Buy now and wait one more year to move in?

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TTGO808
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Buy now and wait one more year to move in?

Post by TTGO808 » Fri May 18, 2018 1:38 am

My family was planning on moving this year to an area with better rated schools, but we decided to wait one more year. We are 95% certain we will want to move in a year. Homes there have consistently increased in value about 10% each year over the past two years as we've been monitoring the market. The public high school is a 10 on greatschools in this area and people who raised their kids there are retiring and cashing out.

We can afford to purchase a home now that we could manage on one income and I'm worried about being priced out of the market next summer. I don't want the pressure of needing two incomes to pay the mortgage once we move.

If we purchase a home this summer, we would try to rent it through a property management company for 10-12 months until we move next summer. Does this seem reasonable or worth it? I've heard that those companies charge about 10% of the rent as a fee. Do those companies usually rent homes out for short term leases? We could leave it vacant as we don't have a mortgage on our current house, but renting it would help to offset the mortgage/HOA/insurance.

What kind of liabilities are there with renting it out for a year? What would the tax consequences be if we rented it out?
Since we plan on moving into it in one year, will lenders still give us a mortgage as if it were a primary residence? We do not have a mortgage on our current home.

Thanks for any advice!

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Pajamas
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Re: Buy now and wait one more year to move in?

Post by Pajamas » Fri May 18, 2018 1:40 am

What if property prices go down instead of up? At least consider that possibility given rising interest rates from historical lows and a current scramble to buy before they do, along with some other factors such as some foreign countries restricting cash outflows that have funded housing purchases in the U.S., changes in immigration and the economy, etc. No one can predict the future with certainty.

TTGO808
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Re: Buy now and wait one more year to move in?

Post by TTGO808 » Fri May 18, 2018 2:10 am

Yes, we thought about that and would only buy if we found a home that we liked and could see ourselves living in for the next 20 years. I would be disappointed if by next year we couldn't afford to buy a similar home on one income because we have always been fortunate for my wife to have the choice to work outside the home. She enjoys working, but I think even more so because she knows she can work part time or not at all.

Is that lifestyle/ work-life flexibility worth the risk of there being a drop in housing prices?

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celia
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Re: Buy now and wait one more year to move in?

Post by celia » Fri May 18, 2018 5:05 am

Why aren't you buying and moving now? If the schools are better, why wouldn't you want your kids in them sooner rather than later?

When you rent a property, there tends to be more wear and tear on it than if it was owned by the occupants. The owner will tend to fix things as they break, whereas a renter won't (or maybe not even tell you since it is not important to them).

If this is a one income vs two income situation that will change in the next year, you could look for a mortgage that allows you to reset it next year.

money_bunny
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Re: Buy now and wait one more year to move in?

Post by money_bunny » Fri May 18, 2018 5:48 am

What if the tenant does not want to move out?

Check your states landlord laws about taking back possession of a property if the owner wants to move in and there is a tenant in the unit.

student
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Re: Buy now and wait one more year to move in?

Post by student » Fri May 18, 2018 5:56 am

I also don't understand why you cannot move now. I would suggest start looking now as it may take a while to find the place that you like.

senex
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Re: Buy now and wait one more year to move in?

Post by senex » Fri May 18, 2018 9:44 am

Some potential liabilities:
  • You may need more costly insurance. You should ensure your insurance would cover renters. If the house is vacant for a while, that can be a big problem (it's very hard/expensive to get insurance on a vacant property)
  • All the usual risks with tenants (damage, complaints, etc)
  • In certain cities/states, the renter protections are so strong that eviction can take a year or longer after they stop paying rent. If you live in a liberal city or state it is definitely worth researching.

LiterallyIronic
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Re: Buy now and wait one more year to move in?

Post by LiterallyIronic » Fri May 18, 2018 10:08 am

TTGO808 wrote:
Fri May 18, 2018 1:38 am
Since we plan on moving into it in one year, will lenders still give us a mortgage as if it were a primary residence?
No, they will not. We were required to move into our house within 30 days of closing in order to qualify for the primary residence mortgage rate. To say it will be your primary residence and then not move in for a year would be to commit mortgage fraud. You'd want to check on the exact rules for primary residence - you may have to sleep there for the first three months and then rent it out, for example. I don't know what the exact terms would be. Alternatively you could get the mortgage at the rental rate, then refinance it when you move in. Or just buy a house a year from now. Whatever you do, I'd be very careful to stay within your legal and contractual duties. I am not a lawyer, my comments are not legal advice, and we have no attorney-client relationship.

mak1277
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Re: Buy now and wait one more year to move in?

Post by mak1277 » Fri May 18, 2018 10:12 am

What about new construction? You could "buy" now with just a deposit and move in later when the build is done. Less fuss than buying/renting.

whomever
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Re: Buy now and wait one more year to move in?

Post by whomever » Fri May 18, 2018 10:22 am

If the house is vacant for a while, that can be a big problem (it's very hard/expensive to get insurance on a vacant property)
It's worth asking what your insurance company's definition of 'vacant' is. We started looking for a retirement home a couple of years before retirement, and unfortunately :-) found one we really liked right away. Our insurance company defined 'vacant' as 'hasn't been visited in 90 days'. The new house was only a few hours away, and we had some pre-move things to do to it, so we just made sure we made a weekend trip at least every 90 days. We discussed that explicitly with the insurer, and they were fine with it.

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celia
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Re: Buy now and wait one more year to move in?

Post by celia » Fri May 18, 2018 11:49 am

student wrote:
Fri May 18, 2018 5:56 am
I also don't understand why you cannot move now. I would suggest start looking now as it may take a while to find the place that you like.
+1
It took us a year to find our first house. We went house hunting about twice a month during that time. After a while, we could just walk into a house and "know" what it was worth, without asking for the listed price. (This was before the internet.)

TTGO808
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Re: Buy now and wait one more year to move in?

Post by TTGO808 » Mon May 21, 2018 5:12 am

We could move now and commute, but it is not ideal (45-55 minutes each way). I am likely to get a job in one year that is 10 minutes from the house we like the most.

I'm researching if we can buy this single family home with a pool and rent it out for one year until we are ready to move. It is our dream home and within our price range. I fear we will not find another home we like as much as this and we will end up with a more expensive less desirable home if we wait a year.

If we buy to rent it for a year, I've been told I'd need to get a non-owner occupied mortgage. Would you buy now to rent it for a year, or just stay put and take a gamble on prices staying within reach?

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Watty
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Re: Buy now and wait one more year to move in?

Post by Watty » Mon May 21, 2018 8:33 am

TTGO808 wrote:
Mon May 21, 2018 5:12 am
We could move now and commute, but it is not ideal (45-55 minutes each way). I am likely to get a job in one year that is 10 minutes from the house we like the most.
What happens if you can't actually get that job?

That said, when you subtract out vacations and holidays there are about 220 working days in a year. The hours and cost of doing the commute are a known amount that you could live with if the house is really that unique and it might motivate you get that new job before the year is up.

With renting the house that will also take a lot of time to get it ready to rent and then refurbish the house again when you are ready to move in.

In addition to being renters being hard on a house they will likely do minimal work on the landscaping which will show even if you hire a landscaping company to come in and do more than mow the grass.

Loik098
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Re: Buy now and wait one more year to move in?

Post by Loik098 » Mon May 21, 2018 4:29 pm

TTGO808 wrote:
Mon May 21, 2018 5:12 am
We could move now and commute, but it is not ideal (45-55 minutes each way). I am likely to get a job in one year that is 10 minutes from the house we like the most.
1) "Likely" to get a job means that you might not get it. What if the hiring manager who knows you leaves before then? What then?
2) You say you'll plan to live in this house for 20 years. What if your new job doesn't last that long, or you later find an even better one 45 minutes away from this dream home? What then?

I think you need to make your decision irrespective of your job prospects, if the new house is that close to your current employer and it's so important to live there. A 45-minute commute can be worth it if it means living where you want to.

Also, remember that it's not common anymore for employees and employers to work with each other for decades: I would not count on a 10-minute commute for 20 years. Decide on how long of a commute you're willing to deal with, look at all potential job prospects within that range (including the one you currently have), and work within that framework.

ralph124cf
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Re: Buy now and wait one more year to move in?

Post by ralph124cf » Tue May 22, 2018 11:15 am

I would buy that house right now.

I would never rent out a house with a pool. Renters will not care for a pool properly. You may need to hire a weekly pool service. There is also serious liability for you if something happens to a guest of the renter.

After previous owners move out, there are always things that need to be done to a house that are much easier to do when it is vacant. Painting, laying hardwood flooring, cleaning or replacing carpet, and redoing doors or windows or woodwork are all much easier (and cheaper) when the house is vacant.

You and/or your wife and kids can take some cots and a small refrigerator there on weekends and see what you really want to have done.

A gradual move is much calmer and less stressful than a one day move.

Ralph

gotester2000
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Re: Buy now and wait one more year to move in?

Post by gotester2000 » Tue May 22, 2018 12:27 pm

You should buy the house now if you are so obsessed by it and commute for 45-55 minutes.

Depending on a job which may happen a year later is not practical as many things may happen during that time. Adding further complications is an unnecessary risk best avoided.

inbox788
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Re: Buy now and wait one more year to move in?

Post by inbox788 » Wed May 23, 2018 1:00 pm

ralph124cf wrote:
Tue May 22, 2018 11:15 am
I would buy that house right now.

I would never rent out a house with a pool. Renters will not care for a pool properly. You may need to hire a weekly pool service. There is also serious liability for you if something happens to a guest of the renter.

After previous owners move out, there are always things that need to be done to a house that are much easier to do when it is vacant. Painting, laying hardwood flooring, cleaning or replacing carpet, and redoing doors or windows or woodwork are all much easier (and cheaper) when the house is vacant.

You and/or your wife and kids can take some cots and a small refrigerator there on weekends and see what you really want to have done.

A gradual move is much calmer and less stressful than a one day move.

Ralph
Agree. If liability isn't an issue, Airbnb? Not sure OP want to or has the luxury to afford a whole year of double residencies, but that would be ideal given the expressed intentions. Is a school transition involved? What grades are the kids in, and what grades are middle school in the areas?

veindoc
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Re: Buy now and wait one more year to move in?

Post by veindoc » Wed May 23, 2018 8:21 pm

TTGO808 wrote:
Mon May 21, 2018 5:12 am
We could move now and commute, but it is not ideal (45-55 minutes each way). I am likely to get a job in one year that is 10 minutes from the house we like the most.

I'm researching if we can buy this single family home with a pool and rent it out for one year until we are ready to move. It is our dream home and within our price range. I fear we will not find another home we like as much as this and we will end up with a more expensive less desirable home if we wait a year.

If we buy to rent it for a year, I've been told I'd need to get a non-owner occupied mortgage. Would you buy now to rent it for a year, or just stay put and take a gamble on prices staying within reach?
Forget about this house. You are not ready to move.
Wait for the job and then look. We found our dream home once and then we were outbid. It was a very unique property for that area. It had a larger lot than most, real closets which is a rarety for an older home, an attached garage and other hard to find modern features in circa 1920’s homes. And it was affordable! It had both the charm and modern features and we fell in love but we lost it. I was distraught for a few weeks. But we eventually found another home that I loved and am currently in. If you had told me that i could be happy in another house the day or weeks after the rejection I would not have believed it. But it happened.

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