Cash Hash » Cash Hash » Free Cash » I need advice. I don't know if I should stay in my house or if I should rent it out?

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  #1 (permalink)
: My husband and I are both students. Last year we saved a lot and we bought a very nice house. We are able to pay the mortgage and all of our bills just fine. The problem is that we are not having any obey left over to put in our savings account. At the moment we have Nothing saved for any emergency. This worries me us.

We were thinking of renting the house and going to live in an apartment to save money.

I worry about having renters in our house.

But the truth is this house is too big for him and I alone.

Maybe moving out is the best idea but i worry that a renter might be too difficult.

I honestly don't know what to do. I know we need money but it makes me sad to leave my house. What would you do if you where is my situation?

Thank you!

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  #2 (permalink)
: Sell the house. If you are not planning on having a large family within the next 6 years then what is the point? SELL price it to get what you owe if you can get a small profit do that then put the money into your savings account. Rent until you are ready to start again. Renters will probably ruin your property and if you are not handy and aggressive you will have to hire a management company to collect rent and property maintenance.
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  #3 (permalink)
: so you think you will save faster by paying a mortgage and rent. good luck with that. sit down, figure out your expenses for a month and cut back on your biggest expenses. stop going out to eat, stop going to the movies, maybe find a cheaper cell phone plan, or ISP. put the money you save into savings.
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  #4 (permalink)
: While you aren't able to save anything from month to month, you are accumulating equity on the house instead of tossing every penny on rent. In addition your house is likely increasing in value all by itself over time. So while no cash is being deposited in a bank account for a rainy day, you are accumulating wealth.

Here is a very conservative estimate. Lets say you bought the house for $200,000 with an FHA loan with 3.5% down and a mortgage of $196,500 at 4% 12 months ago. In the first year you have accumulated on average about $300 each month in equity (in your second year it will average $10 more per month), PLUS the property itself has increased in value by at least 1% (.01 x $200k = $2000). So for the year you have actually saved $5600 simply by paying your mortgage payment. And that isn't even including the interest deduction you will enjoy at tax time.

Renting your property does come with risks as renters don't tend to care for property that isn't theirs and if a repair is needed, their demand can't be put off like you might do if you lived in the property instead. In addition there is no guarantee your tenant will actually pay the rent too and if you can't pay the mortgage if the renter doesn't come up with it, renting is a losing proposition.

If you are in need of money you may simply need to sell the house. But that doesn't sound like it is the case. The only money you lack is the unused money you used to save that gave you a sense of security. This money will eventually return, and in a big way. Over time your experience level will increase and you will make more money at your jobs, but your mortgage payment will remain very close to the same allowing your to sock it away like the good old days. But if you rented, your rent would steadily increase taking away from your increase in salary. Remember it is an investment too. You are so much better off by keeping the house.

Maybe you could rent a room to a classmate or two to gain some extra spending money, stay in the house to care for it properly and even split the utilities. Personally I wouldn't as I prefer to keep my domain free of strangers, but my house isn't too big for me.
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