Big decision - home own vs. rent with a twist!

[mekish]

if the rental potential is less than what you pay for the mortgage then surely it can't be worth keeping the house.

[disneysteve]

Don't keep a house as a rental that you are losing money on every single month. That's the worst advice I've ever heard.

I agree 100% with this. If you want to rent out the house, fine, but ONLY do so if you would at least be breaking even. That means enough to pay the mortgage, taxes, utilities, property management fees, etc. A rental that is losing money each month might have been workable a few years ago when values were skyrocketing, though not a good idea then either, but it should absolutely be avoided today when values are flat or falling. It would be no different than putting your money in a bank account that required you to pay THEM interest each month. Somehow, I doubt that you would take that deal.

[Saving in So Cal]

When my husband and I were about the same age as you and your wife, we bought a home just before the market tanked. We were substantially upside down on our loan with no type of refinancing option and no ability to rent it out for what we owed. We had to relocate for other reasons, so we rented it out for what we could and took the monthly loss. We went through three renters in two years. Each renter had excellent credit and excellent references. Yet, each one had trouble paying the rent on time and each one trashed the place before they moved out.

We end up getting rid of the condo (another story altogether) and living in the smallest apartment we could tolerate for a few years. During that time, we paid off our cars and my graduate student loans (thankfully no credit card debt) and socked away enough for a 20% downpayment on a house with a little bit left over for reserves. In addition, to deal with the loss of a mortgage deduction, we were able to max out our 401k plans. Staying in the little apartment was hard (noisy neighbors, embarassed to have people over, etc.), but it was the smartest thing we ever did. It really put us on solid financial ground.

I understand your wife's position, but I hope she will reconsider her position on temporary rental living. The housing market isn't going anywhere anytime soon, so there is no need to jump right into something. (Anything you buy will probably decrease in value in the short term as well.) You can pay off whatever you need to pay off and save for the right place at the right time.

[DebbieL]

Words of wisdom (and experience) from Saving in So Cal. I totally agree! You too Disney Steve. Excellent point.

[Ima saver]

I agree also, I think selling the house and finding a small rental is a good idea for now.

[boefixepa]

Sometimes it is necessary to sacrifice current wants for future goals. Try presenting to your wife what you could do in the future if, for the next few years, you live in an apartment. It can be for some hard to think of the big picture, but that really looks like the best thing for you at the moment.

[Liz_nhbs]

I think...rentals are such a waste of money and time...try posting a little bit of info with regards to your problem...but if you ask me...rentals really a waste of money..it would cost you much...

[disneysteve]

I think...rentals are such a waste of money and time

That is a very oversimplified way of looking at things. There are plenty of situations in which renting makes more sense than buying. Perhaps you aren't sure if you will be staying in the area. Maybe you don't have enough of a downpayment saved. Maybe, like now, prices are on the decline in many areas and waiting a few months or a year could save you thousands of dollars in the long run.

To say that anyone who is renting is wasting money just isn't accurate.

[dcox20]

That is a very oversimplified way of looking at things. There are plenty of situations in which renting makes more sense than buying. Perhaps you aren't sure if you will be staying in the area. Maybe you don't have enough of a downpayment saved. Maybe, like now, prices are on the decline in many areas and waiting a few months or a year could save you thousands of dollars in the long run.

To say that anyone who is renting is wasting money just isn't accurate.

I think they're more talking about being a landlord than being a renter. maybe I misread it though?

[disneysteve]

I think they're more talking about being a landlord than being a renter. maybe I misread it though?

Oops. You're correct. My mistake.

FWIW, I don't agree with it in that sense either. I don't think you should rent your home, as I've said earlier, but I don't think renting in general is a bad idea. I think it totally depends on the situation and the people involved.