View Full Version : Housing situation with sister?
Last year my sister and I bought a house together in coastal SoCal close to her work. We each paid for half of the house in cash so there is no mortgage, and we split all the housing expenses 50/50. Those housing expenses average out to $250 - $300 each per month ($500 - $600 total and include prop tax, insurance, and all utilities). Plus we split the costs for any repairs, maintenance, etc... that may be needed - those can be expensive. We bought the place together for really 3 reasons - 1). sis wanted a bigger place (had a tiny one bedroom condo) for all her stuff that was close to her work. 2) I'm retired and wanted to be able to have sis house and pet sit my dog so I could travel more frequiently. 3) as an investment with hopes that property values would rise again and we'd sell after 2 years (they have risen fairly dramaticly lately).
Now the problem is that a couple of months ago my sister's company closed the facility she worked at and transferred her to another one 35 freeway miles away. However, she is finding that what should be a 30 minute commute is actually taking her almost an hour and a half each way (LA freeway). She's tried leaving earlier as well as staying later in the area near work but the result is the same - and extra hour commute in heavy bumper to bumper traffic each way. So she can't do that anymore and we are trying to decide what to do about the housing situation.
Options are: 1) to keep the house and have her rent a room near work (which would cost around $800 - $1000/month since it's a VERY expensive area) and I would cover all the housing costs myself. Or 2) sell the place while prices have risen and each go our seperate ways housing-wise. Or 3) she keeps doing the commute and goes insane.
In the number one case we could possible see more rise in our houses prices but that may be off set by the costs we each would have to pay if she rented a room. Plus I would also no longer have a pet sitter and house sitter so would have to either pay someone to do that or take the evil Barkinator with me everywhere. Thus another extra expense.
In number 2 case, we'd get back all our investment and then some (although we'd have to pay capital gains taxes on the "and then some" amount as we haven't had the place 2 years plkus the costs to sell which will be very substansial. Those 2 things together would probably wipe out any profits we would see.) but each would be free to live where ever they wanted and sis can live near her work full time.
In case number 3, sis is armed secruity so going insane probably isn't a good choice :-)! Plus with gas prices over $4/gal here and the wear and tear on her vehicle (and will need to replace it sooner if commuting everday) - that might not even be the frugal way to go.
Any other suggestions? Do you think housing prices will continue to rise by alot over the next year or so? I don't have any special affinity for SoCal or the house myself so selling earlier than planned is OK with me. Probably just go rent a place up in the local mountains for awhile. And while we don't like having to pay capital gains tax for an earlier than planned sale but waiting another year and more to avoid paying those may end up costing more if sis has to pay for a room rental by her work.
Since you own it free and clear...would you consider option #4 of renting it out at a price to cover upkeep, repairs, savings, etc? You could do that for the year or whatever it takes to reach the point where you wouldn't have the capital gains. Then list it for sale when you are out of that window. Then sis could go ahead and rent something small near her work and you could do your cabin rental/travel.
If you both really like the house and each other's company, I wonder how long it is until her retirement? If it's only 2 or 3 years, it might be worthwhile to look into her renting a room - may take a while, but I bet she could find something maybe in a retiree's home, who would appreciate a little extra money, especially from an "armed security" person :).......and just come home on the week-ends for a while.
I like Float On's idea of renting the place out. Since you don't have a mortgage to clear, you could even pay a tenant-management company their 10% or whatever a month to find and vet tenants, handle the inevitable untimely call from tenants for a repair, etc.
Another option that occurs to me is you and Sis selling your current place and buying another together, closer to where she is working. I know you said it's an expensive area, but would there be less-expensive areas in less than an hour's drive time from her work? There would be costs in selling the current house, but buying another house might reduce or eliminate the capital-gains tax issue.
shadowmoss
6-20-13, 2:01pm
If you rent it out, keep your bedroom as your residence as the 2 year rule I believe is that you actually reside in this house for 2 years. Has she checked AirB&B for temporary rooms in the new area? What about the extended stay places, as I found here in Phoenix that it would have been cheaper to stay there than the apartment I had for a short while, without the painful price to break a lease as well as being nicer. Hindsight. But, I digress. Not to judge her age, but also look into +55 apartments if she qualifies as I'm finding they may be cheaper.
And, if you get to Phoenix, I now live somewhere that the Barkinator can visit, unlike the apartment I had previously. :)
Since you own it free and clear...would you consider option #4 of renting it out at a price to cover upkeep, repairs, savings, etc? You could do that for the year or whatever it takes to reach the point where you wouldn't have the capital gains. Then list it for sale when you are out of that window. Then sis could go ahead and rent something small near her work and you could do your cabin rental/travel. That's a great idea and one option we talked over. However, we both aren't too keen on doing the landlord thing so not sure if that's a good option for us or not - will have to think about it more.
Befree - my Sis is only 49 and can't retire until 55 at the earliest - or maybe not until 65 because she won't have retirement medical even though she'll get a pension at 55 so will have to pay for her own insurance until she can get medjcare if she quits her job. So staying put that long isn't an option either. Plus neither of us really likes the area or house so don't really want to stay - or live together long term.
I like Float On's idea of renting the place out. Since you don't have a mortgage to clear, you could even pay a tenant-management company their 10% or whatever a month to find and vet tenants, handle the inevitable untimely :-) call from tenants for a repair, etc.
Another option that occurs to me is you and Sis selling your current place and buying another together, closer to where she is working. I know you said it's an expensive area, but would there be less-expensive areas in less than an hour's drive time from her work? There would be costs in selling the current house, but buying another house might reduce or eliminate the capital-gains tax issue.
Yeah the area is way to expensive to buy in - even renting a place together would be too high as her job is in the Manhattan Beach area of LA and mega expensive. And even a bit inland is high priced and rundown and crime ridden so neither of us would move there. Plus I absolutely hate it there so wouldn't live there. Her renting a room near her work - a nice coastal town - is really the only option except to continue doing the commute everyday. She also wants to remain free of a housing commitment - other than the place we have already if I'm living there - as she wants to be able to transfer to another area within her company (a huge defense contractor aerospace co.) that she likes better - like San Diego or Hawaii - when jobs become available. She a very serious athlete and pro level beach volleyball player so she's gotta stay by the beach :-) :-)
ETA: just looked at housing prices near her work and the average price for a condo is around d $600k and a small 2 bedroom 1 bath house is over $800k. Yikes!! Even the more inland areas house go for over $500k. Too rich for this cheapskapes blood
If you rent it out, keep your bedroom as your residence as the 2 year rule I believe is that you actually reside in this house for 2 years. Has she checked AirB&B for temporary rooms in the new area? What about the extended stay places, as I found here in Phoenix that it would have been cheaper to stay there than the apartment I had for a short while, without the painful price to break a lease as well as being nicer. Hindsight. But, I digress. Not to judge her age, but also look into +55 apartments if she qualifies as I'm finding they may be cheaper.
And, if you get to Phoenix, I now live somewhere that the Barkinator can visit, unlike the apartment I had previously. :) Good point about the 2 year rule - hadn't thought about that at all. So I guess renting it to avoid capital gains taxes wouldn't work. She has looked at some air bnb places and the monthly ones are around $1000 - same or more than room rentals you see on craigslist. She too young for a seniors place too. Personally I think should join me in early retirment and a life of fun and leisure. She has the money for that but, like most, having to fund her own medical insurance for 15 years before she is eligible for medicare is too ify and potentially expensive. Then we'd just stay here until we hit the 2 year mark, sell the place - or keep it longer.
Congrats on your return to the good ole USA Paula. Hope you are enjoying PHX. Too hot for me but a beautiful place.
iris lilies
6-20-13, 9:18pm
omg how much long will Barkinator live???!!! :) You need to make freinds with someone who likes liddle dogs so that you can drop Barkinator off at "Grandmas" and pay that person a few dollars for the Barinator's food while you are gone.
If my house was not full of animals, I'd be that person. Someday perhaps I will be that person.
Sherah, you've not lost money on real estate so in that you are lucky. Probably you should dump this place after you residency requirement for capital gains is up.
Could your sister transfer to a location acceptable to both of you?
http://taxes.about.com/od/taxplanning/qt/home_sale_tax.htm
Read about the exception to the two year rule if you have to change jobs due change in work location. Of course, not sure how that affects your half of the sale. Didn't read it in detail or look for the IRS publication.
Good advice on the two-year exclusion. You might be able to find a decent roommate to help defray the costs until you sell.
Sounds as though with your sister's work aspirations and potential relocation, that she shouldn't buy anything until she is better settled. Perhaps the same for you, unless you already have a place picked out where you'd like to settle down.
What a great idea - getting a roommate myself. Preferably one who can pet sit too :-) . Hadn't thought of that.
I called her last night with some of the various ideas and I think that, for now, she will probably try to find a furnished rented room near work - she's looking at some this weekend and hopes to find something by the first - and we'll keep the house. I'll pay for all the utilities and basic maintenance and we'll continue to split prop taxes and insurance as well as any big housing expenses. She has tons of stuff - big things like 2 kayaks, 3 bikes, surfboards, paddleboards, wakeboards, snowboards,, 5 sets of snow skies and boots, dive stuff, climbing stuff, etc... - along with tons of other stuff (she's a bit of a packrat) so would have to get a big storage unit if we sold. So figure the cost to pay taxes and insurance would probably be the same as paying for a storage unit for her stuff. Also easiest way to go with minimal hassle. She can leave everything at the house and come home on weekends or whenever, and doesn't have to move anything or lock into a long term housing commitment. Then we can decide down the road when to sell. I would like to stay here longer but not permanently , and we never had plans to live together perm. She is in the process of transitioning from security officer to industrial security (keeping that chinease espionage threat at bay :-) )so will have a lot more options to accept jobs at her companies worldwide faci,cities so who knows where she'll end up living! As for the Barkinator, well I have a very nice bf who feeds and walks her while I'm gone but will probably look into getting a house/pet sitter.
Or maybe I can convince her to retire early - which is what she'd really like to do - and travel the world with me.:-) :-)
omg how much long will Barkinator live???!!! :) .You still don't get it (she quotes from the Terminator). The Barkinator will find you and bark. It's what she does. It's ALL she does. She can't be bargained with or reasoned with. She doesn't know remorse or pity or fear. She will never die. She can not be killed. And she will absolutely never stop barking, EVER, until you give her treats. She will hunt you to the ends of the earth to bark at you. The...Barkenator...will...never....stop.....
Just an update: Sis found a great studio apt/room rental - furnished, private ensuite bathroom, private entrance, private kitchenette, large private patio, all utilities, cable and wi-fi included for $640/month - right across the street from her work on the ground floor of a beautiful 4 bedroom townhouse (owned by an older, retired married couple). So she can walk to work rather than do the crazy commute - and she can still come "home" on her days off if she wants too. It VERY inexpensive for the area so we'll keep the house we own together for now and she'll keep all her crap...er...lovely belongings :-) there and sell it at some later date. Housing prices and rampant buying are going crazy around here again so am hoping it's not a bubble and will not burst like in 2007 before we decide to sell.
Gardenarian
9-4-13, 3:10pm
Yay! Sounds like a great deal for you and your sister.
Does this mean you won't have to get a roommate?
Yay! Sounds like a great deal for you and your sister.
Does this mean you won't have to get a roommate?
No I won't get a roommate. Thought about it but decided against it since financially I/we don't need to do that because the house expenses are so low. I'll pay most house expenses and she'll still cover her share of prop taxes and insurance. Of course she won't be able to pet sit any more so I will have to take the dog with me or hire a pet sitter - the ex-bf did it this last trip but don't feel right asking him again now that be is an "ex" :-) - so will have to figure that out. Otherwise it's all good. Her new place even includes a maid! I think I'll switch wwith her.
http://dogvacay.com/
Thanks! I have used www.petswelcome.com in the past to find places o stay with my dog but have never used a pet sitter ex kept for sis or bf. Looks like quite a few in my area on this site.
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