Should I sell or rent out house?

User Forum Topic
Submitted by bibsoconner on January 9, 2022 - 7:38am

Hi fellow Pigs. I'm a long time lurker and occasional poster.

I'm also extremely cheap so I'm hoping for some free marital advice today :)

My wife and I are both 50+ yrs. She loves her job (biotech) and can work remotely from anywhere. I'm starting to hate my career (software engineering) and would like to try something else*. Our one and only house in Pt. Loma is paid off (about 2.3 million according to Redfin/Zillow). We had this idea of moving to St. Thomas, USVI. My wife has family there. She'd continue with her existing job. I'd teach college, high school, or just be a bartender or bus boy. Those last two jobs do not scare me and actually sound sort of appealing right now. I'm somewhat in favor of selling the house. Renting it out from a distance could be a pain. My wife wants to rent it out in case we hate St. Thomas or want to return. She's convinced prices only go up even though she was certainly around in 2008-10. She's got some good points that we are locked into Property Taxes based on 1.4 million and generally, prices go up. As I said, I think renting will be a pain and don't see why we need to return to San Diego (or California) even if we get sick of St. Thomas. So the questions:

1. Would you sell or rent?
2. Assuming you say rent, any ideas for renting a relatively high end (4 bedroom Pt. Loma) house? A particular agency? Rent year to year? Airbnb? We're both concerned about renters trashing the place. And upkeep could be a pain (older, big house).
3. I floated the idea that if we must rent, we put our daughter in it (SDSU student) and have her rent it to students/friends (and stay herself). Perhaps less money but a family member watching the place. We could even make sure she has "skin in the game". I have confidence that my daughter has enough maturity and would act in our best interests based on inheriting it one day and taking a cut off the rent. My wife has considerably less confidence in her.
4. And of course, feel free to dust off your crystal balls and tell me exactly what house prices will do in the next 5 years. That might tell me whether to sell now or later.

Incidentally, rental prices in St. Thomas are very roughly 3-4 thousand a month for something decent. Food prices are a LOT more expense. Gas, curiously is cheaper ($4/gallon).

Thanks for the ideas!

*I've suggested I just retire and my wife can support us both. That didn't go over well :). A future post will ask, "Do we have enough to retire before I drop dead from boredom and/or anxiety at work?".

Submitted by The-Shoveler on January 9, 2022 - 10:12am.

My crystal ball seems to have a defect (or two).
Still working on getting my quantum eraser working though.

Not really a big Climate change believer (or denier) but If I was living too close to sea level I would always be watching the Antarctic glaciers in case I needed to get to higher ground LOL.

The Above said, I think I would always want to own something on the west coast, I think a better question is where you think homes will be in 10 years (time goes by incredibly fast).

Submitted by sdrealtor on January 9, 2022 - 10:09am.

Easy. Hire good local property manager and rent it out. Prices are not going down anytime soon and if we hit a downturn it takes a while for them to drop. Revisit in two years and decide whether to sell then so you still have 500k cap gain exclusion. By then you should have good idea if you like it. FWIW a lot can happen as we age, I’m starting to deal with that myself. Give yourselves time to get a few more miles down the road. Ok you can leave $5 in the tip jar.

Submitted by bibsoconner on January 9, 2022 - 3:15pm.

Thanks sdrealtor. I'd forgotten about the 2 year rule. It also reminds me that I should make some attempt to get my home improvement receipts together. As I recall, beyond the 500K cap you can avoid taxes by offsetting profit on house with money you put into it. Unfortunately, I'm not great at keeping receipts, especially for all the small stuff that ads up! And if current prices hold or increase, I'll definitely be above 500K.

Feel free to post or PM me "good local property manager"!

Thanks!

Submitted by flyer on January 9, 2022 - 7:38pm.

Agree with sdr. We live various places much of the year, but will never give up our San Diego properties, especially with most of our family and friends being in CA. Even HI, where we spend some of the year, can get old. Beaches, golf and all it offers are amazing, but variety is more interesting.

You never know what life may bring over time, so, imo, keeping property here is a smart move on many levels. Many friends do the same.

You should have no problem renting out your home in PL, should you choose to do so.

All the best with your plans!

Submitted by scaredyclassic on January 9, 2022 - 8:39pm.

I'm intrigued that you believe your daughter will manage the property well but your wife does not. I advise some prophylactic marriage counseling for all the issues going on. It's best to go when things are good. Don't wait for a crisis!

I'm going to be contrarian and say sell. You want to be a busboy, damnit! Follow your dream! Why live in point Loma! You can bus anywhere. Perhaps read DISHWASHER! the autobiography of a guy whose dream was to wash dishes in all 50 states. What an awesome tale he tells!

You're sick of your job and I think SD has lost its charm for you. Frankly, point Loma is kinda dull. Take the money and bus dishes with a 2 million dollar cushion. And a working wife! Sounds good to me too! Maybe get high with the other waitstaff out back near the dumpster? Never worry about work. Get a pet ferret. Take up juggling. Free your mind of stupid bullshit.

However, I personally am staying in my house and in my job, sober, filled with normal stupid bullshit, away from dumpsters, but in marriage therapy. I think my wife would pay for me if quit my job...but maybe not...

Submitted by Coronita on January 9, 2022 - 10:02pm.

bibsoconner wrote:
Thanks sdrealtor. I'd forgotten about the 2 year rule. It also reminds me that I should make some attempt to get my home improvement receipts together. As I recall, beyond the 500K cap you can avoid taxes by offsetting profit on house with money you put into it. Unfortunately, I'm not great at keeping receipts, especially for all the small stuff that ads up! And if current prices hold or increase, I'll definitely be above 500K.

Feel free to post or PM me "good local property manager"!

Thanks!

So I had pretty good luck with urbanrealtor as a property manager. he's exactly the kind of property manager you want. Because he's fair and honest. But if a tenant tries to pull a fast one on you, you definitely want someone like him on your side. he's use to dealing with pain in the ass tenants.... and in a pro-tenant state and in a world of rental moratoriums, I'd wouldn't half ass this especially if this is your first time being a landlord.

Submitted by svelte on January 10, 2022 - 10:21am.

Great advice on here from sdr, scaredy, coronita and others.

Some other thoughts that should be factored in:
1. My father always said that retirees are in consensus that one should not jump into something with both feet. Instead, they recommend renting your house out and trying the new area first. You might just find you miss San Diego more than you thought you would.
2. You can pass the house through to your daughter once you die with a much higher limit than 500K...that might be a thought to avoid taxes...and in the meantime you can rent than thing out for several thousand a month and basically not have to worry about a job ever again if you don't want to.
3. I would think long and hard about jumping out of engineering. You'll work just as hard, worry just as much, and have just as little free time in basically any other career you choose...and do it for much less money. (scaredy said this much better than I did!) My best friend in college did that, he quit his Silly Valley sw job to become an artist. I reminded him they are actually called "starving artists". He has learned that lesson the hard way and now his software skills are dated.
4. Flu and I have talked about this before - one really has only so many years until they really can't work any more...health issues, etc. While you can still earn great income, do you really want to call it quits? I get maybe scaling back so you have more free time, but I would be cautious about changing too much all at once.

Just my two cents.

Submitted by Coronita on January 10, 2022 - 3:32pm.

svelte wrote:
Great advice on here from sdr, scaredy, coronita and others.

Some other thoughts that should be factored in:
1. My father always said that retirees are in consensus that one should not jump into something with both feet. Instead, they recommend renting your house out and trying the new area first. You might just find you miss San Diego more than you thought you would.
2. You can pass the house through to your daughter once you die with a much higher limit than 500K...that might be a thought to avoid taxes...and in the meantime you can rent than thing out for several thousand a month and basically not have to worry about a job ever again if you don't want to.
3. I would think long and hard about jumping out of engineering. You'll work just as hard, worry just as much, and have just as little free time in basically any other career you choose...and do it for much less money. (scaredy said this much better than I did!) My best friend in college did that, he quit his Silly Valley sw job to become an artist. I reminded him they are actually called "starving artists". He has learned that lesson the hard way and now his software skills are dated.
4. Flu and I have talked about this before - one really has only so many years until they really can't work any more...health issues, etc. While you can still earn great income, do you really want to call it quits? I get maybe scaling back so you have more free time, but I would be cautious about changing too much all at once.

Just my two cents.

I've been running my F.I.R.E. calculators as of the late....Just in case.

Submitted by svelte on January 10, 2022 - 6:00pm.

Coronita wrote:

I've been running my F.I.R.E. calculators as of the late....Just in case.

lol, yeah I wonder how many FIRE folks are getting a little frightened right now with inflation taking off. Some of them may have used questionable assumptions.

I still think it is folly for a 30- or 40- something to think they can project out 40 to 50 years. The world changes fast!

Submitted by The-Shoveler on January 10, 2022 - 6:32pm.

A late retirement followed by an early death are probably my best option in the current environment LOL.

Submitted by plm on January 10, 2022 - 6:48pm.

Well an early death from Covid is what I want to avoid if they make me go back in to the office. So I will take my chances with retiring early once that day arrives. At this rate, I may never retire, they seem to keep pushing the date out because Covid is so bad now. I will just adjust my expenses to match my passive income. Taxes are incredibly low if you don't make much in retirement. But 2022 has not been a good year so far in the stock market. Hope it gets back to its upward trajectory.

Submitted by Escoguy on January 10, 2022 - 7:22pm.

On balance, I'd sell one 2.3M home and buy two for 1.2M.
Then you can have a place to live or two rentals.

I highly doubt you will get twice the rent for one.

Then you have more options: i.e. you can live one again or sell it.

Not all choices are black and white.

Submitted by svelte on January 10, 2022 - 7:29pm.

Escoguy wrote:
On balance, I'd sell one 2.3M home and buy two for 1.2M.
Then you can have a place to live or two rentals.

I highly doubt you will get twice the rent for one.

Then you have more options: i.e. you can live one again or sell it.

Not all choices are black and white.

I like it!

Submitted by Coronita on January 10, 2022 - 8:14pm.

svelte wrote:
Coronita wrote:

I've been running my F.I.R.E. calculators as of the late....Just in case.

lol, yeah I wonder how many FIRE folks are getting a little frightened right now with inflation taking off. Some of them may have used questionable assumptions.

I still think it is folly for a 30- or 40- something to think they can project out 40 to 50 years. The world changes fast!

for me it's not really just F.I.R.E. it's slightly modified.

For my retirement will be partly funded by rental income and a return on after tax investments before I'm 65.

after 65, it would be funded by my rental, after tax investments, and IRA/401k.

I think I can pull this off with about a 4% return on investment on the investment of after tax cash. Including the cash out refi.

it's a fun exercise of futility because it's unlikely I will retire early now. since I missed my early retirement goals at 40 might as well wait 3 more years and round up to the nearest power of 10

Submitted by sdrealtor on January 10, 2022 - 8:36pm.

Escoguy wrote:
On balance, I'd sell one 2.3M home and buy two for 1.2M.
Then you can have a place to live or two rentals.

I highly doubt you will get twice the rent for one.

Then you have more options: i.e. you can live one again or sell it.

Not all choices are black and white.

Not a bad idea but I’d still wait a couple years as you would want to come back to your home if you come back. Could always do that later. You also avoid transaction costs and other costs. Your in a strong position so use it to your advantage.

Submitted by sdrealtor on January 10, 2022 - 8:37pm.

Dupe

Submitted by plm on January 10, 2022 - 9:14pm.

Coronita wrote:
svelte wrote:
Coronita wrote:

I've been running my F.I.R.E. calculators as of the late....Just in case.

lol, yeah I wonder how many FIRE folks are getting a little frightened right now with inflation taking off. Some of them may have used questionable assumptions.

I still think it is folly for a 30- or 40- something to think they can project out 40 to 50 years. The world changes fast!

for me it's not really just F.I.R.E. it's slightly modified.

For my retirement will be partly funded by rental income and a return on after tax investments before I'm 65.

after 65, it would be funded by my rental, after tax investments, and IRA/401k.

I think I can pull this off with about a 4% return on investment on the investment of after tax cash. Including the cash out refi.

it's a fun exercise of futility because it's unlikely I will retire early now. since I missed my early retirement goals at 40 might as well wait 3 more years and round up to the nearest power of 10

Next Power of 10 would be 100. Just found out about rule of 55, can withdraw from last 401k without penalty now. So if I need more money then I expect, I can take out from 401k as well. But I think rental income, dividend income and cashing out my trading account should be enough.

Submitted by Coronita on January 10, 2022 - 10:26pm.

plm wrote:
Coronita wrote:
svelte wrote:
Coronita wrote:

I've been running my F.I.R.E. calculators as of the late....Just in case.

lol, yeah I wonder how many FIRE folks are getting a little frightened right now with inflation taking off. Some of them may have used questionable assumptions.

I still think it is folly for a 30- or 40- something to think they can project out 40 to 50 years. The world changes fast!

for me it's not really just F.I.R.E. it's slightly modified.

For my retirement will be partly funded by rental income and a return on after tax investments before I'm 65.

after 65, it would be funded by my rental, after tax investments, and IRA/401k.

I think I can pull this off with about a 4% return on investment on the investment of after tax cash. Including the cash out refi.

it's a fun exercise of futility because it's unlikely I will retire early now. since I missed my early retirement goals at 40 might as well wait 3 more years and round up to the nearest power of 10

Next Power of 10 would be 100. Just found out about rule of 55, can withdraw from last 401k without penalty now. So if I need more money then I expect, I can take out from 401k as well. But I think rental income, dividend income and cashing out my trading account should be enough.

See I'm getting old and senile. You know I meant multiple of 10 not power of ten. I hope I'm gone before I reach the next power of 10.

I don't think cashing out trading account is needed. I think what is needed is to make trading account not trading account and make it boring account returning 4% consistently without fluctuation in the principal amount.

Submitted by plm on January 11, 2022 - 11:04am.

By cashing out my trading account, I meant doing it slowly not all at once, first 80K in long term capital gains is tax free each year. And even if I need more each year, its only taxed at 15 percent. Now if only the plan for CA free health care passes, my expenses will drop considerably.

Submitted by phaster on January 11, 2022 - 1:34pm.

bibsoconner wrote:
Our one and only house in Pt. Loma is paid off (about 2.3 million according to Redfin/Zillow). We had this idea of moving to St. Thomas, USVI. My wife has family there. She'd continue with her existing job. I'd teach college, high school, or just be a bartender or bus boy. Those last two jobs do not scare me and actually sound sort of appealing right now. I'm somewhat in favor of selling the house. Renting it out from a distance could be a pain.

The-Shoveler wrote:
My crystal ball seems to have a defect (or two).
Still working on getting my quantum eraser working though.

Not really a big Climate change believer (or denier) but If I was living too close to sea level I would always be watching the Antarctic glaciers in case I needed to get to higher ground LOL.

The Above said, I think I would always want to own something on the west coast, I think a better question is where you think homes will be in 10 years (time goes by incredibly fast).

IMHO a paid off home in SD is akin to having a goose that lays golden eggs,...

as an example walking over to my local coffee shop this morning actually noticed in the neighborhood a small 3 bedroom 2 bath home listed for a monthly 4k rent

basically as I see things keep the home and rent it out,... even if it might be a sorta pain in the ass

actually stopped by piggington myself to ask about if anyone here has experience renting out housing for short term traveling nurses

basically have a studio that I set aside for catholic school teachers (and give them a big break on rent to encourage them to stick around),...anyway am having a tenant move out so until I am able to get another catholic school teacher I thought I'd try short term housing,... any opinions???

FWIW WRT man made climate change,... glaciers in the polar region melt pretty slowly in human terms BUT what is happen is akin to a blink of an eye in geological time,... consider what just happened in the year 2021, scientists observed the first rainfall on top of a mountain of ice in the arctic circle

AND during xmas 2021 there was a record heat wave in alaska,..

meanwhile man made climate change skeptics/deniers say the weather has always changed and CO2 along w/ other greenhouse gasses in the atmosphere is nothing to worry about even though the trend is ever increasing amounts (FYI used an image invoking "Russian roulette" because it is simpler to understand than showing all the math)

looking at the existing trends (if no corrective action is taken) here is a simple perspective of what is going to happen (i.e. we're heading for a climate something akin to the Paleocene-Eocene Thermal Maximum)

http://www.youtube.com/watch?v=81Zb0pJa3...

Submitted by bibsoconner on January 12, 2022 - 8:54am.

Thanks for the comments everyone! I think sdrealtor and others have convinced me that selling (at least right away) is a bad idea. As I self analyze myself, I'm definitely getting sick of corporate engineering*, but I'm convinced that's a separate issue from whether to remain in San Diego or sell the house. I didn't mention it initially, but my wife's parents are getting old, so that's another motivation to spend at least a year in St. Thomas.

ScaredyClassic's description of a carefree life as a busboy smoking pot by the dumpsters certainly does have it's allure... Not sure I need marriage counseling when I have your free advice though. Seriously, I my wife and I are closer in our assessment of our kids that I let on. She could be convinced to use our daughter as the property manager, and I could be easily convinced not to use her. Another factor is that she's suppose to be studying hard, so dealing with tenants and broken dishwashers might not be the wisest choice.

Finally, if anyone else has recommendations for property managers, please send them my way. Again, I'm biased, but I think it's a high end house (large, large amount of land, pool, ocean view, etc.) and should be marketed as such or at least the property manager should have experience with that type of house. Nobody chimed in with long term rental vs. short term.

Thanks all!

*I think I am just tired of corporate engineering, but another thing I've noticed which I wonder is just unique to me is this: either I'm getting dumber, or the folks coming out of university are getting much smarter. Not to brag, but I always thought of myself as not top talent, but definitely in the top 25%. Now I feel like bottom 50% or bottom 25%. Rather than a negative, I suppose the positive way to to look at it is this: the country is in good hands and things will only get better.

Submitted by scaredyclassic on January 12, 2022 - 10:17am.

Marriage counseling while things are pretty good is better than counseling when everything's shitty. It's actually a pretty fascinating thing to do. Still lots of stigma.

Has anyone watched COUPLES THERAPY on showtime?

Old people are getting dumber

Submitted by bewildering on January 12, 2022 - 10:23am.

I had this decision in 2018 and decided to rent out my house.

I talked to a financial advisor who said

"many people leave San Diego, but end up not liking their new location. When they try to return they cannot afford the same type of house and feel miserable."

I kept the house. Thinking I have 2 or so years to decide to sell based on capital gains exclusion.

Now I am very glad we did not sell, and I will just keep renting out the house. One day I will return as San Diego is magical.

The one issue is that I have got used to my house in North Carolina. Much bigger and better than the San Deigo house. I will probably have to redo the San Diego house when I return.

Submitted by jmw on January 12, 2022 - 10:26pm.

Pull out as much cash as you can with a new mortgage. Build an ADU in the back. And live large in St. Thomas with the rest. When you run out of cash, move back into the ADU and keep renting the main home. Win-Win.

Submitted by The-Shoveler on January 13, 2022 - 7:46am.

jmw wrote:
Pull out as much cash as you can with a new mortgage. Build an ADU in the back. And live large in St. Thomas with the rest. When you run out of cash, move back into the ADU and keep renting the main home. Win-Win.

LOL +1 (if just for the fantasy of thinking about it)

Although I think I would still constantly worry about sea level rise LOL.

Submitted by sdrealtor on January 13, 2022 - 10:51am.

bewildering wrote:
I had this decision in 2018 and decided to rent out my house.

I talked to a financial advisor who said

"many people leave San Diego, but end up not liking their new location. When they try to return they cannot afford the same type of house and feel miserable."

I kept the house. Thinking I have 2 or so years to decide to sell based on capital gains exclusion.

Now I am very glad we did not sell, and I will just keep renting out the house. One day I will return as San Diego is magical.

The one issue is that I have got used to my house in North Carolina. Much bigger and better than the San Deigo house. I will probably have to redo the San Diego house when I return.

The best part of this imho is the wait 2 years. Not only might you not afford to get back what you had, what you had might not be on the market when you do. You’ve done great and have leverage to use time as your friend.

As for you, SD likely continues its ascent over years more than NC. When it’s time to come back, sell NC and that will pay for the renovation of your $10,000,000 San Diego home LOL

Submitted by barnaby33 on January 13, 2022 - 4:35pm.

Old people are getting dumber

No they aren't. Young people are adapting to change (required to thrive) faster. I'm still in the thick of it career wise and the pace of change is exhausting to me! I can't imagine slinging code at a competitive level in 20 more years.

Everyone needs therapy, we're all fucked up.

Climate change is real. What was the Disney movie where House said, "the reason you deny it is that it's the only course of action that requires you to do nothing."

I'd double check every form he fills out for you but Urban realtor is a good guy as a property manager.
Josh

Submitted by Coronita on January 14, 2022 - 7:02am.

plm wrote:
By cashing out my trading account, I meant doing it slowly not all at once, first 80K in long term capital gains is tax free each year. And even if I need more each year, its only taxed at 15 percent. Now if only the plan for CA free health care passes, my expenses will drop considerably.

https://www.marketwatch.com/story/i-reti...

"I retired at 50, went back to work at 53, then had a major medical issue that left me unemployed – ‘There’s no such thing as a safe amount of money’ for retirement"

Submitted by scaredyclassic on January 14, 2022 - 10:47am.

barnaby33 wrote:

Old people are getting dumber

No they aren't. Young people are adapting to change (required to thrive) faster. I'm still in the thick of it career wise and the pace of change is exhausting to me! I can't imagine slinging code at a competitive level in 20 more years.

Everyone needs therapy, we're all fucked up.

Climate change is real. What was the Disney movie where House said, "the reason you deny it is that it's the only course of action that requires you to do nothing."

I'd double check every form he fills out for you but Urban realtor is a good guy as a property manager.
Josh


Ok. I agree. Maybe old people are getting slower. Or wiser.

Personally I've been seeing a 4 perc annual gain in wisdom. At this rate, under current actuarial calculations, I should be enlightened right before dying, and I'm reasonably confident I have enough wisdom to last my lifespan through. Could run short though.

Submitted by barnaby33 on January 14, 2022 - 11:33am.

Pardon my earlier non-sequitorial comment. I wouldn't sell if you don't need to. Rent it out and travel around for a bit. I for one can't imagine retiring any place else (by choice) other than here. If the finances aren't your biggest concern then not selling is a no brainer.
Josh

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