# In desperate need of advice



## RedSox (Sep 6, 2016)

Hi guys, I am in desperate need of some advice. I am going through a devastating separation with my wife. 

Obviously my emotional and mental state is not the greatest.

I'm not looking for sympathy, but I could use some expert financial advice in regards to what I should do with the house. My wife wants to sell it ASAP, but I have been thinking about buying her out. She dropped all this **** on me 2 weeks ago and has moved out Sept.1st.

Here are the numbers and I'm sure I'm being way too vague...but please just give me your best opinion. Any advice is better than none right now for me. I'll answer what I can.

So the city assessed the house at $454k. We had a realtor come in and he said given the current market, he recommends a list price of between $439k-$459k depending on how long we want to wait for the right offer. At $439k is he thinking a 1-3 month sell, and at $459k 6 months+.

We currently owe $360k on the house. After some pulling back and forth, she agreed to a buy out of $24,500. I also want to note that only my name is on the title of the house. (I know that since we are married, that doesn't really mean ****...but it does make it easier with less paper work for a buy out)

In order for me to pay her that cash, I will have to take money out of my rainy day emergency fund (well all of it), plus cash out some of my TFSA. This is the only way I can make it work and I will be pretty strapped for cash. The bank already said that I wouldn't be approved to roll the buy out into my current mortgage.

I just feel that buying her out would be the best long term goal. I would plan on renting the house out and I would move into something cheap and small for the time being.

Mortgage is about $1500/month, property taxes/insurance is about $400....so total up front expenses are around $1,900. I'm hoping and thinking I could rent the house out for $2,000/month. (a house on my same street just got rented out for $2,100/month and its the same house as mine)

Can you guys give me your opinions on what you would do? Would you just sell the house? Or try and make it work as a rental? I am emotionally tied to this house since we built it from the ground up and would like to keep it if it financially would work. The house is 6 years old. I've also always wanted a rental property...but I don't want to tie emotional feelings to trying to make a sound judgement call on my financial future.

The market is soft and I seriously think we would struggle to get $430k. (another reason why I would like to hold onto it) If we did get that, we would both be walking away with about $25k equity each. So it's pretty much, make $25k off of selling, or dish over the same amount and rent out the house.

Coles notes -
Currently assessed at $454k
Currently owe $360k
If sold, would get about $25k each
Buy out option would be me paying her $24.5k
Looking to rent out house for $2k/month

Any help would be greatly appreciated.


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## james4beach (Nov 15, 2012)

I know this is a financial forum about numbers & investments and stuff but -- hang in there man, I feel for you and lots of us here can sympathize with how hard all of this is.

I think to make a decision like this you should consult with a lawyer, someone you have hired, and therefore someone who represents your interests. One of my friends has been through two separations and both times he eye-balled the situation, assumed some good will from the ex, and tried to do something that he thought was a path of least resistance. In both cases (from what I can tell) he ended up later having to go to a lawyer for damage control, mainly because the ex did not reciprocate the good will.

I've never been through a divorce but just going based on my friend's experience, I'd suggest you consult with a lawyer.


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## indexxx (Oct 31, 2011)

I feel there is not enough information to give financial advice. The reason I say that is we do not know your income and expenses; on one hand, if you are not tight for income and can handle the possibility of not renting it out for many months, keeping it is an option. However, if you are hoping to rent the house as part of your necessary income stream to keep afloat, that's another thing altogether... counting chickens before they hatch and so forth.

The other side of things is the psychological attachment, which may or may not play on you long term. If there is any 'keep it alive' type thing tugging at the back of your mind, that's not a good thing. What I mean to very gently say is that if you truly can't afford it, you can't look to keep the house because of sentimental reasons or a thought that it will somehow keep reconciliation a possibility. I've personally found (even though I am deeply sentimental), is that a clean break is best. 

If you can afford to keep paying the mortgage while waiting to hopefully rent the house (remember that there is no guarantee you will within the next six months or however long), then keeping it is feasible. If it's potentially going to put you in the hole, I would take the money and walk away, and I'd probably take an incredible trip somewhere like Europe- good for the soul and a reclaiming of yourself.

Much empathy and whatever support is possible to offer through an anonymous website- remember this too shall pass. All the best in whatever happens.


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## TomB19 (Sep 24, 2015)

I would question yourself on the rental idea. It's not for everyone and it's fraught with problems. Most renters suck, although some are fine.

If you really want to do it and you're prepared to deal with the problems of being a landlord, it might be a good idea.

If the house has a basement, consider building a basement suite and move into the suite. It will allow you to keep an eye on the tenants and will let you live for almost free. Rent the upstairs for $1600~1700 with no basement. In terms of getting back on your financial feet, nothing will help like moving into a basement suite and renting the upstairs.

It would help to know what city the house is in. I'm going to guess Calgary. If you're in Calgary, this might not be a bad time to get into a landlord situation but be fussy about your tenants.

Whatever happens, best wishes to you. Most of us have been there and know what the knot in your stomach feels like.


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## slacker (Mar 8, 2010)

Draining your rainy day fund for the purpose of buying a real estate property during this period is concerning.

Until the divorce is complete, and things have settled down, I wouldn't give up the rainy day fund too easily.

I know that you have said that this is the better long term option, but you have to think about the short and medium term too.


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## 319905 (Mar 7, 2016)

My condolences ... let the house go, for one thing that's way too much to pay for a rental property. Sell, find a nice place to rent and for the next while just regroup and take care of yourself ... my opinion. You may feel you're losing money somehow, let that thought go, you'll make it up in the future.


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## Just a Guy (Mar 27, 2012)

As stated above, it's not the right price for a rental. Your margins are way to thin, you haven't factored in vacancy, maintenance, repairs, advertising, your time, etc.

Also, you've already stated you have an emotional tie to he property, that's never a good thing for a rental. How will you deal with walking in should a tenant trash the place? 

Being a landlord is a business, and needs to be treated as such. You need to keep emotions out of it, you need to keep the financials forefront. So far, your going to fail on both fronts. I understand that this is a difficult time, but this is not a good choice as you've described.


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## RedSox (Sep 6, 2016)

Thank you to everyone who has replied. This is an extremely difficult time and my mind is foggy.

A little more info which may help. I can personally afford to pay for the mortgage and other expenses on my own. So technically even if it took 6 months to find the right renter, it wouldn't be a big deal. In my area, a decent 1-2 bedroom Apartment/Condo is almost as much as my mortgage payment. So another theory I'm dealing with is why not keep/rent the house if it's almost just as expensive to rent a place if I sell it?

I just feel its such a bad time to sell a property right now. Prices are low and houses are sitting on the market for a long time if not priced really aggressively. I'm thinking even renting for a year or two may change this.

Any more thoughts?

Also, there are 3-4 houses on my block that are renting right now for between $1,700-$2,000/month. So even though it is a higher rent area, considering a 2 bedroom Condo in the area is at least $1,300/month, paying $2,000/month isn't out of the norm for a 2,200+ sq/ft home with an attached heated double car garage. (The house has tons of upgrades too...it's a high end home. Central AC, granite through out, high end finishings, etc)

Thanks again guys for not ripping me a new one. I know this is very vague and I'm just trying to get a general over view of what you guys would do in my position. I guess I'm just scared of looking back at this situation in a few years and think "damn....I should have held onto that property".


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## andrewf (Mar 1, 2010)

Also, if you are tapped out on your borrowing capacity as a principle residence, keep in mind that the financing standards are tougher for rental properties. Also, you should consult the terms of your mortgage, it likely does not allow for the home to be used for another purpose than as your principle residence.


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## Mukhang pera (Feb 26, 2016)

RedSox said:


> A little more info which may help. I can personally afford to pay for the mortgage and other expenses on my own. So technically even if it took 6 months to find the right renter, it wouldn't be a big deal. In my area, a decent 1-2 bedroom Apartment/Condo is almost as much as my mortgage payment. So another theory I'm dealing with is why not keep/rent the house if it's almost just as expensive to rent a place if I sell it?


Until you added that tidbit of info, I was going to join the crowd and echo the advice we all knew JAG would give - margins too thin, leave emotions out, & c. But it sounds like you can endure running in the red for some time, if necessary. That leaves the question of whether that makes any sense. Certainly from a strict "investment" point of view it does not. Had the house not been the matrimonial home, would you have gone out and bought it as an investment? Probably not. There would be better deals to be found to use as a rental.

One thing you mention is the "high end" nature of the physical premises. While that should help to attract a high end tenant, it will also require high end maintenance to keep it in first class condition for that first class tenant. At the same time, it's quite new and there should be no major issues arising early on.

I'm gonna' swim upstream here, and no doubt feel the lash from fellow CMFers. My out-of-step advice is go with your heart, which you say is in it. At $24.5K you would be buying at a bit of a discount, apparently; perhaps reflecting a notional real estate commission and other disposal costs. It also sounds like you might want to return to the place some day. 

Another reason for the buyout is it will promote a "clean break" with your wife. Keeping it and marketing it could well lead to arguments over pricing, marketing strategy, when, if at all, to drop the price, etc. Once the buyout is done, you can always reconsider and sell on your own, without having to deal with your wife.

Many years ago I bought a house in the US, planning to live there for the long haul. I was there for less than 3 when circumstances changed. One reason for keeping it was the prospect that I might return to live in it. Never did. The purchase was driven by considerations of what would make a nice home. It was not thought of as an investment and subjected to the kind of analysis that would be consonant with an investment motive. I still have the place. It has been rented for almost 20 years. Even with the cross-border tax issues entailed and the long-distance landlord considerations, I have not regretted for a moment keeping it. 

Yes, I could perhaps have got out and invested in something that would have shown a better return. But would I have done so? Probably not. I was moving to the other side of the Pacific and had lots going on in my life. Selling and re-investing in N. America on my way out the door would not have been high on my to do list. So the check from the escrow company would probably have been banked and either ignored or, more likely, frittered away over the ensuing years. Said proceeds would have provided more cash to buy a fancier home in my new land. No doubt some would have been applied to that purpose. In hindsight, that would have been a mistake.

So, in the end, view your situation in a holistic light and do what you think is best. I see no clear path of right or wrong. You are unlikely to make a permanent and fatal error. Keep in mind you have sought advice on a "money" forum. The answers you'll get will, in the main, will focus on money considerations and little else. But the money-centric approach is not the only one. For now, buying out the wife might provide some breathing room and solace in an otherwise emotionally taxing time.


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## My Own Advisor (Sep 24, 2012)

rikk2 said:


> My condolences ... let the house go, for one thing that's way too much to pay for a rental property. Sell, find a nice place to rent and for the next while just regroup and take care of yourself ... my opinion. You may feel you're losing money somehow, let that thought go, you'll make it up in the future.


+1

Take care and do what is simple now. You don't need complexities now.


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## tygrus (Mar 13, 2012)

My advice is do nothing. Sounds like things got a little hot and emotional and a couple months can change things. Who knows what your mindsets will even be at that time. You might even reconcile. Dont do anything rash.


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## james4beach (Nov 15, 2012)

That last one may be good advice, actually - don't do anything rash


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## mordko (Jan 23, 2016)

+1. Take it easy and take your time. Wait until you cool down and weighed all the factors properly. If prices are soft now, a few months later they could drop and you will have overpaid for the property. And this sounds callous but how desperate is your wife for cash? Assume there is o kids involved. If she is the one walking out and needs cash it may push her to take a smaller amount which would make your renting scenario a bit more palatable.


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## AltaRed (Jun 8, 2009)

It seems to me the OP has the cash flow ability to carry the house for awhile, at least months. Thus the first objective should be to stay put, i.e. continue living in the house as a principal residence, and focus on getting a Separation Agreement prepared and signed. That Separation Agreement will cost some thousands of dollars and your lawyer will include a clause that a buyout of $24.5k to your ex will forever get her out of 'any interest in that asset' and will thus free you from any further obligation in the SA to re-distribute any residual funds if the value/net proceeds change. The point being is that as soon as the SA is signed and you provide the money according to the Schedule attached to the SA, the house is yours to deal with as you see fit.

Only after all this is settled should you then start making decisions on whether to keep it as a PR, or to sell it, or to rent it out. Those are decisions for another time. I've been through a Separation and Divorce. Keep it simple and avoid complexity.


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## kcowan (Jul 1, 2010)

+1
Take things one at a time. You ex is assuming the place will yield $405k after costs. What else does she want? Support payments? A share of the furnishings? How about a car?

Are you capable of taking over the mortgage payments? Will the lender allow it?


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## Mukhang pera (Feb 26, 2016)

kcowan said:


> Are you capable of taking over the mortgage payments? Will the lender allow it?


As AltaRed suggests, it sounds like the OP is not a man of straw. In that vein, he commented:



RedSox said:


> I can personally afford to pay for the mortgage and other expenses on my own. So technically even if it took 6 months to find the right renter, it wouldn't be a big deal. I


The OP also said that title is in his name alone, so what the lender will allow is probably a non-issue unless the wife's covenant is on the mortgage as guarantor, indemnitor, or some such and only then if she insists on being taken off as a term of any buyout.


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## RedSox (Sep 6, 2016)

Again, I want to thank everyone for the kind advice. In a time like this, it really does mean a lot to me.

I will try to provide more details, without getting too into it. I am posting this on the internet, so technically anyone could be reading this.

Lets just say there is zero change of reconciliation between my wife and I. I'm pretty sure you guys all knows exactly what that means and why there is not chance...but I'm going to leave it at that.

As for my wife, she owns her own business and is successful. She is not hurting for money. In fact, at this point, she is better off financially than I am. I started a new career last year, so I'm working my way back up the ladder.

I guess one of the hardest things for me is thinking about how our marriage ended, what happened and just the haunting memories of this area. Bottom line is I would never want to live here again. But with that being said, I've always wanted a rental property. I'm just not sure if this is the right time. I would be over extending myself in order to give her the buy out, and then I need to worry about getting the right renter for the right price. Having no back up money is very scary.

If I sell, I still have my rainy day fund, my TFSA and will walk away with anywhere from $25k-$30k in my pocket.

Since there is no chance on ever getting back with my wife, a clean break might be best. One extremely good thing I have going for me is that she and I both agree that we do not want anything to do with each others savings/retirement funds or debts. We will keep our finances separate and just split the equity of the house. She keeps the car, I keep the truck and everything is final. Obviously all this needs to be done properly through lawyers. I am very worried that once I expose her for what she has done, she may want to back lash and try to come after me financially. So it's in my best interest to say nice and quite until all this settles and gets worked out.

I'm just so torn. I do want to keep the property. And if everything fell into place like I want it to, it could work out no problem. But that's the thing, I'm old and wise enough now to realize that nothing ever goes exactly how you plan it too. And you guys are right...with all the emotional and mental stress I have going on already, worrying about finding a renter for a place that is $2,000/month is probably the last thing I should be doing.

I was gung ho on holding onto the property....but the more I think about it, the more I think it may be better to just walk away and start my life over.


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## AltaRed (Jun 8, 2009)

If you cannot live in the house for emotional reasons, then sell it. Forget about renting it out. It will be painful to watch a tenant not care about upscale finishes as much as you do. It is, after all, just an asset than can be monetized. Too many people get way too attached to the place they put blood, sweat and tears into.


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## mordko (Jan 23, 2016)

Are you saying she is leaving you more than 50%, taking into account pensions, etc...? If so - sure, sell the house and start a new life. And if not - how can she "go after your financially"? Or are you afraid she might start complex litigation? Doesn't sound like she is really in a position to do that.


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## marina628 (Dec 14, 2010)

Why/how is her name not on the house and mortgage ,did you purchase it before you married her?She wants out please do not roll over and give her the MAX price you guys will get.Since reading last post I think it is best to sell it if it will cause you more pain to live there ,perhaps have an agreement where she will get paid only when the sale of the house is final?


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## carverman (Nov 8, 2010)

AltaRed said:


> It seems to me the OP has the cash flow ability to carry the house for awhile, at least months. Thus the first objective should be to stay put, i.e. continue living in the house as a principal residence, and focus on getting a Separation Agreement prepared and signed. That Separation Agreement will cost some thousands of dollars and your lawyer *will include a clause that a buyout of $24.5k to your ex will forever get her out of 'any interest in that asset' and will thus free you from any further obligation in the SA to re-distribute any residual funds if the value/net proceeds change.* The point being is that as soon as the SA is signed and you provide the money according to the Schedule attached to the SA, the house is yours to deal with as you see fit.


Lots of good advice on this subject. Take from me, one that has gone through a separation and a long bitter drawn out divorce costing tens of thousands, IMO it is better to sell and settle with the matrimonial assets ASAP. 
The sooner you can make a complete division, the better. Otherwise the extra stress will affect your job and your
health as it did for mine. 

Otherwise it becomes more and more complicated as things progress where rentals are involved and income collected from the rental. BTW; Ex wives can play all sorts of games in the courts that one may not be aware of.

In my case, our matrimonial home that I worked so hard on to improve and upgrade, was sacrificed at a low ball offer after it dragged out for a couple of years. I initially wanted to stay in my own home but that proved to be futile as she got a court order for me to vacate the house by a certain date so that she and my daughter could stay in it until the end of the school year. 
At the end of the school year she rented it out without my permission and moved into her new boyfriend/husband home because she claimed that the court gave her "exclusive rights" to the home to do with as she wished.
That was not the case, but she kept the rent collected anyway. 

She rented it at my expense to renters that had two large dogs that did considerable damage to the carpets and woodwork inside the house. I was furious and this created more animosity than already had been there due to her infidelity.

In the end, I had to pay her over $8k of interest on her half of the marital asset split because the money from the sale of the marital home was not distributed until the date of divorce 3 years later.
That ended up costing me plenty..fighting over the assets and what she had done to "my home", but at the
same time ignorant of the fact I would be charged PREJUDGEMENT interest for not distributing those assets
in a timely manner.... as well as my inability at the time to " just let it go'...

To make a long story short, I never returned to that home, even though I spent 7 years of my life working on it. 
The home would have harboured bad memories for me, even if I could afford to buy her out at the time..which I didn't. 



> Only after all this is settled should you then start making decisions on whether to keep it as a PR, or to sell it, or to rent it out. Those are decisions for another time. I've been through a Separation and Divorce. *Keep it simple and avoid complexity*.


Totally agree. ^^^^


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## CondosDeal (Sep 15, 2016)

*Nice*

very good question and great replies


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## Mortgage u/w (Feb 6, 2014)

I have not much to add since you have quite some good advice here already. I just wanted to join the poll and vote to sell the place. Take the money, start over and make it better!


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