Ask Money

Rent my home

Chris Farrell Sep 1, 2009

Question: I’m a freelance writer, currently making a reasonably comfortable income. I have no student loan or credit card debit, and a Traditional IRA (max contribution every tax year). Part of the reason I can survive as a freelance writer is that I have no mortgage–I inherited my house from my mother (who inherited it from my grandmother).

However, I have been considering leaving the area to go to graduate school–this means I would have to rent the house. The prospect makes me very leery, given how much money I’ve sacrificed to rehabilitate my old home. I’m all too aware what tenants could do to destroy its value, while I was away, and I’m also nervous about keeping an eye on rent collection/utilities payment from a distance.

My questions: I would need to rent the house to pay for my rent in another area while at grad school. Should I consider this option of renting my house if I am not accepted to any grad schools in my immediate area? And, finally, is getting a PhD in English literature a truly terrible idea, as opposed to continuing ‘as I am’? Mary, West Long Branch, NJ

Answer: I’m never going to tell anyone that pursuing a dream is a terrible idea. I just think you should be practical and clear-eyed about the trade-offs. Why do you want to get a PhD in this area? If it’s to get a job, then you already know that the academic job market is tough, especially for scholars in subjects such as English, anthropology, and sociology. What kind of jobs might be available to you after spending several years living as a student? What sort of income will you earn once you’ve gotten your PhD? How do those prospects compare to what you’re doing now? Of course, these questions are irrelevant if this is the pursuit of a dream and you have the savings to go for it without worrying about employment at the end of the process.

I would revisit the rental question once you have figured out the work-and-dream equation. I take seriously your apprehension about becoming a landlord, especially if you move far away. Still, there are ways to minimize your concerns about renting. You would need to hire a management rental company to handle routine maintenance and rent collection for you if you move far away. That contract will reduce how much you’ll earn off your rental income, but it will also relieve you of some stress. You could rent to a friend or someone you’ve known for a long-time. I would also get a copy of Nolo’s Every Landlord’s Legal Guide. Nolo.com is a terrific resource.

I know I’m raising more questions to think about than answers, but what about selling the home to fund the next chapter in your life, assuming you decide on pursuing a PhD? It’s probably best to continue owning your debt-free home. But it’s another option to consider. You would have a nice financial cushion to buffer the years of transition. You wouldn’t have to be a landlord, either. Of course, the price of this approach is letting go of a beautiful home with plenty of memories and no debt. You might also have to wait awhile to go this route since the housing market is still tough.

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