MLS - here we come

As you all know, we weren't able to sell our house when Dan was laid off a few years ago. The market dipped so much that we would never be able to sell for even close to what we owed on it. Our solution was to rent it out while we waited out the market in hopes it would come back. We are $700 short every month between what we get in rent and what the payments on that place are. We really didn't have another option at the time, so we moved into the trailer to make up that difference and it's been a great solution under the circumstances.

A couple weeks ago, we got a late Saturday night call from our tenants saying the furnace went out. Being 4 hours away makes those calls very stressful. There was not much we could do but pay the weekend premium for a service call and have the furnace fixed. The bill was over $450. It was stressful but it got our wheels turning and we decided to reevaluate renting the house vs. trying to sell.

We found a realtor who went out to the condo and gave us a market evaluation. The number was low. It doesn't look like it will change much in the next couple years either so more than likely we would sell for about the same price in a couple years as we could sell for today. It seems to make much more sense to take the loss now and just be done with it.

At $700 a month, we lose $8,400 a year. And that is not taking any repair costs or travel expenses into consideration if something comes up. And I think it's fair to put a price tag on the stress of trying to be landlords at a 4 hour distance. We have already lost almost $13,000 with what we are short every month in rent and expenses and we are going to lose at least $25,000 in the next 3 years if we keep renting. That is a given. And that's assuming we have little to no expenses in repair costs and we keep the renters we have for the duration of the next 3 years. It wouldn't be that bad, but because we took out a loan with no money down, we pay A LOT on interest each month. Less than $200 goes to the principle. In 3 year, we will have only paid down the loan about $7,500.

If we sell now

Our loan is at $149,000. We are hoping to sell for $130,000. Add $8,000 realtor comission and $1,200 title transfer etc. and we are looking at around a $28,000 loss.

If we sell in 3 years

Our loan will be down to about $141,500. Let's say we can sell for $135,000 (and that's a big if) and then add the same comission and fees, we are looking at about a $16,000 loss. But we will have also lost $700 a month over the course of 36 months which amounts to $25,200. Now we are at $41,200. That amount is assuming we never pay for another repair bill and our renters stay that long. It's assuming the place is in the same condition in 3 years as it is now. That's assuming the market goes up some.


We can't sell for what we owe, but we have paid off so much debt the last 15 months, that we can cover the difference for what we are thinking it might sell for. We decided that taking the loss now is going to be better for us in the long run. We both decided we would much rather make a $700 loan payment then come up $700 short between rent and expenses each month. It is the same monthly dollar amount and will end up being less overall if we sell now.

The benefit to selling now is that we can close the door on that chapter of our life and move on. We can eliminate the stress involved with being landlords and the risk factor in renting out a house. We also eliminate any surprise expenses in repair bills. A loan payment is a secure debt. When it's done, it's done. Renting the house with hopes we can sell for X dollar amount down the road is a huge risk. What if the market drops again? What if our renters move out? What if our renters decided to trash the place? What if the furnace needs to be replaced next time and not just fixed?

We are thinking we will end up taking around a $28,000 loss if we sell now. After weighing the pro and cons and praying about it, we decided to put it on the market and see what happens. The only way we can see continuing to rent as a better choice would be if the market picks up a great deal in the next couple years. No one knows exactly what is going to happen, but I think it's safe to say it's not going recover for what we would need it to.

Our original lease agreement is not up for a year and a half, but our tenants are very understanding and have agreed to move out early if we sell in exchange for $900. That's to cover a security deposit on a new place for them. We have agreed to give them a 60 closing date if we accept an offer and they will give us a 60 notice if they find a new place to live. This is risky for us. We thought a lot about what would happen if our renters move out and we don't sell. We priced the condo "aggressively" and are very optimistic that it will sell in the next couple months.
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get involved and be proactive

After a few more calls to the bank, I was able to lower the van interest rate again and lower the trailer interest rate as well. Both loans are now at 3.99%. I am determined to get the most out of our money right now. It pays to call and see what you have to do to get your interest rate lowered. Even if you can't, it doesn't hurt to try.

Here are a few things to remember.

Make sure you ask them what you need to do to get the best rate possible. There are lots of hidden discounts they don't disclose unless you ask. Most banks offer a discount for multiple services and to set your payments up through auto pay.

If you can, offer to make larger payments and/or shorten the term of the loan. This alone can get you a much better rate.

MAKE SURE you ask if they are charging you for loan insurance. This is insurance in the even of a job loss or disability. As I found out, they will often times quote you a payment amount and just tell you the insurance is included, leading you to believe you aren't paying for it when in fact you are.

I am really starting to look at this process as a challenge. Who can get out of debt the fastest and who can save the most in interest in the process. It's been 15 months since we started this, and I am STILL finding ways to save and cut.
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