What would you do in this situation?

Question

My home is financed at 185k I have about 48k in other debt that we Really want to get off our backs (our debt payments are great than our mortgage payment!) and our house would sell for 300k.

Should I sell and after all fees and taxes (lived in it less than a year, plan on selling with a local agent)

Pay off debt and use the left over 15-20k to buy an RV to live in (even further lowering our monthly expenses)

Or hold it because it’s an awesome long term investment being that it would rent for 1900 per month conservatively and find another way to pay off debt.

This is a super quick overview if y’all need more info ask away.

Max T. · Answer

@Matthew Grebeta

I’d keep the house.

Explore a cash out refi and use the money to pay off other debt. Check your comps.

If you’re cool with living in an RV you can probably be cool with renting out a spare bedroom.

Effram Barrett · Answer

Is this your primary residence? If so why not wait another year to avoid capital gains tax? The market could drop slightly altering your sale price but you would still keep the cap gains. Me personally, I would find another way to pay off the debt. Maybe look into loan consolidation

Chris Herrera · Answer

@Matthew Grebeta it sounds like the debt is causing stress in your life and the main goal is to get rid of it or at least that’s what it sounds like

If that’s true, then either find a way to pay off the debt or just sell the house and go  to the RV if that’ll make you happy.

It would be financially a better idea to keep the house and find anyway you can to pay off the debt with other income but if that’s not an option and you just want to get out from under it than just sell the house.

We all ultimately work to have piece of mind and if having that house isn’t giving you that and keeping it in the future won’t help you than sell it and work on building a stronger financial base so this doesn’t happen again

Cathryn Sta · Answer

@Matthew Grebeta

Personally I don’t think the end of the pandemic is going to flood the market with supply.  However I’m a buy and hold woman so some degree of volatility is irrelevant to me.

I agree with exploring @Max T. suggestions.

Michelle F. · Answer

An RV is a depreciating asset. I would not sell an appreciating asset to buy a depreciating one.

I would try to stay in the house 2 years to avoid taxes on sale.

Patrick Blanchard · Answer

@Matthew Grebeta my question would be: what are your goals? What are you trying to achieve? Nobody wakes up in the morning saying “I can’t wait to pay off some debt today!” ... no, you want something on the other side of your debt being paid off. What is it?

Knowing your goals / strong “why” can help you to structure a spending plan (i.e. budget) to help you pay off debt faster than you ever thought possible. I have clients who were able to purchase their first house 9 months earlier than they were expecting. Other clients who were living paycheck-to-paycheck are now making significant progress toward paying down debt. It’s all about being intentional.

If you need an accountability partner, feel free to reach out directly!

Matthew Grebeta · Answer

@Bjorn Ahlblad

I actually bought the house 8 months ago for 175k and put 25k into so it’s basically a 1% deal. The thing I was concerned with is whether this market will continue in these states that are seeing a flood of people moving in from locked down states once bands are lifted.

My concern is that once people stop moving here so quickly there will be more inventory. Idk real estate very well and how quickly that would effect the pricing of homes? Could we see the housing price drop in 6-8 months just as quickly as we saw it rise in 6-8 months?

Bjorn Ahlblad · Answer

@Matthew Grebeta While no one can see the future, I would hold for a year like Effram suggests. I will add that 1900 per month for a 300k investment is insufficient to cover everything. Once sold I would buy something with a much better return. Maybe attend some pocasts. All the best!

Matthew Grebeta · Answer

@Effram Barrett

I definitely hear you.

This is my concern.

Where I live in Florida we have seen prices go from 225k home a year ago now being 300k homes.

In my community and surrounding ones where there used to be 40 3 bedroom homes a year ago there are now only 3 everything is selling in a matter of hours to days.

I am concerned that once the COVID stuff is over and states open back up the inventory will not be as scarce causing the temporary inflation to go back down.

Please let me know your opinion because I am only a year into this.

What would you do in this situation?

Most Popular Reply