Aramingo
Philadelphia, Pa.
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Joined: 04/11/2007
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Having enjoyed five months of the road (January to June) in the Texas Hill Country, New Mexico and Colorado, we've decided to go full timing.
Four years ago we sold our townhouse in Center City Philly (21st and Mount Vernon) for a substantial sum and purchased a row house in a working class neighborhood close to center city (much lower property tax and insurance, lower utils). After adding amenities we lacked in Center City to the purchase price we put in about $150 K. Throw realtor fees, transfer taxes, appliances, expensive area rugs and furniture and we'd have to sell for a bit over $170 to break even. We've priced it at a bit under $150 K.
So where's the upside?
I consider what we'd have paid stay in our previous house (about $10 K a year for propery tax and insurance plus thousands annually on a mortagage. It's likely that we'd have lost the same $20 to $25 K or more.
I've also considered what we'd have spend if we rented instead of buying after selling that house. In the latter case, at least $1,000 a month rent over four years for just a one bedroom here. Most likely we'd likely have bought at least some furniture. So you are talking about $50K probably. If you could stop there, we'd be $25K to $30 K ahead compred to renting in the meantime.
However, that figure is misleading. As an economist would say, you have to count opportunity cost (alternative cost). We'd have earned something in the meantime via investing $140 K or so over the entire four years.
If, as is likely, we'd have put the cash into stocks or mutual funds it probably wouldn't amount to much, since I suspect the large recent drop in the market would have eliminated most gains.
If we had chosen a more conservative investment (CDs or money market), you have to deduct for income taxes--state, federal and local to get the net earnings. I doubt if the earnings would make up for the $25 K to $20 K difference in rental costs. So I suspect we still come out ahead comared to that choice. Meanwhile we got to enjoy a much nicer place over those four years.
Even after counting in such foregone alternative "costs" involved had we rented instead, I doubt they'd add up to $25 K. I suspect we'd have lost much more on our Center City townhouse, both in market value and especially cash we'd have laid out.
After doing those calculations I don't feel so bad about the loss. Of course it would be nice it the housing market hadn't collapsed. As it is the neighborhood we located in was just getting hot beore that occured, so I can't see how any prospective buyer can lose.
Finally there's the non-economic benefit of selling now. We get to experience the freedom of fulltiming while still in shape for hiking, biking, etc. (I'm 66, wife is approaching 58) and the much more less complex lifestyle with all the social advantages.
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sumerduck8
Virginia
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Joined: 01/12/2005
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I agree...go for it. Why stay more and loss money. Enjoy life while you and wife can. Your friend Houston....If you are happy, that's what counts!!!!!
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dons2346
Sioux Falls, SD, formerly of So. CA
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Joined: 11/21/2001
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Glad you could figure out a way to make your loss look good.
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rockhillmanor
On the Road
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Joined: 12/06/2003
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Sold mine in the down market too. Had 2 choices: 1. Sit and wait it out or 2. Sell it when I had one of the only warm bodies in my area wanting to buy it for less.
I chose the later and bit the bullet on the loss. My thoughts were the same. You are never quaranteed tomorrow. So I grabbed the money and hit the road. Haven't looked back and having the time of my life.
Good luck on your new adventure, enjoy every moment you have!
31 ft Four Winds
Chevy Tracker 4x4 Blue Ox
We must be willing to get rid of the life we've planned,
so as to have the life that is waiting for us.
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Kirk
Livingston, Texas.
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Joined: 06/17/2001
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A positive attitude will also serve you very well in your new lifestyle.
Good travelin! ........Kirk
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www.adventure.1tree.net
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WTTCS
freedom , U.S.A.
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Joined: 07/28/2003
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The other side of the coin........or page two.............
Do you have any idea how many people would PAY 25K to go fulltime? Plenty.
1997 chev crew cab 454, 5 sp. 4.10
2000 Fleetwood Caribou 11.5
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dodgerdog
Whittier California
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Joined: 11/08/2006
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Why not just do what everyone seems to have overlooked ... Fulltime and rent your house out... Or let a realator that handles rental property handle it for you.... Then when the market gets better if you want you can sell the house why take a loss at all?
Mike C.
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SGTJOE
Utah
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Joined: 01/12/2006
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dodgerdog wrote:Why not just do what everyone seems to have overlooked ... Fulltime and rent your house out... Or let a realator that handles rental property handle it for you.... Then when the market gets better if you want you can sell the house why take a loss at all?
Mike C.
Evidently dodgerdog missed the thread on renting. Also, if you rent I believe you may end up paying Capital Gains on profit realized unless you live in the Home for the past two years.
2001 Trade Winds 7390
Toad 03 Grand Am
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Golden_HVAC
Fulltime, CA, USA
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Joined: 08/19/2003
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I agree with one of your statements.
It is much better to lose 5% on a much lower cost condo than to lose 5% or 10% on the more expensive home that you where in 4 years ago!
And during the past 4 years you paid less in taxes, and if you could find a way to write off your loss - that would take a good tax man.
A positive attitude always helps! I look at the past two and a half years that I have not been working since selling my house as a wonderful blessing!
Fred.
Money can't buy happiness but somehow it's more comfortable to cry in a Porsche or Country Coach!
If there's a WILL, I want to be in it!
Improve a life KangenPowerTeam.com Akaline Water.
I havn't been everywhere, but it's on my list.
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dodgerdog
Whittier California
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No I did not miss the thread on renting .... I suggested renting out the home to another person while they wait for the market to get better then sell the house for a profit... And I would not volunteer the information to the irs I was renting out my house... Some do some don't... You can sell a house empty or be living in it if they decided it was time to sell.... If your out traveling the country in an rv who's to say the only house you own is not your primary home? I have a second home and I do not rent it out... But I was trying up to a few months ago try to sell it... I decided I would rather pull it off the market and wait a year than take a 50K hit on trying to price it now for todays weak market....
Mike
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