: Need some homeowner advice from a non partial group of Peers



HAZZARDJOHN
07-16-11, 08:52 PM
So here is my Dilemma. I am looking for some advice from people who are not emotionally involved like my Dad who I usually look to for advice like this.

I built a house in Bethel MN in 2006, a year later I got a job offer in South Dakota. Now I put 30K down on the house, but my Realtor told me to sell the house quickly in 07 I would have to take a 10K loss, which would be about 20K by the time I paid the Realtor share. Basically selling my house for 10K less than I bought it. That was not cool with me. So I decided to rent it out for a year and see if I liked SD before I sold it. Well the renter asked if we could do a contract for deed, I had my lawyer look it over and there were some advantages like a Higher sale price, not being liable for repairs etc. So I did it.

Well Fast forward to today. The man who "bought" my house is going to default on the CFD next month. I have been looking for houses here because the contract is up next month and he was telling me he had financing in order to pay of the balloon payment. Well now his business was forced to close and he is bankrupt, a fact he neglected to tell me til Thursday.

So long story short, he is out of the house Sept. 1st and it is back in my name. I paid 190K for this house in 2006 and now I owe about 150K. Back in 06 the land alone was worth 120K so it was a good deal. My realtor hadn't sold a new house in years at that point for less than 200K. Everybody told me, "now's the time, jump on it, you won't lose any money... etc." Now there is a house exactly like mine three miles away that is for sale for 109K, built in 2005 with the same size yard and nicer landscaping. :mad: My Realtor thinks the house could sell for 150-160K but it would be on the market for a while and I would need to finish the half finished basement and do landscaping.

I have a few options which I will list. Some of them I refuse to take.

One is Foreclose, Not going to happen. I have a credit score so high I don't need sunscreen and I refuse to spend the next ten years trying to rebuild that.

Short sale, same repercussions as a foreclosure with the sentence shortened to like 5 years. Not going to do this either.

Rent it out. I could get my mortgage payment in rent. The upside is I can ride out this tough economy and hope that the market comes up. Since I have a little land I have room to store things that I am storing at friend's houses while a tenant enjoys the house. The down side is, I can not get another house and must continue renting until I can get rid of my mortgage or I get a hell of a raise in pay.

Lastly, Rent it out for a year, get my finances in order and get another job in Minnesota and just live in the house. The pluses, I would be close to family. I really like my house. It is nicer than most houses here. I won't have to pay closing costs again, or realtor fees. The down side. It is in Minnesota, so my SD dreams will be over. I will have to pay more taxes so I need a higher paying job. I have to leave the best job I ever had. I seriously love what I do, who I work for and the products I design. The odds of finding a more compatible job are slim in my opinion. I would have to go back to paying outrageous out of state license fees to hunt in South Dakota.

So tell me what your opinions are. Not necessarily going to follow it, but I have an emotional tie to this as well as my family and I am looking for the most logical plan. I have a lot on my mind and about a month to come up with a plan. What advice do you guys have.

http://i17.photobucket.com/albums/b55/Johnny1107/house/P1010066.jpg
http://i17.photobucket.com/albums/b55/Johnny1107/house/P1010068.jpg

^ Here is my house, these pics are from about a week before it got it's occupancy permit. it's on about an acre and a half lot with a state forest in the background. I really love this house.

hueterm
07-16-11, 11:38 PM
The whole thing comes down to how much you want to stay in SD, and how feasible it is for you to do so long term. You like your job and what you do, but if that company sells out or you lose your job, what other prospects are there where you live in SD? The Dakotas are growing areas (especially in the energy sector), but I'm sure not all areas are as hot as others.

If you can rent the MN house and get your mortgage covered, I wouldn't worry about renting where you are now. You definitely don't want to get stuck with 2 mortgages on 2 houses that might be hard to sell.

You need to find a MN renter who wants to do a rent to own, so they have an incentive to stay tied to the house. Hopefully they won't bail on you, and they won't tear the place up.

Just set it up so that if you do move back to MN, you can get out of the deal. You may have to hold the down payment part of their rent in escrow or something. Or if the market recovers, you can settle w/the renters and sell the house.

HAZZARDJOHN
07-17-11, 12:18 AM
Here is my preliminary thought. Put a renter in there for one year. I do not want to do a rent to own or a CFD again as there is too much paperwork and limitations put on me to be able to maneuver. In nine months look at the situation and see if it has changed any. If not I would start looking for a good job in MN that pays what I need and hopefully satisfies me. Then move back home and continue as before. I think I could try this SD thing again as an older more debt free man and it would be a better success.

~John

orconn
07-17-11, 12:30 AM
I think you would be wise to do a straight rental as opposed to something which would limit or complicate your options further down the road.

Your renting a place in SD for the time being is probably a wise move and will give you the flexibility to best respond to opportunites over the next few years. Things are just too unpredictable in the economy and job market right now for you to take on further debt for property in SD.

hueterm
07-17-11, 01:06 AM
If you're willing to move back to MN and can find a sufficient job there, then that would be the best move.

Playdrv4me
07-17-11, 01:13 AM
If you're willing to move back to MN and can find a sufficient job there, then that would be the best move.

Agree with this 100 percent. Of course, I didn't know people "dreamed" of living in South Dakota either.

77CDV
07-17-11, 01:55 AM
Rent the house in MN to cover it's mortgage, taxes, insurance, etc., continue to work and rent in SD. As time goes on, you can decide whether you want to stay in SD, return to MN, or do something else entirely. In the meantime, you're holding income property, which even if you never live in it again can be a good start to a retirement plan, and you have maximum flexibility to follow your career and your pleasure as you like.

HAZZARDJOHN
07-22-11, 11:57 PM
I got the guy to pay for August! Which is good cause I didn't want to pay that month. He found someone to take over the contract. Problem is I will be in the same boat next year and since this guy is in a wheel chair he will have cut up my house to make it wheel chair accessible. The valuation came back from the realtor and she would market it at 125K! What the F! How does a house lose 100K in equity in three years? The valuation I had done in 2008 was 220K when I wanted to sell my contract to an investor.

So after talking with the realtor, talking with my mortgage lady, talking to a real estate attorney, I think I am going with the plan of putting a renter in there now, fixing the house up a little (it needs landscaping and a bathroom in the basement). and then moving back in next September. It gives me a year to find a good job, get my affairs in order and enjoy South Dakota while I am still a resident.

The fact of the matter is the market will not bounce back for years and I am not willing to take that kind of a loss on the house. I will move back, refi on a 15 year mortgage (with the interest rates my payment will be about $100 more a month and I will save 130K in interest payments over the life of the loan) and maybe someday I will sell it and move back, or I can go back to the dreams I had when I built the house.

Taking emotions out of it this is the most reasonable plan IMO

I am a little mad because I am missing Car Craft summer nationals because this has taken all my time this week and I just didn't have the time.

~HJ

orconn
07-23-11, 12:19 AM
It is amazing the shellacking housing values took in the last quarter of 2010 ..... at least here in Richmond. If you really needed or wanted to sell late last year on into this year you could expect to get a price 25% lower than the previous year. Just like back in the 1990's after the real estate bubble of late eighties burst, their is a big over hang of foreclosed, bank owned properties, and it took, in many markets, a good ten years for prices to rise back to levels they had been at the height of the '90's bubble.

HAZZARDJOHN
08-06-11, 09:05 PM
Default
A little update. The couple weeks have been trying to say the least but things are starting to move in a positive direction. It has been non stop fighting with this guy, Lawyuh's, dealing with the county, and the city. The house will be in my name only again at the end of the month. The house is trashed. I have not been in it in four years as I have no rights to it under C4D, but he was required to maintain the house and he let it go to pot. The whole back yard was filled with garbage and junk cars, the carpet is black with grease, the nice fixtures have all been replaced with cheap looking fixtures for some reason. Only two doors were still on the hinges and the white walls were black with grease. I do not think anything has been cleaned in 4 year.

The bathtub literally had grease in it like they were cleaning engine parts, weird cause the huge utility sink I put in the basement seemed to be spotless. The basement is "Finished" in the academic sense but it is poor workmanship and no doors or carpet. The drywall isn't even taped. My Dad and I are working on gutting it back to normal right now.

In a nutshell it is bad, but I have a plan and a renter who is going to move in as soon as we get it liveable. Unfortunatly I have to rent it for less than the market right now to get it rented, but over the next year my Dad and I will get it fixed up to new again.

I have to go after him for damages. I hate being that guy and I know that I probably will never get anything from him, but it is so bad there is no way I can let him walk away without a mark.

I have a week I took off work next week and I have a lot of cleanup to do, but I should have new carpet, all the doors rehung, the fixtures replaced and the house painted before I go back to work. The rest of it I will have to work on when a tenant is in there. It is going to take a huge investment on my part to recover from this, but I will get it done and come out on the other side smelling like a rose.

Thanks for all the advice!

77CDV
08-06-11, 09:20 PM
Well, that sucks in a major way. Sorry your renter turned out to be a douche. Hope the next guy treats the place right. Good luck with the repairs.

HAZZARDJOHN
08-06-11, 09:27 PM
The worst part is he wasn't a renter. At least a renter I could have inspected the house. I did a Contract for deed to sell the house to him, so it was his house. Him walking away is like a foreclosure. I didn't want to be a landlord and this was the only way I could sell the house in 2007, not to mention he put a lot of money down, but now I am a landlord (slumlord) and my house is trashed with no recourse other than litigation.

~HJ

77CDV
08-06-11, 09:31 PM
That sucks even worse! :(

mberisha
08-09-11, 04:39 AM
Agree with this 100 percent. Of course, I didn't know people "dreamed" of living in South Dakota either.

Well depends if you are talking about about Western or Eastern SD....

I lived in western SD for about 3 years 10 miles from Sturgis on the foot hills of the Black Hills...I'd move back in a second if I could....God's country!