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Keep paid for second property or sell it?

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dozulu
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Keep paid for second property or sell it?  Reply with quote  

Hello everyone, could use some other eyes on this situation.

I am a 58 year old widowed homemaker. My primary home is free and clear and I have a nice pension he left me. Have about 830K in investments with a great wealth adviser. I do not have to use the investments except to pay taxes on the money and also property tax.

Here is my dilemma... My late husband and I were given a property about 15 years ago that HD always moved around his family members for a silver dollar. It came to us when his older brother turned it down because he was already retired and could not afford to keep it up. So we took it. My husband and I planned on using it as a summer residence when he retired.

Our primary residence is in Oregon and the second property is in the Black Hills between Mount Rushmore and Crazy Horse. A ranch house and another small cottage on two acres on a creek. It is truly beautiful and we went there as often as he could get time off for vacation.

Then, 10 weeks into our dream retirement, he suddenly died. So I have all this stuff that is for a life I am not going to have. I have resisted making any decisions until a couple years past. Now, I feel like I am able to face things.

Should I keep this property in the Black Hills? It is 1018 miles from my front door in Oregon. So I pay a caretaker to keep the place up. He checks it, mows, does maintenace. I pay brutal fire insurance rates and out of state taxes.

My son thinks I should either lease it out, or sell it. But I have seen what renters can do to a house and this property has always been lovingly tended by each generation. I have emotional ties to this place. If I sell, I can surely get $350K, maybe more, because of location. We usually get 4-7 letters a years wanting to ask if we would be willing to sell.

If I sell it, it would make my monthly budget a little more forgiving. Plus, I would be able to get interest over time on that money.

But it has been in the family, only occupied by family, since it first came open for sale. If I sell, I will never be able to get it back.

Any ideas or advice would be appreciated.
Post Sat Jul 18, 2015 11:40 pm
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blixet
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Is there anyone in the family that you might be able to give first rights to purchase the property from you? That might help with the emotional aspect you have with the place.

Otherwise, I'd look at it as dispassionately as possible considering your potential long term retirement needs. Long distance landlording isn't impossible, but it takes a certain type of individual willing to take on that type of business deal. If you don't see it for yourself, consider selling the property and move on. My condolences on your loss. I don't mean to be insensitive. I am sure that this is a really tough decision.

Information is more valuable sold than used – Fischer Black
Post Sat Jul 18, 2015 11:50 pm
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oldguy
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I've been in that area several times, as you say, it's beautiful. I'm of a rural upbringing, the choice would be easy for me, I would sell the house in Oregon and point the moving van driver to SD in a heartbeat.

But it depends on the SD house - can it be winterized? Or is it a summer cabin with low insulation, no furnace - is there a well or city water, septic or sewer? And so on. The conveniences are way more important as you enter retirement, you don't want to mess with frozen pipes, a failed well, yada. As a retiree snow is pretty as long as it is outside, and as long as you do not need to go out in it to go to work. Very Happy
Post Sun Jul 19, 2015 12:22 am
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dozulu
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Thanks for your ideas guys! Yes, the moving to SD option has occurred to me. Especially since Oregon has obscenely high taxes in every area. SD has no income tax. Also, the out of state taxes there are a third of what I pay on this house in OR. Here in OR, property owners pay for everything as there is no sales tax. In SoDak, they have sales tax and a healthy live and let live outlook.

One of the houses, the larger one is set up for year round living. However, my husband would see one snowflake and tell me to go pack. He said that one winter there would cure me. But I am a cold weather scandanavain northern type human so I do fine in the cold.

My Oregon town is getting a Costco and that will make property sales here easier if I decide to do that. It would be wonderful to get off the fence. Part of the problem is that I was married all my adult life and very few life skills beyond housewifedom. So it has been very scarey learning how to do the stuff most people have done all their lives. I had never paid bills or been to the DMV in my life.

So it is a little intimidating to load it all up myself and go take up residence with Whiskers, my house lion who is now full grown and jumping on my deck every night. But even if I do that, I am still one woman with 3 houses. I have thought of selling EVERYTHING and starting new somewhere.

If I go to SoDak, I have no place to put the 27 foot Searay husband bought me. They get HUGE hail in SoDak and it would destroy my boat if I put it on the water there.

I am a mess of indecision. Unusual for me.
Post Sun Jul 19, 2015 2:01 am
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oldguy
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quote:
or been to the DMV in my life

A 'charmed life', indeed, lol. But I doubt that the line will be long in SD, maybe 3 o 4 folks, not the all-day adventure of OR. (The first time I drove thru OR, a guy at a gas pump yelled at me and took the hose away from me, way too much government.)

Sell the boat in OR - buy a horse in SD, horses and cats have a happy relationship - and the horse will keep the grass trimmed..

quote:
a cold weather scandanavain northern type human

Yeah, snow is no problem when you're retired, you get a cup of coffee, look out the window, watch the deer, and chuckle at working folks who are out there in the dark sweeping snow off their car, trying to get out of their driveway to go to work. (Schadenfreude)
Post Sun Jul 19, 2015 3:44 pm
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blixet
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How far would you be from essential services? Like groceries, medical care, etc. A trip to Costco in Oregon probably doesn't compare to a slog through snow with a Canadian cold front slamming you in January. I'd want to spend some time seeing what it would be like exactly before I considered moving. How would you cope socially? Would you be isolated?

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Post Sun Jul 19, 2015 3:59 pm
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dozulu
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The Black Hills are a major tourist site. I am on the strip of road between the two large attractions, Mount Rushmore and Crazy Horse, the largest sculpture on the planet. It is not like being in a cabin in remote Alaska. Rapid City is at the bottom of the mountains, 20 minutes away and all services are available there. In my location, I am between two small towns.

I think that the thread has kind of lost my original question. Should I sell it?

The money it costs me in upkeep, taxes, insurance is causing my budget to be tighter than I would like.

If I look at the situation without emotion, the numbers say I either need to convert that to income property, or sell it and invest the proceeds. When my husband was alive, we would have had to pay capital gains on everything over the silver dollar we 'bought' it for, but when your spouse dies, jointly owned property resets your basis to the value at the time of death. It makes it possible for people to sell after a death without huge taxation burden.

My son thinks I should put a price on it high enough that I would not cry if it sold.
My sister in law thinks I should get rid of the old life property because she sees I am paralyzed still holding on to the stuff and life I lived with my husband. She thinks it will free me to move forward with my life if I get rid of everything.
My neighbor said that her aunt sold everything following everyone's advice and realized a year later that she craved the familiar.

If I rent or lease it out, I could put my caretaker on a monthly salary to take care of renter issues and make sure it is maintained. If I did that, I could expense my maintainece, taxes, insurance do tax purposes while still keeping the asset. My High Poohbah of Money thought this a good idea.

Oregon has rules, rules, and more rules. I hate it here, except for my friends. I live in a desert that is usually 100+ for long weeks in the summer. I hate the heat.

But just looking at numbers, it is ridiculous to do nothing.

Let's say I could lease it out for 1-2k per month. Best case scenario, I make 24K annually.
If I sell it, invest say 350K at 7% it is $24,500 annually.
If I leave that money invested, it will be $688,000 in 10 years, $1,300,000 in 20 years.
Post Sun Jul 19, 2015 5:25 pm
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blixet
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quote:
Originally posted by dozulu
Let's say I could lease it out for 1-2k per month. Best case scenario, I make 24K annually.


That's a potential best case "gross" income. Then there is the expense side. And even with a caretaker or property manager there are myriad potential issues that will be inherent. I am a landlord but I couldn't do what you propose. In my business plan, there is no place for trust or a lack of information on what is going on all the time. I don't think I am an obsessive control freak. There would need to be a significant upside to take on the extra risk.

I can't place myself in your position and say what you should do. But I know I wouldn't own a rental in a far off place in my own state much less in another. I would sell. If I didn't like where I live, I would move to someplace more amenable. But that is me looking at a hypothetical situation simplistically. I know your reality is much more difficult to figure out. Good luck with it.

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Post Sun Jul 19, 2015 6:59 pm
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oldguy
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quote:
If I did that, I could expense my maintenance, taxes, insurance do tax purposes while still keeping the asset. My High Poohbah of Money thought this a good idea.


I'm a longtime landlord in AZ, SFHs. Yes, the items on your list, plus depreciation, can all be deducted from your income. Depreciation is like a 'virtual' expense, on a $350k property the annual deduction is $12727, so that cuts your taxes by about $1900/yr, ie, it adds about $160/m to your rental income (it's virtual because you don't actually have to spend the money, like you do for taxes, etc).

Things to consider - my best rentals are 1100 to 1200 ft, 3bd2ba. That fits most young families who need a place while they are locking in their 'permanent' jobs, saving for a down payment, etc. They do no want to rent 2000 ft or 3000 ft houses, don't want acres in the country, etc - they can't afford them. So your place will only appeal to a few 'special' renters. And the interested folks are way more likely to be buyers, not renters. And there will be turnover, no one is going to rent it for 10 or 15 years.

lol, of course for me, the choice is easy - sell the house in OR (that money is 100% tax free). Very Happy
Post Sun Jul 19, 2015 7:07 pm
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dozulu
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Thank you guys so much for these ideas!

My caretaker watches over my house as well as hs own. I have complete trust in him. Truly, he could find me the right renters. I think that I old secure a nice retired couple without too much difficulty if I go that route.

The cottage is 1200 2 bed one bath with vaulted ceilings and wall of windows. Less than 30 feet from my bed to the creek. Furnished with many generations of antiques.

House 2 is a 1450 2 bed 2 bath without furnishings.

The we'll is arisan, actually frosts the faucet if you let it run. We put in new pump and new furnace, new hardwood flooring and rerocked fireplace and wall. Deck needs to be redone if I live there. Need a new pumphouse. Need a garage.

Oldguy, thank you for calculating depreciation. I did not think of that...
Post Sun Jul 19, 2015 9:54 pm
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GardenCat
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Hi there,
Late to the posts but...
One thing that hasn't been mentioned is that at our ages if a decision is made to move away from familiar and friends, it likely will be greatly beneficial if you can spend a year in the new environment, if you can afford it and make sense of the temporary situation.

For retirees an often heard 'wish I'd done' comment is around this idea of not really knowing what year-round living in the new place is really about / like. You will need to have reliable, trustworthy, competent and affordable handymen / contractors for all the things that need to be done to a home that you cannot do yourself.

My daughter lives in SD and greatly wishes she and family could move back to CO. SD winters are long and brutal and can make one feel cabin feverish! Below zero weather is nothing to take lightly!

Sounds like you live in eastern OR, where it is kind of high desert, and I know summer is hot and dry there, been there myself. Maybe western OR would be more to your liking?

Anyway, I hope this gives you more to help with your decision. It sounds to me like money is not a worry for you, but it should always be a consideration...

Best wishes
Post Sun Jul 19, 2015 11:12 pm
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dozulu
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GardenCat, thank you for your comment. You are right about other areas of Oregon being greener. But that does not get me out of the obscenely high Oregon taxes. The tax advantages of SoDak would be like a raise! As a housewife my entire life, I am not put off by being marooned by winter. But of course here in Oregon the bad driving days are rarely strung together for very long. I do remember that when I asked my husband why both houses have doors on opposite sides of the house, he said it was built that way so that if you got up one morning and opened the door to snow covering the doorway, you did not have to dig out, you could always use the door on the other side. Shocked That is why he only wanted to live there for summer. I think a test year through all seasons is a very good idea. If I can't hack it, I can abandon ship and get back to Oregon. But I am a winter loving creature. It is already probably too late for this year to be prepared for a SoDak winter back there. Usually the houses are winterized so I would need to invest some time and money in prep. My late husband grew up there so would know what to do, but I would need to hire this done. When I asked my husband in June why every other truck had a load of firewood, he said prepping takes more time than in Oregon Shocked Here I use 4 cords every winter. I do to know what the number would be there. If the storm knocks your power out, you had better have wood in backup for heating. Both houses have propane furnaces and fireplaces but the electric must work for the furnace to circulate the heat...
Post Mon Jul 20, 2015 2:27 am
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oldguy
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quote:
you did not have to dig out, you could always use the door on the other side.


In the Old Days, they strung a clothesline from the house to the barn in winter. You used it to guide you in a blizzard. (In a blinding blizzard you might miss the house on the way back from the morning milking, and freeze to death in the storm.)
Post Mon Jul 20, 2015 3:49 am
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dozulu
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My grandfather, an immigrant from Finland, froze to death in Upper Peninsula Michigan during a storm when he lost touch of the clothesline between the house and barn. Left my grandmother a widow with three little girls and no English language skills.

The people in SoDak are remarkably warm and caring. Not uncommon for them. They do not know how unusual they are in this regard. My late husband and his friend were looking for someone they used to know and knocked on a door to ask for directions (way way off road) and the person at the door invited them in. Then this kind soul drew them a map, insisted they stay for lunch, sent them on their way with a jar of jam. Very good people. And this story is average for back there.

They are so close that they form strong lifelong friendships. The 3rd week of July every year my husband's friends (about 200) get together for a 3 day poker game and reunion. Most live other places now but they come back like salmon returning to their home waters. I usually stayed home. One round up of the yahoo's was enough!

I have attributed the warmth of the people to the need to check on one another during winter in the old days. You needed community to survive. People are important to them. It is now ingrained in the culture. The flip side of this is the relaxed business practice. Weird is kind of common there.

True story...had an app with insurance agent in Custer. Got to the office and found he had cancelled all apps to go fishing because it was so nice outside and the fish were biting.

True story...in Rapid City at the crowded Walmart parking lot saw a woman talking in calm so thing tones to her wolf. Her WOLF. I was the only person who seemed to even notice THERE IS A WOLF IN THE PARKING LOT.

True story...saw a station wagon chocked full of kids driving away from the swimming hole. The driver was about 10 years old. She was peeking over the dash through the steering wheel.

My husband got his license when he could see over the counter and had 50 cents. He began driving on grandma's ranch so young, he doesn't remember when he started driving. It was just something he always did.

A different sort of place.
Post Mon Jul 20, 2015 2:06 pm
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oldguy
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quote:
A different sort of place.


Yup.
I read a book, maybe 10 or 15 yrs ago. Something about a 'dish towel in the window'. It was about SD Norwegian farming communities long ago, when a pg farm wife was about to deliver, she hung a dish towel in the kitchen window - passing farmers saw the towel & rushed home to get their wives to help.
Post Mon Jul 20, 2015 2:57 pm
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