    oil pan 4 Monkey+++

    The ghetto might be getting better. There have not been any shootings I know of and only one meth lab fire so far this year.
    In 2013 there were multiple shootings and at least 3, maybe 4 meth lab fires.

    As long as I don't have to do another roof for a few years.
    I really need to get out there, with a ladder and probe cam.
    If it's really messed up I would need the price to come down.
    We probably could afford to make payments and have the house worked on as long as its not major structural work like a new roof or Foundation repair. Minimum I can work at my job is about 48 hours a week. It pays good. But I don't have time for shit else.
  18. Ura-Ki

    Ura-Ki Grampa Monkey

    For what it's worth, When we bought our place in Colorado, the land was worth far more then the asking price of both land and house, so we did the deal and bull dozed the home as it was too far gone to save ( and other major reasons) I would find out just what the value is, and see if it is truly worth it as is, or if you can swing a better deal with the house needing major work! Also, the advice of "Contractors Loan" is a good idea, BUT you have to be careful, as some times those loans are for a fix and flip type deal, and you have to be a contractor/builder for a set amount of years before you can get something ( that was my experience) lucky for us, I have a Commercial business which I was able to add a CCB to and took the hit on insurance to get much better pricing on building materials and was also able to hire "sub contractors" to come in and do things we were not able to, like HVAC and electrical and plumbing! Another area that made a YUGE difference was we were able to get a much better deal on a slightly used commercial gen set for 1/4 the cost of new!
    Tully Mars, Motomom34 and sec_monkey like this.
  19. oil pan 4

    oil pan 4 Monkey+++

    Yeah I have 1 used 7kw contractor generator, a 17.5kw generator and multiple name brand pure sine power inverters and batteries.
    I installed mini split units at the current place. I can do hvac, plumbing and electrical. Only licensed to do hvac.
    Motomom34 and sec_monkey like this.
  20. Motomom34

    Motomom34 Monkey+++

    I just sold a house and had to put thousands into the well and a new furnace. Those are big ticket items that is always a good thing to see paperwork on.
    Ura-Ki likes this.
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