Should I sell or rent out house?

[bibsoconner]

Hi fellow Pigs. I’m a long time lurker and occasional poster.

I’m also extremely cheap so I’m hoping for some free marital advice today 🙂

My wife and I are both 50+ yrs. She loves her job (biotech) and can work remotely from anywhere. I’m starting to hate my career (software engineering) and would like to try something else*. Our one and only house in Pt. Loma is paid off (about 2.3 million according to Redfin/Zillow). We had this idea of moving to St. Thomas, USVI. My wife has family there. She’d continue with her existing job. I’d teach college, high school, or just be a bartender or bus boy. Those last two jobs do not scare me and actually sound sort of appealing right now. I’m somewhat in favor of selling the house. Renting it out from a distance could be a pain. My wife wants to rent it out in case we hate St. Thomas or want to return. She’s convinced prices only go up even though she was certainly around in 2008-10. She’s got some good points that we are locked into Property Taxes based on 1.4 million and generally, prices go up. As I said, I think renting will be a pain and don’t see why we need to return to San Diego (or California) even if we get sick of St. Thomas. So the questions:

1. Would you sell or rent?
2. Assuming you say rent, any ideas for renting a relatively high end (4 bedroom Pt. Loma) house? A particular agency? Rent year to year? Airbnb? We’re both concerned about renters trashing the place. And upkeep could be a pain (older, big house).
3. I floated the idea that if we must rent, we put our daughter in it (SDSU student) and have her rent it to students/friends (and stay herself). Perhaps less money but a family member watching the place. We could even make sure she has “skin in the game”. I have confidence that my daughter has enough maturity and would act in our best interests based on inheriting it one day and taking a cut off the rent. My wife has considerably less confidence in her.
4. And of course, feel free to dust off your crystal balls and tell me exactly what house prices will do in the next 5 years. That might tell me whether to sell now or later.

Incidentally, rental prices in St. Thomas are very roughly 3-4 thousand a month for something decent. Food prices are a LOT more expense. Gas, curiously is cheaper ($4/gallon).

Thanks for the ideas!

*I’ve suggested I just retire and my wife can support us both. That didn’t go over well :). A future post will ask, “Do we have enough to retire before I drop dead from boredom and/or anxiety at work?”.

[sdrealtor]

Easy. Hire good local property manager and rent it out. Prices are not going down anytime soon and if we hit a downturn it takes a while for them to drop. Revisit in two years and decide whether to sell then so you still have 500k cap gain exclusion. By then you should have good idea if you like it. FWIW a lot can happen as we age, I’m starting to deal with that myself. Give yourselves time to get a few more miles down the road. Ok you can leave $5 in the tip jar.

[The-Shoveler]

My crystal ball seems to have a defect (or two).
Still working on getting my quantum eraser working though.

Not really a big Climate change believer (or denier) but If I was living too close to sea level I would always be watching the Antarctic glaciers in case I needed to get to higher ground LOL.

The Above said, I think I would always want to own something on the west coast, I think a better question is where you think homes will be in 10 years (time goes by incredibly fast).

[bibsoconner]

Thanks sdrealtor. I’d forgotten about the 2 year rule. It also reminds me that I should make some attempt to get my home improvement receipts together. As I recall, beyond the 500K cap you can avoid taxes by offsetting profit on house with money you put into it. Unfortunately, I’m not great at keeping receipts, especially for all the small stuff that ads up! And if current prices hold or increase, I’ll definitely be above 500K.

Feel free to post or PM me “good local property manager”!

Thanks!

[flyer]

Agree with sdr. We live various places much of the year, but will never give up our San Diego properties, especially with most of our family and friends being in CA. Even HI, where we spend some of the year, can get old. Beaches, golf and all it offers are amazing, but variety is more interesting.

You never know what life may bring over time, so, imo, keeping property here is a smart move on many levels. Many friends do the same.

You should have no problem renting out your home in PL, should you choose to do so.

All the best with your plans!

[scaredyclassic]

I’m intrigued that you believe your daughter will manage the property well but your wife does not. I advise some prophylactic marriage counseling for all the issues going on. It’s best to go when things are good. Don’t wait for a crisis!

I’m going to be contrarian and say sell. You want to be a busboy, damnit! Follow your dream! Why live in point Loma! You can bus anywhere. Perhaps read DISHWASHER! the autobiography of a guy whose dream was to wash dishes in all 50 states. What an awesome tale he tells!

You’re sick of your job and I think SD has lost its charm for you. Frankly, point Loma is kinda dull. Take the money and bus dishes with a 2 million dollar cushion. And a working wife! Sounds good to me too! Maybe get high with the other waitstaff out back near the dumpster? Never worry about work. Get a pet ferret. Take up juggling. Free your mind of stupid bullshit.

However, I personally am staying in my house and in my job, sober, filled with normal stupid bullshit, away from dumpsters, but in marriage therapy. I think my wife would pay for me if quit my job…but maybe not…

[Coronita]

[quote=bibsoconner]Thanks sdrealtor. I’d forgotten about the 2 year rule. It also reminds me that I should make some attempt to get my home improvement receipts together. As I recall, beyond the 500K cap you can avoid taxes by offsetting profit on house with money you put into it. Unfortunately, I’m not great at keeping receipts, especially for all the small stuff that ads up! And if current prices hold or increase, I’ll definitely be above 500K.

Feel free to post or PM me “good local property manager”!

Thanks![/quote]

So I had pretty good luck with urbanrealtor as a property manager. he’s exactly the kind of property manager you want. Because he’s fair and honest. But if a tenant tries to pull a fast one on you, you definitely want someone like him on your side. he’s use to dealing with pain in the ass tenants…. and in a pro-tenant state and in a world of rental moratoriums, I’d wouldn’t half ass this especially if this is your first time being a landlord.

[svelte]

Great advice on here from sdr, scaredy, coronita and others.

Some other thoughts that should be factored in:
1. My father always said that retirees are in consensus that one should not jump into something with both feet. Instead, they recommend renting your house out and trying the new area first. You might just find you miss San Diego more than you thought you would.
2. You can pass the house through to your daughter once you die with a much higher limit than 500K…that might be a thought to avoid taxes…and in the meantime you can rent than thing out for several thousand a month and basically not have to worry about a job ever again if you don’t want to.
3. I would think long and hard about jumping out of engineering. You’ll work just as hard, worry just as much, and have just as little free time in basically any other career you choose…and do it for much less money. (scaredy said this much better than I did!) My best friend in college did that, he quit his Silly Valley sw job to become an artist. I reminded him they are actually called “starving artists”. He has learned that lesson the hard way and now his software skills are dated.
4. Flu and I have talked about this before – one really has only so many years until they really can’t work any more…health issues, etc. While you can still earn great income, do you really want to call it quits? I get maybe scaling back so you have more free time, but I would be cautious about changing too much all at once.

Just my two cents.

[Coronita]

[quote=svelte]Great advice on here from sdr, scaredy, coronita and others.

Some other thoughts that should be factored in:
1. My father always said that retirees are in consensus that one should not jump into something with both feet. Instead, they recommend renting your house out and trying the new area first. You might just find you miss San Diego more than you thought you would.
2. You can pass the house through to your daughter once you die with a much higher limit than 500K…that might be a thought to avoid taxes…and in the meantime you can rent than thing out for several thousand a month and basically not have to worry about a job ever again if you don’t want to.
3. I would think long and hard about jumping out of engineering. You’ll work just as hard, worry just as much, and have just as little free time in basically any other career you choose…and do it for much less money. (scaredy said this much better than I did!) My best friend in college did that, he quit his Silly Valley sw job to become an artist. I reminded him they are actually called “starving artists”. He has learned that lesson the hard way and now his software skills are dated.
4. Flu and I have talked about this before – one really has only so many years until they really can’t work any more…health issues, etc. While you can still earn great income, do you really want to call it quits? I get maybe scaling back so you have more free time, but I would be cautious about changing too much all at once.

Just my two cents.[/quote]

I’ve been running my F.I.R.E. calculators as of the late….Just in case.

[svelte]

[quote=Coronita]
I’ve been running my F.I.R.E. calculators as of the late….Just in case.[/quote]

lol, yeah I wonder how many FIRE folks are getting a little frightened right now with inflation taking off. Some of them may have used questionable assumptions.

I still think it is folly for a 30- or 40- something to think they can project out 40 to 50 years. The world changes fast!

[The-Shoveler]

A late retirement followed by an early death are probably my best option in the current environment LOL.

[plm]

Well an early death from Covid is what I want to avoid if they make me go back in to the office. So I will take my chances with retiring early once that day arrives. At this rate, I may never retire, they seem to keep pushing the date out because Covid is so bad now. I will just adjust my expenses to match my passive income. Taxes are incredibly low if you don’t make much in retirement. But 2022 has not been a good year so far in the stock market. Hope it gets back to its upward trajectory.

[Escoguy]

On balance, I’d sell one 2.3M home and buy two for 1.2M.
Then you can have a place to live or two rentals.

I highly doubt you will get twice the rent for one.

Then you have more options: i.e. you can live one again or sell it.

Not all choices are black and white.

[svelte]

[quote=Escoguy]On balance, I’d sell one 2.3M home and buy two for 1.2M.
Then you can have a place to live or two rentals.

I highly doubt you will get twice the rent for one.

Then you have more options: i.e. you can live one again or sell it.

Not all choices are black and white.[/quote]

I like it!

[Coronita]

[quote=svelte][quote=Coronita]
I’ve been running my F.I.R.E. calculators as of the late….Just in case.[/quote]

lol, yeah I wonder how many FIRE folks are getting a little frightened right now with inflation taking off. Some of them may have used questionable assumptions.

I still think it is folly for a 30- or 40- something to think they can project out 40 to 50 years. The world changes fast![/quote]

for me it’s not really just F.I.R.E. it’s slightly modified.

For my retirement will be partly funded by rental income and a return on after tax investments before I’m 65.

after 65, it would be funded by my rental, after tax investments, and IRA/401k.

I think I can pull this off with about a 4% return on investment on the investment of after tax cash. Including the cash out refi.

it’s a fun exercise of futility because it’s unlikely I will retire early now. since I missed my early retirement goals at 40 might as well wait 3 more years and round up to the nearest power of 10

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