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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: y2kate who wrote (5214)	9/11/2002 2:00:36 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

if we married before I sold this house, would the 500K profit be free and clear? I don't honestly know for sure. Anyone know the details on this screwy law? A single person who has lived in a home as their primary residence for at least 2 of the last 5 years can avoid tax on $250k of the profit. If they marry before they sell the home can they avoid $500k? My guess would be yes as long as the new spouse lives there for two years as well. But you never know unless you look up the law, or already have. Does anyone know the answer to this?

To: y2kate who wrote (5214)	9/11/2002 3:48:42 PM
From: Paul Senior	Read Replies (1) \| Respond to of 306849

y2kate. Ah, I see more info. about your situation after my post. I write this, but I can't tell if I'm intertwining my own baggage or issues. Which I probably am. I'll move away from real estate ups-and-downs and holy-cow-we're-in-a-bubble-what'll-I-do? comments. Perhaps this is your first and maybe only chance to capture $500K. For me, "either-or's" are a little harsh. (Move or do nothing) So I like your "compromise" situation. Take the money out by refi. You'll get to see a Big Amount resting comfortably in the bank. Sure, you'll have a bigger mortgage, but you can comfortably make the increase from the principal and interest from the banked funds. You get to stay in the house/area you like. And having that money allows you options. Esp. as you might be starting a family. Options you might not otherwise have if your house drops in value or if mortgage rates rise. (I'm not understanding though what you mean when you say refinancing as a hedge -- if you stay in your $800K home and it drops in value, I'm not one to suggest or condone skipping away from the home and keeping the refi money.) Alternatively, there's this: A free lance person in the entertainment business and an actor prospect and wanting a family. It's like couple just starting out. Is an 800K home too much home for the situation? Even in LA? Maybe. Maybe not, because you "can easily make the payments". You do seem to have a tough decision ahead of you. I'll guess though that whatever you decide will wind up okay. Paul Senior (just my opinions and musings)

To: y2kate who wrote (5214)	9/13/2002 5:33:23 AM
From: Amy J	Respond to of 306849

RE: An open question to the thread: if you were in my shoes, would you be selling now? If so, how would you invest the proceeds over the next couple of years?" ---------------- Hi y2kate, I'm a reader of the Real Estate thread here, though don't post. I've enjoyed everyone's posts here - very educational. Saw your question and felt you may find a conservative perspective useful for reflection. First let me say that I don't think there's a right or wrong answer since it depends upon an individual's personal preference and risk tolerance levels. Maybe if you run the numbers and then feel through different perspectives, you could create a unique solution that feels right for you. ( My perspective on real estate is ultra conservative. In general, I don't believe in personal debt and have gone through great extremes to avoid debt (worked 3 jobs through college, biked to work until I saved up enough money to get a car outright, drove a very old car in order to save up for a brand new car rather than incurring debt, etc.) I have this same conservative philosophy when it comes to real estate too. ) I don't know what your personal situation is, but if one is in their twenties or thirties, intend to be the main consistent breadwinner (but in a high-risk industry such as entertainment), don't want to ask ones parents to financially bail one out on a mortgage payment if one gets ill or unemployed, intend to have children in the next year or so, and have savings that have been hurt in the stock market, then I'd sell your house immediately before you get married and place $200k in the bank and use $300k to buy stocks in order to write covered calls to possibly generate $36k/year (to either increase your cash flow, or to increase buy backs into stocks, or to begin saving for a down payment on a new house when your child is around 4 years old which could be when the RE market generates some deals, assuming it does crash (which I think it will). However, even before considering any of that, I would really examine how your local area's real estate acted in previous boom/bust cycles and your city's projected population estimates. For example, if your local real estate's historical 10-year annual price growth was 7%, then if one takes 299k and multiplies it by 1.07 ** 6 one gets $450k and possibly that's a guestimate to the underlying value. Is ($800-$450-7.5%800-taxes)= $290k less taxes, worth the hassle of a move or the potential risk of not being able to buy back into that particular neighborhood if prices don't crash, et al? If you have capital other than your house (which it sounds like you do), then I'd just stay where you are and refi to reduce the mortgage payments before you get married, and take any extra cash and place it into some type of restricted trust (where it is available to only you if you medically need it, such as a pregnancy.) I'm a firm believer that money in a marriage should be 50-50, however, I'm also a firm believer that one should put their financial affairs in order before getting married so that it helps the couple always retain a buffer, reducing the chances of money from getting spent, in order to ensure a married couple always has this safe buffer of cash on the side - money problems is the number one cause of marital problems and divorces and no one needs that. So for the benefit of the marriage I'd put that money in some kind of trust (to be owned by both parties when you get married) but so that no one can spend it unless something dire happens. A childhood neighbor of mine became an actor, so did someone I went to school with, and I recently met two people that separately just finished creating a movie. From what I understand, creating a movie involves raising capital (selling the pitch/story to movie executives), working like heck around the clock, and then it involves a lot of work to get the movie into distribution channels. The sense I gained is, the money comes in very unevenly and there are gaps between projects. (The neighborhood actor had a lot of financial pressures when he was in-between projects, per the National Enquire and Jay Leno show.) I think the uneven payments means a person has to have a huge cash reserve, especially in the high-pressured entertainment business. Your low mortgage payment is very attractive though - maybe you shouldn't sell? The way this country is spending money ($153B deficit again), continued deficit spending could lead to higher interest rates, etc. Regards, Amy J