This post is for Cait, who previous expressed an interest in hearing about what was going on when I said I was planning on making some changes.
I’m selling my house.
I’ve been doing some major soul searching over the last little while. When I bought my house little over three years ago, I was in a bit of a different mindset. I had mentally plotted out where I saw my life going; I expected I’d get married and have kids. In my mind, a 3 bedroom home made sense because it was something I saw myself growing into in the near future. Never mind that my relationship at the time was tumultuous at best and damaging at worst, I wanted to plan for the future. Through rose coloured glasses that’s where I saw my future going. I made a mistake.
There were a few other reasons why I purchased as large a home as I did. Carting around as much stuff as I had, I honestly thought I needed the space. That and I felt that if I ever needed to sell the place, a three bedroom home would be easier to sell to a family than one with two bedrooms.
At the end of the day though, I was living in the future. Much like paying for wants on credit when the money isn’t available, I mortgaged what I thought was my future. Living by myself, I don’t need nearly the amount of space I have, and decluttering my things over the last couple years has made me realize that.
Selling a house is not a cheap endeavour, and it’s not a topic I’m taking lightly. This move has the potential to cost me up to $20,000, once you factor in the costs of moving, realtor fees, lawyers, etc… Rest assured I will be doing my homework before I step forward.
My plan at the moment is to downsize to a 1 bedroom condo with a purchase price below $200,000. Optimally I would like it if all said and done my next mortgage was in the range of $100,000 after applying the equity from my current home. Condo fees are obviously an important consideration here, but given that my current total utility costs are in a similar range to condo fees, I don’t see it being an issue in terms of affordability.
Making this move will open up a lot of possibilities for me. Having a much smaller mortgage at my current income opens up the possibility of paying it off early; imagine being mortgage free by 35 or earlier. Alternatively, I could take the difference and start investing more aggressively. I could completely max out my unused RRSP and TFSA contribution room within a couple years. I could do more travelling. I could make career moves that require a pay cut without the fear of not being able to pay my mortgage. If interest rates went up appreciably, I wouldn’t be in a bind. I can easily take a 3% increase in my mortgage rate right now, but imagine being able to take 13% rate increase without worrying. A 6 month emergency fund based on my current expenses would go a hell of a lot farther if my fixed expenses were lower.
I suppose I should be clear on something here; I still hope that marriage and kids are in my future. I don’t ever foresee myself giving up on marriage, and until I hit menopause or a doctor tells me I’m SOL, I hope to have children. But that is not my present situation. If and/or when that time comes, my plan is to turn the condo into a full time rental property rather than selling it. If I have it paid down far enough I’d like the income from that property to go towards buying another one. Being a landlord doesn’t generate entirely passive income (leaking toilets don’t fix themselves), but it’s a good start.
The sale itself won’t occur this year, but rather in the summer of 2014. There are still some things that I need to finish in my home before I would consider it market ready. Tackling those projects is the plan for this year. I’ve already made a (hopefully) comprehensive list of tasks that need to be finished, ranging from installing flooring transitions between the rooms, to replacing a bathroom sink, to installing a door to the basement, to building a step off of the back porch. The Boy and I took my list of projects to a hardware store a couple weeks ago and started pricing everything out. The goal for this year is to get everything finished, and most importantly, pay for it in cash.
It’s going to be a busy year.
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That must have taken a lot of soul-searching. But it sounds like the outcomes will be entirely positive!
It really did. There’s a lot of emotion attached to the fact that it’s my first house as well. I’m hoping it will work out for the best in the long run.
I thought this was a really beautiful thought out post. You bought your house and put some sweat equity by basically flipping it and I think it was an excellent decision when you bought it. You can now reep the benefits of your hard work by getting the money out of your place. Living in a 1 bedroom condo definitely seems to be realistic for you and you won’t have to have a room mate! I can’t wait to hear about the projects you tackle and truly hope for the best. It’s a phenomenal life decision and a hard one to make, way to go Cassie!
Thanks Asia
If at the end of the day I can get out of it what I put into it, I’ll be okay with that. I hope to have a list of projects I need to accomplish along with estimated costs up sometime next month.
Do you know how the housing market is in your area? They keep saying to expect a drop in the next few years. I hope you don’t lose out money on it.
Currently the housing side of things in my area is increasing price wise, while condos are decreasing in price. My biggest concern is that the peak time of year for selling duplexes is after the peak time for buying condos, so we’ll see how that does.
I’ve been wondering (pretty much since I found out) why you had a townhouse when you were just one person. A 1 bdrm makes perfect sense for you because it’s more manageable, cheaper and easily rented if ever you and your BF decide to move in together.
Yeah, I kept thinking I would grow into it. Instead I appear to be shrinking out of it. Live and learn I guess.
Thank you. When I first started looking at places, I was looking at townhouses and two bedroom ones seemed so small, but three bedroom ones were huge. My mom really seemed convinced that I needed three bedrooms and it was so hard to confront her and tell her that I didn’t. I didn’t know what I would use that third bedroom for (first for sleeping, second for an office, third for what?) and it just would have been wasted space and extra cost. I eventually ended up with a two bedroom condo, which has worked out to be the perfect amount of space for me and pretty affordable, less than I was paying per month in rent.
Do you think that your place has gone up in value since you bought it? If so, have you factored that into your estimated $20,000 of costs to move?
According to my tax assessment it’s gone up about $10,000 since I bought it. I know that’s not a 100% reliable way of estimating it, but it’s consistent enough for me at the moment. I’ve factored it into the estimated percentage that the realtor would take for their cut if I don’t find a discounted one, but otherwise no, I haven’t factored in the increase at all.
Just by reading your profile it sounds like a smaller place will suit you much better. I hope you can get out of your larger home easily!
Fingers crossed!