My biggest financial regret revolves around our rental.
In 2005, I should have listened to my DH and just waited to buy a house when he got back from deployment.
Instead, I went out on a househunting trip before we moved. Purchased a house he had not yet seen, and that became ours.
In 2 years, he hated the house, the neighborhood, everything about it. But we were stuck.
I told myself it would be okay, this was just our starter home and future investment property. This would be the place to provide us with income to supplement the kids' college tuition and my lack of a pension.
We took a trip to Hawaii in May 2007, only to come home and find our neighborhood tagged and the gangs starting to come out because of the nice weather.
It was then DH and I decided to move. We had looked at houses for a year before, but the "tagging" is what made us take that leap.
I love this house, but I knew when we bought it we couldn't really afford it. But I was afraid of selling the other one at the time. We can now afford this house but I look at the rental now as a burden and bad decision. Yet I would tell myself I could take the $12K loss last year against my taxes so it was benefitting us in the end.
I know now the only person I was lying to was myself.
I took the time and sat down today and decided - if I took that $600/mo loss on the rental and invested it instead, by the time the rental would have been paid off - I would have had - at a 5% rate of return - $440K and generating $21K in interest a year. MUCH less stressful than being a landlord.
So the decision is final in my mind. As soon as the latest contract is up, we are going to put it on the market. Even if we have to walk away with the HELOC still in our debt, it will be much better for us in the end.
My next regret is more a concern now... this house.
If we have to move in 2010, I'll probably take a $4K/year loss on the property. I won't be able to rent it out at a profit till 2013... and this home is much more expensive so we would stand to have to pay back anywhere to $30-$50K if we sold. So although I would LOVE to go back home to Hawaii, financially it would be better for us to stay here.
So I guess we'll see. I'll cross that bridge when I get to it.
However, I am done buying houses. Unless we end up in Hawaii or Missouri next - we will rent. I think the only way we'll buy again is if we do have 20% to put down, KNOW we will be there for more than 3 years, are confident in the area, and not just buying to buy because everyone else is.
If there is anything I can learn from this and be thankful for... it is just that I'm young enough that we can still recover from this mishap and still have hopes of retiring in our 50s and being debt free.
My biggest financial regret
May 25th, 2008 at 07:28 pm
May 25th, 2008 at 09:23 pm 1211750591
May 25th, 2008 at 09:30 pm 1211751024
Second, even with your numbers looking so bleak, if you look at the big picture (I'm assuming you don't have a negative am or interest only loan) even if you contributed the extra money towards your 2 homes for the next 30 years the houses will go up in value in 30 years and you would be subsidizing a mandatory savings account at the end when the house is paid off and you get the rent checks every month. You are young and that would be to your advantage. It could still work out well for you in the end. Definately the longer you can hold out from selling the better. The market will rebound, we just don't know when. My guestimate is that in certain markets we will see sales led by bank owned sales for the next 1-2 years. These need to be flushed out, and then the real sellers will have a chance to sell their properties again. Someone with a mortgage higher than the prices that the banks can sell at have no chance right now.
If you are desperate to sell now you could also look into selling with a lease option or seller financing, also known as a wrap mortgage or AITD. I only know the laws in CA, and I don't know where you are located so check with a trusted real estate prof. where you live... You could get someone in your rental that would cover your costs and treat your home like they are the owner not just a renter... People want to buy, they just can't get loans like they could a year ago and there are ways to work towards them buying and you selling without loosing money every month.
I had no idea this would get so long! I wish you much luck...
May 25th, 2008 at 10:25 pm 1211754337
I think a lot of these people will be feeling real financial pain in the coming years.
May 29th, 2008 at 04:04 pm 1212077083
EVERYONE says that it's so easy. I've been very wary mostly because of time. The idea that you have to manage a property. NOBODY tells you the downsides of buying an investment property!