/r/Frugal I need your help, recently got an inheritance and need to live on my own now. Not sure what to do.

mhgilliland · 4 months

My advice to you would be to speak with a financial planner immediately.

kidNurse · 4 months

What about buying but then rent the whole house out! It's a 4 bedroom and much larger than your current needs and depending upon where you live, you would have more that enough to cover the mortgage and your rent in a place that won't require as much maintenance. If you estimate a one bedroom rent is 650, what's a 4 bedroom going for, 2500 maybe? That would cover your rent somewhere else and you still have the investment.

m741 · 4 months

First, sorry for your loss. What do you need the house for? You say it's a 4 bedroom house. There's one of you. That's a huge house, and a huge investment to have hanging over your head. To see if that's worth it, you need to compare to rent for an apartment in your area.

Here's the balance for each decision. My assumption is a sustainable rate of return of 3% in the market, and that maintenance, depreciation, unrented months are 50% of rent, which is a bit pessimistic:

Sell House

+117k @ 3% SWR = $3,500 annually = $300/month investment income
-- Rent

Buy House

+25k @ 3% SWR = $62/month investment income
+ $400/month basement rent * .5 = $200/month
+ $500/month bedroom rent (estimated) * .5 = $250/month
-- $960/month mortgage & tax

Thus, I would consider buying, if general rent were $650-$750 in your area. You'd probably come out further ahead if you were handy enough to make home improvements and proved to be a decent landlord. Personally I would keep the home and try to rent out two bedrooms + basement. I would pay off the mortgage in advance with any spare income and after a year or two stop renting one of the bedrooms (too much effort), and then a year or two later I would try to sell the house and move into something of a more reasonable size.

Hope this was helpful.

McNuggz · 4 months

Buy the house, keep your 25k. If you decide you don't want a house and would rather have the money.. then sell the house later. If you sell the house for 150k, wouldn't you be in a much better position than if you never bought the house to begin with? You would have 175k rather than your initial 87k.

jiqiren · 4 months

Depending on the seriousness of your heart condition… You probably don't want to have $25k of cash if you have a medical issue. Unless you have good health converge already - you won't qualify for government help if you have assets. Better to have the house + debt + qualify for gov health assistance.

If you have any assets beyond a home and low-value car the government will force you to spend the money to cover costs before they help.

littlejohnnyjewel · 4 months

Buy the house. Mortgage & insurance under 1k is a pretty good deal...it might be your best opportunity to own. You're on track to be a homeowner, with a paid off mortgage, at 43! That will put you WAY ahead of the game, even if you have a meager income, in the meantime.

As a student, you should be in a good position to find tenants for extra rooms, if you decide to rent them out.

Stubb · 4 months

Sorry to hear about your loss. Sounds like you've been dealt an unpleasant combination of issues to deal with.

I'd recommend selling the house. Buying it will commit you to maintaining it and complicate moving to chase opportunities. Working part time and going to school will take up a considerable amount of time. Do you really want to spend what's left of your free time mowing the grass, cleaning gutters, painting, caulking, and fixing shit that breaks? Several of my pals own rental properties, and big variable is finding renters that will pay on time and not trash the place. That's harder than you'd think.

Stick with an apartment for the time being. It may cost a bit more, but you can pick up and move much more easily and you're not on the hook for maintenance.

Also look for a financial advisor that can help you manage your savings. You're sitting on significant amount of cash. I'd recommend finding someone that operates off a fixed fee (e.g., 1% of your invested amount) and has complete freedom in placing your assets (i.e., they're not getting a commission from a particular family of funds).

missingpiece · 4 months

If I were in your situation, I would sell the house. Where you're at in your life, you don't need an entire house to yourself, and you don't want to piss your money away paying to live in a huge house every month. Plus, you don't want to be tied to this house. If you sell it, you could move anywhere, do anything!

Other posts are saying that you could always sell the house if you decide you don't want it, but now is not a good time to sell a house, and it likely won't be for the next several years. Meanwhile, having over $100k would be enough to give you complete financial freedom for a long time, if you're careful with it. I'd still keep my job and not live outside my normal means, as you'll bleed money like a stuck pig, but you're no longer limited by finances.

Pay for your school and then decide where you want to live. Europe, Asia, the ocean, Lake Michigan, you name it.

TheGoddamBatman · 4 months

So your two siblings want to sell you a 180k house for 67k?

They sound pretty foolish. Jump on that before they realize what they're giving away.

Squameda · 4 months

Sell everything, move to Thailand...

Drapetomania · 4 months

Sell the house, invest that money carefully. Since you're still going to school and haven't started a career it's likely this won't be the house you'll live in forever.

Also realize that owning a house is a lot of work and maintenance, including cost of repairs. You'll have to mow the lawn, shovel the snow (depending on region), possibly deal with shit like backed-up sewer, burst pipes, broken dishwasher, etc. In an apartment you don't have to deal with that, and frankly it sounds like it's already in a bit of disrepair. And depending on your lawn mowing can be labor intensive especially if you have to mow on a slope (which really sucks).

Don't fall into the "I HAVE TO OWN A HOUSE!" bullshit that culture dictates. This money will get you through school and help you possibly start your own business or help put you on the path to finding one. Just spend it RESPONSIBLY and don't think that because you have a lot of money in the bank you can eat at Red Lobster every night.

Buying the house to sell later is a risky venture because of the state of the economy and property values.

Also, renting--it can be a lot of work, because people don't treat the house as well as they would their own and then you have to deal with repairs, possible criminal activity on your property, so on and so forth. Do you really want that headache while you're in school? My mother rented out before and it was a real headache.

TableTopFarmer · 4 months

Buy the house from the sibs, make small principal only payments until you are out of school, and then refi and give them each a fat balloon payment.

sunnydaize · 4 months

I think it mostly depends on if you want to stay in that house long-term, what sorts of expenses that house is going to incur (ie does it need a new roof etc) Also I don't care if that guy in the basement is your best friend since kindergarten, if he doesn't pay his rent kick his ass out. This is why you shouldn't mix business with friends. :)

thomas533 · 4 months

Buy the house. The general rule is to acquire assets (things that generate money). Since you are renting rooms out, the house is a money maker for you. If you rent out a second room, the mortgage will be almost completely covered and your rent is essentially free.

syuk · 4 months

Sorry to hear about your loss.

Drop some cash on a financial aid, or do it free at a bank if they still can. Don't mention your business until you legitimise it, or you can pretend that this is an opportunity to go into business and then legitimise it.

It is not a huge amount of money so remember that, it won't last forever but you can use it as a great springboard into a nice future for yourself. don't let anyone make you do anything until you have got some advice (not from the internet, from a financial advisor, a bank or a lawyer).

Internet guy advice, don't waste any money, if you like the cellphone business go apeshit with that (get some leaflets and a website and some stock (parts or cheap tablets) maybe but don't go carraaazy, just tidy things up.

edit: if you keep the property drop a fair chunk of your money on improving and maintaining it. If there are problems with it then it might not be worth what you expect later.

Good luck!

japaneseknotweed · 4 months

Go to the local hardware store, call the local realtors, talk to the folks down at the town office. Ask around, find out who the local landlords are who actually do a good job keeping their houses in good repair. Find out who the good contractors are. Pay a landlord and a contractor a respectable hourly fee to do a walkthrough/consult with you, talk to you about what you are getting into.

If you keep the house, you can always rent part of it to someone at a reduced rate in return for management/upkeep.

thewhitebear · 4 months

Buying and renting the whole house is a good long term decision, and you will benefit from it years to come. If anxiety is getting to you. Sell the house, take the cash and rent. Less things on your mind, and it will just be simpler. Definitely write them all out so it gets it out of ur head and onto paper. Good luck!

jooes · 4 months

A similar thing happened to my friend about a year ago. His mom passed away, and he was stuck with the house. So, he just figured out how much it would cost to run the house, and then rented out bedrooms to people. He lives there basically for free, and usually he comes out ahead too (He also factored in "emergency expenses" in the rent he charges, which aren't always needed)..

But seriously, talk to somebody who actually knows this kind of stuff... That's probably the smartest thing you can do...

DoingEverything · 4 months

Be cautious. With so much uncertainty in your monthly cash flows for the next few years, you would expose yourself to a huge amount of risk by buying out the entire property. Are your siblings employed? Continuing to hold the property jointly isn't a bad idea.

vcaylor77 · 4 months

If this is your childhood home where all your family memories were made, be sure you really want to sell if you decide to sell.

As for the job situation, it's not hard to get jobs for local government as an emergency services dispatcher. Usually pays decently and you're sitting in an office.

hardman52 · 4 months

This post and thread seem strangely familiar.

vbullinger · 4 months

First off, sorry to hear about your dad.

I've never rented and never will. Seems insane to me that people are suggesting you sell the best asset you'll ever have plus give up on all your memories and then give money to other people so that you can stay at their place for a short period of time.

If you have a mortgage of $87,000 and you're paying $960/month, you're paying too much. Obviously, that was set for the full mortgage. You should refinance. It might be tough if you don't have a full-time job, however. You might need to wait a while.

Don't move and rent out the whole house. Just find one or two very trustworthy people and rent to them while you live in the house. Get handy, if you aren't already, because you're the landlord now. You're 26, not 12, so you probably already know a thing or two.

Seriously, focus on that full-time job thing. This is extremely important. I don't want to sound mean, but 26-year olds shouldn't be living with their parents anyway. This is a rude awakening and a rough kick in the pants to get you going, but you need to get a career off the ground and fast.

In the meantime, your minor income plus rent from a friend or two (at most, no need to go crazy) should easily pay the bills.

rainbownerdsgirl · 4 months

Buy out the house and rent out all the rooms except for yours and continue to live there.

I am sorry about you losing your dad. Please let us know what happens.

fishbulbx · 4 months

Do not sell while the housing market is down and mortgages are at record lows. You can always sell the house later if your situation changes. Plus your siblings could help you out on the payment structure if they are more financially secure (let them bring that up.)

nonviolentprotestor · 4 months

Buy out your siblings, if that option exists. That leaves you with the option to live in the house, or sell it, or rent it, without having to split things in the future with them.

It looks like the 62k is a 2/3 split of the present equity in the house. I suppose that's the fairest way to do it. If I were your brother, I'd probably give you my share for a bit less than the appraised value, if you were moving into it and taking ownership. But, obviously, if you decide to sell now, I'd expect a fair 3 way split of all proceeds of sale.

Sorry for you loss, but I hope you get this sorted out soon. As others have suggested, consult with a financial planner immediately as well, to make sure that the cash you have is handled well. And if you do assume the full mortgage and full ownership of the home, renegotiate that mortgage at a nice new low rate. Being a student, I'd recommend locking into a fixed rate 5 year term, at least, so you know what your rate is. Having a couple of room mates paying you to live in the extra rooms is totally the way to go, if you can find people that you can trust. I did this for the past five years, and built up a substantially equity in a house which I sold this past summer when I got married, and we now live in a brand new dream home as a result. Having other people pay my mortgage for me for a few years was awesome. But again, your situation may be different. Best of luck.

noctrnalsymphony · 4 months

I rent out the basement for $400 a month(which is a steal) to a friend

renters pay on time(current one doesn't)

These two statements are your problem. As far as financial obligations, you MUST be a landlord first. I would advise not renting to friends, especially not at a loss to you. There's generosity and there's being used. Figure out which one is your scenario.

Maybe $400/month is OK for one of the bedrooms, and someone who can afford the basement could move in? Is it a finished basement?

RosieMuffysticks · 4 months

I strongly recommend that you buy out your siblings, then rent out two of the rooms in your house for $250/mo each. Strict rules on kitchen and bathroom usage, no messes left in the common areas, and you take responsibility for vacuuming, dusting, etcetera. Use your second bedroom as a studio, home-business office, or storage of family heirlooms.

You can shop around for cheaper homeowner's insurance, take out carpets and replace with laminate or vinyl, which will lower the insurance premiums, install fire alarms and extinguishers, which will also lower the premiums.

Whatever you decide, understand that owning a house is a huge responsibility, and you may want to weigh the fact that this was your parents' house (sentimental value) against your youth and ambitions.

If you install a vanity sink and mirror in each of the rental rooms, you can charge $300/mo.

herpderpherpderp · 4 months

Jesse Pinkman?

slack_with_me · 4 months

Buy the house from your siblings. Property, although low now, is an asset and assets are good things to have in these trying times.

Then rent the house out to someone trustworthy (maybe the sibling) for what it would take to make you comfortable now. I.e. take the cost of taxes and mortgage and get as close to that as possible.

I did this when I bought a house valued at 600 at the time for just under 5, and the value dropped a third (upside down on it basically). After 5 years, the value is up bc the rent paid for upkeep/improvements, I have a mortgageable asset, and in a few years maybe will even make a profit.

I had to pay out of pocket for difference between the rental value and the mortgage payment/taxes. and I won't lie it was pretty difficult. There was a lot of sacrifice. But I came out the other end with a manageable home in an amazing neighborhood, if I ever decide to move back with a family.

The base point being, I made someone else pay down nearly 7 years of my mortgage principal. That's pretty frugal.

rbarnette123 · 3 months

1st world problems. You're a toolbag.

dont_be_an_arse · 4 months

find a good handyman. preferable someone with awesome reviews. pay him to fix the house to a decent standard. then rent it out to a family (etc). then get an apartment. their rent payments will cover your apt rent and then some. put a huge chunk into something safe, like an ira or good stocks. get a decent car if you need one.

lensman00 · 4 months

If you file your taxes (which you really should be doing anyway), you'll very likely come out ahead by receiving an Earned Income Credit which should more than exceed any tax liability you might have.

diggity801 · 4 months

I'd sell the house and invest the money. That is too much house for one person. You could get roommates but then you have to have the hassle of getting them to pay you every month. If it were me, I'd just live simpler in a 1 bedroom apartment and invest the money.

Manilow · 4 months

God you're pathetic. 87k... really? If you need a financial planner to figure out what to do with that you might as well just go and blow it on hookers and booze right now. No amount of professional help will save you from being so fuckcing stupud.

otherwiseyep · 4 months

Holy shit you are barking up the wrong tree in this forum. Forget about frugal and do it right.

First off, you need a lawyer and a financial planner. I am very sorry for your loss but the first order of business is divvy up the estate cleanly, not to maximize returns.

Who is the executor here? Is it you?

Given a vague "everything left to everyone" will/estate, first order of business is to divvy up the personal possessions, furniture, stereo, etc. My advice is to just let everyone pick in order of youngest-to-oldest, or some randomized order. Everyone picks one thing until everyone's done picking. Then just liquidate the rest and split it: put the house and cars on the market.

PI hate to say it, but people in your position are a Real-Estate-Speculator's best friend. Divorces and deaths are the best ways to get real estate on the cheap, because they produce assets that need to be liquidated for cash quickly.

You can't both expect to sell for top-dollar, and expect to sell quickly. If you want to sell real-estate at top-dollar, you you need to be able to wait for the right buyer. If you want to sell it instantly, you need to accept the fact that someone else is going to arbitrage it.

You seriously need a lawyer. Sorry for your loss.

drhugs · 4 months

Your situation seems a bit more involved than the one my standard mantra addresses: if you like pizza and beer, you should try making your own for at least a fraction of your consumption thereof.

Equipment requirements are modest:

Pizza: bread machine with a 'dough' setting, bowl, pizza pan, oven. You need flour, yeast, and toppings (cheese + veggies?)

Beer kits: primary fementor bucket, long spoon, glass carboy, hose, siphon rod, bottles, caps, capper and the sanitizer product. Plus good water of course. The replenishable consumables there are: beer kits, sanitizer and bottle caps.

you'll need to login or register to do that

create a new account

login