Home > Ouch! That hurt!

Ouch! That hurt!

February 4th, 2010 at 05:00 pm

So BB and I had a good looonnng fight last night. Tears/threats/ was awful.

It started when BB called me at work to say he talked to a bank about getting a HEL to renovate the townhouse and learned they are nearly impossible to get nowadays. He said we would need to get a consdtruction loan.
I lost it. I know construction loans are very complicated/very expensive, require 20% down, and must be paid back in 1 year.

I took his call and said: "This project is already getting more expensive than we planned. You were in charge of organizing and making a plan. I knew it was going to get messed up because we were so impulsive and there was no research first...and now you want to use my inheritance for the 20% down to fund your construction loan. No. No Way. NO WAY!"

So we argued on the phone and hung up. I simmered at work and when I got home I really went after him. I told him I was tired of him coming to me for money, I was already tired of this project and that the down payment money I was fronting under the promise he will pay me back half was the last dollar he was getting for this project. ...those were the nicest things I said.

Then he keeps argueing with me and makes some good points and I start to weaken.

Then he goes in for the kill. Oh this hurt.

He said "Gamecock- you keep controlling the money with your plans and your ideas. But you had the biggest chance in the world to make money and you blew it. You made the worst business decision ever 4 years ago and I have never opened my mouth. I have never mentioned it. You just go on with your plans and have never even seen how stupid you are with your biggest asset."

He's talking about a condo I inherited 4 yrs ago in San Fransico. At the time of the inheritance it was appraised at $600k. The unit had been purchased by my parents in the 70's for $43k. When it was passed to me it had no mortgage, the taxes were locked in at less than $2k a year, and it had been rented by the same family for 6 years (the same family still occupies the unit.) The rent it was collecting was a little low for appraised value/cash flow standpoint. Basically my family had not been to CA in over 15 years and we really dont know what the rental market is like. But the place has not been updated so my mom had the rent at a price she thought was fair- and I kept the rent at that price, raising it just 3% a year for 2 yrs till the real estate market tanked at which point I have not raised it all all for 2 yrs.

My financial advisor/BB/ and BB's dad ALL tried to convince me to sell it.

I was leary of the financial advisor because I figured he just wants a bigger stock portfolio to manage so he can get a larger commission.

And I thought BB wanted liquidity so he could live like a king.

BB's dad was the most rational- showing me that $600k sitting in a bond fund was earning about 2x the interest as the rent was collecting without all the liability...but I looked at his charts and passed on the idea of selling.

The place is sentamental to me because it was my parents. And I personally dont trust myself to have access to that much money. Plus the rent it collects is plenty for a normal person to have as extra income- why get myself accustomed to a lifestyle that I dont need? I wanted something solid to pass down to my kids. And most of all- this might be awful- but I think once I sell the place while I am married to BB it becomes OUR money because it was accrued while we were married. Then if we ever get a divorce half of it goes to him. But if I keep the inheritance intact, in the event of divorce- it stays with me- because it was given to me only before we got married. True? I dont know. (Do I think we will get a divorce? I dont know. Does anyone ever think they will get a divorce when they get married?- yet 50% do.)

So for years I have not really given the property much thought.

Well the property value has of course tanked. Foreclosure listings in the building are selling for $450-$470.

So last night BB explained to me that I have mismanaged away $150,000. That people are predicting California will never boom again the way it was- that every year I own it the property is that much older and has more disrepair than the last year. BB told me that every week during the real estate crisis he would think about the CA property but never said a word. And I continued to live my life never even aware of the money that was being lost.

So ouch. That more than stings. It stings bad and you know why? - I think he is right.

Holding onto the property will just be trying to recoup losses. The property is getting no regular maintance and every year that passes a problem could be getting worse- leading to more inspection issues when it does sell. And having the property so far away with no ability to regularly look after it does increase liability issues.

I think I actually should sell it.

Should I?

21 Responses to “Ouch! That hurt! ”

  1. zetta Says:

    What you did or didn't do with the condo has nothing to do with the decisions on the current property. Even if you had sold, what you said earlier still applies -- you don't want to spend your inheritance money on this project. Don't let the argument get sidetracked.

    You have no particular reason to sell at this moment in time. I'd suggest waiting a year or two to see whether the real estate market picks up when the economy improves.

  2. momcents Says:

    Just because it was appraised at $600K doesn't mean that it would have sold for that. I know two houses in my neighborhood that have been on the market for THREE years this coming May. Starting prices were about $330K. Now both are in hte $265K range, with only really low offers (like $190K). And hindsight is 20/20. If you don't need to sell because of a financial fix, I'd say leave it. You haven't done anything in this long, and to decide to do so after a childish quip from your DH, I wouldn't. You're a smart girl! I wouldn't let DH rattle your chain. AND if he was so concerned about the money that you were losing then, he should have said something to you at that time. BB isn't fighting fair. Shame on him!

  3. Broken Arrow Says:

    I'm not going to tell you what to do. This is an emotionally-charged issue, not a financial one. And yet... that's the problem. It's an emotionally charged issue, and it needs to swing back to strictly finances. I urge you to set your feelings and your past aside, and do what you feel is best given the numbers.

    In fact, I think you'll find that the best way to put your financial past behind you is to make great financial decisions from now on.

    Take care now!

  4. thriftorama Says:

    I'm sorry but it doesn't sound like the condo was a mistake at all. It's making you money isn't it? And you could always live in it if youwant...

  5. ceejay74 Says:

    No, I don't think you should sell. At least not hastily. Seems to me you're a very careful, calculating person who then makes sudden huge impulsive decisions--I can't tell from your blog whether it comes from within you or from external pressures (such as BB's comments). You've just made one impulsive move that you're sort of freaking out over--don't make another one, because then you'll be dealing with both simultaneously.

    I don't know how to counsel you with BB. I live with two partners who don't have long-term vision about finances--but they realize it and have happily transferred 95% of the decision-making power to me, realizing that I'll probably get us to a better place financially than either of them would. Seems like BB is wildly inconsistent and unrealistic in his views on money, but doesn't realize that. I don't necessarily think you should be in control because you brought the vast majority of assets into the relationship...I think you should be in control because you have a measurably better grasp of finances than BB.

    But if he doesn't realize his own shortcomings, then I'm not sure how you're going to accomplish that.

    I'm not a fan of "divorced finances" for a family situation from my own experiences, but several people on this site have very compelling arguments in favor, so I realize they work best for some relationships. Maybe it's something to consider with BB?

  6. Joan.of.the.Arch Says:

    It is probably better to carefully deliberate about paying for renovations. Is the new place livable without them? Can you make-do for a few years while your earned incomes increase and/or better loans become available?....You did not make a bad decision about the CA condo, by the way. You still have it as an asset whether it has generated as much income as it might have in some other way or not. That is a good thing. Does your DH understand preserving assets? Does he understand that there is real value in holding on to a pot versus putting it all on a couple numbers on the roulette wheel, so to speak?....I'm thinking you two sit pretty far apart on the spectrum of impulsiveness versus constrained planning and that is something unlikely to change. I imagine questions like this one will always be present in your life together. It just won't be over such big sums all the time.

  7. Chris P. Says:

    Honestly, you don't have a financial issue, you have a marriage issue. It sounds like both of you have some resentment and anger brewing under the surface that just exploded last night. It also sounds like neither of you really trust the other's financial judgment. I would encourage you to seek counseling and work through this. Good luck with whatever you decide to do.

  8. momcents Says:

    Game-I asked attorney-brother about pre-marriage inheritances. Should you sell the condo, the proceeds aren't necessariliy considered marital assets. If you do not comingle the funds or set up a trust, it is still your money.

  9. Ima saver Says:

    When I married my current husband, I owned my own home free and clear. I did NOT put his name on the house. I did not want to split the money from the sale of the house should we divorce. It was not until we built our 2nd house (7 years later) that I put the new house in both names.
    I think you are smart not to sell the inherited house right now. I also think you should probably not buy the new Savannah house.

  10. Analise Says:

    Only you can decide on the course of action regarding the sale of the SF condo. One advantage to selling is that you inherited a "stepped-up" value ($600,000) so if you sell for less you will have no capital gain taxes to pay. A disadvantage is that the market is bad right now and you will sell low and it will likely improve if you are patient.

    If you do sell the SF condo, which is your sole and separate property through inheritance, DO NOT co-mingle the proceeds by putting them in a joint account. Keep a paper trail that proves this is your sole and separate property.

    As far as any interest or income this asset generates, it becomes a little murkier. Does the rent go into your joint account? Do you file joint taxes and both claim the gain or loss from the rental? Maybe you should consult an attorney.

    I have all my sole and separate property in a Revocable Trust and also have a pre-nuptial with my dh. I did this on the advice of my attorney because my assets were considerably larger. We also have a Community Property Trust. Good luck... the issues related to "my money and our money" will only continue to get more complicated and emotional. I know... I've been through this with my ex-husband.

  11. monkeymama Says:

    No - the mistake would be to sell right now.

    Real estate in San Francisco will *always* be hot. It's not *crashing* anytime soon. MArket rents are also extremely high in SF. Though I don't disagree with keeping the rates low for good renters -but in the future, it may be more worthwhile as a rental than cash in the bank. If you some day get tenants who pay market rates...

    Don't get me wrong, the boom for SF was in the 80s/90s. I don't think it is going to increase much more in value over the long haul. But it will certainly hold its own.

    I don't think holding on to the property is a mistake AT ALL! Don't beat yourself up over it. & don't do anything rash... Big Grin
    As far as the townhouse - you haven't signed the dotted line. You can always walk away. I'd think long and hard...

    {I may be biased because I am from SF and can only dream of affording the rents OR purchasing a decent property there. For that - I'd say it's a nice asset!}.

  12. gamecock43 Says:

    Things are better. I went home for lunch and BB apologized up and down about last night. He cleaned the house because he felt so bad! I accepted his apology and told him he did have some good points. I told him I want to focus on this new townhouse project now- and maybe late next year once we are through with the renovations and know what we are going to do with the property- we will turn our attention to the CA property.

    I feel better that if I sell it the money is still in my name.

    And BB now changed his story and is pretty sure we can get a HEL to pay for the construction.

    The whole fight has left me exhausted. Its much harder to backtrack the pain caused after the damage has been done. I'll admit it- I love BB a little bit less today than I did yesterday.

    But I know everything will be fine in a few days.

    We are going ahead with the townhouse project. In our fighting last night BB expressed how much he was looking forward to this project as a way to prove to me how good he can be with budgeting and making money. He truly feels like this is a cant miss deal and he really wants some freedom to run the project to show me what he can do. But with me holding the purse strings so tightly I am kind of dooming the project to fail because I need to trust him, and trust that when he says he wants money for something- that it will payoff in the end. He asked me if I would have purchased the property if he wasnt involved. I thought about it and said "no. I would have been afraid of the work it needs. I wouldnt have been able to do it." But I do trust BB to do it. I cant handle that project- but I actually think BB can. I just need to give him some air so he can do his thing.

    And he promised me that if he bombs on this project and breaks even or less then he will never ask for money again.

  13. whitestripe Says:

    TBH if I inherited my dad's property (bought for $87k ten years ago, a tiny little two bedroom cottage in a country town two states away, now worth over $350k) I would NEVER sell it either.
    The reason you go to work each day (or whatever) and slave away years of your life for money, is so that we can all do the things that we WANT to do. If you want to keep the property and are not in dire financial problems, then don't sell it please.
    It sounds like all these issues stem from two differing viewpoints, BB is looking at this from a purely financial and investment way, and you are from an emotional standpoint. But the fact remains that BB has NOT been smart about money for many years, otherwise he would have given up baseball years ago and gotten a proper job to earn money and stop leaning on you. You allowed him to do that because he WANTED to keep playing baseball, right? It's nice to see that he IS thinking financially now, but he can't do a sudden about-turn and expect you to go along with it, when you've supported his wishes and wants over the life of your relationship and now suddenly he expects you to do what he wants and wishes again, and not take into account what YOU want either.
    I'm sorry if I sounded harsh, but it just seems a little unfair.

  14. debtfreeme Says:

    I do not have time to read all the replies but when it comes to inheritances, I believe that if the money from the sale is not co mingled or used for the current family then it remains yours only, even in the event of a divorce.

    I remember that happening to a friend several years ago. She sold a piece of land from her dad and did not put the money into joint accounts but kept it seperate. her husband wanted half and tried the divorce thing to get it and it did not work. So...

    And I would be hesitant to give someone power over 40-50K when that person has shown that he might not be that financially educated. If he wants to prove he is ready for a project like this, why not make him in charge of the budgeting and finances for teh next three months and see how it works out?

  15. gamecock43 Says:

    I think he had a good point to sell when the bubble was up. But we didnt know it was a bubble at that time. And in the year or two it takes me to come around to make the decision- nothing is going anywhere. I agree- the condo is not hurting anyone. No one in my family is dying and needs an expensive medical treatment. We all make money to do things we want to do. And for the last few years I have wanted to keep the place. Looking back- I can see how maybe it wasnt the best financially- but it was an easy way to keep everybodies hands out of the pot.

  16. momcents Says:

    Glad that things are looking up and no major arguments are continuing! I do believe that life is too short to be spent in contention. It is much easier when everyone is on the same page. My suggestion: Take a money management seminar with DH. He might be enlightened! Mine became better educated after we attended one, and our communication improved immensely in talking about finances.

  17. Broken Arrow Says:

    (Internet text does not convey tone very well, so please try to imagine me trying to talk to you in a warm, fatherly sort of way.)

    Game, forget the past. You can't change it now, and you've learned and grown from it, right? That's all we can ask of ourselves.

    Nobody's perfect. All we can do is make the best decision we can, regardless of the outcome. Just do your best, and try not to look back. Ok?

  18. all4money Says:

    I don't agree with everything Suze Orman says, but I do agree 110% with one thing --- she always says that when you inherit money, you shouldn't touch a dime of it for a whole year. There are too many emotions to deal with after you inherit a large sum of money, whether in cash, real estate, or whatever. I think you did the right thing in waiting and not selling the CA property. No one had a crystal ball to know that the housing market would tank in 2008.

    You guys will be just fine -- just keep each other in check and work together with a common goal in mind. Whether it's a marriage or a real estate venture, you've got to have the same goals so maybe it's time to just figure out what those goals might be... remember also that you are YOUNG and thus have plenty of time to make mistakes along the way. Smile

  19. homebody Says:

    Monkey and I are in the Bay Area enough, we could always drive by and take a look for you!

  20. boomeyers Says:

    Yep, the bubble burst, so you may as well hang on to it. And take up homebodys offer to drive by and check it out!

    Now, the fact is, you don't love BB any less, your just not as "in love" with him at the moment. It will pass, this is marriage....

  21. Apprentice Bliss Hunter Says:

    I agree with boomeyers.... you don't love BB less... it's just probably the first time that something in him was so negative and hurtful towards you... It wasn't him (who he really is) but old behavioural/emotional patterns from his past rearing their head.

    See the video above for a better explanation from Eckhart Tolle - especially at around 5:30 mins.

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