Su casa es mi casa, but I'm not sure we want it.
January 12, 2015 7:44 PM   Subscribe

We ended up hiring a lawyer to assist in enforcing the divorce "agreement" and won! Or did we? The total judgment against the ex is 50K and he is required to sell the property. At the hearing, he tossed us a curveball and offered up the property in lieu of selling it himself. I'm confident we would not be able to turn around and sell immediately to cover the debt owed. Should we force the sale or hold onto it in hopes of making a profit?

This was our original question and the grand total was arrived at from enforcing the property division as agreed upon and unpaid maintenance with interest and lawyer fees.

The property in question is 1.25 acres of land with an orange shag carpeted, peeling linoleum and 38-years-of-smoking smoke stained ceiling, 1977 single-wide mobile home in a county that is much further behind the rest of our state in recession recovery. Property values suck and they're not moving up quickly, but they are working their way back.

The (rounded off) financials:

$125,000 to $135,000 potential fire-sale value (as is, on the market tomorrow, land-only value)
$1,500 to quit-claim the property back
$73,000 mortgage ($680/mo)
$11,000 to $12,000 in possible sellers fees

Potential long-term capital gains over $120,000 if sold by us.

Unearned income for maintenance on a maximum of $19,000 if not sold by us.

Obviously, the numbers do not shake out to covering that $50k. At the high end, we would almost break even.

So why are we considering keeping the property? We could hold onto the property for a couple years, counting on the land to continue to appreciate to a point where we would do more than just break even. It's also highly unlikely the ex will make enough on the sale to cover the debt and will move on through life living in his mother's basement with a judgement against him and make zero attempt to clear that debt.

Bonus points for forcing him to sell: we have no desire to live there and holding onto the property for a time would prolong buying a home in a different area of the state. Another caveat is that the mobile is unlivable for us so we'd be paying a mortgage in addition to living elsewhere.

(Yes, I've basically talked myself into forcing the sale.)

Hope me change my mind?
posted by Mysterious Trousers to Law & Government (15 answers total) 2 users marked this as a favorite
Force the sale. Are you kidding? I am an involuntary landlord and it sucks. You don't want to deal with it, and yay! you don't have to. So don't.
posted by charmedimsure at 7:50 PM on January 12, 2015 [21 favorites]

One the one hand, you could force the sale and get some money now, but he's not going to ever come up with the rest. But you can wash your hands of it and move on.

On the other, land is land, and it could appreciate in value somewhat over the next couple of years. Being a landlord can suck, but it's still income offsetting the cost of carrying the property. You stand a better chance of getting more money over the long term if you keep it. And, if nothing else, you get more control over the situation - he's got no real incentive to maximize your return.

Personally, I'd take the land.
posted by Pogo_Fuzzybutt at 8:01 PM on January 12, 2015

Response by poster: He will be forced to move, immediately. Renting the mobile wasn't even being considered as an option (hm...) but tearing it down and putting up a tiny home for short term/vacation/weekend living is.
posted by Mysterious Trousers at 8:04 PM on January 12, 2015

"He will be forced to move." This to me screams that you will have to go through the long, expensive, time-consuming and tedious process of evicting him. This means going to court, waiting a month (or more!) and calling the police (and paying them) to make him leave.

I'd force the sale.
posted by ethidda at 8:09 PM on January 12, 2015 [6 favorites]

Make him sell it, take your thirty grand or whatever it winds up being, and move on. Go buy that house you want.
posted by J. Wilson at 8:18 PM on January 12, 2015 [4 favorites]

Why tie yourselves to this property and the situation if the possible gains will hamper future house plans now and only maybe be a tiny bit profitable several years down the line if you're lucky?

Force the sale and start your own lives without this thing around your necks.
posted by quince at 8:27 PM on January 12, 2015 [6 favorites]

Sure, land is land, but if you got that money in cash tomorrow, would you be considering spending it to buy a property like this?

Be wary of overvaluing a situation just because it's the easier option.
posted by lollusc at 8:54 PM on January 12, 2015 [10 favorites]

Check with your attorney. She or he is supposed to advise you on it. Said analysis should have a tax lawyer there. Set the goal of the meeting of the lawyers and you as a solid recomendation. If your lawyer already has one on the table give it very serious consideration. You paid for it.
posted by Ironmouth at 9:08 PM on January 12, 2015 [3 favorites]

How much do you value simplicity and not dealing with stuff? If you accept his offer, is eviction an issue like others mentioned? How are you equipped for maintaining the property and figuring out when the right time to sell is?

Leaving the ball in his court is what I would do. Unless you are freaking desperate for cash, and need to have it in your hands so you can turn it over for whatever you can get in the shortest possible time.

If you can wait for him to do what he's required to, that is the option that won't have you pulling your hair out (at least if I were you).
posted by colin_l at 9:29 PM on January 12, 2015 [1 favorite]

How much is peace of mind and closure worth to you? More than any possible profit on the land (which could well turn out to be a loss)?

It seems like whatever you get pretty much immediately is all you're going to get. Take what you can get now and move on. It's been four and a half years.
posted by dg at 12:13 AM on January 13, 2015 [1 favorite]

If it was only the land, it might be worth hanging onto, but carrying a mortgage on a crappy property is going to affect your chances of getting another mortgage on the kind of place you actually want to live in. Stick with the agreement that he's got to sell.
posted by Azara at 1:40 AM on January 13, 2015 [1 favorite]

I am landlord and real estate investor. Investing in real estate is a great thing.

But this is NOT a good investment for you. Real estate investments need to be objective and clinical. No matter what you say, there is emotional baggage attached to this house.

Force the sale. If you want to invest in real estate, do it somewhere else.

Your question is not really about real estate investing. You question is: I just went through a difficult divorce, and I can come out with some extra money if I want to extend the emotional and legal involvement.

Don't be greedy. Cut ties and move on. Force the sale of the house.
posted by Flood at 4:05 AM on January 13, 2015 [7 favorites]

On the surface I agree with Flood, there's a lot of emotional baggage here and on that front it might be best for you to walk away.

However, are you the type of person who can divorce yourself from your emotions and look at this only from a business perspective?

To that end, have you really investigated the land as an investment property? Have you spoken to any real estate agents or rental agents in the area? How is the land zoned? Are there any upcoming plans to re-zone the area as commercial? Any developers interested in surrounding area? Is it in the middle of farm country? Could you rent it to be farmed? Could it be rented to a church or other organization as a retreat site (obviously, sans mobile home)? How much will it cost you to have the mobile removed? Or renovated? As far as the ex- having to move immediately, would he rent it back from you at enough of a rate to cover the mortgage?

With those answers in hand, and if they were favorable to a keeping the property as a business investment; if you could nominate someone to deal with the day-to-day tasks of landlording in order to avoid any emotional turmoil, even for just a year or two until you get some distance from it, would it make sense?

You need a lot of professional advice (lawyer, tax advisor, real estate advisor) before making this decision.
posted by vignettist at 8:11 AM on January 13, 2015 [2 favorites]

Be sure to factor in all the extra complications about keeping it: If you keep it, you are keeping a mortgage (which affects your ability to get other big loans), tax issues (different tax stuff can apply to houses you're not living in), and legal liability for stuff that happens there (eg what if someone gets hurt because you're not there maintaining the property). If you want to remove/tear down the trailer and put up another house, you'll get the fun of managing that whole process from a distance, finding contractors you trust, etc.
posted by LobsterMitten at 11:05 AM on January 13, 2015 [3 favorites]

In addition to what LobsterMitten has said, there could be penalties for not mowing the lawn and things like that. In my city if a landlord or homeowner gets three notices that the grass is too long or there are too many weeds they get severe penalties. As the mobile home deteriorates, will the city/county send notices or fees for the eyesore?

Honestly, it seems like a huge headache. I've had two good friends recently try to sell their (very nice) houses and deal with nothing but problems. One of them even ended up selling for FAR less than she paid just to get out from under the place. Right now real estate is very much a buyers market. I wouldn't recommend being a seller if you can avoid it.
posted by TooFewShoes at 3:57 PM on January 13, 2015 [1 favorite]

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