Help! Big Decision!

[cornered in CA]

We are considering moving to AZ. We ould sell our house in Danville, CA or get a loan for 40thousand and rent in AZ for a year. From there we would sell our house in 2012. I have a job offer in AZ. The goal is to reduce stress and wipe out all debt. What do we do? Staying is not an option.

[irmanator]

why would you be taking out a loan and renting? I am not sure i read that right.

[gpoitras]

How can anyone give you advice based off of that information? Give us some more information as to why you need to take out a loan to rent?

[cornered in CA]

let me back up..

...we are being advised to rent in Arizona for a year before selling our home in CA. This would allowour current home in CA to increase in value for a year. In the meantime we would borrow against our house go to AZ with that money and pay for rent with that money. If we like AZ and both jobs work we sell the CA house and walk away with more money. I am relunctant to do this from a personal standpoint. The goal of moving is to wipe out debt and improve quality of life. There are no guarentes. s. I am in need of another educated opinion. From a real estae view this is a viable option but how risky is it?

[jpg7n16]

...we are being advised to rent in Arizona for a year before selling our home in CA.

and who is giving you this advice??


Sorry that was my first thought - my actual advice is, if you're not living somewhere, you probably don't need to own a house there. (unless you were intending to rent it out)

Sell the house, and rent for the 1st year while you scope out the area. If you like the job, stay. See which neighborhoods you might want to own a home in. Take it easy for a year


And do it without having to worry about a house back in Cali.

[Seeker]

...we are being advised to rent in Arizona for a year before selling our home in CA. This would allowour current home in CA to increase in value for a year. In the meantime we would borrow against our house go to AZ with that money and pay for rent with that money. If we like AZ and both jobs work we sell the CA house and walk away with more money. I am relunctant to do this from a personal standpoint. The goal of moving is to wipe out debt and improve quality of life. There are no guarentes. s. I am in need of another educated opinion. From a real estae view this is a viable option but how risky is it?

Very risky, IMO. Real estate is not certain to go up in just a single year. Danville is a very expensive location.

You need to provide numbers here... otherwise people are not going to understand the reasoning.

I'm assuming that you owe more dollars than you can reasonably get for selling the house right now?

Maybe it's that you have some equity and that's why you are considering taking an additional 40k loan.

But, you must absolutely understand that the chances are 50/50 housing values may not go up in one year... and in fact, they may go down in that short period of time. A lot depends on the job situation up there, and the number of other homes in the area that are "for sale." But if there are no jobs available, then the homes will not sell "higher" in one year.

Real estate is still uncertain. Selling now won't be "easy" but I'm not convinced that another year will change anything for the better.

For better advice, you really need to provide all the info as pertaining to your decision.

Income, debts, expenses, and possibly the alternative options you have available.

If "staying" is not an option, that's fine, but what is an option?

What happens if the California home continues to lose value and you have an additional 40k loan against it?

If my goal was to "reduce stress and wipe out all debt" then I'd do that.

I'd sell the California house (even if it means a loss, because if the prices continue to go down, then my stress would continue to go up).

Remember your goal.

[kork13]

Is renting your CA house not an option?

I guess I have to agree with the others, it kind of feels like we don't really have a full story, so it's rather difficult to provide any meaningful advice....

[disneysteve]

we would borrow against our house

If you are able to borrow 40K against the value of your home, that tells me that you are not upside down on the loan and, in fact, have a pretty good amount of equity. That being the case, sell the house. Might it be worth more next year? Sure, and maybe not. But what are your costs to carry the home for another year while not living there - taxes, utilities, landscaping, insurance, etc? Some insurance companies will not cover a vacant home so keep that in mind.

Without more info, I'd say to sell the house if you are moving out of state.

[woodie96]

In reading what the OP stated, I get the feeling that a new start is what they are looking for, and they don't want to sell the house until they are sure things will work out in AZ.
For me, I would consider it too risky, as JPG pointed out, the real estate market is in such upheaval now, who knows what it will be a year from now. I definitely wouldn't want to reduce my equity in the house that much, because I don't see a way you can recoup those expenses a year from now.
When I was in the military, I moved alot at uncle sam's expense, but taking a 40K loan to move from CA to AZ seems rather steep to me, I may be wrong.

[cornered in CA]

First off, thank you for trying to help, now I will try again..

I am not as savvy as many of you which is why I am here seeking advice. We are not upside down. We make our house payments and have a CC debt of about 16 thousand. I have a round 8 thousand in savings. I have two jobs, one to pay for the $800 a month tutoring for our daughter. The other for house taxes. Selling the house would wipe out all debt, allow us to buy a home w/ no payments in AZ and have a nest egg to build on. The person advising is my father - who has done very well for himself and owns a successful construction company. He wants to make sure we don't trap ourselves in AZ with no way to get back. WHY are we leaving? It's personal, my DH suffers from depression. He is vested in the union so he will receive his pension at 62 (he's 40.) We can go back to AZ where I was very successful (already contacted owner said he would love to have me back and they are opening their third spa/salon) and named top producer for my dept. and the whole spa/salon. I would manage our finances, the nest egg, and allow for modest vacations that we can't afford now with our 8yr. old. I hate the idea of managing a rental form AZ and the cost that comes w/ it. I don't want more debt, but I am being told that I am foolish for doing this in such a way as to trap us. I do not want further debt. I understand from a realty point of view though....god, I hope this is enough info....it's way more then I intended share.lol! Thank you in advance, I look forward to your response and already appreciate your help.

[cornered in CA]

I forgot to answer a question...we are advised to take out a loan against the house and to use that money in AZ for rent and living. Then if we decide to stay in AZ we sell the CA house, pay back the loan and hopefully pocket more money then we would now. This is my fathers "fool-proof" plan....

[woodie96]

In moving to AZ, you have been successful there, what about the job prospects for your husband. Would he be looking for the same line of work and continue with the union there?

Also, what would be the go/no go point once in AZ. Would you and your husband give it a year, two, three?

You stated that if you sold the house, you could buy one in AZ and have no payment and a nice little nest egg. The money you would be saving not having monthly house payments, coupled with your nest egg, could build up quite nicely rather quickly. If that is the case, I don't see why you would be trapped in AZ. I'm not arguing against your father, who by your statement is very successful and business minded. I'm sure he is trying to keep your best interest at heart.

I tend to agree with your father on renting there first, to see if it will work out to your expectations. To sell the house in CA now, then buy in AZ, if for some unfortunate circumstances AZ doesn't work out, then try to sell that house to move back to CA, where you would not have your original home, would cost a fortune in closing costs.

I guess for me, it would come down to how certain I was about the future in AZ. I would sure hate to continue paying for a house for a year or more that I wasn't living in. But that is just me. Good luck in you decision, I hope it all works out for you.

[disneysteve]

I forgot to answer a question...we are advised to take out a loan against the house and to use that money in AZ for rent and living. Then if we decide to stay in AZ we sell the CA house, pay back the loan and hopefully pocket more money then we would now. This is my fathers "fool-proof" plan....

Sorry to say your father's "fool proof plan" has some holes.

I don't understand the "no way out" issue. You are planning to rent in AZ, not buy. If you rent for a year and things don't work out, you move back to CA. What's the problem? You wouldn't move back to your current house. You'd have to buy another one. So what?

What I would not do is sell the CA house and buy one in AZ unless you are positive you will stay there for at least 5 years. I think renting in your situation makes a whole lot more sense.

[cypher1]

Personally I'd look at selling the house from hearing too many stories of people I know still trying to juggle holding onto to multiple properties within this dropping market. Just seems like an expensive option if you're paying to not live there for a year or so. Have you considered just renting out your current house for even a small period of time? I think someone brought up that idea earlier, and that would definitely reduce a large amount of overhead for monthly expenses.

[MonkeyMama]

I am from the area around Danville. I totally understand the advice you have been given. The real estate market is really volatile (A relative's house appreciated $100k, last year alone). PLUS, if he has that much equity, his property taxes are set lower for life. It is really easy to get priced out if you move out of the area. Even if he could afford a home again, the property taxes may be insane if he moved back later. His concerns about not being able to move back later are very valid.

So rent out the house, if there is that much uncertainty. It really seems like your best option. A hassle? Of course. But what other choice do you have (that makes any sense)?

Either that, or just bite the bullet and sell the house. I'd probably be more inclined to do this because you never know with the market. (We sold a home in San Jose in 2002. We were planning to sell it in 2001, but held off a few months selling it. IT sold for $100k less than expected, and that was only because 9/11. The market was HOT at the time. I can see you relying on all this equity to get out of debt, etc., etc. So sell the house and take the money NOW. Who knows what will happen in a year!)

Borrowing money to rent is a terrible idea. Borrowing $40k anyway. Borrowing $10k, you may be able to convince me. Couldn't you rent something REAL cheap in AZ??? All that said, the longer you wait to sell, the more likely your equity can evaporate. Just think carefully about that.