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Got my new dream home, but now stuck 

JC
Posts: 48

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10/4/2016
JC
Posts: 48
Good job on your progress!
I would say if your house is in a livable condition, then just live in it the way it is. There's no need to incur any more debt until you've saved up an emergency fund, put some money toward retirement, etc.
I know this is a relatively old post. I hope you are doing better.
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chaddz3
Posts: 2

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3/18/2016
chaddz3
Posts: 2
Congrats on moving in the right direction, but it appears you might be trying to do too much too fast.. slow down a bit and work in stages. give yourself some time to rebuild your resources. Not only will slowing down allow you to build resources back up to work with, but you may find that you may change your mind over the course of the renovations on exactly what you are wanting to do, maybe think of a different way of doing it, or change the idea completely.. Its always better to change your mind about what your going to do, before you start than it is to be half way through it and end up like, well damn, i dont like it this way or this doesn't look as good as i thought it would... and all the resources and effort end up being wasted because you start over... give yourself time to look at all the different things you can do, who knows you might come up with something that is more fullfilling (and possibly cheaper) and be exactly what your after.. Just like when driving.. going fast is fun and exciting.. but if you make a mistake, it hurts alot more.
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getnhappy
Posts: 17

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2/24/2016
getnhappy
Posts: 17
(1) take your time on the renovations if you're feeling stretched. It's not a sprint, it's a marathon. Based on what you have said, you're doing everything right.
(2) if you are going to ultimately put some debt on the property, now is about the best time ever due to low interest rates. If, however, you can avoid debt altogether, even better - it's impossible to go bankrupt if you don't have debt!
(3) don't forget about sweat equity, doing some of the work yourself. My net worth is over $1.5M but I just changed out my toilet last week because I wasn't going to pay a plumber $300 for what I knew I could probably do myself - youtube videos can show you how to do anything.
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njhowie
Posts: 77

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2/20/2016
njhowie
Posts: 77
In the current interest rate environment you should look to ultimately get a mortgage to finance the remainder of the work - because mortgage rates are still at all time lows. If the bank said they couldn't give you a home equity loan because it was still under construction, then your reply should have been "No problem, give me a construction loan". Finish what needs to be done, then get a regular mortgage to refinance the construction loan.

That's what I would do...the money is so cheap, it doesn't pay not to do it.
edited by njhowie on 2/20/2016
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Grabbyg
Posts: 3

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2/9/2016
Grabbyg
Posts: 3
Getagrip, thank you so much for your well thought out answer. You hit it all on target. You very much captured my feelings. I feel more hopeful after reading your response--and of course welcome other views. It's hard when you spend your entire adult life pursing a dream (of buying a house)--since I was 12 and now I am 57, only to hit the wall of reality. But reality is what I must deal with. I applied for a home equity loan and was denied because they said the house was still under construction. This was yesterday, and I was pretty devastated. But as I step back a little, I think they did me a huge favor. Up to this point I have taken on no debt, and I think this is how I should finish this house as well. I would say it is 90% done, and now I just need to slow down and clean things up and move forward.
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getagrip
Posts: 29

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2/9/2016
getagrip
Posts: 29
It sounds like you've hit a bit of a slump where the dreams you had aren't matching with the reality you are facing. I can sympathize. I guess my questions are when you say you are looking for some direction and are feeling a bit lost, what are you looking for? I don't know if you are in dire straights financially and looking for general advice, looking for tax advice on the capital gains tax, feeling house poor because that's what appears to sucking in all your money, wondering if your choices will lead to you becoming a millionaire, etc..
So, I've got nothing on capital gains tax advice other than figuring it has to be paid. Worst case IMHO is having to get a home equity loan for the house if you've overextended or negotiating with the IRS to make payments over time but otherwise I've nothing specific to offer. Having very little debt is great and helps with temporarily shifting priorities to help cover the capital gains tax. Feeling house poor I can relate to, I recall that feeling very well and can only state that being careful in the purchases and watching your budget will slowly get you on the plus side again. I may also suggest that perhaps slowing down the rehab for a bit, if you haven't already, until the other issues are settled may delay your dream home being a reality for a year or two, but it seems to me you have the knowledge and discipline to ensure that you get there. With respect to becoming a millionaire, it's a nice goal and nothing wrong with shooting for a specific number, but you may want to consider more about what you need to become financially independent (e.g. you only have to work if you want to) as another possible goal for your future investments and their payouts. Not everyone, even today, has to be a millionaire to meet their needs and enjoy their lives. If you are in a slump, I've found for myself just sitting back, assessing things and running the numbers often makes me realize things may be tight for a while, but are likely to loosen up down the road a bit so I don't have to course correct all that much. Best of luck.
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Grabbyg
Posts: 3

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2/8/2016
Grabbyg
Posts: 3
Hi. I grew up in the projects of ny and always dreamed of owning a house. I saved and invested and managed to recently buy a $122,000 fixer upper. I had an additional $100,000 for reno. Being my first house, I made mistakes and there were many unexpected problems (boiler blew, mold etc) and I have gone through the money and still need to finish floors and side the house. I live in the east, so everything is $$$. Now I also face a capital gains tax on all the stocks I sold to buy this house. My goal is to one day be a millionaire. I have very little debt. I'm just looking for some direction, I feel a little lost.
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