We put the place on the market a couple of years ago and didn't get any bites. Not sure why.

The market is hotter than a pistol right now, but one of the reasons we didn't feel too bad about not selling last time was the hassle of temporary storage/accommodations while building, plus daughter's 7 acre lot wasn't eligible to be subdivided yet. That restriction will expire in August.

So we're mulling over the possibilities again.

Pluses: This house is 100+ years old, not energy efficient and 20 miles from anywhere. The new house would be cheaper to heat/cool, easier to clean, require less maintenance and be less than 10 minutes from shopping, medical facilities and emergency services. I'm 70, she'll be 78 in August so that's a big plus. And I'd get a new shop!

Really the only minus is the hassle. We'd only "own" one acre but have the run of all 7 which is more land than I have now.

The ONLY way I'd entertain going forward is if we met two criteria: Net $250K after all fees/expenses, and be able to rent it back until the new place is ready to move into, then move everything ONCE.

We'll probably go as far as having the place re-appraised and check the feasibility of the idea.

Mind if I ask what part of Maine you're in?

quote:

Originally posted by RogB:
Mind if I ask what part of Maine you're in?

The cold part.

From a lenders point of view I’m gonna say is your buyer buying as a primary or a rental ? If he’s buying it as a primary residence and anywhere in the contract it says your renting back for more than 30-60 days his lender may have issues. Most loan documents are boilerplate and for a primary res you typically assert that it will be owned occupied within 60 days. Moving 2x sucks

i personally would have some concerns (mine, not yours) about the overall proposal. But you guys are at the age of do it or forget it.

What you are proposing seems doable. Pending the buyer's intentions.

You think the market will change that much between now and August? Wait to sell?

Beware of the buyer raising the issue that you did something wrong to the place between selling it and the end of the rental period. Not that you will have, but it's a free second shot if the buyer misses something that the buyer could've used to negotiate a lower price during the sale. With a 100+ year old house, that's entirely possible. Even something like ordinary wear and tear - an absolute non-issue in a rental - could wind up coming back to bite you when you're ready to give up the lease.

quote:

Originally posted by RogB:
Mind if I ask what part of Maine you're in?

On the coast, East of Bar Harbor. 20 minutes by boat, an hour or so by road up the East side of Frenchman Bay and back down the West side. I can see Mount Desert from the house.

quote:

Originally posted by 6guns:
You think the market will change that much between now and August? Wait to sell?

Oh, for sure. Just in the "wonder if it's a good idea" phase.

quote:

Originally posted by Il Cattivo:
Beware of the buyer raising the issue that you did something wrong to the place between selling it and the end of the rental period. Not that you will have, but it's a free second shot if the buyer misses something that the buyer could've used to negotiate a lower price during the sale. With a 100+ year old house, that's entirely possible. Even something like ordinary wear and tear - an absolute non-issue in a rental - could wind up coming back to bite you when you're ready to give up the lease.

Excellent point. We'd have to come up with some sort of codicil (if that's the right word) to cover that.

quote:

Originally posted by ElToro:
<snip> Moving 2x sucks

So much so, in fact, that it'd be a deal breaker.

You get what you negotiate in my experience. And in this market you are in the drivers seat. I've seen much crazier ideas. I would do my best to separate the two transactions i.e have a rental agreement that is conditioned on the sale. But in the end it won't make too much difference to the risks.

Sure.

Negotiated lease backs are a thing. At least here in California.

Here, in California, it's not even two separate transactions. There are pre written forms for it, so that the lease back is contingent on escrow closing, and rental deposit and rent can be paid out of the escrow proceeds.

Disclose it in the listing. Some people are turned off by the idea of being a landlord for 4-6 months. Others would jump at the idea of buying something now at low interest rates, and waiting to move in a few months when their own situation sorts itself out. For example, in the before times, people would happily lease back until the summer so they wouldn't have to pull their kid out of school in the middle of the year.

I personally know a guy and his wife who did just this.

They sold their house in San Diego then rented it from the buyer for six months while the new homestead was being being built in Colorado. His new position with our company only required him to be I Colorado the first week of each month (company really worked with him on that).

So, for the monthly rent equal to the new owner's mortgage, escrow and $100, friend and wife lived in the house and he made monthly trips to check on the build (he did stay two weeks at one stage though). It was a win win for both parties.

quote:

Originally posted by PHPaul:
daughter's 7 acre lot wasn't eligible to be subdivided yet. That restriction will expire in August.

Have you thought about having your daughter build the house as a 'mother in law' on that area, to your spec, while it's still her property?

You'd need to work out the financial arrangements, but that might make it possible to get things started before the restriction is removed.

There will need to be some sort of incentive for the buyers. Price below value or a tasty rent back rate.

We did a back lease on our former house, but only for 2 months.
Buyer wanted a quick close & the seller of our current house couldn't be ready in time.
Our agent was a bulldog & got the back lease at the same rate as the mortgage we were already paying. Buyer wanted a pet deposit & she got that nixed too, as the dog had lived there 6 years already.

Open a home equity line of credit on the existing home. Use the funds to pay for the new construction on a specified draw schedule per the new builder contract. You will only be paying payments on the portion of the funds that have been used, so your “rent” will be very cheap at first then slowly go up as you take more funds out as the build progresses. When you are 60 days out from completion put your current home on the market. When it sells, use the proceeds to pay off the equity loan and pocket your remaining equity. No moving twice and unlike rent payments, the interest on the home equity line is tax deductible.

quote:

Originally posted by TXJIM:
Open a home equity line of credit on the existing home. Use the funds to pay for the new construction on a specified draw schedule per the new builder contract. You will only be paying payments on the portion of the funds that have been used, so your “rent” will be very cheap at first then slowly go up as you take more funds out as the build progresses. When you are 60 days out from completion put your current home on the market. When it sells, use the proceeds to pay off the equity loan and pocket your remaining equity. No moving twice and unlike rent payments, the interest on the home equity line is tax deductible.

And if the house doesn't sell pretty much immediately, I'm well and truly screwed.

Two things to keep in mind here:

1. I live on <$4000 per month. A $1000 per month rent/mortgage payment is a non-starter.

2. I'm EXTREMELY risk-averse.

My fiancé is a realtor and does a lot of new construction. Your scenario is common these days. Market is so hot in Massachusetts that buyers have given 60 occupancy for the sellers after closing as part of the negotiations. The sellers marketed their houses stating they wanted that in the offer. As mentioned above, the lender usually requires occupancy in 60 days or less so that can be an issue. My fiancé’s builder finishes homes faster than that so it is t an issue. But that’s not super common for new house builds.