Rather than buying our "dream home" (which we couldn't really afford), my
wife and I bought a double as our first home. We intended to live here for
5 or so years, then move out and rent it out to fund our retirement accounts
over the next 50 years. The place where we are living now has 1,300 sq. ft.
on each side, 3 bedrooms each side. We paid roughly $45k for it, and put
another $20k in repairs into it. If we sold right now, we would probably
only get $70k for it - less than what we have in it, if I value my time
working on it at $10 an hour.
School district here is not so great, and kids are getting to school age,
so we would like to move out. We spent all of our cash paying off the debt
on our double. Unfortunately, credit tightened up, so now we are only
getting approved for $70k to $80k for a house. While houses come up in this
range, and in the area we are looking at, most all of them require a lot of
fixing up work.
A real estate agent pointed us to the USDA rural loan program. She told
us it was designed for folks like us, who had good cash flow, but not enough
$ to put down a large down payment at the moment. (describes us to a t) I
told the folks at the USDA up front that while we could save up about
$400-$500 a month, we don't have more than $3k to put down for a down
payment. After spending weeks communicating, filling out paperwork, and
paying them to check our credit histories and such, they sent us an email
asking if we were going to sell our double. I again told them no, that
right now we would have to take a large loss if we sold it in the current
market, and that it was always intended to be an investment for our
retirement funds. They immediately replied that sorry, they can't help us -
USDA Rural loan program is for people who don't currently own real estate.
What a waste of time!!! Evidently if we sold, we would no longer own real
estate, and would qualify for the program. Of course, then we would have
enough $ for a traditional loan, too.
So, I am facing a situation where it appears that for the short term
betterment of my family, I need to sacrifice the long term health of our
retirement accounts. In other words, sell this place at a loss so that we
can move and the kids can attend a decent school system. I am knocking my
head against the wall over this one - I want my wife and my kids to be
happy, but I hate the idea of simply handing this place over to someone else
at a loss, especially after I spent several years of my own labor completely
replacing the plumbing systems, electrical wiring, spackling, refinishing
the floors, replacing windows, etc. I have put months and months of my time
into this place, not to mention probably $20k in repairs. The idea of
someone else profiting from all of my hard work, instead of us, really galls
me.
I only wish there was some way I could turn this place over to some sort
of real estate investment trust, in exchange for shares in the trust put
into our IRA's, or something like that. That would accomplish what I want
for our retirement, and at the same time then we could show no ownership of
a current house, like the USDA rural loan program wants. I need to somehow
show "non ownership" of this property, yet somehow have it benefit our
retirement accounts.
Anyone have any experience with a situation like this? Thanks!
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