Replies (9)
- wetdawgs
- Contributions:39658
You are missing routine maintenance and non-routine maintenance costs.
- Lauren Schenke, "LaurenBHR"
- Contributions:12
Hi -
If you choose to rent, I would seriously think about renting for a minimum MINIMUM of 5 years or so before the market starts moving much at all. Home prices in Folsom have somewhat stablized over recent months, but they are not heading up quite yet. Also consider rental vacancies into your estimate - you may have a renter move out and another not move in for a month - be sure to take that into consideration.
Job relocation is considered a valid hardship if you do decide to go through with a short sale. Your lender "should" accept this as a reason that you can no longer pay your mortgage. Of course - each lender is different, as is your personal situation.
I'd recommend that you speak with a CPA you trust to discuss any tax impacts you may have if you do complete a short sale. You should also speak with a real estate attorney to discuss your best course of action in regards to the credit, tax, or professional impacts when considering a short sale or foreclosure. I recommend Steve Beede (RE attorney) in Roseville - he has a low cost consultation for clients considering short sales or foreclosures to discuss their personal situation and options.
Ask yourself if you want to buy another home anytime soon, or if you really want to pay more $500 a month towards the cost of a rental in a country in which you are not even located. Our office would be more than happy to sit down with you and discuss your situation in depth and what could be the best course of action with you. Please give me a call or email if you're interested or if you have any questions.
Best of luck!
Lauren Schenke
Better Homes Realty, Folsom
49 Natoma Street, Suite A
Folsom, CA
If you choose to rent, I would seriously think about renting for a minimum MINIMUM of 5 years or so before the market starts moving much at all. Home prices in Folsom have somewhat stablized over recent months, but they are not heading up quite yet. Also consider rental vacancies into your estimate - you may have a renter move out and another not move in for a month - be sure to take that into consideration.
Job relocation is considered a valid hardship if you do decide to go through with a short sale. Your lender "should" accept this as a reason that you can no longer pay your mortgage. Of course - each lender is different, as is your personal situation.
I'd recommend that you speak with a CPA you trust to discuss any tax impacts you may have if you do complete a short sale. You should also speak with a real estate attorney to discuss your best course of action in regards to the credit, tax, or professional impacts when considering a short sale or foreclosure. I recommend Steve Beede (RE attorney) in Roseville - he has a low cost consultation for clients considering short sales or foreclosures to discuss their personal situation and options.
Ask yourself if you want to buy another home anytime soon, or if you really want to pay more $500 a month towards the cost of a rental in a country in which you are not even located. Our office would be more than happy to sit down with you and discuss your situation in depth and what could be the best course of action with you. Please give me a call or email if you're interested or if you have any questions.
Best of luck!
Lauren Schenke
Better Homes Realty, Folsom
49 Natoma Street, Suite A
Folsom, CA
- sunnyview
- Contributions:26844
I think you need to consider all your options. if you have to relocate for work, you may be able to get a short sale approved by the bank for less than you owe. You need to get tax and legal advice before you decide what to do so you can look at all options.
Personally, I would not go in the hole $500 a month for a house in Folsom. The market will take time to recover there and if your income is lower, every long distance repair will be painful to pay for and deal with while you wait. You need to look at your options now. If it were me, I would probably try to make a deal with the bank and not prolong the situation.
Personally, I would not go in the hole $500 a month for a house in Folsom. The market will take time to recover there and if your income is lower, every long distance repair will be painful to pay for and deal with while you wait. You need to look at your options now. If it were me, I would probably try to make a deal with the bank and not prolong the situation.
- shasta_steve
- Contributions:448
Ok I am not trying to talk you into renting but I think you may be able to write off much more than you think. I am not an expert on the IRS rules, as it pertains to your situation, but they do say you "may" be able to write off up to 25k in losses on a rental, if you "actively" participate in the renting of your property. You could write off just about every expense you have listed. You could write off all your payment except for the small amount that goes on the principal. You may even be able to write off some of the expense to come back and check on your property.
Another huge deduction that most people do not know about is depreciation. In a nut shell it is basically a little over 2 1/2% of the value of your house when you rented it out. It does not include the value of your property the house sits on. So if your house and property are worth 280k but your property was worth 80k then you could write off a little over 5k a year just on the depreciation of the house.
There are lots of things to think about if you rent and it can cause other tax problems down the line but it is something to think about. I would not be surprised at all if you could take well over a 10k loss a year on your house for tax purposes. You really need to talk to a good tax person who could give you a good idea what to expect.
That being said I think you are underestimating the cost of insurance, as it often goes up when you rent the house out. Also you will likely not have the house rented out 100% of the time. Renting out of the area is a huge headache as I doubt a rental agent that only charges $100 is going to do much for you.
Another huge deduction that most people do not know about is depreciation. In a nut shell it is basically a little over 2 1/2% of the value of your house when you rented it out. It does not include the value of your property the house sits on. So if your house and property are worth 280k but your property was worth 80k then you could write off a little over 5k a year just on the depreciation of the house.
There are lots of things to think about if you rent and it can cause other tax problems down the line but it is something to think about. I would not be surprised at all if you could take well over a 10k loss a year on your house for tax purposes. You really need to talk to a good tax person who could give you a good idea what to expect.
That being said I think you are underestimating the cost of insurance, as it often goes up when you rent the house out. Also you will likely not have the house rented out 100% of the time. Renting out of the area is a huge headache as I doubt a rental agent that only charges $100 is going to do much for you.
- shasta_steve
- Contributions:448
I was not thinking well tonight the depreciation is a little over 3.5% a year or a little over 7k a year for a house worth 200k. Basically you get to depreciate the house over a period of 27.5 years. Again though it is much more complicated than just that and talking to a good tax person really helps. I was way too hardheaded and did my taxes myself. I got it done correctly but if I had to do it over again I would have hired someone the first year. It would have saved me lots and lots of hours on the computer trying to figure out just how everything worked.
Another problem you may have is if you short sale or let the house foreclose, the HELOC may be considered income, as it is mostly likely a non-purchase money, recourse loan. There are ways around paying much of this often but still something to run past a tax person also.
As far as your other questions. You never know what banks will do as far as a short sales. If the HELOC is with a different lender it may cause you problems. Personally I would not want the rental as they are a major pain, especially if you are paying money every month just to keep it. Short sales are not magic, no matter what agents try and tell you, they do affect your credit and your ability to buy.
Another problem you may have is if you short sale or let the house foreclose, the HELOC may be considered income, as it is mostly likely a non-purchase money, recourse loan. There are ways around paying much of this often but still something to run past a tax person also.
As far as your other questions. You never know what banks will do as far as a short sales. If the HELOC is with a different lender it may cause you problems. Personally I would not want the rental as they are a major pain, especially if you are paying money every month just to keep it. Short sales are not magic, no matter what agents try and tell you, they do affect your credit and your ability to buy.
- Morgan Larson, "ServiceAndSolutions"
- Contributions:6
Your facing an issue many people are facing right now. So first off, you are not alone! Personally, I would find it difficult to know that by renting I am going to lose at least $6000 per year on a home I'm not living in. This doesn't even count vacancy, maintenance, or other unexpected charges.
On the flip side, short sales aren't easy. Especially short sales involving multiple loans. But, as mentioned earlier, job transfer is a legitimate hardship. Also, banks are getting better about negotiating short sales. Rather than the 18 month process it once was, we are seeing deals go through in as little as 3 months. There will be a hit to your credit, but without missing a payment the hit could be less. Also, with no notice of default you may even be eligible for moving funds through HAFA.
If you decide to go the short sale route, you'll want an experienced agent who works with a professional short sale negotiator. Our in-house short sale negotiator's prime focus is dealing with these banks every day. She knows the ins-and-outs of all the different banks and is often on a first name basis with many of the bank negotiators. She's closed more than 60 transactions this year alone. Miracle Worker is what I call her.
You're in a tough spot, but I'm sure you'll make the choice that's right for you.
Morgan Larson
[website removed by Zillow moderator]
On the flip side, short sales aren't easy. Especially short sales involving multiple loans. But, as mentioned earlier, job transfer is a legitimate hardship. Also, banks are getting better about negotiating short sales. Rather than the 18 month process it once was, we are seeing deals go through in as little as 3 months. There will be a hit to your credit, but without missing a payment the hit could be less. Also, with no notice of default you may even be eligible for moving funds through HAFA.
If you decide to go the short sale route, you'll want an experienced agent who works with a professional short sale negotiator. Our in-house short sale negotiator's prime focus is dealing with these banks every day. She knows the ins-and-outs of all the different banks and is often on a first name basis with many of the bank negotiators. She's closed more than 60 transactions this year alone. Miracle Worker is what I call her.
You're in a tough spot, but I'm sure you'll make the choice that's right for you.
Morgan Larson
[website removed by Zillow moderator]
- E.Rose Velasco, "E.Rose"
- Contributions:1
Seems like a money drain no matter how you attempt to keep the home. If I were in your shoes I'd work with a Realtor who knows short sales very well and allow the short sale. Within about a year to a year and a half, I've seen many people able to purchase again (provided they've kept their credit in good standings after the short sale).
I realize it might be difficult to let your home go but financially speaking you're better off in the long run given the current housing market.
If you'd like to ask me any other questions I'd be happy to answer. My email address is [email removed by Zillow moderator]
Best of luck!
I realize it might be difficult to let your home go but financially speaking you're better off in the long run given the current housing market.
If you'd like to ask me any other questions I'd be happy to answer. My email address is [email removed by Zillow moderator]
Best of luck!
- John Navarro, "user0711089"
- Contributions:1
[promotion deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines]
- user6839889
- Contributions:1
You are missing water/garbage collection charges - 100pm
insurance on rental is 90 not 50pm
maintainence is100pm
cost of replacing a tentant is100pm assuming 2yr cycle
Short sale or rent my home in Folsom?
Currently I have around $300,000 on my first loan and $50,000 on my second (HELOC). I have been paying my mortgages properly and have no financial distress. If I try to sell the home now, it may go for $280,000. We are thinking of moving to a different country and my salary maybe cut down by as much as 50%. I am guessing these will be my average monthly expenses if I rent out the home:
1. Both loans together - $1,650
2. Property taxes and Mello Roos - $450
3. Rental property manager - $100
4. Insurance - $50
5. income Tax on rent - $200
I should probably be able to get a deductible of around $200 per month for all the property tax I pay. That means, my total out of pocket expense per month will be around $2250. My guess is that I can try to rent the home for at least $1750. I will have to pay $500 out of pocket per month and I may be able to afford it even if I leave the country and take up a job elsewhere.
I now have three specific questions:
1. Not sure when we will have housing upturn. But, will it make more sense to short sale or rent the home given my circumstances? What are the pros and cons on each, for my specific case?
2. Am I missing anything in my rental expense list above?
3. Will banks entertain short sale based on the fact that I am planning to move to a different country and my salary will be lower? Note that I am current on all my payments until now.
Thanks you so much for all the help.
Stating a discriminatory preference in an advertisement for housing is illegal. If you think this content is discriminatory or otherwise inappropriate and feel it should be removed from Zillow, please let us know by completing the information above.
We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.