<p>dstark, thanks for the offer but I’m not in favor of it too. I don’t think DW had a use in mind also and just want it for the sake of having it.</p>
<p>Output?? I think you mean input 
Actually, there could be benefit to investing in real estate when the prices and interest rates are low… but IMO it should be either rental property that has a HIGH likelihod of renting (vacation, potential for corporate rental, that place for your daughter in Boston or NY, etc) or DOWNSIZING (like in a nice downtown condo) and renting current home.</p>
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<p>Output in sense of the rewards.</p>
<p>Yes, you are quite on the dot. That is what my feeling too. I really want to live in on a very lively place (a 2 street area) which is not in the downtown but have all the upscale shops with good restaurants. A nice 2 beds condo and one can walk to everything. We spend 1 of our weekend day/night there. I did look up for a 1 bed condo on the upper east/west side of NYC which started all this. DD want that too but convincing DW will take time.</p>
<p>^ a weekend place in the city sounds great!</p>
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<p>Actually, it is not a bad idea. Why not? Even Dear Abby used to say, “Show him (her, them) this column.” :)</p>
<p>POfIH, if I were in your shoes, I would either stay put where you are (remodel the kitchen and buy your W a membership to the nicest private gym that has a pool) or sell your current house/buy the dream property, and I would use the rest of the money allocated for real estate investments to buy a condo for your DD (in NYC or Boston or wherever she ends up after college). Good luck.</p>
<p>Compromise? Maybe promise a nice vacation each year, somewhere with a pool? </p>
<p>Or research to see if you can find a good deal on time share resale? (I have heard many people are trying to unload them. But I have not done any research).</p>
<p>POIH- You might want to keep an eye on the new budget/tax reforms…I believe I read that the administration is seriously considering getting rid of the mortgage tax credit.</p>
<p>^^…Or at least modifying it, so the second houses, timeshares, HELOC, etc. would not be eligible for tax breaks (as it should be).</p>
<p>Our family also has not enjoyed pool ownership. Out of the 3 relatives who have pools, NONE of them use it more than a few times/year (if that much). One of them has been remodeling their home & the water has been dirty for over a year & no one can swim in it until they get around to changing the water and other long overdue maintennace.</p>
<p>One of my cousins remodeled her home (after her two kids went to college) from a 3 bedroom to a 5+ bedroom with a 4 car garage. Her husband died & she now rattles around in that huge home alone. She has been very friendly lately and was overjoyed to host us last time we were in her city. She’s considering her options about what to do with this humungous home and is thinking of downsizing to a two bedroom place somewhere nearer her grown kids & growing grandkids; it will be much easier to maintain. Fortunately, in her housing area, properties have retained their value (for the most part).</p>
<p>Another friend who has one kid who left the nest & the other soon to also leave the nest just moved into a HUGE house (with an elevator, fishpond, waterfall and swimming pool, as well as recreation room and 6000+ square feet or so). She calls it her “ball & chain,” as it’s a beautiful show home but she feels she’s ALWAYS cleaning it. Even with all her cleaning, this lovely new home set of our family’s allergies.</p>
<p>I agree that liquidity while our kids are in college is very comforting and not to be lightly compromised. It is also a lot of pressure to expect that over the next 15 years one’s high income will remain at that level. There is a lot of talk about cuts to wages, benefits, deductions, etc.</p>
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<p>I think you live in the Bay Area, is that correct? There are some areas here that have been so overbought at the height that nearly every house is underwater. Contrary to what you might think, these houses are impossible to buy. There are 2 reasons for this: 1) owners are not willing to bring cash to the table and 2) banks are not willing to recognize these losses on their books. </p>
<p>Friends of mine have sold their $2million+ house with the intent to move to an area closer to the coast. They have cash. Lots of it. They have excellent credit. They have no debts. They have documented income that’s very high. They can’t even get a phone call returned from the sellers’ lenders.</p>
<p>Neighborhoods like this will take years for all of the foreclosures and underwater houses to work their way back to relative equilibrium. It seems very risky to tie up your money in a situation like that when you have other options. </p>
<p>You want to buy a house with a pool? I’ll give you a really good deal on mine ;)</p>
<p>My family had a pool for decades. We all used it heavily when weather permitted. (This was in CT.) There was no “pool guy”–we vacuumed it and added chemicals ourselves. My parents have since then owned houses down south, and they always had a pool, which they always cared for themselves. My sister has a pool, which she maintains herself, and uses heavily. We rented a house in England that had a pool, which we used constantly during the season and maintained. I frankly don’t understand why people think it is such a big deal. (Californians I have known are convinced that you HAVE to hire a pool guy or something will mysteriously go wrong. )If you aren’t going to use it, of course, that is another matter, and then I suppose the need to do anything to keep it functioning would seem like a pain.</p>
<p>POIH, you mention that you and your wife agreed to live in a smaller, less expensive house many years ago so that you could afford private school tuition for your D. We have no idea how constricted your space now is. Perhaps your wife would like to have a nice dining room, and has been forced to eat in the kitchen for the last decade. Perhaps your wife has relatives and friends whom she would like to have visit, but since you don’t have a guest room it means that people have to sleep on the sofa or stay at an expensive hotel. Perhaps you have only one full bathroom, and everyone has to contend for it. Perhaps she yearns for a garden, and you don’t have room. Perhaps she loves to cook, and has been constrained by a galley kitchen with no space all this time.</p>
<p>I don’t think those are unreasonable desires, and certainly far from a 5 bedroom, 5 bath6,000+ sq ft place with all kinds of bells and whistles. </p>
<p>The financial scheme presented by the realtor seems very risky to me, though. If you can sell your current house and buy another, that’s one thing. To carry a lot of real estate debt that would be financed by renting is another.</p>
<p>I am attracted by the idea of a combination of a pied-a-terre and a country house, personally.</p>
<p>I was a landlord once – forced into it when a house sale fell through and we didn’t have time to put it back on the market. One of the worst experiences of my life – 12 years of hell. We rented it quickly at first, then after a couple of years the tenants moved out – just when the economy collapsed. It sat vacant for 10 months, every couple weeks we lowered the rental price. Of course this was during the winter, so we had to pay to heat the empty place.</p>
<p>We had tenants who didn’t pay the rent, and we had to go through the eviction process – and then had to dispose of all of their belongings and clean up their mess. We were sued in small claims court by another tenant who didn’t want to pay her rent – we won, and collected $10/month from her for years. We had to spend a lot of money fixing the foundation one year, which put us more in the red. </p>
<p>One of the happiest days of my life was when we finally got an offer from someone to buy it (it was on and off the market for years). Another one of the happiest days of my life was the day that sale went through.</p>
<p>I hope I never have to be a landlord again.</p>
<p>One additional thought: you won’t be able to get a loan on this second house. A large lot + large house + pool = a million dollar house or more in California. That puts you in jumbo loan territory. 4-5 years ago lenders would have been falling all over themselves to fix you up with a jumbo - 5/1 ARM, Option ARM, fully-amortized, zero down, liar loan, you name it, they would give it to you. Now those lenders are either out of business or are severely limited in the jumbos they’ll originate.</p>
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<p>If you need the rent on the first house to pay for the 2nd, and you don’t have at least a 1-2 year history of actually collecting this rent, then you’d be trying to finance the 2nd mortgage on your current income only. A lender is going to look at your first house as a liability. Your income would have to be in the area of an executive at Google/Facebook/Apple/[name-your-favorite-tech-company] in order for you to qualify for a jumbo on a 2nd house. And if your income was that high you’d be paying cash for the 2nd house anyway.</p>
<p>Don’t believe me? No worries, just make an appointment with a mortgage broker you can trust (I can give you the name/number of mine), have your wife go over the finances with him/her for an hour or so, and she’ll very quickly be convinced that a 2nd house is not possible.</p>
<p>Being a landlord is not for the faint-hearted. There are any number of issues that can & do come up. When we were trying to be frugal, I was the landlord for a while. We had to figure out a fair rent, hear the tenant’s issues with the neighbors, be concerned about whether the strike meant she couldn’t pay her rent timely, advertise for new tenants, do maintenance, get service people to repair, & replace major appliances as they broke over time. </p>
<p>When the tenant left, we turned property over to a good property manager who nets MORE than we ever grossed & handles everything.</p>
<p>I agree with the above post–talk with a GOOD mortgage broker & see what would even make sense before you get yourself into a huge dilemna which may not even be real.</p>
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<p>POIH…has it dawned on you that you are spending a LOT of money on your daughter (I’m not knocking that but it’s a fact)…maybe your WIFE would like a piece of the financial action.</p>
<p>This latest housing bust has taught me that if you can’t afford to make the payments on a 15 or 30 year loan, you shouldn’t buy the house. Many people squeezed into a house using low rate/5 year and then adjustable loans, thinking that they would be able to refi when the time came. Now they can’t because they are underwater. I wouldn’t risk it.</p>
<p>@ ParentofIvyHope – good to see you again. I haven’t run into you on a thread for awhile.</p>
<p>For some reason I also thought of remodeling. You can keep it as simple or as involved as you want. Little changes can make a big difference. If your wife has some time on her hands she might enjoy doing some of the work herself.</p>
<p>Remodeling is no picnic either. Trust me on this one.</p>
<p>It’s one thing to spend a bit of savings for a splurge. Tis another to stretch yourself the way real estate agent proposes. I hope you find an answer comfortable to both of you - that’s the ideal way (if possible) to ensure low stress, harmonious marriage.</p>
<p>POIH, we would love to sell you our house!. 4-bedroom on a golf course with a pool. 4,000+ square feet. We bought it when my 18-yo son was starting 4th grade…and can’t wait to be rid of it.</p>
<p>The Pool: Older pump means at least one major repair each year. Constant skimming and vacuuming in spring/summer. And don’t get me started on the $$ we spend on chemicals. Oh, and my husband is the only one of our family of four who used it in 2010…primarily to cool off after running.</p>
<p>The Cleaning: I (the wife) don’t work, which means I can’t really justify hiring a maid. We used a once-a-week lady back when I was still driving the kids around, but these days I do it ALL. It’s a lot of square footage to keep dusted, swept and mopped.</p>
<p>The Utilities: Even after we’ve added a radiant barrier in the attic and closed off vents in two of the bedrooms we don’t use, our utility bills are more than the mortgage payment was in our first home. </p>
<p>The Property Taxes: I realize that property taxes aren’t the same issue in CA, but ours are $24K+.</p>
<p>We can’t WAIT to downsize and get a smaller place. As soon as son is graduated, we are out of here.</p>