Category: Houses

Buying a second house and prepping our first for rental

In the past few months we’ve really started to dread our morning commute. Enough to the point that we’ve thought about buying a second house closer to work so we could get some of our personal time (and money) back.

Instead of just dealing with it, we decided to do something about it. So, I contacted a realtor and my wife contacted the bank. We wanted to keep our costs and our commute time low. $270k maximum home price. 7 miles maximum distance from work.

We were able to meet with a realtor that weekend. Fortunately for us, my mom was in town, and able to watch the kids (thanks Mom!). We had one full day to see as many properties that the realtor would show us. We were scheduled to see five.

Luckily, right before we met up with the realtor, the bank came back to us and said we were approved for the full loan amount, so our search wouldn’t be for naught.

The first house we looked at was perfect. It was completely modernized, had all new appliances and a beautiful deck. There really weren’t any updates that we’d need to have done before moving into it. The problem, though, was that it was listed as a 3-bedroom house, but it only ended up having 2. Deal-breaker. We already have two kids and are planning on having a 3rd in the near future.

With that house being stricken from the list, we started to look through the other properties. 3 of which were either terrible, way overpriced, or just nothing special.

Then there was the fifth house.

The fifth house was beautiful. It had amazing curb appeal, and a gorgeous inside to match. The best things about it were that it was way under our max price and it would reduce our daily commute by at least 15-20 minutes in each direction.

We put in an offer a little under asking price and asked for full seller’s assist (if they accepted this would mean that they would pay all closing costs). Shortly after, they accepted our offer. With the rate we locked-in with the mortgage company (3.25%), our monthly payment would be around $1300 ($650 less than our primary mortgage).

We’ve been spending the past week creating a plan of how to maximize our current home’s rentability factor. It still needs a few rooms painted, and our lawn has been more or less destroyed by our dogs. There are minor cracks from the house settling as well. All of our issues can be easily fixed, but we’re finding ourselves on a time budget at this point. We need to have this house completely rentable by the time we move into our new house. That gives us about 60 days total.

Usually the home buying process is a huge pain in the ass filled with offers, counteroffers, bidding wars, or general dissatisfaction with the available properties. We didn’t have any of those issues. It was all smooth sailing really. It’s the work that we’re going to have to do to get out of this house and get someone else into it that is daunting.Our current house is gorgeous though (exterior and interior). It also offers something that a lot of rental homes can’t: Extreme energy efficiency. We installed solar panels last year and they have saved us almost $1400 in the first year alone. With a monthly energy bill of about $50/month (the house is 100% electric), how could a renter pass that up?

Property management? Becoming a landlord? These things are foreign to us, but at least we have two months to learn what we’re getting into. Does anybody have advice for a couple who is in the process of buying their second home with an intention of renting their other house out?