I have a financial situation I need to think through and am looking for other points of view....
We own a duplex. The owner's side is a little over 1500 sq. feet. It only has 2 bedrooms right now, which isn't enough for us. We do have a tentative plan for remodeling, which would give us an extra room. We'd end up with a somewhat smaller home for our family of 4 than is "the norm" (at least to most people). We'll eventually need to replace the windows (there are a lot) and the oil tank. Other than that, it's on a fantastic street, great neighbors, nice big back yard, etc. The rental side has never been vacant in the almost 5 years we've owned this place. The rental market where we live is extremely strong and has been for the last 20 or so years. Rent received pays more than half the current mortgage.
We have friends who are about to sell their house. We LOVE their house. Huge wooded lot, river view, nice sized home but not too big, just a fantastic place. Will eventually need a new roof (my husband would put on so it'd just be materials) and a new boiler. We'd also really want to add a studio apartment to the detached garage, which my husband could do so it'd cost materials only. The house is cosmetically beautiful, well made, and a great buy.
The housing market where we live is actually very positive and there are ZERO investment properties on it right now. We've heard from realtor friends that duplexes are hotly sought after right now so we'd likely have no problem selling.
These are all the points i've been considering and I think I can't see the forest through the trees right now.
1. Refinancing the duplex or buying the new home would mean financing about the same amount but with the duplex, we could do a 15 year mortgage and we'd have our renters paying almost half of it. The new property would mean a 30 year mortgage.
2. We would prefer to live in the new house - but we could stay in the duplex if it were remodeled.
3. We need to catch up on our retirement. Staying in the duplex would mean we could max out my deferred comp (putting 16,500K away per year) sooner. (We both have deferred benefit retirement plans so the deferred comp is our extra....)
4. It'd be hard to pay off the new home before I hope to retire in 20 years, but doable if we watch our money.
5. If we stay in the duplex, we'd have very little money worries. I know it's the best bet financially, but I can't get past wanting to live in the new home. I wonder if it's because it's already "done" - no work is needed cosmetically, while our place does need work.
6. I don't love the idea of having renters forever, but, I do want to have extra living space for either elderly parents or if our kids go to college here in town - keeping the duplex would mean by the time extra space was needed, we'd have it (and the house would be paid off).
In reading the above, it looks like I'm leaning towards staying in the duplex, but staying would mean we would need to put about $75,000 into it. Plus, the new home, the single family home, is so close to my ideal, it's hard to just say no. I've crunched the numbers and when all was said and done, the duplex will cost us (our share, not including what the renters contribute) about 500K after 15 years and be paid off, and the single family, about 610K after 22 years. I want to live in the single family, but I recognize how much finanicially smarter it would be to stay in the duplex. Maybe I just need someone to tell me to stop whining. Or maybe living in a beautiful home is worth the extra 110k.
any words of wisdom for me?