January Mortgage Update: Getting ready to spend a year in paradise

Last month (December):
Balance:$34,190.77
Years left: 2.5
P =$1,066.94, I =$147.47, Escrow =$788.73

This month (January):
Balance:$31,114.84
Years left: 2.25
P =$1,079.06, I =$135.34, Escrow =$788.73

One month’s prepayment savings: $7.91

If we kept up with our current rate of pre-payment, we would be done with the mortgage completely in less than a year.

We aren’t going to do that.

Why not?  Because we need the money!  Why do we need the money?  Because I’m only getting half-pay and we’re moving someplace for the year where daycare and housing are both twice as expensive.  (It’s all official!)  And taxes are insane because they provide social services and things.  Crazy, I know!

So we will need that extra 2K/month to pay for goods and services instead of pre-paying our mortgage.

It seems like there’s always something going on with money–getting ready for DH to quit his job, adjusting to DH having a job, then adjusting to a year at half pay with bigger expenses.  Life is never really in steady-state.

There’s so much to worry about.  Housing, schooling, daycare.  Months worth of money posts, eh?

We still don’t know what to do about the house.  I’m strongly tempted just to get a trustworthy grad student to kitten-sit in exchange for free rent and taking care of the house and utilities (we’ll be bringing Little Kitty with us, but we can’t take 3 cats, so either the cat formerly known as mean kitty will have to go with a relative while we take nice kitty who pees with us, or we’ll leave both kittens with a sitter.)

DH thinks it will still be worthwhile to try to find someone to rent at market price, even though that means we’ll have to fix the bathroom, repaint, and keep things clean constantly (also probably pay for storage for our furniture).  I think we’ll end up probably doing a hybrid– posting to sabbatical and new faculty sites and then getting a house-sitter if nobody bites.  Possibly striking a deal with new faculty if they are amenable.  We’ll see.  We may not worry about this until March.  I don’t know.

The most we would get for renting the house would be around 20K.  DH thinks that’s a lot, but given the amount of work we have to have done first and the annoyingness of keeping lawn and house sparkling (not to mention housecleaning expenses), I’m not so sure.  But maybe if we avoid Craigslist and just stick to a few exclusive sites it won’t be so bad.  Maybe we’ll get lucky.

I hope this all works out!  But if it doesn’t, I don’t want to be stressed.  Based on my projected savings calculations and the savings we did when DH was unemployed that we never put away (because we knew this was going to be a possibility, though we *thought* it would happen last year), we should have about 85K in our emergency/to-spend fund by May.  Hopefully that will be enough to keep us from stressing out if we don’t find tenants along with the paycut and the additional required expenses.  Right now I’m hoping to continue contributing to retirement and the 529s (although retirement literally would take up all of my take-home pay, so I won’t be able to completely both max it out and do a DDA and pay for health insurance), but that’s another area we can loosen if we need to.

I’m both excited and scared.  But I’m not that worried about money.  Still, we’re still going to have to stop prepaying the mortgage sometime this summer.

(Technically if I had another 72K, or even another 48K, I would be less worried about money.  A lot of our problems would be solved if we could just afford 6K/month to rent out a furnished house from a professor on sabbatical.  Our friends say there’s going to be a market correction, but I’m not holding my breath that it will happen before we get to or even before we leave paradise.  Bubbles can take a while to pop.)

37 Responses to “January Mortgage Update: Getting ready to spend a year in paradise”

  1. eemusings Says:

    Renting out your place fully furnished (negating storage need) not an option?

    Damn right, life is never in a steady state. Guh.

  2. Holly@ClubThrifty Says:

    As a landlord, I would be worried about fixing your home up then renting it out. You could very easily spend a lot of cash on upgrades and new stuff and have someone come in and ruin it or, at the very least, not take care of it like they should. I obviously hope that doesn’t happen to you!!! It sounds like a housesitter is a good alternative if you don’t mind missing out on the money for the relatively short time period you will be gone.

  3. Kellen Says:

    Living somewhere else for a year sounds awesome! And hopefully fun for the kids. Sounds like somewhere in Europe?
    Collecting $20k in rent sounds worth keeping the house clean–worth hiring a good cleaner to keep it in good shape. I don’t think a new faculty member would turn it down if it’s not perfect–I would assume that they will most likely have kids too, if they want to rent a house, and they’ll understand, when touring the place, that it’ll be extra clean for them when you and your kids move out, before they move in. I don’t think it’s so much of a hassle that you shouldn’t look for a renter, plus it might make the renter’s life easier too, having someone ready to move in. I am also guessing that the house might not *need* the upgrades that you think a renter would require–renters aren’t necessarily looking for perfection.

    • nicoleandmaggie Says:

      We’re no longer in a good elementary school zone and there are plenty of top of the line alternatives. It is not a landlord’s market, especially if you can’t rent out to students.

      Also, when I say the kittens destroyed the master bathroom, I mean that literally.

  4. nicoleandmaggie Says:

    Guys, you are all well-meaning saying that oh renting should be no problem, but I have plenty of friends who have been through this renting out the house for a year nightmare. It is very unlikely to run smoothly or easily.

    • Leah Says:

      I’m on the nightmare side. My parents rented out their house for a year. The renters damaged stuff and brought them bedbugs. I had (and have!) no desire to be a landlord after that, especially with a house I’d have to come back to.

      When I was in grad school, I knew a few profs who would be gone for 6 months or so for field seasons, and one of the grad students just floated between houses house-sitting. He paid utilities (somewhat pricey in a whole house in the winter in Michigan) but didn’t pay any rent. That worked out well for all the parties. Just be sure to get someone you trust well enough, and make it clear that you’re not doing any major upgrades or anything — maybe just clean pee-smell carpet, but be okay with the house being functional as enough. I’d put anything pricey/heirloom into storage or into one room and lock that. A trustworthy person would understand that. In fact, I’d be grateful if someone put away anything they’d be heartbroken to have break.

      • nicoleandmaggie Says:

        We don’t actually have pee-smell carpet– she prefers cloth. So mainly bed sheets and the occasional cloth diaper or less frequently clothing left on the floor (yuck!). Orange pet smell spray works pretty well if sprayed before laundering.

    • Sarabeth Says:

      I believe you – we are in a similar market, it sounds like. Our sabbatical plan is to rent it out cheaply to new faculty, charging maybe 70% of market rate. I think at that price we’d get enough takers to be able to choose decent tenants. And they’ll be getting enough of a deal that they won’t mind the imperfections.

    • Kellen Says:

      True, I have never been a landlord, so I don’t really know… it just seems like a lot of money to me, probably not so much to you guys :)

  5. Bardiac Says:

    Congrats on the sabbatical! That’s super excellent news!

    I’ve been away for a semester at a time, and couldn’t bring myself to try renting. I did try having a reliable student stay, but he took basic care of things but didn’t stay, so (since I didn’t have pets to worry about), that was fine.

    I guess I’m saying that I agree, it’s really hard to rent for a year to have someone stay in your house. Maybe a new faculty member, but if you can afford it, getting a reliable grad student to housesit and pet sit seems likely to work. S/he’d get a real benefit, and would be likely to be reasonably neat and take good care of the cats, and you’d have that peace of mind.

    Good luck with things working out. And Congrats again on the sabbatical!

    • nicoleandmaggie Says:

      I think #2 was that reliable student back when she was in grad school for one of her professors.

      • Debbie M Says:

        Some reliable grad students like gardening or carpentry (or other stuff you don’t like) and wouldn’t mind paying a “rent” that involved that, especially if you reimbursed them for materials. So you could actually have an improved house when you get back even if you don’t get any rent. Or you could charge some laughably small amount like $100/month that would still help a little but still be a fantastic bargain for a grad student.

        And I suppose it’s hard to believe, but some undergrad students are also reliable. My boyfriend did a huge amount of clean-up and repair to get a place super cheap when he was an undergrad student. I’ve heard you can get a hint of how people will treat your house by looking at how they treat their car, but I do know it’s not a perfect correlation at all–better to look at their house.

        So exciting! Good luck!

      • nicoleandmaggie Says:

        I’ve heard that care of houses and care is inversely related.

      • Debbie M Says:

        Interesting.

  6. Leigh Says:

    Exciting! And so many things to figure out! Would recasting the mortgage help at all with your expenses while you’re on sabbatical? I’m not sure I would try to find a renter myself, for just a year. That barely seems worth the effort.

    • nicoleandmaggie Says:

      I think it isn’t worth recasting at this point– we will reevaluate if we end up needing the extra 1k/ mo (give or take). Stopping prepayment gives us an extra 2k/mo, which we will probably need.

  7. Ana Says:

    Wow, so exciting! Agree that renting sounds like a PITA and I’d be terrified that the tenants would leave the place in worse shape at the end of it. If you can afford it, and sounds like you can (because you outright said you could!) the grad student house-sitting/kitty-sitting sounds like a good plan.
    I know you won’t say where you’re going but can you say if its in the US or not?

    • nicoleandmaggie Says:

      Yes, we can afford it, though that’s assuming that we only have a 2 bedroom apartment in paradise for the four of us (and spend down savings, and if necessary, stop putting extra away for retirement). But we likely wouldn’t know we had renters in time to change our paradise living situation anyway.

  8. Comradde PhysioProffe Says:

    If you are risk averse and can afford to not collect rent for the year, it sounds like the potential financial downside of renting could outweigh the rent you collect.

    • nicoleandmaggie Says:

      We can afford to not collect rent, but not without trade-offs, you know? We can’t have the kind of house we want to rent and max out retirement and prepay the mortgage and make sure the DCs’ schooling situations are good and so on… Some things have to be cut back on, the main thing being where we’re going to live next year. And DC1 will have to do public school.

  9. MZ Says:

    We have had grad students or the like cat-sit for very minimal rent while we’ve been on sabbatical and it’s worked out well every time. The worst that happened were some post-docs who weren’t very clean and who kept the cats alive but didn’t exactly lavish them with affection, and even that turned out fine because a) I ended up giving in to a longstanding debate with my husband and hiring house-cleaners when we returned because cleaning up one’s own mess is bad enough but yuck to other people’s, and now we just have house-cleaners and it’s better all around; and b) the cats did not go through a “we hate you, because you left us, and now we will pout and misbehave” phase but instead threw themselves at us, as if saying “THE PEOPLE ARE BACK!”

  10. heybethpdx Says:

    it sounds like it may be more trouble than it’s worth to get a tenant. I agree the grad student thing may work out – would you consider looking for a grad student to project manage some of the changes you’ve wanted to have made at your house? I know that entails extra expense, but lets you avoid the hassle.

    If you DO go the grad student route, I’d be tempted to either leave all furnishings in place, or just clear out one bedroom by piling all the contents into another, and avoiding the hassle of packing/storage.

    • nicoleandmaggie Says:

      A few years ago I read a rec letter for a graduate student who had done just that for another professor. Too bad he has long since graduated!

      A problem being that we can’t really afford to do what we’re doing (go on leave someplace expensive, not get rent on the house) *and* renovate the kitchen.

      We really should get the master bathroom fixed and the walls repainted but that shouldn’t be too huge an expense since most of the bathroom damage is superficial (fixable with putty, removing the rest of the wallpaper, and lots of paint).

      Yes, if we hire someone we won’t be using storage, just our attic. There’s plenty of space for someone to move their one bedroom apartment furnishings in.

  11. What Now? Says:

    I can imagine that a new professor coming to your university might be happy to have a place to live for cheap rent, offsetting the cost of moving cross country; that first year of a post-doctoral job is so hard financially, and having a nice place to live in the new town while one gets on one’s feet financially and gets to know the new place.

    • nicoleandmaggie Says:

      Yeah, we’ll see. Our house is pretty big, which makes it less attractive for new people without families and it’s not in a great school zone which makes it less attractive for new people with school-age families. Like I said, we’ve had friends go through this before and recently and it’s not that easy. Sometimes it works out (usually in August or September after the faculty member has already left), but there’s a lot of nail-biting beforehand.

  12. J Says:

    Renting to new faculty can be complicated in unfortunate ways. We rented from someone who was on sabbatical when I started my faculty job. On the one hand it was nice because we didn’t have to deal with finding a place by flying out ahead of time but s/he charged us a little more than the going rate for places in the area but thought we were getting a great deal because their place was so ‘nice’. It seemed worth it at the time (and financially was probably neutral because it saved the travel out beforehand and we only rented it for one semester) but since their version of ‘nice’ turned out to be totally different than ours (we hated that house!) it was a little awkward. We felt a little ripped off and they felt like we should be really grateful, not a great way to start a relationship within a department. It was fine in the end but my feeling is that renting to other faculty (at least within your dept) can lead to awkwardness.

    • nicoleandmaggie Says:

      Well, we won’t be charging more than the going rate. The going rate is 2200/year unfurnished for places similar to ours (but not showing kitten or toddler wear). We know that it is easier to rent out a unfurnished place and it’s easier to rent for two years than for one, because there are a lot of people who rent while they’re building their new mcmansion. The going rate for an efficiency apartment is $600/mo. In theory we could rent our place out for $1200/mo to random people on craigslist (and some people do this, but you do end up with a different class of renters in terms of whether or not they actually pay the rent on time, take care of the lawn, house, and utilities etc. compared to university affiliated people, and the background check stories are often terrifying).

      As for someone in our department, we’re not hiring this year, so that’s not a possibility. There are other departments on campus hiring.

  13. Cloud Says:

    Wow! Congrats. I have nothing to add on the renting thing, so I’ll just hope it works out as well as it can.

    If you’re anywhere near my part of paradise, be sure to let me know so we can “do lunch,” as they say.

  14. tracy Says:

    I spent a year on a fellowship and needed to rent my house to be able to afford to do the fellowship. It was very stressful to find decent student tenants, but in the end worked out fine. I used one bedroom and locked all my stuff away (a few valuables went to my mom’s house), and they rented with basic furnishings, kitchen stuff, etc, which they loved. As theater students who spent most of their time out of school traveling between shows, they didn’t have stuff, and loved having a big kitchen. After they moved out and before we got back, I replaced the carpet with hardwood in half the house and did some other repairs I had wanted to do anyways, so it worked out for me in the end. I’d be leery of leaving a house empty these days.

    • nicoleandmaggie Says:

      It would be easier if our HOA allowed us to have unrelated people in the house– plenty of students would be willing to rent our 4br plus study at more than market rate with or without furnishing.

  15. Revanche Says:

    No suggestions here, just hope that you’ll find a low-stress arrangement and an invitation to have a meal of some sort if you happen to be in the Bay Area! :)


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