Free house in small town or high rent in big town?
March 28, 2011 6:17 AM   Subscribe

In-laws want to give us a house. For free. But is it worth it?

My husband and I currently live in the DC-metro area. Rent is very high, and real estate is even worse (houses start around $150 for something very small). But it's a really awesome area, very diverse, tons of things to do. His parents (through a complicated series of events) have a house near our hometown (very small town several hours away from where we are now) that they would like to give to us. The house is completely paid off, although of course we'd be dealing with gift taxes/property tax, etc. But it's a free house, right?

-Free(ish) house vs $1500/month rent, allows us to save money instead of just staying afloat
-Closer to my family (yes, this is a pro).
-The house itself is very nice, and mostly renovated.
-No longer driving in Beltway traffic.

-Moving away from a very diverse/liberal/exciting area to a hyperconservative one.
-Most of our friends live in the DC area, and I find it hard to make new friends.
-There are a few things that still need to be finished in the house: replace some windows, finish the kitchen.
-We don't have the things that you need for houses; lawnmower, tools, extra furniture.

I'm looking for anecdotes/advice from people who have had to choose between big-city expensive living and almost-hicktown cheap living. Is it worth it? Would I regret it forever? As a side note, I will be looking for a new job soon, so my career isn't tying me to the DC area.

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posted by anonymous to Home & Garden (27 answers total) 1 user marked this as a favorite
Take the house. The money you save, your social capital, education, and resourcefulness can help you deal with the cons. Take the opportunity to save/invest that high-urban living money to shore up a long future.
posted by cross_impact at 6:23 AM on March 28, 2011 [3 favorites]

I suppose selling it and using that to buy a condo in a better area is out?
posted by Alcibiades. at 6:24 AM on March 28, 2011

I moved away from a lifetime of DC/beltway living to a small conservative town and HATED EVERY MINUTE OF IT (except the snowshoeing, that part was awesome). However, I was 7.5 hours from DC which is a really really long drive back and an even longer drive for people to come visit. But you will be only a few hours' drive, which is a great roadtrip distance to visit DC and for friends to come spend weekends with you. In fact when I decided enough was enough and it was time to move "back," I moved to a smallish city exactly 3.5 hours door-to-door from my house to my brother's in Bethesda. It is perfect -- friends come to visit and enjoy the countryside and Americana quality, and we go back to DC when the mood strikes.

Also if you are able to find good work where you're moving to, then you can save your money and head back to DC with a downpayment before too long.
posted by headnsouth at 6:29 AM on March 28, 2011

Take the house and, if you can, sock away what you would be paying in rent in some kind of interest-bearing vehicle. After 2 years, you will have grossed $36,000, minus property taxes and sundries for your new house. What if you only managed to keep half of that? $18,000? If you stay there for five years that's $90,000 you didn't spend on rent. Again, not every cent of that is going in your pocket, because it's expensive to be a homeowner. But you'll probably be way, way ahead of where you otherwise would have been. Good luck!
posted by Buffaload at 6:33 AM on March 28, 2011 [1 favorite]

Will you be able to find a job in the new town? Rent and real estate are high in the DC area precisely because it's the one place in the country with an actual abundance of good-paying jobs.

Why not rent the property out, and use it as a secondary source of income?
posted by schmod at 6:33 AM on March 28, 2011 [8 favorites]

A gift that large is unlikely really free. Is this a Grandkids now gift? Is this a our jobs can't follow and as such, we trade career advancement for a menial dead end job gift?
posted by Nanukthedog at 6:36 AM on March 28, 2011 [8 favorites]

SUPER MAJOR POINT: You and the inlaws need to be absolutely clear and on the same page about who's house it is and clear from the start. If they still consider it theirs and they're just loaning it to you for a while, major fighting can occur when you start changing the decor and all. The four of you need to sit down, have a talk and get the ownership, both legal and emotional, ironed out and make sure everyone is crystal clear about what's going to happen.

-Moving away from a very diverse/liberal/exciting area to a hyperconservative one.
-Most of our friends live in the DC area, and I find it hard to make new friends.

Do you really want to live in small, potentially boring town, where a steady stream of "Liberals SUX, AMIRIGHT" is the norm? That sounds like a slow mental death for a left leaning person. Visit the town if you can, and find the liberals, so you can at least have some peace and familiar surroundings, it'll make a world of difference when living to a new location.

-We don't have the things that you need for houses; lawnmower, tools, extra furniture.

You'll be saving money, so can pick up a lawnmower and tools that first month and add furniture as you go. Finishing the house is in the same boat, take care of the needs then handle the other stuff
posted by Brandon Blatcher at 6:37 AM on March 28, 2011 [3 favorites]

I've been living 60 miles from DC in the heart of Red America for 9 years. It really isn't that big of a deal. If you want to MeMail me with the actual town you might move to I might be able to give you a little more insight into what living there might be like.
posted by COD at 6:40 AM on March 28, 2011

Take a weekend to do a quantitative analysis. How much tax will you pay? How much can you sell the house for when you want to leave? Will you be able to sell the house stuff when you leave (for how much)? What's the opportunity cost / financing cost of all that stuff? What salary could you find in that area? How much will you save on insurance? Will you have to buy a (n additional) car?

When you leave will your professional development have suffered? How much of your life will you save / spend on commuting? Are you talking about DC exurbs or really away like Lynchburg? Those are fairly different culturally.

Culturally, my parents had to do this several times (Big Company moves you into the middle of nowhere to deal with some crap for a year or two), and it depends. In small towns there are relatively high socioeconomic status people who tend not to be bigots or morons. You just have to find them. People in a small town can avoid brining up contentious and judgmental subjects while you're around, and many of them are legitimately of let-live nature.
posted by a robot made out of meat at 6:46 AM on March 28, 2011

The money you save in rent will be money you spend drowning your sorrows in alcohol because you live in a hyperconservative neighborhood with no friends and controlling in-laws.
posted by madred at 7:04 AM on March 28, 2011 [3 favorites]

I moved to what I would consider the least liberal friendly town in mid-mass. It hasn't killed me - I just don't randomly talk politics with neighbors and assume they'll agree with me. Those that I do talk politics with are a few, and generally they get me. As a plus, I'm very well versed on tea-party-esque talking points and I have a very quiet and subtle ability to force more folks blinded by only thinking about the easy stuff to start thinking about the larger implications of their policy. Its a lot like missionary work, except more rewarding when you can actually see them begrudgingly start supporting an opinion they didn't take the time to understand before and vehemently argued against.
posted by Nanukthedog at 7:22 AM on March 28, 2011 [3 favorites]

I left the city four years ago; I lived in DC for a bit when I was younger... My knee-jerk is that you don't want to do this. DC does have a lot to do and if you are still out there enjoying that, you will hate living in Small Town. You can tell yourself you'll still drive in to go to your favourite restaurants &c, but when you are tired at the end of the day you are going to look at all the driving involved, shudder, and eat out of your freezer (because you are tired of the only decent take-away that actually delivers to your house, which is not very good anyway)...

I do adore my Small Town, but I did not leave the city saying "it's a really awesome area, very diverse, tons of things to do"; I left the city saying "I have had it with the noise, the anonymity, the crime, the filth." I could be wrong, but my read on this here is that you are not psychologically in a good place for this sort of move.

And new windows are expensive, and the lawnmowers and curtains add up, and there will always be something -- your furnace will break, you'll need a plumber, etc -- and you won't save as much as you think. I think in the four years I have owned my house I have spent what adds up to your rent over four years on fixing the place up, and that can be depressing, and I think it would be significantly worse if the house was not in just the right place and wasn't precisely what I had intended to live in, house-wise. ("Mostly renovated" -- how bothered will you be by the parts that aren't?)
posted by kmennie at 7:24 AM on March 28, 2011 [1 favorite]

Take the house, but only if the transaction is fully documented and gives you legal possession and title over the house. Most likely, it would be turned over to you via a quitclaim deed or similar legal instrument. Make it very clear to your in-laws that you want and expect a legal transfer, then hire a lawyer who is not affiliated with them in any way to get the ball rolling.
posted by Gordion Knott at 7:26 AM on March 28, 2011

What sort of strings are potentially attached to the gift? Is this 'just a house' (as your question tends to imply) or is it a family home with lots of special memories for you in-laws? Is the gift being offered simply because your in-laws are financially comfortable and particularly generous, or is there potentially some sort of implicit quid pro quo arrangement that hasn't been voiced yet (you'll visit them more regularly, you'll start a family, etc)?

If you do move and six or twelve months later decide you can't stand another minute in said town will you feel obliged to 'give' the house back? Or will they be happy for you to sell it and use the proceeds to buy a house on the other side of the country?

I'm in Melbourne, Australia, so can't comment at all on DC vs. hicksville, but…

A friend of ours lived about 8km north of the CBD ("downtown") Melbourne (a city of ~3M people). Most of her friends (including us) lived within about 5km of her house. She had a child, and when the child was about 2yo her partner and she announced they were going to move to a beautiful bush block on the outskirts of town, about 35km east of the CBD. My partner and I strongly encouraged her to consider renting in the town for a few months first, because despite being surrounded by absolutely gorgeous native bushland we thought she'd find it terribly isolating. But they'd made their mind up, so they sold up and moved.

Fast forward twelve months and they've already come back to the city. Just under an hour's drive proved too far for her friends to visit regularly (most of us have young children, which tends to interfere with the best of intentions).

Putting aside the offer of a free house, it sounds like you wouldn't otherwise consider moving from where you are now. I'd discuss with your partner and in-laws what will happen should you make the move and then decide it just hasn't worked out. If you're convinced it won't be a problem then think of this as a cheap way to try something different. If it's potentially going to get messy then tread carefully…
posted by puffmoike at 7:35 AM on March 28, 2011

I have not been in your position, but the way I see it is this: between spending some money to live the life I want to live, and giving up the life I want to live in order to save some money, there's really no contest. Live the life you want to live. It sounds like you want to live in the city.
posted by adamrice at 7:46 AM on March 28, 2011 [12 favorites]

What will this do to the autonomy that you and your husband currently have?

Now that I'm in my forties I've seen this pattern a few times- there's frequently a correlation between financial assistance from parents and parents (or in-laws) really getting in your business, and feeling they have a right to do so, after all, they gave you a house. I'm not saying this will happen for certain, but at this point, it seems to be the rule.

If you know that you have a hard time making friends, I'd be very wary of moving someplace where you might have a hard time finding new friends. Feeling socially isolated really sucks and should not be discounted in your balancing of pros and cons.
posted by ambrosia at 7:54 AM on March 28, 2011 [1 favorite]

Put the money question aside for a moment.

I'm always wary of making decisions based on money pros and cons, even though I realize the practical necessity of doing so sometimes. Thing is, money comes and goes, and when it does either in a large way, it's rarely a result of something planned for. Gifts happen, and so do catastrophes. You never know. Marriage and happiness are another thing altogether.

A marriage is an agreement. At its best, it is an agreement to safeguard each others happiness and well being. It is an agreement to cultivate fertile ground in which the other partner can reach his/her potential. You owe this to each other, and (to my mind, others may disagree) all major decisions should incorporate this factor: Does this decision contribute to our happiness, potential, and well-being. Then money, entertainment, etc.

Guard your marriage, guard your real happiness. Nothing else really matters in the long run. Especially if it erodes the important things. The best laid financial plans can go sideways through no fault of your own. Your happiness however, is yours alone to create and cultivate.
posted by nickjadlowe at 7:56 AM on March 28, 2011 [1 favorite]

Are you going to be happy living in a small town? It doesn't seem like there are any other reasons you want to live in this town, and the house is only going to be a small part of your life there.

Also, small town living may be cheap, but so is small town labor. You're probably going to be paid much less at a comparable job in a small town vs. in a city.
posted by geegollygosh at 7:59 AM on March 28, 2011

Take the house and rent it out?
posted by By The Grace of God at 8:07 AM on March 28, 2011 [2 favorites]

You aren't going to be able to crunch the numbers on this without expert advice, i.e. a CPA and/or attorney (probably both), because of the tax implications. You're going to need to figure out who really owns the place, and if your in-laws are wealthy enough to consider giving away houses, they're wealthy enough to need some significant estate planning. Heck, giving you the house could wind up triggering gift tax this year, affecting the estate tax when your in-laws pass away, and leaving you with a basis which is significantly lower than it would be if you acquired the property via traditional sale. This, in turn, could subject you to unexpected tax liability when you sell the place.

Given that you're basically weighing "awesome/expensive" v. "sucky/cheap", if the latter actually winds up being not all that cheap, figuring this out is going to be pretty important.
posted by valkyryn at 8:13 AM on March 28, 2011 [4 favorites]

I own a house 90 miles from the apartment I rent in the northern Virginia suburbs. I have been shuttling back and forth between the two for 11 years.

A lot depends on the job situation in your small town. Unemployment in my rural area is high; wages and salaries for the jobs that do exist are significantly less than the DC area. Getting a job is much more dependent on family connections (i.e., nepotism). People fight over getting jobs driving the school bus or to work at Walmart. Many people I know there have had a series of available jobs--not careers. And you may very well find that your success in the job hunt is affected by your political and religious beliefs.

I have friends in both places. There are certain things I like about living in the rural area, a paid-for house being one of them, but the employment and educational opportunities are far better in the DC area.

As noted by many others, there are significant tax issues for you if you are given a house. If your main issue is the high rent, you might compromise and look in the DC exurbs. Longer commute, lower rent, yet still having access to the DC job market.
posted by apartment dweller at 8:35 AM on March 28, 2011 [1 favorite]

Is it in a desireable area where you could rent it out via VRBO or AirBnB? You wouldn't have to rent it out year-round since it's near some family, you could use it as your own vacation house and use rental income to pay for any necessary upgrades/repairs. Or, just rent it out outright. You can do that for a few years and decide what you want to have happen to it later.

But, this really all depends on lots of interpersonal factors that people have raised above. Owning a property outright can be an incredible asset provided you are able to generate income from it. Keep in mind that this will have an effect on your tax liability as well. So, you need to talk to an accountant.

If it were me, I'd be tempted to hold onto it for a few years and neither live in it nor sell it. But, I also can't really imagine that that's what my relatives intended and it would probably cause harsh feelings.
posted by amanda at 8:40 AM on March 28, 2011

3rd option: ask in-laws to contribute to a house that is closer to them, but not necessarily in a very conservative area.

Personally, I'd be uncomfortable with my in laws controlling such a large part of my life.
posted by theora55 at 8:44 AM on March 28, 2011 [1 favorite]

Why not accept the gift, take ownership, and rent it out to cover taxes, upkeep, plus a little extra money for your bank account. Then when the market improves, sell it, and use the proceeds to buy a place where you actually want to live.
posted by mmf at 9:35 AM on March 28, 2011 [2 favorites]

Not enough job info. Possibility for too many strings attached. Avoid.
posted by WeekendJen at 11:15 AM on March 28, 2011

Maybe not as free as you think. Do they expect something from you. Would they be agreeable to you selling the house. I would explore why they want to give you the house. Is it so you would be there to do their bidding?

Does not sound like a good idea if you love the DC suburbs and not small-town life.
posted by JayRwv at 11:51 AM on March 28, 2011

For whatever it's worth, you can buy a house for $60,000 east of the Anacostia river in DC. You can even get a (tiny, but nice) condo in NE for around $100k. Also, don't forget that DC's homestead tax rebate is awesome for cheaper dwellings. The first $67,000 of your house's assessed value is untaxed. Unless you're very wealthy, DC's tax burden is considerably cheaper than Maryland or Virginia.

I live in a tiny place that costs way more than it should. However, my commute to work is 10 minutes long, and I live within a 5 minute walk of groceries, a metro station, my doctor, and several dozen great restaurants. I wouldn't trade any of those amenities for a big house in the boonies, especially if it came bundled with a long commute.

Ask yourself how much space you really need to live in, and whether or not you actually want to own a house, and all of the trappings that come with it.

My gut reaction about a gift-house from the inlaws is to throw my hands up and scream "IT'S A TRAP." Obviously, only you can make that call, but my guess is that this is a ploy by your inlaws to get you to move out by them. Unless you can sell the house, or rent it as a secondary source of income, I'd avoid this offer, as it looks like it will cause you nothing but heartache.

I'll concede that small-town living does have some redeeming qualities, even for liberal-minded folks such as yourself. However, my guess is that there are going to be far too many strings attached to this house (that you haven't mentioned or don't know about) to make it worthwhile.

(Yes, there are a whole series of tremendously complicated issues surrounding my East-of-the-river. statement. However, it does remain true, and the value of your house would basically have nowhere to go but up.)
posted by schmod at 2:08 PM on March 28, 2011 [1 favorite]

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