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One House Makes A Home…….

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Three houses still makes for a four lettered word but, that word is not “home” my friends.  Now, don’t get me wrong I am very thankful for what we have and I know that if we can stick with it for a few years they will serve us well.  But sometimes the going is real rough.  I’ll try and explain our house situation without completely confusing ya’ll.

House #1: I lived in this house until I was about 10 years old. My parents kept it as a rental and my husband and I bought it from them a couple of years after we were married.  For the first year that we owned the house we lived with my parents and pretty much gutted and totally renovated the entire house.  Two weeks after we moved in we had to evacuate because of Hurricane Rita.  Our entire area was completely devastated by the hurricane. Luckily the only damage to our house was the roof, and a tree had demolished a shed that was in the backyard. After living there for a while we decided to do a small addition to the house.  We did all the work ourselves and it took about 6 months.  Literally a week after we completely finished the addition we were driving to my parents and one of the houses on their street was having a for sale sign stuck in the ground.  My husband saw the crazy in my eyes and just said ” Oh no”.  By that evening we were under contract. It all happened so fast that we didn’t have time to sell our house.  We decided that we would keep it and turn it into a rental. That brings us to………

House #2: We currently live in this house.  I love the neighborhood that we are in.  Not only do my parents live down the street but so does my grandfather. Actually, when I was 16 the house my mom and dad had built burnt down a week before Christmas.  Months later it was decided that my parents would buy my grandparents’ home and my grandparents would live in another house on the property. So, I’d spent all of my young life running around the woods at my grandparents (it’s not a “traditional” neighborhood, there aren’t any lots less than an acre and most are 5 acres) and have known most of the people that live here since I was little.  I do not want to leave this neighborhood.  My girls are able to ride their bikes or walk down the road to see their grandparents and great grandfather whenever they want and I really like that. Much to my husbands chagrin another house has recently come up for sale down our street.  It’s bigger than ours and has a large shop on the property that my husband can utilize to make extra money.  He often buys vehicles, fixes them, and then sells them for a profit. His doing this is difficult right now because he doesn’t really have a good place for it. We are considering buying this house and turning the one we currently live in into our second rental property.  I have so many conflicting feelings about this but I’ll get into that in a different post.

House #3:  Unfortunately, we now have this house because my husbands grandmother passed away in January of this year and we inherited it.  My husband and his cousin are the only family she had left and she left the house to both of them.  This is a real problem.  My husbands cousin lives in Nevada.  When my husbands grandmother was sick we took care of her and starting paying her bills. We never could get the cousin to answer the phone when there were problems.  Now that she is gone, we really can’t get him to answer the phone.  We are paying utilities right now so that the house doesn’t fall into disrepair.  Ideally we would live there and really knock our debt out because there is no note but, it is over an hour away. It would cost so much in gas to get back and forth to our jobs that it wouldn’t really benefit us. Also, we would have to change our girls schools and the town the house is in is really tiny and the schools aren’t great. My husband is considering just having the cousin buy us out or selling it to an outside buyer.  This entire situation has been a real nightmare. We don’t want to have to get a lawyer in order to get in contact with him but we don’t see that we have much of a choice.

Current amounts owed:

  • House #1.   $66,830.20
  • House #2.  $82,362.50
  • House #3.  $anity

Ok. So, there is the skinny on the houses. Any opinions about buying another house or how to deal with the cousin? I’d love to hear them!

Check back tomorrow for interest rates, minimum payments, and income info!


32 Comments

  • Reply Angie |

    What part of the country do you live in? Housing seems so inexpensive! I’m not sure if you need a “bigger” house… wouldn’t it be great to sell the third house and erase all your non-consumer debt? I would have recommended to keep house 3 but the situation with the cousin makes it difficult.

    • Reply Stephannie |

      Louisiana. We really got a good deal on both houses. We definitely don’t need a bigger house. Honestly the biggest draw is that we’d have 2 houses that in about 12 years would be paid off and generate income. Also, the shop would allow us to make more money as well. The area we live in is doing amazing as far as economic growth and they are thinking there won’t be enough housing for all the jobs being created so rentals are a good investment.
      As far as house #3 goes, I want to sell but it’s on water and my husband has visions of it being a family camp. Personally, with the cousin situation, I don’t see keeping it as an option.

  • Reply Angie |

    With the acreage at your current place, would you be able to build a shop on your property after you’ve paid off your debt? I’ve been to LA once… my husband has family there. My son was just a toddler, but he keeps asking when we’re going back to “N’awlins” every time he sees the Disney cartoon.

    • Reply Stephannie |

      Your son knows his hot spots, now if New Orleans could only be like the Disney version lol.
      As for the shop, we do have the room on our property but the way our house is situated there’s not really a way to put a driveway to it without costing a small fortune.

  • Reply JT |

    There are a couple of scenarios that might work out.

    1. Keep House #1 and rent it out IF you can earn enough money on it to set some aside for repairs and have a little extra income. It’s close by so it wouldn’t be a burden if emergencies occur. Keep and live in House #2. Sounds like that’s your favorite one and you would hate to move anywhere else. Sell House #3. If your husband and his cousin both legally own the house, it might be a hassle to sell it. Maybe by enticing the cousin with how much money he could get if the house is sold, he might be more eager to accept your calls. Or if he wants to keep it, offer to have him your share.

    2. Rent House #3. It’s not TOO far away so it may not be too much of a hassle if you have to go out there once a month or so. I’d really consider it unless the house needs alot of repairs/updating or you predict alot of future repairs. I’m guessing there is no mortgage and your just paying utilities for now. Again with the cousin, if he is hard to get hold of I’d consider sending him a letter with a return signature (so you know he actually got it) saying you are planning on renting the house, respond by such date if you have issues,concerns,questions, and how or if you plan on sharing the rental income after expenses. Give him a date to respond by and if he doesn’t make that date, assume he is ok with idea. Then sell House #1.

    3.Sell both House #1 & #3 and keep House #2. Use all that money to get rid of all your debt and your done!

    Also, you mentioned a possible 4th house that would be better cause it had the shop and was bigger. I wouldn’t advise buying it. Right now, you don’t have the money and you already have 3 houses. If you can get rid of 2 of the houses and/or get completely out of debt, then I think it would be ok to buy the other house. But until then……

    • Reply Stephannie |

      So many scenarios! I appreciate them all and they are all something to consider. The rental(s?) are something we are considering for retirement years.

  • Reply Meghan |

    Hi Stephannie-

    In regards to the inherited house, was there an executor of the estate? Have they been able to get in touch with the cousin? Ideally, they would be responsible for helping you to resolve the issue…

    Alternatively, if you are spending money on the house already every month, it might be worth the small fee to have a lawyer (or even a paralegal) draw up and mail a document to the cousin. I know you don’t want to turn this into a legal affair, but something just to offer the cousin all the possible scenarios and list your top two choices for what would happen. (If you are near a law school you might even be able to find a student group that does these sorts of things for the experience.)

    I also wonder if renting the house is a possibility? It may be difficult to get in touch with the cousin now, but I can’t imagine they would complain if checks started showing up in the mail every month!

    Have you had the house appraised and inspected? If offering the cousin the opportunity to buy you out, or vice versa, it may be smart to know the true value of the home.

    As far as buying another house, I am not against it. The only questions I would ask are: how confident are you in the rental market in your area? Generally, at this time mortgage lenders are much more stringent in their requirements, where would you come up with the down payment for the house?

    Cheers!

    -Meghan

    • Reply Stephannie |

      My husband was actually named executor of the estate.
      It needs a lot of work done before we rent it and speaking as a landlord, it’s hard work. I’m not sure that we are willing to do that and send him a check every month. Also, I’m not sure how our taxes would work since its an investment and threes no note to offset profit?
      I’m extremely confident in the local rental market. The house we currently rent out has never been vacant and I always have at least 30 applicants within a couple of days once the tenant leaves.
      We have some savings and in the spirit of full disclosure, we (and the cousin) will get some money from the inheritance.
      It’s enough to do what we need to and still have emergency funds. Of course, if we decide against it, we will pay off a decent chunk of our debt.
      I do want to say this, we consider buying this house (if we were to buy it) as an investment that will benefit us when we retire.
      There’s a lot to think about!

  • Reply KLM |

    Are you turning a profit on house 1? In other words, does rent cover the mortgage, taxes associated with that income, any municipal fees, etc.?

    • Reply Stephannie |

      Yes, we make about $250 per month after everything is paid. Now, most of this we put aside for possible repairs. Just this last year alone we spent about $2500 in plumbing problems.

  • Reply Mary |

    I love that you have all of these housing options-that’s a high class problem. Many people would be happy to have one home today.

    As far as what to do, you’ve answered your own question. You love house #2 so I’d stay there. It sounds just perfect and lovely. Sell house number 1 and house number 3 and pay off all your debt. Once your debt is paid off, you won’t need the extra property to fix cars since you potentially won’t need the extra money. Also, you mentioned that it’s bigger. Kids grow and if you love the neighborhood, I’d be more likely to keep the current home and once the kids grow and move out, you’ll have a nice home that is just right size wise and is paid off. More land and more house is more upkeep later on. Take any extra money you have after all the debt is paid and pay off your current mortgage. Rentals are a lot of work and also the whole situation with your cousin is a lot of work. If you can’t reach him now, turning this into a rental will only be more work for you. Save yourself a lot of time and get rid of all of these properties, pay your debt and enjoy your life. With your cousin, I’d get an attorney involved right away, and give him the options and a reply date. You’ll need a very experience attorney to resolve this so don’t be afraid to hire the best attorney you can right from the start to save yourself as much time. Hiring an attorney with less experience when you have a cousin who won’t respond will only aggravate the situation since you’ll have to hire someone more experienced to get around this situation since most likely, he won’t respond. . I have a friend whose parents left a home to him and his brother. The brother lives in another state and never responds to anything. He refuses to pay his portion of property taxes or any maintenance fees nor will he respond to any legal matters. They’ve had offers to purchase the property and he doesn’t respond or refuses. He has had to hire a few attorneys and is very distraught over this situation. His only choice now is to continue paying the taxes or let it go into foreclosure. He continues to pay on the maintenance and taxes and it’s a huge mental drain on him. Hire an attorney right away and get this off your plate asap. It is a total nightmare of a situation and you’ll be better off nipping this in the bud.

    Once you get these houses sold and debt paid, I’d focus on learning to maintain a debt free lifestyle. Sometimes maintenance (meaning staying debt free) is more work than eliminating the debt itself. I hope I’ve given you some ideas. Your current home sounds lovely.

    • Reply Stephannie |

      Thank you for the advice! I agree completely that having too many homes is a nice problem to have. You’re also right about rentals being a lot of work. We currently have enough equity in house #1 to sell it and pay off all consumer debt. Which my husband and I have discussed. The thing keeping us from doing so is that it will be paid off in 12 years and we will be 45 and that will be retirement income for later. House #2 will also be paid off in 12 years (we refinanced them at the same time) and could potentially be retirement income. Do you think using them as rentals would be bad investments? I truly want your opinion, not being snarky 🙂

      • Reply Mary |

        Just lost my comment, arggh. I can’t speak to whether or not it’s a good investment decision or not, but rather, just giving my opinion on what I’d do. I see a lot of people try to keep rentals and when someone is in debt, it ends up being expensive and another thing to take care of. I understand the logic of wanting some retirement income however I’d be more inclined to simplify, liquidate and pay off all debts and your current mortgage and then invest in your retirement after that. If your husband enjoys and can do the property maintenance and repairs, that would be helpful. If not, it’s just another job on top of his current one. Also, it can be expensive to hire someone every time a renter has an issue. When I read your post, it sounded very stressful that’s all, having all of these properties (and for good reason!). In the end, do what you are comfortable with and talk it over. I find it helpful to imagine first what you want the end result to be meaning ideally, what do you want? Do you want to be totally debt free and taking care of rentals in your retirement or what does that look like in your mind? Once you know the goal, the decisions will come easier for you. Above all, never do anything you aren’t comfortable with….you can always defer a decision for a year or so when you are unsure. Hope this clarifies it a bit.

        • Reply Stephannie |

          Thank you for this! Honestly I think my husband is still so emotionally attached to the property that he’s trying to think of any way to keep it which just isn’t smart. You are so right about the rental issue. We only have one now and it’s really hard work.

      • Reply Jen From Boston |

        “The thing keeping us from doing so is that it will be paid off in 12 years and we will be 45 and that will be retirement income for later.”

        I know houses are different than, say,pliers and batteries, but in a way you are hoarding. And you might be “thinking poor.” I have a clutter problem so I started looking at FlyLady.net, who’s conquered her own clutter problem. One of her sayings is that keeping something because it might be useful in the future is a way of “thinking poor.” When you do that you’re assuming that you won’t be able to afford the item in the future when you actually need it, so instead you clutter your present life with it.

        Granted, real estate is a bit different, but when I read that I immediately thought, “They’re assuming they won’t be able to afford a retirement home when they’re ready to retire, so they’re hanging on to this house and all the work required to maintain it and rent it out.” Another way to look at the situation is that if you sell the house now and pay of your debt, you’ll be able to get yourself in a much better financial position so that by the time you retire, you could sell the home you’re living in and downsize to a new home. Also, by the time you retire your housing needs might be different – maybe you’ll want a condo because you can’t do lawn work, or maybe you’ll want to move into an assisted-living development, etc.

        Just a thought.

  • Reply gloria-victoria |

    Sell house #3. You may need to go to court to force the sale if the cousin will not talk to you about it.

  • Reply jaye |

    I would just point out that more homes means more risk. And that no matter how good the real estate market is now, it’s likely that it won’t stay that way. Beyond that, are you (or your husband) ready to deal with/maintain 3 or even 4 houses if something really bad happens (more sickness, disability, even divorce)? I know that’s an awful question, but it may be worth thinking about. You are super-optimistic and that’s great, but life doesn’t always turn out as you’d hope.
    Regarding house #3 – I think I’d get rid of it. Definitely don’t move there. A good education for your kids is worth more than you would gain by moving. In terms of keeping it – why put yourselves at the mercy of the intransigent cousin? Doing so will add more stress to your life and likely benefit him more than you – not to mention ruin the fun of a family camp. And regarding your husband’s dream of a camp, it’s a nice idea, but maybe just paying off your debts, funding some wonderful vacations and using some for college funds may be a better idea. I don’t know for sure how old your kids are, but let me tell you, getting hit with that first $50,000/year bill is going to hurt if you’re not prepared!
    Sorry to be the voice of doom and gloom, but I know my 49-year-old self (with a first kid going to college in September) wishes she’d made different choices at 33! Good luck.

    • Reply Stephannie |

      Ack, you’re right! If any major life changes happened it would put us in a precarious position! Thank you so much for commenting it gives us a lot to think about!

  • Reply Anne |

    I’m sorry, but with all this equity I don’t find you an appropriate poster here. It’s more like a slap in the face of how much you actually have. Like the poster above said, high-class problems.

    • Reply Stephannie |

      Please don’t take this the wrong way but that comment seems funny to me. The only debt that I feel like we’ve been smart about is the houses. This blog (as far as I understand it) is not about struggling and barely making it but getting out of debt and making smart choices. We’ve got over $30,000 in debt that we want gone and that debt was a bad decision. The rental we have is a lot of work and people ( by people I mean renters) assume that just because you have an extra property then you must be rich. I can assure you this is not the case. Just want you to know where I’m coming from but I respect your opinion.

      • Reply Jim |

        I like that we have such a variety of bloggers. And like Stephannie said debt is debt. It is about making choices, and having “gazelle focus” in getting it gone.

        • Reply Stephannie |

          Thanks, Jim! I like the variety too. I’ve already learned a lot and we are only a week in!

    • Reply Keely |

      I completely agree Anne. Excluding their mortgages they only have $24K in debt (plus some medical?) and $15K of that is on a car loan. If Stephannie really wanted to get out of debt they would sell the other houses, be debt free and probably cut down the amount they owe on the house they live in. Instead, she’s talking about buying ANOTHER house and going further into debt. Ridiculous to be blogging here. Needless to say I won’t be reading on TH.

      • Reply Stephannie |

        Sounds good, Neely! The other bloggers are great and I hope they keep you interested 🙂

    • Reply Jen From Boston |

      And I suppose you thought Claire was an inappropriate choice, too. Good grief. One of the aspects of this blog is showing how PAST decisions got the bloggers where they are!! And it can happen to ANYONE regardless of income, class, etc. Stephanie and her husband made choices that got them into credit card debt. Sure, they could sell their houses and pay it all off, but that’s only one solution. The other part of getting out of debt is developing habits to REMAIN debt-free.

  • Reply Debt-free Dan |

    Hi Stephanie,

    I have a few rental houses in addition to my primary residence. Each of the rentals is cash-flow positive and I’m managing them myself. On your one rental house, if you have reserves available to fund maintenance and vacancy, then that house is self-sustaning. Just make sure you’re accounting correctly for all house costs. You should be getting a depreciation tax deduction in addition to mortgage interest deduction and other expenses. Assuming it’s tax-neutral or better, I would keep house #1.

    At the moment, house #2 sounds fine. I see the appeal of the new property near house #2, but I would not rush into that if you have lots of other debt. Surely it’s not the only such property available. You can get into a similar property when you’re in a stronger overall position.

    If you could buy out your relative’s ownership on house # 3 without taking on new debt, it might be a good idea, assuming it’s also cash flow positive. Here again, if you wanted to expand your rental portfolio and you didn’t already own this property, would you go out and buy that one or something different? I suspect you would buy something closer even if the other numbers worked on this house. For that reason, I recommend you sell this, with a forced sale if necessary. Since it’s paid off, I would take your share and pay off most of your remaining debt.

    I, for one, think your housing situation is an interesting twist, in comparison to the other bloggers. I look forward to reading about how it fits in with your plans.

    • Reply Stephannie |

      Thank you, it’s nice to hear from someone with investment property. We have a little in reserves for the rental we have and that’s just since I’ve been working and not running my business. You’re right, we would not purchase a house to rent that far away and I also think you’re right in thinking we should sell it and pay off debt.

    • Reply Walnut |

      I really like that one of the bloggers here is considering their retirement. Getting out of debt is important, yes, but it’s also critical to be thinking about retirement and alternative forms of cash flow.

  • Reply Andrea |

    Personally, I love your story and focus on the long term! We’ve considered getting into rentals as well. The housing market is still depressed where we live, but rentals are going through the roof. All the informative posts and comments are helping expand our research.

    • Reply Stephannie |

      Hi, Andrea! It’s been a good thing for us, so far. Our market is doing well because of all the growth in our area. I think it’s a great investment but it’s also really hard work. We’ve had to learn to be tough that’s for sure! I’m planning on future posts about our experience being landlords. Hopefully it’ll give y’all some information that can help in your decision. There’s also someone else in the comments that has investment property and they could have a lot of helpful insights too.

  • Reply Heather |

    Here comes the negative nellies…

    30k is still a lot of debt and it is debt that isn’t benefiting anyone by making payments-so more ecitement to get it paid off. I prefer when people are smart with their choices and have rental incomes or such because it can be a burden until you get a routine going, but once those mortgages are paid and you bank all that money, you and your family are set for a healthy future and retirement! And god forbid something were to happen, you can sell the house and have that instant cushion.

    Sorry, your story is the main one I come on here to read and feel like I relate to the most, and I cant stand negative nellies!

So, what do you think ?