I just put my house up for sale and no one I know understands why

[pashka]

Ha, I'm literally in the process of selling my appartment as well and I can only confirm your experience. The original idea a year ago ehen i bought it was that I can make yearly pre payments (I'd use all of our money accumulated over the course of a year after paying for mortgage. In other words playing frugality game to the most).
Now, as bad as it sounds it gets even worse given the scorching red market of Toronto and risks that it imposes, shall I decide to simply pay accordingly to schedule and forget about pre payments will expose me to 10yrs of risky journey.

Not even to mention that the appartment isn't worth its price in the first place...

This had been a reason of some harsh tslks eith my wife lately who isn't ready to give it up so easily (why? It's just a concrete box after all, no hard feelings should be involved)

You know, I personally feel that the more I hear that I'm wrong then the more confidence it gives me to follow my own path.

My J.O.B. is in IT as well btw

Sent from my SM-G930F using Tapatalk

 

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[njord]

This is Kind of funny i also have a house but for me its financially better to keep it.
In holland the still subsidise morgaging houses so its far cheaper to buy then rent I also rent out 1-2 rooms so i bearly pay morgage.
And to top it off i dont have a GF to move to.

My car is another story, I pay more then € 100 a month just to have it so it was nagging me the last few months because i bearly use it.
But now the garrage bill came in i have to pay nearly 2k to keep it on the road. So im dumping it I can live on public transport and these days you can use car rental apps that are 10x cheaper then owning a car.

 

[SteveO]

These types of decisions are all very personal. Do what you want.

On the flip side. I have made many decisions that I have later regretted. No need for regrets though. The trick is to keep forging your path.

 

[Andy Black]

Cutting your living expenses by $20k a year is impressive. Tell your friends you're getting a $20k salary increase and see how they react instead.

I used to use a handy rule of thumb that you needed a £2k annual salary increase to get an extra £100/mth in your hand.

If that’s similar in the US, then $20k a year ($1,600/mth) in your hand is like getting a $36k annual payrise.

 

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[biophase]

In 2003 I sold my house and moved back in with my parents to do this same thing. My reason was that I couldn't rent my house out for cash flow. I ended up moving to AZ in 2004 after that and the rest is history.

BTW, I sold for $345k, and then in 2011 it sold for $280k, and was just listed at $360k. So $15k appreciation in 15 years? It's not always good to keep your real estate for appreciation sakes, you never know what will happen.

 

[OlivierMo]

I've definitely thought about that. But every time came to the conclusion that the couple hundred bucks a month I would make in rent would not be worth the time or effort. I could spend a few hours per month managing plus the burden of risk as a landlord to make a couple hundred bucks, or pick up a few more hours of work. I'm a programmer and charge $100-$125 an hour

Man I need to charge that rate. I have it all wrong.

 

[Zcott]

I used to use a handy rule of thumb that you needed a £2k annual salary increase to get an extra £100/mth in your hand.

If that’s similar in the US, then $20k a year ($1,600/mth) in your hand is like getting a $36k annual payrise.

£2k pay rises are always fun until HMRC come knocking.

But you're right, that's a better way of looking at it! Be interesting to see how people react once you tell them that you're getting a $36k pay rise.

 

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[FreakyThomas]

I'd sell it 100% ! Especially if you SO agrees and understands.

 

[Johnny boy]

“I’m selling my home in a high market to avoid loss of equity, lower living expenses, free up cash for business usage and lower my bills and resulting stress. If you don’t understand that then I’ll be laughing at you in a couple years”.

Tell that to everyone.

 

[biggeemac]

Do you have equity? Can you do a cash out refi, and then dump the proceeds into a business of some kind or an investment property that will pay for your living expenses AND rent out the house?

Sell = taxable event
Cash out refi = non-taxable event, although, there are refinance fees

 

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[garyfritz]

Someone else would also be paying off your mortgage, and it will likely appreciate a decent amount in that time. Don't underestimate these factors--they can add up to a lot more than the cashflow.

This. I have a large lakefront home. It's stupidly large for one person and I was feeling broke after my divorce, so I almost sold it. Decided not to, and instead I rented out the walkout basement as a lakefront apartment. Between my equity and the rental income, my net "house payment" is less than I'd pay for a 1-bedroom apartment.

Meanwhile the house has appreciated about $300k in the last 6 years. And as a bonus I live in a beautiful quiet spot.

So holding the house can work out well, if your market cooperates. I'm feeling a bit nervous about economic conditions but not quite enough to think about selling just yet.

 

[QDF]

This. I have a large lakefront home. It's stupidly large for one person and I was feeling broke after my divorce, so I almost sold it. Decided not to, and instead I rented out the walkout basement as a lakefront apartment. Between my equity and the rental income, my net "house payment" is less than I'd pay for a 1-bedroom apartment.

Meanwhile the house has appreciated about $300k in the last 6 years. And as a bonus I live in a beautiful quiet spot.

So holding the house can work out well, if your market cooperates. I'm feeling a bit nervous about economic conditions but not quite enough to think about selling just yet.

Nice! I would take that setup in a heartbeat.

I don't want anyone to think I was suggesting him (or anyone) to hold onto property just for appreciation though.

My point was, even if the place appreciates 0% over the course of the mortgage (unlikely), someone else will be paying it off for him even if he's not cash flowing anything.

As others have mentioned here though, it's a personal choice.

 

[DustinH]

Sell it. Take the money and run. Use the money to market your business or yourself. In 3-5 years you will be able to buy a better house for cheaper.

I went to school in Bham. Lived in Homewood and Hoover.

 

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[WJK]

I am a single (well, have a girlfriend but not married) guy with no kids and a dog. I currently live in a 3BR 2.5BA house. I bought this house 3 years ago when I was still within the confines of the slowlane mindset. I am selling my house to move in to an apartment with my girlfriend. Doing so will decrease my living expenses $20-30k / year. All of this money will fund my business while I maintain my current 9-5 or will be saved to a point where I can leave my 9-5 and have enough savings to live and commit all of my time to my business. My current income is at the very bottom of 6 figures.

None of my friends or family understand why I am selling my house. I have received several lectures from my parents on why they think this is a bad idea. They are boomers and still paying off a mortgage. None of my friends actively agree with me on the move either. I know they're all wrong because they're all slowlaners and live inside the typical American Dream box. The only person who fully supports this decision is my girlfriend. She is of the fastlane and entrepreneurial mindset like myself.

Does anyone else have experience with this? My mind keeps going back to Gary Vee and Andy Frisella. Gary talks a lot about how too many people will never chase their dream because they are chained to their homes that they dont need and only have to impress other people that do not care. Andy talks about how no one will support you during your journey, but will say "I always believed in you" when you succeed. These two guys and what they preach is helping me sticky to my guns on selling the home.

Does anyone else have any similar stories or advice on downsizing to fund their business? I'm really just LAMPing for some validation

I would take the $ and buy a 2 to 4 unit building. I'd live in one unit and rent the others. That will give some tax benefits and hopefully enough rental income to "house hack" with no personal rental expenses.

 

[MJ DeMarco]

Typical response from the Scripted gallery in your life.

When your action doesn't comply to Scripted rules and norms, you'll face friction. In other words, you're getting Semmelwashed. (Unscripted , pg 178)

“This renaissance story demonstrates the next bias you’ll face on your UNSCRIPTED path: Semmelwashing. However, Semmelwashing doesn’t come from your mind; it comes from the hive mind of the mainstream. It’s what happens when unconventional crashes into conventional. When traditional paradigms are opposed or questioned, not only is the message attacked but so is the messenger. A Semmelwashing is the friction we face when other people discover we aren’t following the conventional SCRIPTED brainwash.

For them, you’ll likely come across as unwashed, a rubber band needing a “snap back” to reality, namely their reality. For example, prepare for a Semmelwashing after telling your parents you’d rather skip college so you can remain debt-free. Prepare for a Semmelwashing after Facebooking that you’ve quit your job to pursue something impressively fulfilling instead of remaining depressingly employed. Prepare for a Semmelwashing when your trendy friends can’t understand why you’re driving a decade-old Camry while they drive new cars. Anytime you defy convention and stamp a path where few tread, expect oppositional floggings from ordinary people with a reeducation on what convention demands.”

Excerpt From: MJ DeMarco. “UNSCRIPTED : Life, Liberty, and the Pursuit of Entrepreneurship.” iBooks.

 

[jakeG]

Do you mind sharing if what your house is worth and what your mortgage is compared to renting an apartment. Why do your friends/family think it's crazy? What is their thought process on why it's a bad idea?

For sure. Sorry for the formatting here, I have it all in an Excel spreadsheet but couldn't copy nicely.

Current Principal Balance $210,456.99
Original Loan Amount $223,250.00
Loan Origination Date 03/31/2016
Interest Rate 3.375%

My monthly mortgage payment is $1372. I'm paying $394 / month toward principal. The rest is in PMI, Insurance, and of course, interest.

The house will be listed and likely sold at 250k. The net sheet I put together with my realtor will put my net proceeds around 232k, less the roughly 209.5k that will be remaining on principal. Putting about 20k back into my pocket. After my original down payment (12k), upgrades I have put in to the house, and interest, I am coming away from the house down a couple thousand. However, I don't see this property increasing enough in value over a longer period of time to cover the upgrades and down payment. As far as renting, I would rather use that mental capacity on myself and business.

We haven't for sure landed on our new place yet but I am estimating that my rent in the apartment will be $975. The total rent will be $1950, split between me and my girlfriend. We could definitely live somewhere cheaper, but the couple hundred bucks a month saved in rent makes a substantial difference in living conditions in this town. Unknown to most, Birmingham is one of the most murderous city in the country and is consistently in the top 10 most dangerous cities in the country. So living in a decent part of town is crucial. We're looking to move out of here at some point.

5. Birmingham, Ala.
Birmingham homicides in danger of hitting 22-year high

The substantial difference is in operational costs and maintenance costs. This home is approaching 10 years old. Appliances will soon start dying out needing replacement or repair. The yard has gone to shit despite my best effort and thousands of dollars and hundreds of hours of time invested while I was still in the slowlane mindset. Now that my mind is in the fastlane nothing is more frustrating than having to spend money and 4+ hours every few days during the summer getting it up to neighborhood standards.

Expenses -- the left is current and averaged from my past expenses, the right is estimated in the apartment

Monthly
Mortgage/Rent 1320 ||||||| Mortgage/Rent 975
Water 100+ |||||||| Water 40 (Birmingham, Al is notorious for high water costs due to decades of a corrupt city government Birmingham Water Works chair, others charged in corruption probe )
Power 115+ |||||||| Power 50
Natural Gas 60+ ||||||| Natural Gas 0
Pest Control 35 ||||||| Pest Control 30
Cleaning 150 ||||||| Cleaning 0
Cable/Internet 110 ||||||| Cable/Internet 75
Security System 90 ||||||| Security System 0

Quarterly
AC Filters 35 ||||||| AC Filters 0

Annual
Termite 225 ||||||| Termite 0
HOA 400 ||||||| HOA 0
Landscaping Upkeep 400+ ||||||| Landscaping Upkeep 0
Window and Gutter Maintenance 125 ||||||| Window and Gutter Maintenance 0
Carpet Cleaning 400 (thanks to the dog) ||||||| Carpet Cleaning 0

Another large chunk of savings will come from food savings. My gf is a dietitian, and I have estimated about $5000 - $7000 of annual food savings when we move in together. There are several other expenses not included here that I am cutting back on as well. I'll also be liquidating most of my possessions. The house is fully furnished and so is my gf's apartment, so we will not nee to buy anything and have too much stuff to fit into an apartment. I should make a couple K selling everything in the house (including a Big Green Egg setup).

All in all, by this summer I should have 50k+ in cash savings after this event. Largely due to the selling of the house and possession liqudation.

The people in my immediate circle opposing the decision dont really understand cash flow. They also believe that rent is "pissing money away" but somehow fail to see that a mortgage primarily consists of interest and PMI (pissed away money) until about year 20. They cite all of the classic old mindset home ownership principals, "but what about your tax write off", "you're working towards owning it", "your home is your biggest investment". They also believe that a home should ALWAYS return as a positive investment, and should not be sold until it is a positive investment, even though that has never happened to them. Just a complete misunderstanding of basic accounting, cash flow, and time valuation. It's really just the epitome of the scripted life.

 

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[jakeG]

Sell it. Take the money and run. Use the money to market your business or yourself. In 3-5 years you will be able to buy a better house for cheaper.

I went to school in Bham. Lived in Homewood and Hoover.

Nice! I live in Irondale right now. Grew up in Hoover. I have a friend moving to Nashvegas in August. That town is awesome. It's on my list of possible destinations.

"Use the money to market your business or yourself. In 3-5 years you will be able to buy a better house for cheaper."

That has been my rationale. My parents say "you dont want to have a house payment when you're our age". But my mentality is that I should be able to pay for, in cash, a bigger and better home in a better area in like 10 years. Just scripted mentality from them.

 

[jakeG]

Typical response from the Scripted gallery in your life.

When your action doesn't comply to Scripted rules and norms, you'll face friction. In other words, you're getting Semmelwashed. (Unscripted , pg 178)

“This renaissance story demonstrates the next bias you’ll face on your UNSCRIPTED path: Semmelwashing. However, Semmelwashing doesn’t come from your mind; it comes from the hive mind of the mainstream. It’s what happens when unconventional crashes into conventional. When traditional paradigms are opposed or questioned, not only is the message attacked but so is the messenger. A Semmelwashing is the friction we face when other people discover we aren’t following the conventional SCRIPTED brainwash.

For them, you’ll likely come across as unwashed, a rubber band needing a “snap back” to reality, namely their reality. For example, prepare for a Semmelwashing after telling your parents you’d rather skip college so you can remain debt-free. Prepare for a Semmelwashing after Facebooking that you’ve quit your job to pursue something impressively fulfilling instead of remaining depressingly employed. Prepare for a Semmelwashing when your trendy friends can’t understand why you’re driving a decade-old Camry while they drive new cars. Anytime you defy convention and stamp a path where few tread, expect oppositional floggings from ordinary people with a reeducation on what convention demands.”

Excerpt From: MJ DeMarco. “UNSCRIPTED : Life, Liberty, and the Pursuit of Entrepreneurship.” iBooks.

Thank you @MJ DeMarco !! Even though I finished up Unscripted and TMF a couple weeks ago, I feel like I need to go through them again

 

[CementFeet]

I am a single (well, have a girlfriend but not married) guy with no kids and a dog. I currently live in a 3BR 2.5BA house. I bought this house 3 years ago when I was still within the confines of the slowlane mindset. I am selling my house to move in to an apartment with my girlfriend. Doing so will decrease my living expenses $20-30k / year. All of this money will fund my business while I maintain my current 9-5 or will be saved to a point where I can leave my 9-5 and have enough savings to live and commit all of my time to my business. My current income is at the very bottom of 6 figures.

None of my friends or family understand why I am selling my house. I have received several lectures from my parents on why they think this is a bad idea. They are boomers and still paying off a mortgage. None of my friends actively agree with me on the move either. I know they're all wrong because they're all slowlaners and live inside the typical American Dream box. The only person who fully supports this decision is my girlfriend. She is of the fastlane and entrepreneurial mindset like myself.

Does anyone else have experience with this? My mind keeps going back to Gary Vee and Andy Frisella. Gary talks a lot about how too many people will never chase their dream because they are chained to their homes that they dont need and only have to impress other people that do not care. Andy talks about how no one will support you during your journey, but will say "I always believed in you" when you succeed. These two guys and what they preach is helping me sticky to my guns on selling the home.

Does anyone else have any similar stories or advice on downsizing to fund their business? I'm really just LAMPing for some validation

Dump your friends too...

 

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[WinYourself]

Not a bad time to sell. However market could get worse fast.

Top seems to be in already, at least in big cities. Indicators pointing down.

Take the 20k and run.

Dump it on the market and be happy & free.

You will save your future self lots of time and energy if you just stop telling people in your life about your plans and just do it.

Stop looking for validation. You don't need validation.

Stop looking for approval. You don't need approval.

Just do what you think is right.

Makes life very simple.

Only ever ask advice from your mentors or people in the category "been there done that".

 

[MJ DeMarco]

Based on the numbers you presented, I like it the idea of selling. You get some cash and reduce your monthly outlay.

I'd also guess you'd be selling at the top of the market. You've also alluded that the house is not in a very good part of town, decent, but not great -- as you start making goals, you will outlive the house and demand a better area anyway.

 

[biggeemac]

Agreed with selling. You don't have enough equity for a cash-out refi, and I think if someone needs to sell, it needs to be sold yesterday. I think the writing has been on the wall for months that the housing market could see some significant cooling. Let those that buy at the top be the bag holders.

 

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[rogue synthetic]

We could definitely live somewhere cheaper, but the couple hundred bucks a month saved in rent makes a substantial difference in living conditions in this town. Unknown to most, Birmingham is one of the most murderous city in the country and is consistently in the top 10 most dangerous cities in the country. So living in a decent part of town is crucial. We're looking to move out of here at some point.

I don't know what your situation is as far as needing to be down there in the Jones Valley, but if I were concerned about safety and rent I'd be looking down to Shelby county and skip out on downtown.

Get you a place down in Columbiana or Chelsea for $200 a month. You'll save money and avoid bullets. (280 or 65 traffic might get you instead.)

 

[jakeG]

I don't know what your situation is as far as needing to be down there in the Jones Valley, but if I were concerned about safety and rent I'd be looking down to Shelby county and skip out on downtown.

Get you a place down in Columbiana or Chelsea for $200 a month. You'll save money and avoid bullets. (280 or 65 traffic might get you instead.)

For being from New Zealand you sure do have a good understanding of bham lol. I am actually looking forward to moving down town. The area I am moving to is out the vicinity of where most violent crimes happen. I also typically arm myself whenever I know there's a possibility of trouble. So physical safety isn't a major concern of mine. That being, said I'm not about to move to Woodlawn or even Avondale to save a few bucks.

My gf is in her early twenties and I am in my late twenties so we are still active and like going out when we are taking breaks from our growth. Being downtown allows us to do that easily with lots of options. Living in Columbiana or Chelsea would kill any night life activities for us and basically seclude ourselves from society. For those reading this post that don't know Alabama -- Columbiana and Chelsea are "country" suburbs. Decent enough living areas any cheap but extremely boring.

As MJ said above "as you start making goals, you will outlive the house and demand a better area anyway." This is my main train of thought. The long term goal here is to stay in Birmingham for a short period of time longer, then move to a better area (we're looking at Texas and Florida) and buy a much better home in cash within 5 years.

 

[biophase]

We haven't for sure landed on our new place yet but I am estimating that my rent in the apartment will be $975. The total rent will be $1950, split between me and my girlfriend. We could definitely live somewhere cheaper, but the couple hundred bucks a month saved in rent makes a substantial difference in living conditions in this town. Unknown to most, Birmingham is one of the most murderous city in the country and is consistently in the top 10 most dangerous cities in the country. So living in a decent part of town is crucial. We're looking to move out of here at some point.

Expenses -- the left is current and averaged from my past expenses, the right is estimated in the apartment

Monthly
Mortgage/Rent 1320 ||||||| Mortgage/Rent 975
Water 100+ |||||||| Water 40 (Birmingham, Al is notorious for high water costs due to decades of a corrupt city government Birmingham Water Works chair, others charged in corruption probe )
Power 115+ |||||||| Power 50
Natural Gas 60+ ||||||| Natural Gas 0
Pest Control 35 ||||||| Pest Control 30
Cleaning 150 ||||||| Cleaning 0
Cable/Internet 110 ||||||| Cable/Internet 75
Security System 90 ||||||| Security System 0

Are all the rent numbers divided by 2? Going from a $1320 mortgage to $1950 in rent isn't exactly downsizing. It seems like if your GF moved into your house, the cost of living there would actually be cheaper than the condo.

From these numbers it feels like the real reason you are selling is to move to a better part of town and to move in with your GF. If you weren't moving in with your GF would you still be selling? And if so, what would your rent numbers look like?

 

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[LittleJohn]

I am a single (well, have a girlfriend but not married) guy with no kids and a dog. I currently live in a 3BR 2.5BA house. I bought this house 3 years ago when I was still within the confines of the slowlane mindset. I am selling my house to move in to an apartment with my girlfriend. Doing so will decrease my living expenses $20-30k / year. All of this money will fund my business while I maintain my current 9-5 or will be saved to a point where I can leave my 9-5 and have enough savings to live and commit all of my time to my business. My current income is at the very bottom of 6 figures.

None of my friends or family understand why I am selling my house. I have received several lectures from my parents on why they think this is a bad idea. They are boomers and still paying off a mortgage. None of my friends actively agree with me on the move either. I know they're all wrong because they're all slowlaners and live inside the typical American Dream box. The only person who fully supports this decision is my girlfriend. She is of the fastlane and entrepreneurial mindset like myself.

Does anyone else have experience with this? My mind keeps going back to Gary Vee and Andy Frisella. Gary talks a lot about how too many people will never chase their dream because they are chained to their homes that they dont need and only have to impress other people that do not care. Andy talks about how no one will support you during your journey, but will say "I always believed in you" when you succeed. These two guys and what they preach is helping me sticky to my guns on selling the home.

Does anyone else have any similar stories or advice on downsizing to fund their business? I'm really just LAMPing for some validation

I support your decision 100%. ever since I sold my house I halved my monthly nut, significantly reduced liabilities, and gained the freedom to start a business.

You will have a similar result no doubt.

 

[rogue synthetic]

My gf is in her early twenties and I am in my late twenties so we are still active and like going out when we are taking breaks from our growth. Being downtown allows us to do that easily with lots of options. Living in Columbiana or Chelsea would kill any night life activities for us and basically seclude ourselves from society.

Yeah I feel you. At that age I wanted to be down in the thick of it too. I had a place up on the hill in Southside about 20 years ago. (This was long enough back when Five Points was still happening and not liable to get you shot...)

I get the impression that things have changed a lot since I lived there. Even back when I left, the closer parts of Shelby like Pelham or Alabaster and even spots Hoover were still affordable without being too far out.

 

[jakeG]

Are all the rent numbers divided by 2? Going from a $1320 mortgage to $1950 in rent isn't exactly downsizing. It seems like if your GF moved into your house, the cost of living there would actually be cheaper than the condo.

From these numbers it feels like the real reason you are selling is to move to a better part of town and to move in with your GF. If you weren't moving in with your GF would you still be selling? And if so, what would your rent numbers look like?

Yep you are correct. The 1950 is the total rent, split, would be 975 per person.

In short -- yes -- I would still be selling even if I were not moving in with her. I would definitely not be moving in to the 1950 / month apartment though. I would be moving somewhere with the same type of expenses, around $1000 / month or less in rent. I honestly would probably be moving somewhere else, out of Birmingham. Likely to south Florida.

Quickly looking at the numbers on my decision spreadsheet, moving her into my house would still be about 3k more expensive annually than the current plan. I also wouldn't benefit from selling all of the crap that I have. I mean -- I could sell all of that anyway but probably wouldn't if I don't move. Also wouldn't benefit from the ~20k from selling.

 

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[jakeG]

I support your decision 100%. ever since I sold my house I halved my monthly nut, significantly reduced liabilities, and gained the freedom to start a business.

You will have a similar result no doubt.

Thanks man!

 

[splok]

My monthly mortgage payment is $1372.
The total rent will be $1950

So, this thread seemed to be going pretty well. Then, all of the sudden... crazytown!

You're not saving money because you're selling your house.
You're saving (a little) money because you're getting a roommate.

Doing so will decrease my living expenses $20-30k / year.

Sorry, this just isn't going to happen. You're digging up all sorts of rationalizations to justify it. Sell your house if you want, but don't pretend that you're doing it because you're going to pocket an extra 30k/yr.