Saturday, May 19, 2012
A New Plan!
After four months up for sale we have officially taken our Alberta home off the market. Two low ball offers were rejected ($70,000 to $80,000 below our asking price - we had the property professionally appraised it it was priced to sell already - they were trying to steal a great "view of the ponds" property). Rather than taking a beating on price we have come up with an alternate plan.
This plan involves having a mortgage - our new home on Comox was half paid for with savings. We have always had a secured line of credit, the last several years after our mortgage was paid off it had a zero balance. When we purchased our new Island pad we put the difference between purchase price and savings on the line of credit knowing as soon as the Alberta home sells we would wipe any debt out. Well, that didn't happen.
Everyone (realtors, lawyers, tradespeople, business people) is predicting another "boom" in Alberta - as right now we are experiencing the lowest unemployment rate in North America beating out all other States and Provinces due to being oil rich. We did have a recession in Alberta, realty prices went down about 15%, we just did not feel it as much as the rest of the world. Property prices are actually on the increase - just not in time for this sale. Most estimate that within two to three years the Alberta real estate market is likely rebound to pre-recession prices.
Our problem: we want to move now.
We looked into renting our home out with a management company that only rents single family homes on one year leases to executives. We even had someone come through and tell us how much rent we would get - it sounded very promising. We did our due dilligence and checked the management company's references - all good. We got some advice from some friends who have a lot of rentals - and then we got a wee bit scared. Remember, this was originally our dream home and not purchased for rental. It is currently in spotless condition - like new and it is only seven years old and well taken care of. Our friend suggested that even if a renter did $10,000 damage over two years we still would come out ahead after expenses - about $500 per month. We heard some horror stories of others who did due diligence and then still had very bad renters. I started having trouble sleeping, you know that feeling when in your gut you know it might be the right thing to do but feels so wrong? Apparently hubby was feeling the same way.
Our solution: two adult children (18 - in Alberta that is our legal adult age, and 21) who are both attending college in two year programs this fall - both of whom we are financially responsible for as long as they attend school and who are currently living with their Mother. These boys are unlike many young adults. They are both hard working with jobs and cars and very responsible but wanting some privacy and independence. They are not partiers. They realize we have a large chunk of our equity tied up in this home and we need someone to take care of it for us when we are not in Alberta shovelling snow and mowing lawns. They have agreed to move in in June and hubby and I will move on to the Island. They will make a small contribution to the expenses and will buy their own food and clothes and we will take care of the rest of the expenses. We can return for holidays and visiting family as well as hubby's company has many Alberta clients lined up already so he will return a few days every month or so for business.
The original plan (as devised over the last several years) involved both of us taking six months to a year off together when we moved to the Island. Hubby's plan veared left when he quit his job in January and started his own company, which is already making money. There will be no time off for him. He is going to try and line up work for fall to still do a bit of relaxing this summer with me while still growing his company. I want to take the summer off - I need it. I have never been unemployed and have worked continuously since I was 18 years old and am now battling a disease that won't kill me but that makes it very hard to work with cronic fatigue(fibromialgia).
This new plan costs more, but after figuring out all the expenses we can do this. Fortunately based on a life of always living well under our means, paying cash and being frugal we can make this choice. I will wait until fall until to make some sort of income and even then - part-time work only. We had saved money for this year - now we will have to make sure every frugal choice counts to make that money last as long as possible. We have backup emergency savings if this plan doesn't work out as well as we hope.
The plan is a two year committment for all - after that we will determine if it is the right time to sell or not and will likely to make back more than this plan costs with potential that the market could shoot up higher than our original purchase price (wouldn't that be nice).
Sometimes, when life throws you lemons, you make lemonade. We are extremely good at paying down debt - our net worth is likely to actually grow versus decrease based on the new plan. Fortunately for us we have a strong economy in Alberta with another boom ahead predicted in the short term future or we may have just sold and gotten what we could have and taken a loss.
So now we start our new life in Comox together - living as frugally as possible to make this new plan work.