Torn between two houses
February 7, 2019 6:16 AM   Subscribe

I'm house hunting. I've seen eight of them so far, and I'm getting to a point where I feel the need to make a final decision, no takebacks. I want a house for the sake of having a house at this point but I also want a house that adds to my overall financial health (good resale value, the type of house I can rent out, etc.) I am a single person with no kids looking for a two-bedroom starter home on a relatively low income.

The final two are as follows:

House A:
-- quiet suburb with good schools
-- old and in need of updates (adding central air and upgrading appliances, mainly)
-- 5% less expensive overall than House B
-- would not make a good house to rent out, as second bedroom is very small

House B:

-- somewhat less quiet suburb with worse schools
-- completely rehabbed and move-in ready with no updates needed
-- 5% more expensive than house A
-- much better layout for renting, plus closer to "city" amenities that would attract renters

Basically, do I want something that will sell better down the line, or rent out better right now? (Not interested in discussing the merits of renting out a room in and of itself, etc, right now. Please assume I have thought this through and it would be a good option for me.)

(Also, assume that in terms of doing the rehab work on House A that I would be negotiating the deal based on the need to add central air later on.)

I feel torn. Unfortunately I have an emotional attachment to House A that I am trying to overcome in order to make an objective decision.
posted by coffeeand to Home & Garden (24 answers total) 1 user marked this as a favorite
 
A family that moves to area A won't be looking for a house that, realistically, has 1.5 bedrooms.

Since you mention renting the house out it sounds like you might want to move away. Consider saving your money and not buying a house until you have a stronger sense of where you want to live.
posted by mareli at 6:30 AM on February 7, 2019 [3 favorites]


Response by poster: To clarify: I do not want to move away, I just want to rent out a bedroom to offset costs. I know a lot of broke queer and trans people who just need a cheap room to stay in and I could provide that to them.
posted by coffeeand at 6:36 AM on February 7, 2019 [1 favorite]


I don't think there's anything wrong with taking your emotions into account here. You're going to live in this place every day. At the very least, I would not talk myself into buying House B if I wasn't sure about it. If House A realistically won't work for you with the renting scenario, it might be better to wait until you find something that works on both an emotional and practical level.
posted by something something at 6:37 AM on February 7, 2019 [10 favorites]


If that emotional attachment is something that might also apply to others (like it isn't because of family or history reasons) it's likely that it will also attract the next buyer/renter. Also, for resale and rental, there will still be single people who want houses in the future. Even without it being cheaper, I'd go for the emotional attachment every time.
posted by advicepig at 6:40 AM on February 7, 2019 [1 favorite]


That you have a "relatively low income" makes me lean towards this being a poor investment decision. The term "money pit" is an apt one for houses -- if you do not inherently have the resources to do the refurbishing on house A yourself, the upkeep for House B is likely to also be difficult (if it was refurbished purely for resale, also expect things to be cheaply and poorly done). Also, have you looked at the cost of taxes on both properties? Can you afford a few thousand dollars for a new furnace at the drop of a hat? Have you looked into energy usage for each house, poor insulation or wiring can take a significant bite out of utility payments.

Are you mortgaging a large majority of the value of the house, or planning on using equity loans to finance upkeeps and repairs? If you're constantly refinancing to afford repairs and upkeep, the house has $0 investment value because whatever it sells for is just going to pay off loans, you won't profit.

Houses are nice, but owning one as an investment has a lot of ongoing expenses to making it a worthy investment.

Now, if your goal is to just switch from "paying rent" to "paying mortgage-taxes-and-upkeep", and the tradeoff is 50/50, then buy whichever house makes you happier (5% difference is negligible in the long run), but make "my house is an investment" a wishful goal and just keep it livable as long as you want to live there.
posted by AzraelBrown at 6:42 AM on February 7, 2019 [7 favorites]


If you can reasonably afford to pay a mortgage on House A without having rental income beyond maybe a token amount that friends can pay while getting back on their feet, and can make a decent deal to cover the central air costs, I'd go with that one. Your emotional attachment is worth something, and upgrading appliances is annoying but does not have to be so expensive that I'd let it make or break a house-buying decision.

If you cannot make the mortgage numbers work without a renter paying full price, then House B - being a landlord has enough hassles, without starting yourself out at a disadvantage by having a place that's going to be hard to rent for a reasonable price. You will also develop a House B attachment when it is yours and you can do with it exactly what you want!
posted by Stacey at 6:50 AM on February 7, 2019 [4 favorites]


Of these two, I think it has to be B. The layout restrictions in A are going to really limit your rental options, and it sounds like that's important to you both personally and financially. However, eight houses really isn't a great many to have looked at, and if neither of your "finals" are quite right, there's no reason to put pressure on yourself to pick one just because you've seen a bunch.
posted by teremala at 6:54 AM on February 7, 2019 [8 favorites]


Keep looking, neither is quite right.

When thinking about these two houses - House A is probably the better investment - schools matter, neighborhoods matter. House B could be a flip, in that maybe it is move in ready, but if the appliances are cheap and the finishes are trendy and the workmanship is poor... you might find yourself fixing and replacing things you didn't anticipate or plan for and having to update again when you sell anyways.

Depending on the market, you can possible negotiate the price, or negotiate help with closing costs (seller subsidy or something like that) so you can keep more cash on hand for emergencies.

Finally, if they are different school systems they may have different property tax rates. Differences in property tax rates can amount to hundreds a month.
posted by everythings_interrelated at 7:13 AM on February 7, 2019 [3 favorites]


I am not sure we can tell you which is your priority between wanting to rent a room and wanting good resale value. I will just add that I owned a house and later needed to rent a room to cover the mortgage. It had a good layout for it - a bedroom and full bathroom right next to it on the first floor, separate from my bedroom and bathroom upstairs - but the location was not great for finding quality renters because it was far from downtown, had poor transit access, and lacked many neighborhood amenities. As a result I really struggled to find a renter after my divorce, and ended up with someone who was a very challenging tenant because I couldn't be picky.

If the renter is critical to your affording the house, that's different from you wanting to do something good for a certain community. It's possible your connection to that community might mean you wouldn't struggle as much to find a renter. But location DEFINITELY matters in more typical situations where someone is looking to rent a room, so that is something to keep in mind.

Eight houses isn't that many to have seen. I'm house hunting right now as well and considering an offer after seeing only six, and worried that's too few!
posted by misskaz at 7:42 AM on February 7, 2019 [4 favorites]


When I was buying a house, my rules were:

1. The house had to have everything I would foreseeably want in a house for the next 10 years
2. Couldn’t have anything in it that was genuinely inconvenient or irksome, because what’s irksome at closing will drive you insane by year 5
3. Have to be able to afford the payment and all the expenses by myself, without roommates
4. But the living space should be arranged such that if I had a roommate, we wouldn’t be stepping all over each other
5. I had to be able to rent out the unit, if it came to pass that I had to relocate or something, but didn’t want to/couldn’t sell.

Frankly, the fact that your income is relatively low, that you’re looking for an investment opportunity, that the houses you’re looking at require rehab, and that you’re trying to overrule your love for a particular house in order to prioritize resale value, and that you “want to buy a house for the sake of having a house”....these are all absolutely awful reasons for house-hunting. Truly the opposite of where your head and money should be. You should not be buying a house at all.

If you insist on buying a house, go for House B. It’s move-in ready and isn’t going to cost you $25,000 in needed repairs in the first few years that you own it. If you don’t like House B enough to see yourself living there happily for the next 10 years, don’t buy it. Buy a house that combines the quality of House A and House B.

Do yourself a favor and take a first-time homebuyer’s class, and read some books about homebuying. This is a decision that could easily ruin you financially if you don’t make a good choice that fits within your means. The decision you’re about to make is exactly the same one that saw millions of people into foreclosure during the housing crisis. Don’t go down that road.
posted by Autumnheart at 7:56 AM on February 7, 2019 [5 favorites]


Consideration for House A; If you need to do work, what is the possibilities for expansion of some kind to make Bedroom 2 bigger, and/or add extra space and/or bathrooms?

Generally, if you are also able to make many of the upgrades yourself (can you frame a wall? Put up drywall? Tile/plumbing for a bathroom?), that would save a significant amount of money of upgrades.

Also - as for central air - you may instead look into ductless units; less expensive, and for a small house can be very efficient.
posted by rich at 8:10 AM on February 7, 2019


I'm the type of person who would never buy a new car or a new house (or a fixed up house). So I'm with house A.
BUT are you like me? Or do you know anyone who can help you manage the renovation of house A?
I renovated an apartment for my sister, using only paid craftsmen, and out of curiosity she had it re-evaluated after the renovation. The increase in value was way over the price of renovation, so for her it was a good investment. But you can't do this if you don't know how. Right now I'm struggling with a case in a foreign country, where we need local help, and the local help is not helpful, to put it mildly. So I'm learning how bad you can do if your architect or contractor are not trustworthy.
posted by mumimor at 9:26 AM on February 7, 2019


I had a two bedroom starter home and even in a hot, hot market it was hard to sell. Even now I look at that neighbourhood and three bedrooms have risen dramatically in price but the two bedrooms are pretty static and basic considered tear-downs (if the house is on a large lot in a gentryfing neighbourhood this could be a good thing). Generally two-bedrooms just don’t hold their value for investments.
posted by saucysault at 10:04 AM on February 7, 2019 [1 favorite]


Response by poster: Thanks you guys.

My impulse is to just sit on it and let the price go down on both, and keep looking. (It seems like virtually every home in my price range reduces in price at least twice before it sells. A lot of these are formerly flipped homes so they're kind of overpriced out of the gate.)

mumimor, I also don't like to buy anything especially flashy. Give me a solidly maintained home where the fundamentals are sound and I'm happy. I'm kind of allergic to granite countertops anyway.

I'm worried about pissing off my realtor by asking for too many showings and taking too long to buy though.
posted by coffeeand at 10:07 AM on February 7, 2019 [1 favorite]


I would like to echo misskaz in that there's no "well, I've looked at enough houses, NOW I MUST DECIDE" metric. You look until you find a really suitable choice, keeping in mind that your offer may not be accepted. If neither of these choices is quite right, keep looking; there will be other choices.

Generally, the idea that you can afford your mortgage because you're buying with a renter in mind is not a great plan (unless you're buying a two-flat and even then, it's still not the best plan). Knowing that you can afford your mortgage (plus insurance, plus utilities, plus food & life) but planning to supplement that because your floorplan allows you to rent a room is the way forward.

Also, generally, unless you love the process and have the funds, or are a house-flipper, buying with the house with the list of things that have to be rehabbed, updated and replaced sooner rather than later (as opposed to buying the house that you'll want to paint and maybe change the bathrooms eventually) is more trouble than it's worth. It's expensive; it's disruptive; and if you put it off, you are paying a mortgage on a home that annoys you, rather than one that suits you and which you'll slowly change to accommodate you even better.

Also, finally, unless you know you'll be selling and moving in X years, resale value is not as important as affordability and immediate known deficiencies. People who buy knowing they'll sell when they have kids--or when the kids move out--or some other fairly predictable marker--really need to consider how and when they'll be able to resell. Otherwise, you're buying, not renting, so resale is a broader question about the stability of the neighborhood and predictions about housing markets and you're better off making political decisions to preserve/improve the school system, transit system, &c than trying to choose based on what might happen when you sell, whenever/if ever that might be.
posted by crush at 10:14 AM on February 7, 2019 [3 favorites]


I'm worried about pissing off my realtor by asking for too many showings and taking too long to buy though.

To you, this is likely the largest financial decision you will ever make in your life. To your realtor, this is just another day at the office. Do NOT buy the wrong house to appease someone else who is just doing their job. If your realtor is pushing you into a purchase you don't want, get another one.
posted by missmary6 at 10:36 AM on February 7, 2019 [20 favorites]


I must've seen 20-30 houses when I was house shopping, and now literally every time I drive by one of the ones I viewed and was seriously considering, I think, "Thank God I waited for something better and didn't buy that one." DO NOT RUSH THIS DECISION. If you piss off your agent there are plenty more out there. Don't let them steamroller you.

Also, seriously consider home owning expenses beyond the initial purchase. Appliances die, roofs need replacing, storms cause damage. And reselling can be a gamble, depending on changes in the neighborhood and the market that are out of your control. Houses are just generally unreliable as investments.
posted by velvet_n_purrs at 11:38 AM on February 7, 2019 [3 favorites]


To the question as written, I think B seems like a better choice for you, but as others have said there's no need to rush.

and th this:
I'm worried about pissing off my realtor by asking for too many showings and taking too long to buy though.

They don't care. I never bought a house without seeing, like, 20 houses or more. You will be in this house a long time.
posted by GuyZero at 11:49 AM on February 7, 2019 [2 favorites]


Also, don't buy a house that needs upgrades unless

a) you can't afford anything else
or
b) you have the money and a concrete plan to upgrade it
posted by GuyZero at 11:50 AM on February 7, 2019 [1 favorite]


House B. Have you ever owned a home or done a lot of work in a house before? That 5% lower cost could get eaten up easily in the cost of updates, and it can be a huge hassle to do that work. With House B you know what you are getting. Also, I wouldn't worry a ton about schools because it sounds like a good house for an adult, a couple, or a couple with a baby who would move before their kids were in school for more space. And being closer in to the city is a huge advantage.

House A sounds like it's calling to you, so before you bite: would you commute get longer? Have you lived in that community before?

It could be you need to look for C or beyond, but B sounds like a good option to me.
posted by bluedaisy at 1:15 PM on February 7, 2019


I feel torn. Unfortunately I have an emotional attachment to House A that I am trying to overcome in order to make an objective decision.

I actually think this is super important. Buying a house is an emotional thing as well as financial. Yes it's a financial investment and you should make responsible decisions from a financial standpoint, but also this is going to be your home. You have to actually live in the thing!

When I was looking at houses, someone whose opinion I respect very much and who has always lived in interesting, lovely houses, told me that what's most important is that when you walk in the door, it feels like home. Whatever else, your house should feel like a home to you, should feel like it suits you. Otherwise, what are you even doing? Are you going to buy some hypothetical future stranger's house, and then merely camp out in it for five years in the hopes of selling it to that theoretical person who may not even exist?

If you make a decision based solely on the financial side of the equation, you are cheating yourself. Allow your emotions a role in your decision-making. When choosing between two houses that would both be basically sound financial propositions, allow yourself to choose the one that you personally would prefer to live in. You don't have to maximize this transaction, you just have to make sure you're not being foolish. After that, let your heart guide you.
posted by Anticipation Of A New Lover's Arrival, The at 4:18 PM on February 7, 2019 [1 favorite]


Way seconding velvet_n_purrs!
You don't know the future housing market. You don't know if some major manufacturer is going to go under, taking their work force with it. You don't know if the neighborhood is going to go to seed.
But you do know that as soon as you sign the final paperwork, something is going to go wrong....

Oops, termites! Whoa, that was some storm, and now that glorious tree has several limbs hanging straight down over the driveway. Hey, how did those tiny cracks get in the bathtub surround tile... and why is my bedroom carpet wet?

It could be replacing a shared fence, or reroofing sooner rather than later. It could be all the little money sucks, like replacing a toilet wax ring, unsticking a kitchen drawer, fiddling with a slow-draining faucet.
And of course there's the temptation to redecorate... furnish... splurge!
This takes mental energy as well as cash.

Bottom line, wait until you find a house that you can live in without major repairs at the start. If you can't fix it, and you can't barter for someone else to fix it, then continue to save for the down payment and wait until the right house comes to you.
There will always be another house.
posted by TrishaU at 6:32 PM on February 7, 2019


I agree with everyone saying to keep looking. Eight houses is nothing, and doesn't mean you are being too picky.
posted by Dip Flash at 6:45 PM on February 7, 2019


Yes, in the grand scheme of things you've only seen a few houses. I think you should wait, for the right house with the right-sized rental opportunity.
Speaking of which: "I just want to rent out a bedroom to offset costs. I know a lot of broke queer and trans people who just need a cheap room to stay in and I could provide that to them."

This is a lovely, good-hearted impulse. Please vet your prospective roommate carefully (as your home is your haven), and have the proper paperwork drawn up for the rental. Formal agreements protect the both of you, and if your down-on-their luck lodger ever needs to prove residency for a job or school benefits or anything, having something in writing (dating to the start of their tenancy) is helpful.
posted by Iris Gambol at 5:34 PM on February 25, 2019


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