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Like many people in 2020, I was terrified by COVID and decided to leave New York and buy a home. I got a pretty good deal on a two-bedroom house in suburban South Carolina near my family (I think?). House prices were still relatively low at the time, so he was able to cover his 10% of the down payment with savings. I have his 30-year mortgage and my monthly payments (including taxes) are about $1,700, which is still less than my rent in Brooklyn. There are many other costs. The house isn’t in the best shape and there are fees for mowing the lawn and all sorts of other expenses I never thought of. Financially, I am lucky enough to afford all these things. However, I am starting to realize that this purchase was a big mistake.
First, I miss New York so much. I love being close to my family, but I’m single and queer and don’t have much of a romantic outlook here. , at different times in life. We also recognize that there are limits to being fully remote when it comes to careers. I am missing the opportunity to advance in my field. Because in New York, where my office is currently a remote option, I have a low profile or no connections.
Basically, I want to sell my house and move back to Brooklyn. But is it a terrible idea? I know he needs to be at home for at least 5 years before selling, but the real estate market isn’t great these days (or so I hear). is that really true? I think I could rent it out, but that seems like a big headache and I’m not sure if it’s worth it financially. Are there other options I’m not thinking of?
Nice to meet you, thank you for your understanding. i have a personal theory. regret buying a house than actually saying so. Of course, owning property is a great privilege, and complaining about it makes me feel a little sick. Kudos to you for noticing that it wasn’t. A home should be a source of comfort, not an expensive burden tying you to places you don’t want to go.
That said, selling your home just a few years after you bought it, especially in this economy, may not always work in your favor. there is.
“five year rule” What you mentioned is general advice and is not wrong. The logic behind it is that selling a house actually costs a lot of money. Closing costs and fees associated with both ends of a transaction (buy and sell) are typically around 7-15% of the overall price, so a house must value comparable amounts in order to reach breakeven on a transaction. there is. In other words, you want your home’s value to grow enough to cover these costs, which usually takes at least five years.
However, as with any rule of thumb, there are many exceptions. “That advice assumes the housing market is operating in a vacuum,” said a Brooklyn-based certified financial adviser, my financial planner“That’s usually not how the real world actually works.”
Moreover, there is no average in real estate prices today. The rampage of suburban housing in the early stages of the pandemic has slowed, especially when mortgage interest rates rise, but the market is still very uneven. Maybe you can sell the house for more than you bought it for. maybe not. But the important thing is that the five-year rule doesn’t stop you from doing research on your home’s current value and what it takes to come out on top for sale potential.
To handle numbers you can try one of many real estate calculator online This will help you estimate the potential profit you’ll make from selling your home, taking into account often-forgotten costs (little things like pre-inspections and marketing). This helps you see how much money you need to sell without losing money. Minus all sale fees and what you still owe on your mortgage. If your home is in the desired area and you think you can buy it at a reasonable price, it’s worth talking to a real estate agent about next steps. (You might want to do it anyway to get an idea of the market, just make sure you haven’t signed anything with anyone yet.)
But more likely than that, it’s hard to make a profit on sales right now. So you should also consider option 2, rental.This is financial and When Emotional perspective so you don’t have to make yet another A big, reactive choice that you might regret later.
You also have to remember that selling this house and moving back to New York doesn’t have to be part of the same decision. You can try a test drive. Rent out a house, sublet a New York apartment for six months, and see how it goes.
“One of the things I see with a lot of my clients is that people don’t know where they are, especially when we come out of the pandemic,” says Genkin. “I encourage you to try out solutions before committing, especially since the New York you remember may not be the New York you find when you come back.”
Plus, if you bought in 2020, your mortgage rate may be higher. If I can find a tenant willing to cover the monthly maintenance costs ($1,700 for a two bedroom house he seems like a pretty good deal, but I’m not sure what it is). (which is normal in your area), this home could be a great investment in the long run. Sure, managing a property when you live in another state can be a hassle, but you said you have family living nearby. After a few years, you may change your mind and go back, or you may continue to rent for decades as an additional source of income. Both are good results.
Finally, let’s take a quick look at the most boring part of homeownership: taxes. “If you sell the house now and make a profit, it will be exempt from capital gains tax because it is your primary residence,” he said. However, that exemption does not apply if you rent and sell later. Unless lived in for at least 2 of the 5 years prior to saleI’m not tearing my hair out over this — you just pay capital gains tax Based on the profit you make, not the overall selling price — but it’s something to consider. You can always rent it out for two years and then reconsider your selling options before the exemption runs out. Again, you have time to make this decision.
Overall, I think this process needs to be patient. Deciding where you want to live may require some research, especially during this tricky and transitional moment. If I were you, I wouldn’t complicate trying to sell your house at the same time. “Breathe,” says Genkin. “There’s a financial element to this decision, but there’s also a qualitative process to figure out what you want in the end.”
The Cut’s financial advice columnist Charlotte Cowles answers readers’ personal questions about personal finance.Email money conundrum [email protected]