can't afford to live in our house, and can't afford to sell it

[Oliver'sMom]

I don't think we can afford to rent it out either.

We own a 3bdm condo in a great location, on bus route, etc...but our HOA fees have gotten out of control in the past year and we simply can't afford to live here anymore. We bought this place right before the housing bubble burst in 2006 for $94,000. The last county appraisal came in at $89,000

We live right off campus of a major university and our units rent out fairly easily. We just have zero reserve funds in case something went wrong, tenant skipped rent, damages, etc.

I feel like we're taking a huge risk renting it out, but if we try to sell, we're loosing money with that as well. Plus, we're loosing out on the investment opportunity we bought this property for in the first place.

We're having another baby in July, so we definately can't afford to continue living here, plus it would be nice to have a yard or be near a park.

What would you do?

[EricaDoula]

Rent out a room maybe? You're in a tough situation! Maybe depending on what your mortage is, you could rent it out by room to college students for a reasonable rate! Good Luck.

[Oliver'sMom]

our place is less than 1000 sq ft, so it would be pretty tight living quarters to have us three (soon to be four) and a college student living under the same roof. I think I'd go crazy! Thanks for the suggestion though

[FillingMyQuiver]

You said the county appraisal came in for $89000. Is that for your taxes? I ask b/c generally speaking, the tax assessment and a real estate appraisal have very little to do w/ one another.

If you are serious about selling, you should consult w/ a few real estate agents and see what kind of numbers they give your condo. You may be surprised. OR, you could go to a site like www.zillow.com and see if any condos in your area have sold recently and what they've sold for, just to get an idea of comparables.

[RiverSky]

County appraisals are rarely accurate according to the market. You can check out Zillow.com and see what the Zestimate for your place is, or try to figure out what similar units in your building have sold for in the recent past, but even those won't be as accurate as an assessment by a property appraiser.

Regardless, how much is your monthly payment and how much could you rent it out for? How much can you reasonable afford for housing on a monthly basis and could you rent another place for that amount or less?

Could you refinance for a longer term or ask for a loan modification to get a reduction in your monthly payments? How long ago did you buy the place and how many years are on your loan still?

At this point, if you were to foreclose on your place, you would likely ruin your credit for a very long time and would not be able to fix it any time soon, due to your lower income. Bad credit is going to make it hard for you to even rent another place, let alone a good or better place, and you will be stuck in an even worse situation, I think.

I think the way to go for you is to raise your income somehow. Start couponing, if you don't already, and CVSing to save as much and pay for your household supplies as you can.
hotcouponworld.com
google "CVSing 101"

Start babysitting other's children for short periods of time. Weekends and date nights, as well as doctor and dentist appointments are times when even moms who stay at home occasionally need a babysitter and I know I would always prefer to have my children stay with another mom who possibly has children my children can play with. You can advertise by word-of-mouth, via any moms groups and/or playgroups you are a part of, and see what happens.

Even if you can save or make an extra $200-400 a month, I imagine it will really help. I know people who save about $500 a month on food via couponing. I know one woman is a CVSing guru and she received over $1800 worth of stuff at CVS in 2009, and paid out less than $85, using the techniques described in many places on the net.

You can also try writing articles to make a little extra cash (check out the Work at Home Well forum here on MDC).

Do you get any extra help like governmental assistance on a month to month basis? Is it possible that you qualify for any that you have not yet tried to receive? Like, if you are in the U.S., are you on WIC or food stamps?

Good luck!

[RiverSky]

Originally Posted by Oliver'sMom

our place is less than 1000 sq ft, so it would be pretty tight living quarters to have us three (soon to be four) and a college student living under the same roof. I think I'd go crazy! Thanks for the suggestion though

But chances are the college student will almost never be home and even when he/she is, they will be locked in their room, studying or sleeping.

My other idea is for you to rent the room to a single mom with a young child. Perhaps you could even take over care of the child while the mom goes to school or work, and you could make even more money. Even if you did this for one semester, or one year, it will buy you a bunch of time and perhaps the market will go up, you might be able to sell and you might be able to move to a place you like better.

[hjrowan]

If you rented it out, would the income cover your mortgage and HOA fees? If so, you could move to a cheaper property (rental/buy, whatever works for you at the moment) and save an emergency fund over a few months to cover issues you might experience with your condo. It seems as though the difference between the condo's value and what you paid for it ($5000) is small enough that a moderate increase in house prices would leave you in the black??

Good luck!

[wildmonkeys]

If you don't sell right now, the lower county assessment is good because it will lower your property taxes.

[bobandjess99]

Coming from someone who has 7 people (2 parents 5 kids) in a 900 sq ft house, i want to say you absoltely could, if you wanted to, live in something that small.
Honestly, I'd look at selling it even at a loss. I know a few thousand dollars seems like a ton of money, but really, in this economy, it's not a bad deal for getting to walk away frm a house you can't afford.

[Oliver'sMom]

The rent we would receive would cover the mortgage and HOA fees. Plus we can rent an actual house out in the country for a lot less than what we're paying now. We're in a prime location here, so rent is high. I'm just worried about worst case scenarios and us being hosed because we have zero extra money in case something happens.

The way the market works here, you have to have a tenant firmed up by August 1st, before school starts, or else you're going to have to wait until the following year to find someone. If we do rent our place out, we need to list it fairly soon. Plus, we would need to find a house to live in preferably before the new baby comes (mid July), so there's a month gap there where we would possibly have to pay both rent and mortgage. Ack!!

I just looked up our complex on zillow and the last unit sold for $84,900. Granted, there are a lot of really crummy units here that need a lot of work. Ours is very nice with new flooring, a view etc...so we may be able to get more. Dh is not willing to sell at a loss whatsoever though.

We receive food stamps, WIC and ds is on medicaid, plus we're applying for LEIAP on the 18th. Dh is finishing up his masters and should have it in hand by May at the latest. He plans on teaching at the local community college until he finishes his Phd. That income will be huge for us! We just have to make it until then.

I agree we need to raise our income. I have a lot of skills and could easily get a job, but it will take me out of the house, and then I'll have to pay for someone to watch ds so the actual take home money is hardly substantial.

I babysit on occasion, but it isn't steady enough. It's something though, and I'll continue doing it. I'm able to make our food stamps last the entire month with some to spare (which is something I'm proud of because they don't give us much at all) so I don't think I need to cut back there.

The problem with this place is that our utilities are included in the HOA fees. They're the average of the entire complex. We don't have our own meters, so for example, our water bill last month was 90 bucks! It doesn't matter how conservative we are with everything, it all gets averaged in with the college student neighbors who have their heater going with the windows open, or leave their sinks to drip all night. It's outrageous.

So do you think it's worth the risk to rent it out? We can try our best to save a little emergency fund for the condo.

[Fuamami]

Originally Posted by Oliver'sMom

The rent we would receive would cover the mortgage and HOA fees. Plus we can rent an actual house out in the country for a lot less than what we're paying now. We're in a prime location here, so rent is high. I'm just worried about worst case scenarios and us being hosed because we have zero extra money in case something happens.

The way the market works here, you have to have a tenant firmed up by August 1st, before school starts, or else you're going to have to wait until the following year to find someone. If we do rent our place out, we need to list it fairly soon. Plus, we would need to find a house to live in preferably before the new baby comes (mid July), so there's a month gap there where we would possibly have to pay both rent and mortgage. Ack!!

I just looked up our complex on zillow and the last unit sold for $84,900. Granted, there are a lot of really crummy units here that need a lot of work. Ours is very nice with new flooring, a view etc...so we may be able to get more. Dh is not willing to sell at a loss whatsoever though.

We receive food stamps, WIC and ds is on medicaid, plus we're applying for LEIAP on the 18th. Dh is finishing up his masters and should have it in hand by May at the latest. He plans on teaching at the local community college until he finishes his Phd. That income will be huge for us! We just have to make it until then.

I agree we need to raise our income. I have a lot of skills and could easily get a job, but it will take me out of the house, and then I'll have to pay for someone to watch ds so the actual take home money is hardly substantial.

I babysit on occasion, but it isn't steady enough. It's something though, and I'll continue doing it. I'm able to make our food stamps last the entire month with some to spare (which is something I'm proud of because they don't give us much at all) so I don't think I need to cut back there.

The problem with this place is that our utilities are included in the HOA fees. They're the average of the entire complex. We don't have our own meters, so for example, our water bill last month was 90 bucks! It doesn't matter how conservative we are with everything, it all gets averaged in with the college student neighbors who have their heater going with the windows open, or leave their sinks to drip all night. It's outrageous.

So do you think it's worth the risk to rent it out? We can try our best to save a little emergency fund for the condo.

Can you put away just $50 a month until you have to rent it out? And then, when you get the deposit from them the tenant, be sure to put it away for emergencies.

Or maybe you could work part-time on the weekends so you don't have to cover daycare? Or exchange with another part-timer mom?

[Oliver'sMom]

Originally Posted by Fuamami

Can you put away just $50 a month until you have to rent it out? And then, when you get the deposit from them the tenant, be sure to put it away for emergencies.

Or maybe you could work part-time on the weekends so you don't have to cover daycare? Or exchange with another part-timer mom?

I'm sure we can manage to put away 50 bucks a month. Dh can easily cut down on his beer consumption

I already work part-time on the weekends...but it isn't every weekend. I've put in my application to substitute teach at the public schools, but they won't hire me until fall...if they hire me at all.

[VisionaryMom]

Originally Posted by Oliver'sMom

The rent we would receive would cover the mortgage and HOA fees. Plus we can rent an actual house out in the country for a lot less than what we're paying now. We're in a prime location here, so rent is high. I'm just worried about worst case scenarios and us being hosed because we have zero extra money in case something happens.

Actually your tenant likely would get hosed. Please do not rent to someone if you cannot handle any repairs needed. BTDT. I rented in college from a couple who bought and house and divided it into apartments. My AC unit broke in July in Georgia, and they couldn't afford to fix it. That sucked, and I vowed not to rent from individuals again. It's not fair for a tenant if you know you don't have the reserves to do work that may be needed on the place. (Plus, if they report you to local rental boards - had a friend do this because of faulty electrical wiring - then you could end up in worse shape).

The other thing to consider is that you'd need some time between tenants. Around universities people move often, so you're looking at likely one month per year with no tenant. Can you afford that?

If I were you, I'd try to stay there by increasing income, decreasing all expenses, whatever you can do. We're in the same place. Our house is worth about $15,000 less now than what we bought it for, but we're just going to wait it out.

[Oliver'sMom]

Originally Posted by BrandiRhoades

Actually your tenant likely would get hosed. Please do not rent to someone if you cannot handle any repairs needed. BTDT. I rented in college from a couple who bought and house and divided it into apartments. My AC unit broke in July in Georgia, and they couldn't afford to fix it. That sucked, and I vowed not to rent from individuals again. It's not fair for a tenant if you know you don't have the reserves to do work that may be needed on the place. (Plus, if they report you to local rental boards - had a friend do this because of faulty electrical wiring - then you could end up in worse shape).

The other thing to consider is that you'd need some time between tenants. Around universities people move often, so you're looking at likely one month per year with no tenant. Can you afford that?

If I were you, I'd try to stay there by increasing income, decreasing all expenses, whatever you can do. We're in the same place. Our house is worth about $15,000 less now than what we bought it for, but we're just going to wait it out.

Our HOA covers damages to the exterior of the building or anything shared with other units, so major things would be covered such as plumbing, electrical, AC, roof, siding, etc. If we did rent it out, we'd use our HOA as the property managers. Our main liability would be if the heater went out or the water heater broke, or any of the appliances. Or if the tenants skipped rent or we had to evict them for whatever reason. These are all things we couldn't afford if they happened right away, but if we had time to save we may be able to. I don't know, still seems pretty darn risky to me.

Plus, we just got a letter today from our local SRS saying that our food stamps will be taken away the 31st. Dh got a new job this semester teaching an anatomy lab. It pays $600 more a month, so they're taking away $300 of food stamps

[wildmonkeys]

So I thought about this more and wonder if you should try to determine if you really can afford to live there for a little while longer? I mean, I get that you don't want to, but you could also let all the smart frugal mdc people see you income/budget and help you figure out how to make staying for a bit work - just a thought (I apologize if you already did this on MDC and I missed it!)

[SunshineJ]

I wouldn't rent it out. If you're in a college town and the place is located in a prime area, I'd list it for what you'd like out of it and see who bites. If you can get what you owe out of it, then in this economy you're golden and can move to a better place as you described. Renting it out seems like the least attractive option by far. It doesn't cost anything to speak with a realtor and list it for 6 months. If you did that now and were still determined to move, you would have time to have it rented by August.

[Fuamami]

Originally Posted by BrandiRhoades

The other thing to consider is that you'd need some time between tenants. Around universities people move often, so you're looking at likely one month per year with no tenant. Can you afford that?
.

You should plan on this, but it might not actually ever happen. We rented out a house less than a block from the university for over three years, and I had never had it vacant once. I'd have to get all my cleaning done in one or two days between tenants, it was such an easy property to rent.

[Ola_]

If you put it on the market to sell, you could also advertise it as a potential income property (since it's close to the school). When I went to school some students' parents would buy a house, let the kid live in it while they went to school, and then rent it out after. Maybe post some signs at the university to advertise it too?

[VisionaryMom]

Originally Posted by Ola_

If you put it on the market to sell, you could also advertise it as a potential income property (since it's close to the school). When I went to school some students' parents would buy a house, let the kid live in it while they went to school, and then rent it out after. Maybe post some signs at the university to advertise it too?

That's our idea for when the kids go to college if it works out.

I agree that renting sounds least attractive for everyone involved.

How much is the difference between what you make and what you spend right now?

If you share your skillset, I'm sure we can help brainstorm other ways to make money, esp. near a university.

[pitter_patter]

I think I would try to purge and organize your home to make room for the new baby, and for the eventual move once you are able to sell your condo. I'd sit tight in the condo and wait for prices to come back up a little bit, being a landlord without an emergency fund is not a good position to put yourself in. I lived in just over 1000 sf. with my husband, twins, two cats and a dog, and we all lived. Being organized and finding creative storage solutions makes all the difference in my experience.