LandlordInvestor
Dryer sheet wannabe
So here is a question the DW and I keep pondering:
We plan to downsize from our larger home to one of our former homes (currently a rental). The wife has always loved this home and its the perfect size for a couple. We might have to kick out a good tenant, but this would not be a major problem.
If you look at it purely from the numbers it makes sense to downsize earlier, but of course there is much more to it than this. Lets look at the numbers first:
Where we are now (Current Home) is 3,600 sq ft, 4-3, with a pool, HOA, $8k per year in property taxes, lots of landscaping and other maintenance goodies. Our old primary home (currently a rental) is 1,800 sq ft, 3-2, and just a few years older than our current home.
Old Home
Mortgage 850
HOA-
Other Home improvements / mntc 100
Insurance (Home) 75
Property taxes 250
Electric 250
Gas 50
Water/Sewer/Trash 100
Cable 100
Broadband access 100
Total 1,875
Current Home
Mortgage 2,016
HOA 72
Other Home improvements / mntc 250
Insurance 100
Property taxes 708
Electric 300
Gas 50
Water/Sewer/Trash 150
Lawn service - 100
Cable 75
Broadband access 100
Total 4,006
So it essentially costs $2k more per month for the "Big House". Sounds like the quicker you get out the better...
The issue is if we leave the old home as a rental for 5 more years it will be paid off. Also at this point when we sell the current home we will clear (after all upgrades to sell, RE commissions, staging, kitchen sink, etc.) just over $100k. If we sell today we might still clear 20-30k after all commissions and expenses, but would owe money on the old house. (The rental barely cashflows, but this is on a 15 year note.)
Then there are the intangibles.. Our original plan of 5 more years in the larger home would allow our 13 year old daughter to continue to enjoy the nicer home through high shool. Are we being selfish trying to force a downsize so that we can retire earlier? Same school district so we are not moving her away from friends...
With a sub 4% 15 year mortgage in our current home..making the $2k per month payment is not as bad as it seems as you get over half of it back when you sell. It's the rest of the monthly nut that makes me want to move up the downsize.
It's hard to say how much quicker we could retire if we downsized now vs later. The fact that mortgage payments paid now are increasing our cash out when we sell complicate it. Then the intangibles...
Ok, the question.... Has anyone downsized too early and wished you had stayed in your larger place longer? or Are you wishing you would have downsized quicker than you did? Anyone else going through this conundrum of a decision?
We plan to downsize from our larger home to one of our former homes (currently a rental). The wife has always loved this home and its the perfect size for a couple. We might have to kick out a good tenant, but this would not be a major problem.
If you look at it purely from the numbers it makes sense to downsize earlier, but of course there is much more to it than this. Lets look at the numbers first:
Where we are now (Current Home) is 3,600 sq ft, 4-3, with a pool, HOA, $8k per year in property taxes, lots of landscaping and other maintenance goodies. Our old primary home (currently a rental) is 1,800 sq ft, 3-2, and just a few years older than our current home.
Old Home
Mortgage 850
HOA-
Other Home improvements / mntc 100
Insurance (Home) 75
Property taxes 250
Electric 250
Gas 50
Water/Sewer/Trash 100
Cable 100
Broadband access 100
Total 1,875
Current Home
Mortgage 2,016
HOA 72
Other Home improvements / mntc 250
Insurance 100
Property taxes 708
Electric 300
Gas 50
Water/Sewer/Trash 150
Lawn service - 100
Cable 75
Broadband access 100
Total 4,006
So it essentially costs $2k more per month for the "Big House". Sounds like the quicker you get out the better...
The issue is if we leave the old home as a rental for 5 more years it will be paid off. Also at this point when we sell the current home we will clear (after all upgrades to sell, RE commissions, staging, kitchen sink, etc.) just over $100k. If we sell today we might still clear 20-30k after all commissions and expenses, but would owe money on the old house. (The rental barely cashflows, but this is on a 15 year note.)
Then there are the intangibles.. Our original plan of 5 more years in the larger home would allow our 13 year old daughter to continue to enjoy the nicer home through high shool. Are we being selfish trying to force a downsize so that we can retire earlier? Same school district so we are not moving her away from friends...
With a sub 4% 15 year mortgage in our current home..making the $2k per month payment is not as bad as it seems as you get over half of it back when you sell. It's the rest of the monthly nut that makes me want to move up the downsize.
It's hard to say how much quicker we could retire if we downsized now vs later. The fact that mortgage payments paid now are increasing our cash out when we sell complicate it. Then the intangibles...
Ok, the question.... Has anyone downsized too early and wished you had stayed in your larger place longer? or Are you wishing you would have downsized quicker than you did? Anyone else going through this conundrum of a decision?
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