I think staying put is the right decision. I was going to ask a few more questions, but don’t feel like you have to answer them now since you already decided. So I’m putting them out there for someone that reads this thread that is may be in a similar situation.
One way of looking at this home purchase is that your aunt is essentially giving you a gift of $25,000. Are you comfortable accepting that? Is she giving $25k to all of her nieces and nephews or just you? If you’re cool with the gift, why not just tell her to sell the house for $150k and cut you a check for $25k? If she would say no to that, then she doesn’t really understand the real estate deal she is entering into, does she? This could cause big family problems in the future.
That’s assuming you’re actually getting the house for $25k off. Let’s play this out as if you weren’t. Why are you considering this all of a sudden? And why are you only considering this one house in this one town? Just because it is a family house? If you are a numbers guy, separate the numbers from the family. If you wouldn’t consider moving to this town and buying a $150k house or any neighboring towns, why are you considering this at all. Are you just trying to help out your aunt? Are there ways to help out your aunt without uprooting your family?
Or, if your aunt doesn’t need help from you getting her house sold, why is this even a consideration if you weren’t already considering a move there? Or maybe you were. Did you visit many houses in the area and decide your aunt’s is the best? If I were your wife, I’d be pretty bummed if my only option was a family house and then come to find out that the house down the street is on sale for the same price and has a way better floor plan. In other words, don’t tie yourself to the house just because it was you’re aunt’s at one point.
Without igniting the debate on taxability again, I’d say the tax-free nature is attractive vs. W2 earnings. I could go get a part-time job and pay taxes, or earn miles/points tax-free. The latter is definitely better for someone who needs to keep their income under a certain amount for ACA subsidy or other reasons.
I also don’t agree that the down payment should be considered as part of the savings to arrive at $17k since you would either continue living there and it won’t matter, you would sell and move which would recoup the funds, or it would be a $30k investment in rental property. The only way the down payment should count against savings if it the value of the home plummeted and you somehow lost the all equity.
I am sure there were other reasons for not moving, but the savings over the period would be much more than the $17k you are using to justify not doing it.
The reason I count the $30k is because of such a short timeline. We would absolutely not (barring any income issues) live in the place more than three years. That goes against the entire spirit of the plan.
If the timeline were something like ten years, then sure I agree that basically moving $30k from cash to housing would be a wash at the end. But in two years, there’s no way I could recover that because of transaction costs to sell the place (if that is the route we took at that time).
I think for a two-three year timeline, with respect to the sole purpose (to save cash), it is very relevant.
Transaction costs on selling a $150ish house would not eat up $30k in equity. $9 or $10 grand maybe if you went with a full price realtor, still leaves $20k on table unless you overpaid for the property somehow and actually lost money off your purchase price.
Exactly. In two years, I doubt the market will move much, but let’s say I overpaid by $10k, and the market goes down a bit. It’s really easy to eat into that $30k between market movements and transaction costs. Point is, I won’t see even 50% of that money if the market ticks down just a tad plus transaction costs.
If it were a $400k house, then sure a 20% down payment would still be recoverable with a minor downtick.
Im not the first to see it.
Not sure what ur trying to accopllish here. Each time somebody offers legit info u get defensive about it. INCLUDING ME.
Go back n read ur responses and tell me im off …
This thread is two months old. With the help of the forum, I was able to make the right choice. I don’t think I was ever defensive at all. I think I simply wasn’t seeing the forest through the trees.
And responding to a thread that’s 2 months old after @jaytrader made a decision, found peace with it, thanked everyone, and has happily moved on, accomplishes something?
