Home Selling in 90640>Question Details

Michael, Home Seller in Industrial Area West,...

My home is free and clear but I'm broke. How can I cash out safely? Should I try to stay until value goes up?

Asked by Michael, Industrial Area West, Roseville, CA Sat Feb 28, 2009

I own my Condo free and clear, it was left to me by my mom long since through probate.

I'm broke, I just got a very low paying job. I figured my expenses and i won't make it.

How do I cash out safely so I can get most of the value? Should I get a loan to hold me over in hopes that property value will go up?

I put so much time, money and blood sweat and tears into this place to make it fantastic home. If I run now, I know I won't ever have anything like it again. I'm scared a HELOC is a big rip off, and any loan I get is quicksand with points, fees, etc.. Banks are the scourge of our nation it seems to me.

I need an exit strategy or method to use my equity without losing my house to the bank anyway.

I thought about renting it out, but seems it might take a huge beating by the tenants meanwhile (?).

I would appreciate your help. Thank you very much.


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Other/Just Looking’s answer
Lending answer:

Michael, I know only what you've posted about yourself, but I'm going to give you the same advice I've given to clients who come to me in a similar situation to yours.

1.) Your mom left you with a tremendous inheritance: A home free of any debt. Most parents work all their lives and are uable to do for their children what your mom has done for you. Although it may not seem like it as you deal with everyday expenses, you are wealthier in terms of what really matters than most Americans.

2.) Whatever you do, DO NOT borrow against your home. Don' borrow period. As others point out below, if you are struggling to pay the HOA and taxes, a mortgage loan will only make things worse. Cash in hand from a mortgage or HELOC will vanish faster than snow in the desert. In your situation, borrowing may wind up being a miserable way to give away your home to a lender.

3.) It is far, far, easier to live well with low overhead than it is to make an income large enough to service debt. Your own research shows that the replacement cost to rent a similar dwelling is at least double the low ownership cost your mom left for you. Even in a tough economy, it's easier to find a job to cover your current overhead than to find one that will cover rent.

4.) With low overheard you are in a great position to build up savings and investment. Assuming you could find a job that could cover rent for a replacement dwelling, the extra money for rent could be saved. Ownership of a home has long been the basis for building wealth towards retirement, and yours is already paid for. Find a roomate to defray some of your expense, look for a job that leads to a career, and live like Ebeneezer Scrooge for a few years.

In fact, live like no one else will for 5 years so you can live like no on else can for the rest of your life.

5.) When you find a roomate, make sure you have a signed agreement on rent, upkeep, and shared cost of utillities. Don't let a roomate run up debt. Set up web cams (hidden) if you' worried about security. Put valuables and importan docs in a safe deposit box at your bank. Get a safe (bolted in) for things you need at home.

6.) Save, save, save like a madman. Go to the library and read everything available about personal financial management. Join a group online or in your community that supports saving and sound financial planning.

7.) Always remember what your mom has done for you. Never give up, never give in. There is ALWAYS a way to win.
4 votes Thank Flag Link Tue Mar 3, 2009
What about taking in room mates?
Any lender that is going to make a loan to you is going to look at your ability to repay it. If you can't make it on your current income how in the world could you make it with paying an additional monthly bill?
As for renting the property out you still have to live somewhere. Could you rent it and pay to live somewhere else? That seems like a bigger risk. Gettin a room mate to help defray expenses may be your best solution.
Web Reference: http://www.Find1Home.com
2 votes Thank Flag Link Sun Mar 1, 2009
Good answer as alway Deep River, The question has already been answered but I would like to say I am proud to have an oppertunity to be in the same forum as professionals who would advise someone not to use their services because it would not be in the best interest of the client.
1 vote Thank Flag Link Tue Mar 3, 2009

Many years ago I went to a financial planner and I thought he was going to work wonders for me and tell me what I had to do to make lots of money and get my house in order. After submitting all my paperwork and financials and waiting for this great binder with all my options--he said I had to make more money somehow.

These were great answers and would lean towards the 3rd option and get a roommate. You never referenced where you were living but as was said if you need to live somewhere, why not live in the place you own free and clear.

Don't worry about the normal wear & tear on the condo, this is part of owning real estate. And if you live there you can police and take better care of your condo, than anyone else. It’s your condo, so you will set the rules.

As Licensed Realtors we are not allowed to give legal advice, but I would recommend that you look up "Roommate Agreements" online, and see if you can get a low cost attorney or legal aid group to assist you with drafting an agreement.

Good Luck
Web Reference: http://www.edtorrez.com
1 vote Thank Flag Link Mon Mar 2, 2009
Thank you James, Edith and John. I will answer your questions respectively:

James: I pay $198/mo in HOA dues and $223 in property tax. Total= $421/mo

Edith: Here are the specs on my place: Condominium | Beds: 2 | Bath: 2.0 | Square Feet: 1,118 | Lot Size: 1,218 | Year Built: 1985

I have made the following improvements over the last 10 years: new Rheem AC/furnace/condenser (3k), new carpet / vinyl flooring (4k), tub/shower / tile flooring / toilets (3k), water heater (2k), indoor oil pant (2k), refinished stair case (1k), light fixtures, electrical fittings / plates, range hood, and garbage disposal totaling at least 15k.

John: Renting a room in the 90640 is about $800/mo. I think your right, a roommate might be the best alternative since I live alone by choice otherwise I 'll be shopping for a FIXED RATE mortgage.

I remember hearing many stories from friends about roommates having sticky fingers, it will be a challenge adapting. I don't really want to sell, maybe FIXED RATE mortgage is the way to go, as few are blessed with a trustworthy roommate. How do you handle a rental agreement with a live in roommate? I don't know the first thing about renting to a roommate. How do I properly rent to a roommate?

Thank you all for your wisdom and advice.

1 vote Thank Flag Link Mon Mar 2, 2009
All indications are prices will not recover for years. Some feel we are nearing a bottom, but in the past prices bumped along with little advace for several years befor starting to go up again. These are general statements, and may not apply in your market.

If you love the home, see what kind of long term FIXED RATE mortgage you can qualify for. A question for you. . . would renting be cheaper over time than paying taxes, condo fees?

As to renting; a quality property management firm will help you. If you want to DIY, be sure to run a credit check and run a criminal/rental/employment history, and demand a substantial deposit. If you screen carefully, you should be able to get good tenants. . . but where will you live and what will it cost?

My advice: suck it up, tear up your credit cards, stop all but the most vital expenses and stay where you are; it's your home. If you still are committed to selling, then be prepared to take a beating; list your property at a a price that will attract buyers; that means competing with short sales and REO's in this tough market. I can put you in touch with a reliable realtor in your area if you like. Call me at 541-660-8598
Web Reference: http://century21.com
1 vote Thank Flag Link Sun Mar 1, 2009
I am surprised no one has offered this option, if viable to your social & economic situation.

You could sell and then buy in a location that is in less demand than Montebello. For example, buy in Riverside County or San Bernardino County where a condo can be purchased for under $100K.

You could have after sale proceeds that could pad your savings. Even after taxes are paid and after the purchase of your replacement condo or home.

If you would like specifics on the valuation of your condo, closing costs and your net proceeds from the sale.... feel free to contact me at 626-780-8483. I am the listing agent on the 10th St. Montebello property. I grew up nearby.
0 votes Thank Flag Link Sat Dec 12, 2009
Michael, The esscense of "Predatory lending" is making a loan to an invididual who will NOT be able to pay it back. If you own your Condo free and clear and still can't make it how are you going to rent it out and then go rent a place yourself!! Geez, if you can't make the NONE payment on a condo free and clear with your current job how do you think you'll be able to afford it by getting a loan? HELOC's are dead and you wouldn't qualify anyway. How old are you? Have you considered a "reverse mortgage"? If your not a senior then forget that idea.
Why don't you sell it. With your lack of income the only way to acess the equity is by paying for a hard-money loan which you'll be able to live on for a while but the payment won't end your misery.
Get a better job! Your a prime person for a scam so be very careful. If it sounds to good to be true it is!!
0 votes Thank Flag Link Mon Mar 2, 2009
Hi Michael,
I feel that with having put in so much effort and money to fix the place up nicely as I understand it from you, this is probably not the right time to sell it and then you need to rent a place to live toooooo! Right?

The idea of taking a room mate may work out for you as there will be someone to share the expenses with you, but that is a very personal decision to make and also we do not know how big your place is.

If you have not yet talked to a lender/bank, may be it would not hurt to do so, you may be able to get an equite loan, i.e. borrow some money on the property to carry you over as you are saying that the condo is fully paid...

The very best suggestion I can make at this time is to sit down with a reputable and experienced Real estate agent in your area and a reputable lender (that Realtor may be able to suggest to you!) and together figure out based on all the financial information, market conditions etc. what your best options would be.

good luck to you!
If you would like me to recommend to you an experienced area Realtor let me know by writing to me directly to edithsellshomes@gmail.com
Edith YourRealtor4Life! Working always in the very BEST interest of her clients....
0 votes Thank Flag Link Sun Mar 1, 2009
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