A very complicated situation started brewing this weekend. It involves people moving to a retirement village and a house being vacant. There was talk about Lauren and I potentially moving into said vacant house. This would be awkward and I’m not sure how much detail I should go into. To simplify things, lets just say that we’ve potentially just bought a house. Now, this is a nice house. Good solid construction, very livable. Not to mention free. There are numerous downsides however, all of which need to be weighed against the major upside of having a large rent free living space.
First, our commutes to work would double or potentially triple. In my case it would go from 20 minutes up a rarely used highway to an hour and a half up the most major freeway in the state. Second would be the surrounding area. It’s really far away from everything we like/enjoy about where we’re living now. No restaurants, no stores, no friends, no church, no convenience. Third, it’s really too close to things I don’t enjoy. The dirt mall, bad movie theaters, lots of congestion, lots of traffic. It’s also really, really close to my in-laws. Almost too close. I love my in-laws (that’s actually not a lie), they’re very nice people. But it would be like Everybody Loves Raymond, they’d be right down the street. For those who would understand the analogy, it would be like moving from Amherst NH, to the old stinky part of Nashua NH. Fourth, the house needs a lot of work. A lot. New everything would be required before moving in. Nothing major or really time consuming, but everything “little” thing. For example, it would need new carpet in every single room, new sheet rock in some places, a new paint job, stuff like that. It wouldn’t need new plumbing or new windows or a new roof, nothing crazy. There’s a bunch of little stuff, but those are most of my major concerns.
So, I’m between a very interesting rock and a very sharp hard place. On one hand, it would make life affordable. We wouldn’t be paying rent anymore. Lauren could get a new car. I could pay off school loans and we could save for a real house of our own. On the other hand, there is a lot of work to be done, a lot of downsides and life would be hard for at least a couple years.
This is definitely something that’s going to need to be discussed at length before I decide on anything.
Yikes, tough call. a lack of rent is nice, but if you’re paying the equivalent in rent money every month to fix it up, I don’t know if it would be much of an improvement.
then again you would own a house for free, and would instantly win out on selling it later, should you go that route.
plus I’m sure it frees up a LOT of money, which rocks, from just about any perspective.
This is true, it would save money in the short term. It’s the long term that I’m concerned about. It raises some interesting questions. If I’m given the house as a gift, technically, since it’s over $12k, I’m supposed to pay taxes on the “gift” and it’s value. That would be roughly $20-30k. Plus, what are the normal every day taxes on the property? $3-4k is average for every $100k of house. So, if I have to pay $30k the first year, PLUS pay to fix it, is that really worth it compared to the actual market value of the house. I have heard that there is an exemption to the “gift tax” if you live there for 2 years prior to the transfer but I’m not sure, I’d have to ask my lawyer and or CPA. This is why I don’t own a house at the moment, all this stuff is so confusing.
Just from my own perspective the commute alone would make this a non-decision. With gas costing as much as it does on top of spending an extra 40 minutes to an hour (each way?) in the car…that’s a potential two hours fewer to spend at home relaxing, spending time with Lauren, etc. Waking up earlier every morning and getting home later every night… that’s the sort of thing that can really downgrade your quality of living quickly.
Money is important and saving ti is very nice. I’m sure getting out of debt (which you seem to be handling at least relitvely well now)j would also be nice, but at the cost of so many little things it might not be worth it. You have to live the life you’ve got now in the best way you can. Saying that you will forego all those little things for 5 years or maybe more in the hopes that your finacial situation will improve to a point that you can move to a nicer place etc might not be worth it.
I certainly don’t have the answer for your situation but I hope that helps to give you a few more things to consider.
J, thanks for the advice. The commute is something that is very much in the forefront of my mind. I’ve actually done this commute before. When I initially moved to Texas, we were staying with the in-laws before the wedding. So there was a good 6 months of this exact same drive. It’s not terrible, but it’s certainly not good. I would not be looking forward to doing it again. Not unless I could swing some modified hours with my office or something. Say, go in at 10 and leave at 7? That sort of thing. But that probably won’t happen.
It’s still too early to say if we’ll actually get the house. That’ll probably develop over the next 3-6 months. I’ll be nervously thinking about what I might do in the meantime. I think the best scenario might be to leave the house/deed with the current owner, move in, and plan to fix/flip it no more than a year later.
That would give us money to buy/built a house, improve the current house to make a profit, and give us some place to live. Not taking “possession” of the house would save us from a major tax bitch slap, the owner would get work done for free, we’d have free rent (minus the labor we’d put in) and in the end we’d get a new house and they’d get a profit.
It could work. Maybe. I dunno. I’ve still got to work this over in my mind.
Thank you guys for the advice and input. You rock!