<p>Hey, BigBearMom – Congratulations on the divorce. Enjoy the freedom!</p>
<p>Before you make another decision, google ‘becoming a landlord’. There’ll be books at the library to help you with the local laws. Read everything you can on the pitfalls and dangers, including what to watch for before accepting a tenant or a roommate. People get into a lot of trouble by not checking references, by feeling sorry for people, and letting the rent be late. Be sure to put all your valuables in a bank deposit box before you show or let anyone live there with you. Don’t forget you’ll need insurance on the place!</p>
<p>I’m so glad to hear you are going to pursue your education! This is the key to improving your life. I applaud you for taking the steps you need to take…I know it hasn’t been easy. Good luck!</p>
<p>It depends on how much cash you have left over. It’s not prudent to have your whole lump sum tie in a house. Even after the bubble, people have not learned that house price does not always go up. You could be stuck with many years.</p>
<p>I won’t put all my money on it, but high enough, more than half. So, I have to be very careful.
Yes, I will keep some cash just in case for emergency. Glad I got a job, even it’s a basic entry job, but at least I have insurance.
I still can not make my mind, use my calculator all the time, read the home owner rule book, search from Internet… One of my friend told me, I already made the decision but I’m looking for someone to tell me I’m right (or wrong). I guess this is a transition, however, in the future, there are many many thing I need to make the decision by myself. I’m learning !</p>
<p>My suggestion is to skip the townhouse deal. Keep your cash, using some of it as needed for living expenses while you are getting your vacation. That would allow you much more flexibility for the future. Good luck!</p>
<p>Putting more than half of your net worth into a house is a very risky move. You need to look at the big picture. Do you have 12 months of cash for emergencies? Do you have enough income to live on? Do you have a plan for retirement? Can you pay property taxes? </p>
<p>You have an opportunity to leverage your money, in other words you can make it work for you by using a small amount on a down payment for a house. By tying up your cash in an illiquid investment, you leave yourself very exposed. Have you met with a mortgage broker to see if in fact you’d be eligible for a mortgage? If you have a low credit score, you can rent for now and work over the next year to establish a higher score.</p>
<p>There are about 20 posts above saying pretty much the same thing, that it’s a mistake to purchase a house now, a mistake to think about being a landlord when you have no experience or knowledge of the laws, and an even bigger mistake to pay all cash. What else are you looking for?</p>
<p>Please take time to educate yourself on investments, asset allocation, and real estate before you lock more than half of your assets up in a purchase that will be very expensive to get out of.</p>
<p>Bigbearmom, 2 years ago I also knew of a lady who was divorcing from her rich husband who was a doctor I think. She also plunk down her share of the settlement in a 3 bedroom house near a top 50 university. Guess what? the house value has gone down in half. She was very adament in purchasing the house. Nobody could stop her. I think you are making the same mistake.</p>
<p>So your plan of renting out rooms will not work. Then you would be buying this house just to rent the whole thing out and where would you live?</p>
<p>I honestly believe you are making a huge mistake. Rent a small apartment, go to classes and get certified. Invest the money wisely and, most of all, conservatively. Getting into real estate right now is not, I repeat, not a good idea.</p>
<p>I’ll be a contrarian here. My mother did exactly what the OP proposes after my father died. She had a huge house in Swarthmore and rented rooms to Swarthmore students back in the '80s. She didn’t charge much rent, and she called them roommates. She never wanted for tenants, she enjoyed their company, and she more than covered her mortgage. She had a great time and did it for more than ten years. Finally the northern winters got to be too much for her and she moved to Florida at age 75.</p>
<p>How many garage ? Is there plenty public parking space near your unit ?<br>
Unless your neighbor complain to association, otherwise you will be fine. You need to pick up the “right” tenants, and clearly told them the “rules”. If the location is good enough, maybe you can rent the whole unit to a family, make some profit (it really depends on the location, better talk to an expert).<br>
You are buying a new house, under construction, usually builder will not give you discount, but you can try to get some upgrade option free, which will help increase the value of the house (in case you want to sell it after few years). 42" cabinets instead of 36", marble or granite counter, hardwood floor or maybe fire place…
You are paying cash, I believe you will get some credit too, use the money for upgrade, don’t spend extra, it will cost you more property tax.
Location is the most important. If this is not on a good location, then, forget about it…</p>
<p>OP - you are from Asia, right? Maybe you can find international students from your country or ask for your friend’s help to find tenants, we all have some friends who have kids in state university looking housing. You really need to find the “right” tenants.</p>
<p>October maybe not a good timing, do you have enough money if there are no tenants for 6 months?</p>
<p>Rental income is actually a good play right now. Just look at the big rental income stocks they are trading at insane P/E rations meaning that there is obviously expected growth in the industry. Either way if you do that math there is a much more efficient way to take the higher interest rate play, buy TBT which is a ETF that is short US bonds, it will pretty much correspond dead on to the performance of rental assets and other mortgage based instruments</p>
<p>I still vote NO on the rental plan. Rental income stocks can benefit on large scales / averages. The OP is making decisions regarding a big chunk of savings, possibly needed down the road for security.</p>