Buying a new house (before selling the old)

[cheapdoggy]

Haven't posted or lurked for a while so here goes.......
I just accepted a job offer in Ohio. The problem is I'm living in New York (Long Island). We own a house and want to buy a new one in Ohio. Pretty much this is the plan so far. I'm going to start work Jan 1. I was going to get a cheap studio and commute every other weekend while my wife painted rooms and otherwise gets the house ready for sale ( I've been doing all the "hard" work ie. renovating a bathroom and doing trim work etc in the rest of the house). I guess someone here has done something like this. I'm just looking for some input.
Are moving expenses deductible?
What about interview costs....motel,food,gas plane tickets?
How about a bridge loan...how do they work?
We do have equity in our old house but the market is nuts.
We were thinking of selling our house in the spring so families could be ready in the fall for school...How does that sound?

[maat55]

My rule of thumb is to never buy one house before selling the other unless you can pay cash. I put your current house up for sale tomorrow(ASAP) and commute until sold. During the closing period, I would have your new home ready with contingency.

[MonkeyMama]

My rule of thumb is to never buy one house before selling the other unless you can pay cash. I put your current house up for sale tomorrow(ASAP) and commute until sold. During the closing period, I would have your new home ready with contingency.

Agreed.

We almost did a bridge loan. But I believe there is pretty substantial interest if you don't sell within the time frame (ours would have been 6 months), and even then it is an expensive way to borrow.

Anyway, when the market was hot we ended up owning 2 homes for about 4 months because we had the great timing to put our home on the market like the day before 9/11. The market dipped, we decided it would recover quickly and went through with the purchase. We could easily afford both mortgages. The old place sold rather quickly (in a day, as originally expected) once we worked out the refi mess to pull out the down payment - the refi took 3 months - but the market just started to recover at that point so was okay timing.

Anyway, even though it all worked out for us, we were going to sell our first place for a solid $100k more than we ended up getting. We had ample opportunity to back out of our new purchase without losing a dime, but struck it through.

I tell you I would NEVER buy again like that, even though it turned out okay. Never. I would never buy a house again until I had the cash from the old one in my hot little hands. I would never make plans until I had the cash. The market, no matter how hot, is finicky. Lesson learned.

In this market? I think it would be crazy to take on a bridge loan.

I don't remember the details on the bridge loan except it was a risky thing to take on in an iffy market. Our real estate agent (who was excellent BTW) told us not to touch those things with a 10-foot-pole. I think she talked us out of it.

I'd rent until your house sells and you have the cash from the sale. From somewhere who has BTDT when moving somewhere new. It may be a pain to rent in the interim, and to move your stuff multiple times, but sure beats owning 2 homes indefinitely.

[cheapdoggy]

I should also throw out there that we have 3 kids, 3 dogs and 3 cats. I wouldn't want to be homeless. I don't think there would be many takers from the landlord's side for a month to month lease....That's what I had in my mind when kicking these ideas around. I do have enough cash to put down on a second home and pay two mortgages for awhile. I was thinking that since I had to rent anyway I might as well apply that to mortgage number 2.

[kork13]

I should also throw out there that we have 3 kids, 3 dogs and 3 cats. I wouldn't want to be homeless. I don't think there would be many takers from the landlord's side for a month to month lease....That's what I had in my mind when kicking these ideas around. I do have enough cash to put down on a second home and pay two mortgages for awhile. I was thinking that since I had to rent anyway I might as well apply that to mortgage number 2.

Look at it carefully, and assume worst-case scenarios. If you really can afford the two mortgages for up to, say.... a year, then you might be okay to go as you originally proposed. Don't take my word as gospel, because I've never owned a house before, but strictly from a logical standpoint, if that would be best for you and you can afford it, I'd say do it.

[maat55]

I should also throw out there that we have 3 kids, 3 dogs and 3 cats. I wouldn't want to be homeless. I don't think there would be many takers from the landlord's side for a month to month lease....That's what I had in my mind when kicking these ideas around. I do have enough cash to put down on a second home and pay two mortgages for awhile. I was thinking that since I had to rent anyway I might as well apply that to mortgage number 2.

I would rent a cheap cheap one room flat while waiting for my house to sell. The rent is no different than the interest. I think you have too many animals, that will turn off buyers. You will take a huge risk buying before selling, good luck.

[chai]

yes.. i think you should transfer your animals before you sell your house..

[snafu]

How much RISK are you willing to absorb? If you have already accepted an offer of employment, I presume you have already generated interview expenses. Have you checked with the employer to determine if they will cover any expenses?

Next, check with your accountant or go on-line to gov. Ohio to confirm which employment moving expenses are tax deductible when supported with receipts. Some have limitations, some are time sensitive. Better yet, ask your future employer to pay or at least contribute to those expenses.

Seek the simplist accommodation, close to work during the transition period. Given the economic climate, tons of people would welcome you as a short term tennant in their home/ basement apt. to help them and their finances.

Why not list your home now to see what interest can be generated? As a buyer you can ask for any conditions you wish like making the purchase contingent on selling your existing home. While living in your new state this would give you breathing room to become acquainted with your new community and see how the economy sorts itself out. Start preparing lists of needs and wants in Ohio.

[segmond]

NY is a hot area, and if you can rent out your old house to cover your mortgage costs, then why not? If you were moving from OH to NY, then you would really have a problem.

[MYOM]

You are skating on very thin financial ice to want to own two homes in a falling housing market. Don’t commit this financial folly. House prices have further to fall. The last thing you should want to own are two houses falling in price at the same time.

Dan Clemons retired Certified Financial Planner

[cptacek]

Haven't posted or lurked for a while so here goes.......
I just accepted a job offer in Ohio. The problem is I'm living in New York (Long Island). We own a house and want to buy a new one in Ohio. Pretty much this is the plan so far. I'm going to start work Jan 1. I was going to get a cheap studio and commute every other weekend while my wife painted rooms and otherwise gets the house ready for sale ( I've been doing all the "hard" work ie. renovating a bathroom and doing trim work etc in the rest of the house). I guess someone here has done something like this. I'm just looking for some input.
Are moving expenses deductible?
What about interview costs....motel,food,gas plane tickets?
How about a bridge loan...how do they work?
We do have equity in our old house but the market is nuts.
We were thinking of selling our house in the spring so families could be ready in the fall for school...How does that sound?

A few questions...

Is your wife going to be working during this time AND fixing up the house AND taking care of the kids? (I worked full time and fixed up the house, and just that is exhausting)? Is she capable of doing the work good enough for prospective buyers? Is the "hard" work done, and all that is left is painting?

Don't count on doing a lot of work when you come home every other weekend. If you guys like each other, all you will want to do is be around each other and not fix up the house

If you have animals, get them out of the house and clean the carpets. Add some good smelling spray or something to get the animal smell out.

I would either get an efficiency apartment or put an ad on Craigslist asking for a room to rent. If you have an efficiency apartment, you will need a bit more than you will need to rent a room...the person probably has kitchen stuff you wouldn't need to buy if they agree to let you use their kitchen. An added bonus to renting is that you can scope out the neighborhoods before buying something.

I THINK that interview costs are deductible...but I don't know for sure because the companies I've interviewed with have all paid for that stuff for me.

[Gruntina]

Haven't posted or lurked for a while so here goes.......
I'm just looking for some input.
Are moving expenses deductible?
What about interview costs....motel,food,gas plane tickets?
How about a bridge loan...how do they work?
We do have equity in our old house but the market is nuts.
We were thinking of selling our house in the spring so families could be ready in the fall for school...How does that sound?

Contact your HR at the new job, there should be someone there that can help with your relocation. Usually large companies have communications with vendors to assist employees with moving.

[TBH]

I would never buy a house again until I had the cash from the old one in my hot little hands. I would never make plans until I had the cash.

But how else can you ever buy another house? I am hoping to move up in the next few years, and there is no way I could convince my family to move into a rental between selling one house and buying another.

My ideal is to have a good-sized down payment for the second house, and not have to sell the first house to come up with the down payment. But new house. THEN put old house on the market and live in it while we fix up new house for a couple months. Move into new house. If old house doesn't sell in a reasonable amount of time, take it off the market, rent it out, and try again in a year.

Our big never-do-again lesson was only having a month between closing and moving in. The result? 4.5 years later we still haven't refinished the floors, which look terrible. We could have done much more of the work ourselves if we had had more time before moving in. As it was, we had to hire whoever was available right then.

PS. GO PHILLIES!!!

[maat55]

But how else can you ever buy another house? I am hoping to move up in the next few years, and there is no way I could convince my family to move into a rental between selling one house and buying another.

My ideal is to have a good-sized down payment for the second house, and not have to sell the first house to come up with the down payment. But new house. THEN put old house on the market and live in it while we fix up new house for a couple months. Move into new house. If old house doesn't sell in a reasonable amount of time, take it off the market, rent it out, and try again in a year.

Our big never-do-again lesson was only having a month between closing and moving in. The result? 4.5 years later we still haven't refinished the floors, which look terrible. We could have done much more of the work ourselves if we had had more time before moving in. As it was, we had to hire whoever was available right then.

PS. GO PHILLIES!!!

You buy on contingency, never own two houses. Once you have a buyer you can buy another house contingent upon sell of your current home, happens everyday. If you cannot afford to pay cash for your next home, you cannot afford to buy BEFORE YOU SELL.

[momof1in150]

In most states it is called a Hubbard Clause in the Purchase & Sales agreement. If you find a house and your house hasn't sold yet then you attach a Hubbard Clause to your P&S. This means that the house that you want to buy is still on the market and if someone else wants to buy it then you have a certain time period to remove the Hubbard and purchase it based on your P&S. The time frame is typically 24-48 hours.

Most people don't have the luxury of closing and then having weeks to do stuff on the house. Most of move in the same day as closing especially if you are selling another home because you have to be completely out of the house on the day of closing.