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Castles in the air, castles on the ground.
Jul. 2nd, 2007 03:29 pmMichael's birthmother paid us a quick visit this weekend. In the course of a day or two, huge changes were set in motion for us - an experience simultaneously exciting and dizzying.
She's in the position of needing to sell one of her real estate properties. If she doesn't buy another property within a certain number of days, she becomes responsible for paying taxes on the capital gains - which would be a huge hit. But she's trying to divest herself of her rental properties, so she doesn't want to buy another property in Oakland.
Enter us. We would certainly like to buy a house, but we don't have money for a down payment.
Our tentative plan is to use the money from Laura's sale to buy a house that's divided into 2-4 units (common in the downtown Baltimore neighborhoods where we'd like to live; think converted mansions). That way we'll have rent to cover a substantial portion (or perhaps all) of the mortgage payment, and we can slowly buy Laura out. She's suggested that she might be willing to charge us simple (rather than compound) interest, although I'm not sure if her financial planner would go for that.
If we can make this work - have a house that largely pays for itself - it would free us up in so many ways. Michael has thoughts about going back to school, for example, and then starting a small business. That would be much easier to do if we weren't struggling to meet a large mortgage. We'd have a lot more flexibility for balancing work and family. The tradeoff: we'd have to spend a fair amount of time being landlords, and we'd have to put some effort into learning how to do basic home repairs ourselves.
So far we're mostly looking in our current neighborhood, Mount Vernon, and in the neighborhood just to the northwest of us, Bolton Hill. The neighborhoods would actually take us down fairly different paths.
Bolton Hill is primarily a residential neighborhood - streets and streets of large, lovely townhouses built in the second half of the 19th century. It's a beautiful neighborhood with lots of trees, much quieter than where we're living now. We wouldn't have the experience we have now of being just a block or two away from lots of restaurants and shops. So far we're mostly looking at houses in the southern part of the neighborhood, perhaps a 10-15 minute walk from where we live now - so we'd still be within walking distance of a lot of stuff. We'd be a 25-minute walk from the library and church, instead of a 10-minute walk.
The houses we've found in Bolton Hill (this and this and this) are essentially set up as single-family homes with an apartment attached. They seem to have less of an apartment-house feel - at least, as far as I can tell from the listing and from walking by the houses. They look lovely and well-kept from the outside. Our portion of these houses would be large, and it would be fairly easy to convert back into a single-family home if someday we had the extra money and wanted the extra space. The flip side is that the rent from the apartments wouldn't cover more than about half the mortgage, so we'd still be making a substantial monthly payment.
We probably couldn't afford a house like that in Mount Vernon, where we're living now. (We can only really afford our rental because it's priced under the market.) In Mount Vernon, we'd be talking about a scruffier, larger property with more units. Instead of a "house with an apartment," we'd be looking at a "multi-unit building with owner's unit." Something like this or this. We'd be looking at blocks which are slightly more marginal, and houses that would probably need more upkeep (and perhaps some major work). We would keep the strong urban environment that we have now - close to shops, restaurants, buses, museums, the public library, and our church, but also close to drug dealing, crime, etc. Rent would probably cover almost the entire mortgage. The flip side to that: we'd have to be a lot more landlord-y.
It's all very exciting and very terrifying. We've got some big decisions to make about what we want our lives to look like over the next ten or fifteen years.
She's in the position of needing to sell one of her real estate properties. If she doesn't buy another property within a certain number of days, she becomes responsible for paying taxes on the capital gains - which would be a huge hit. But she's trying to divest herself of her rental properties, so she doesn't want to buy another property in Oakland.
Enter us. We would certainly like to buy a house, but we don't have money for a down payment.
Our tentative plan is to use the money from Laura's sale to buy a house that's divided into 2-4 units (common in the downtown Baltimore neighborhoods where we'd like to live; think converted mansions). That way we'll have rent to cover a substantial portion (or perhaps all) of the mortgage payment, and we can slowly buy Laura out. She's suggested that she might be willing to charge us simple (rather than compound) interest, although I'm not sure if her financial planner would go for that.
If we can make this work - have a house that largely pays for itself - it would free us up in so many ways. Michael has thoughts about going back to school, for example, and then starting a small business. That would be much easier to do if we weren't struggling to meet a large mortgage. We'd have a lot more flexibility for balancing work and family. The tradeoff: we'd have to spend a fair amount of time being landlords, and we'd have to put some effort into learning how to do basic home repairs ourselves.
So far we're mostly looking in our current neighborhood, Mount Vernon, and in the neighborhood just to the northwest of us, Bolton Hill. The neighborhoods would actually take us down fairly different paths.
Bolton Hill is primarily a residential neighborhood - streets and streets of large, lovely townhouses built in the second half of the 19th century. It's a beautiful neighborhood with lots of trees, much quieter than where we're living now. We wouldn't have the experience we have now of being just a block or two away from lots of restaurants and shops. So far we're mostly looking at houses in the southern part of the neighborhood, perhaps a 10-15 minute walk from where we live now - so we'd still be within walking distance of a lot of stuff. We'd be a 25-minute walk from the library and church, instead of a 10-minute walk.
The houses we've found in Bolton Hill (this and this and this) are essentially set up as single-family homes with an apartment attached. They seem to have less of an apartment-house feel - at least, as far as I can tell from the listing and from walking by the houses. They look lovely and well-kept from the outside. Our portion of these houses would be large, and it would be fairly easy to convert back into a single-family home if someday we had the extra money and wanted the extra space. The flip side is that the rent from the apartments wouldn't cover more than about half the mortgage, so we'd still be making a substantial monthly payment.
We probably couldn't afford a house like that in Mount Vernon, where we're living now. (We can only really afford our rental because it's priced under the market.) In Mount Vernon, we'd be talking about a scruffier, larger property with more units. Instead of a "house with an apartment," we'd be looking at a "multi-unit building with owner's unit." Something like this or this. We'd be looking at blocks which are slightly more marginal, and houses that would probably need more upkeep (and perhaps some major work). We would keep the strong urban environment that we have now - close to shops, restaurants, buses, museums, the public library, and our church, but also close to drug dealing, crime, etc. Rent would probably cover almost the entire mortgage. The flip side to that: we'd have to be a lot more landlord-y.
It's all very exciting and very terrifying. We've got some big decisions to make about what we want our lives to look like over the next ten or fifteen years.
