So BB and I had a good looonnng fight last night. Tears/threats/yelling...it 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?
Ouch! That hurt!
February 4th, 2010 at 05:00 pm
February 4th, 2010 at 05:09 pm 1265303372
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.
February 4th, 2010 at 05:14 pm 1265303649
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!
February 4th, 2010 at 05:15 pm 1265303750
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!
February 4th, 2010 at 05:20 pm 1265304016
February 4th, 2010 at 05:33 pm 1265304797
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?
February 4th, 2010 at 05:41 pm 1265305302
February 4th, 2010 at 05:55 pm 1265306133
February 4th, 2010 at 06:00 pm 1265306410
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.
February 4th, 2010 at 06:04 pm 1265306682
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.
February 4th, 2010 at 06:41 pm 1265308907
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.
February 4th, 2010 at 06:43 pm 1265309018
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...
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!}.
February 4th, 2010 at 07:11 pm 1265310683
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.
February 4th, 2010 at 07:22 pm 1265311370
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.
February 4th, 2010 at 07:28 pm 1265311735
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?
February 4th, 2010 at 07:30 pm 1265311825
February 4th, 2010 at 08:05 pm 1265313917
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.
February 4th, 2010 at 08:21 pm 1265314913
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?
February 4th, 2010 at 08:52 pm 1265316725
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.
February 5th, 2010 at 02:23 am 1265336604
February 5th, 2010 at 03:25 am 1265340330
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....
February 5th, 2010 at 12:29 pm 1265372950
http://www.youtube.com/watch?v=MXsjEUHfM_0&NR=1
See the video above for a better explanation from Eckhart Tolle - especially at around 5:30 mins.