We've all seen clips of Mitt Romney saying that the solution to the mortgage crisis is to let housing prices bottom out so that investors could come in, buy them, and turn them into rental property. Well, that's what's about to happen to me and my husband. On the other side of the Wisconsin cheese curd (don't live there any more, still wish I did), I'll tell my story, and ask your advice.
After twenty years of preparation (most of which I worked full time and raised two kids) I finally got my dream job two years ago. The only issue--the job (which is part-time, but has excellent benefits) was two states away. I didn't care then, and I don't care now. I'm happy where we are.
Except for the problem with the house. We were fortunate enough to have enough money to make a substantial down payment on our new home and keep our old house. There were special circumstances to the move, so it took about eight months to get the house ready for sale. Finally, we listed it. Our first broker didn't seem to get the market, and the house didn't have a lot of showings. Our second broker told us we needed to start at a price fifty thousand dollars below where we'd started the first time. That was a blow, but we took it. That was six months ago. We've lowered the price another twenty-five thousand dollars. We've still gotten only a couple of nibbles, and no offers.
It's not cheap to own two houses, and we can't do this any more. We've spent a lot of what would have been my retirement money, and taken a huge capital loss. We're fortunate enough that we'll be okay, but this has to stop. So we called some dear friends, whom we knew managed rental properties. We had not fully understood their business. Turns out that, while they certainly aren't even close to being in Mitt's league, we're a small story in the midst of his big one.
There are a lot of smart people around here, and I'd like to get opinions from folks with real estate knowledge about what's about to happen. We have neither the ability nor the desire to manage the property, so we will lease it to them, and they will sublease. They propose to pay us a rent that is a bit above our current fixed expenses. Those expenses will go down. We won't be paying to insure contents, and our property is over-assessed, and we are appealing the assessment. We'll also save about $750 a month in non-fixed expenses that will either vanish (driving back and forth between) or be shifted to the tenants (utilities). They propose to keep the house rented for three years. In months when they do not have tenants, they propose to give us half the lease price. Finally, they propose a 3 year term, with option to buy at a price that is lower than the current listed price, but above what my husband told them would be our bottom line.
It's that last part that's getting to me. For if the President is re-elected and housing prices start back up, we will lose. If Romney wins and has his way with the rest of the housing market, the value of the house may go below the stated price, and we would, by comparison, win. I'm not fond of my money betting that Romney will win while I work myself as hard as I can for the opposite outcome.
We are fortunate. All that is at stake is money here, and probably just the quality of our retirement years. We won't be wanting for necessities. We adore our new house, city, and job. Those are gains for those retirement years. Not a wash, but not a disaster.
And yet we've been stepped on. And that makes me both mad and sad.