My wife and I are relocating from Austin TX to Alabama. What do we do with our house in Austin? We bought in 2022 for 430k and our mortgage payment is $2800 a month. The market has gone down so much that if we sell now we may end up having to pay money. We can rent it out for maybe $2100. Not sure what to do. We’ve sunk money into remodeling the home but will still lose money when we sell.
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dHi Steven,
This is a tough situation, and I empathize with you. We are all in such an abnormal real estate market right now and relocation is more complicated than ever. Unfortunately, there is no one-size-fits-all solution, and ultimately, you will need to choose the best option that aligns with both your emotional and financial well-being.
I always remind my clients that real estate properties are illiquid and can be energy- and time-consuming. Before making any decisions to buy or sell, consider if maintaining the property will be a burden for you and your family. To better understand your situation, I have a few questions: Is this move to Alabama permanent or semi-permanent? Do you plan to rent or buy a home there? If you intend to settle long-term and eventually purchase a house, managing a rental property in Texas with a negative cash flow can be both emotionally and financially taxing.
As an advisor, I prefer to work with data, understand your life goals, and explore the best options available. Here’s what you can do next:
- Research and Consult: Speak with reliable realtors in both the Austin and Alabama markets to understand the current selling, renting, and buying prices.
- Gather Data: Collect the following information to discuss with an advisor:
- What’s your current mortgage rate? The 30-year fixed mortgage rates in 2022 ranged from 3.22% to 7.08%.
- What’s your current monthly cash flow like? Do you have a positive cash flow to support both the Austin home and the new home in Alabama?
- What’s your household balance sheet like? Do you have enough liquid assets and savings to keep a real estate property at a loss?
- How much did you spend on remodeling and what’s your new cost basis for the Austin home?
Best Regards,
Jing Zheng, CFP®, EA, MBA
Founder and Financial Planner
Neat Financial Planning, LLC
(703) 468-1810