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Extracted from the Accidental landlord thread where this subject was off-topic.
Quote:
Originally Posted by jms493
So closed minded....there are so many other factors.
Nope. Just explaining what you are doing if you are renting out a property - waiting for prices to recover.
(1) You are now speculating in real estate and no longer a homeowner for that property.
(2) You are using leverage for your investment speculation.
Quote:
Originally Posted by jms493
If they sell the house for a $150 loss how would they be able to afford that?
Irrelevant.
Anyone $150k under should look at a short sale. If they don't qualify due to assets or income, they should suck it up and bail.
Quote:
Originally Posted by jms493
They were forced to move.
So was I. I clearly said that I was in the same position and that I was sympathetic.
Quote:
Originally Posted by jms493
You can explain your theories better without coming off like such an ass.
No I can't. I AM an ass. Ask anyone.
I'm an especially big ass when someone is in denial about what they are doing or what their property is really worth.
There. I'm an ass I'm an ass I'm an ass. I own the insult now.
Quote:
Originally Posted by jms493
When the market goes up they may be fine.
Hence, the speculation part. They are speculating that the market will go up and they will be able to sell for what they want to sell.
What if the market doesn't go up for ten years where they live?
What if the worry about vandalism is causing them stress ( which is unhealthy )?
What if the worry over losing money month-after-month is causing them stress ( did I mention that's unhealthy )?
As I mentioned in the other thread; I sold for $319k in Jan 2008. Had I rented, I would have lost hundreds of
dollars every month and the value of the property would have dropped while I was owing it to less than $250k.
What if that house doesn't "recover" till 2020? Yeah. Renting was really smart.
Quote:
Originally Posted by jms493
They one thing that sucks bad is being so far from the rental prop.
I have one but it is 5 mins away from my primary residence.
No. There are THREE things that suck:
(1) renting a place out-of-state
(2) renting a place at a loss where you lose a little more every single month
(3) not knowing if or when you will ever get a chance to sell the property for what you think you deserve for it
People so convinced that the real estate market is going to turn, can speculate in that conviction
by buying stocks that tend to do well in a rising real estate market. There is none of the messy
realities of dealing with tenants, worrying about vandalism, maintenance, and signing a bunch of papers.
Being a landlord is a business. It is a business that someone should do with money and property
that they don't have emotional attachments to. It should be learned deliberately and slowly.
I have 6 reasons:
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(1) Because it was off topic in the other thread.
(2) We were asked not to continue with the rent/denial/speculator/leverage thing.
It was a reasonable request since the OP wanted to know about HARP.
(3) I would also like to know other's opinions on this issue, so I started a
thread that specifically wants to know if people think renting is stupid or not.
(4) I might be way out in left field here. I want to know.
(5) Someone might change my mind.
(6) I have not seen a thread that specifically addresses what a bad/good move it is.
Thank you for the post, actually. I can't agree more.
We are in the similar situation, had to move quickly and now renting our house out, below market rent and for about half the mortgage. It's a pain, and I'm willing to take a loss to rid myself of this pain ASAP. Luckily, we are not talking about being 150K underwater - our mortgage is less than that.
The house is on the market for almost a month and we had one showing. We will lower the price pretty soon and will keep cutting it until we get buyers in the door. I'm simply not doing this landlord thing for the next year or two or three. Cut your losses!
Thank you for the post, actually. I can't agree more.
We are in the similar situation, had to move quickly and now renting our house out, below market rent and for about half the mortgage. It's a pain, and I'm willing to take a loss to rid myself of this pain ASAP. Luckily, we are not talking about being 150K underwater - our mortgage is less than that.
The house is on the market for almost a month and we had one showing. We will lower the price pretty soon and will keep cutting it until we get buyers in the door. I'm simply not doing this landlord thing for the next year or two or three. Cut your losses!
I disagree totally, at one poiint in the 1980s I was stuck with two houses and unemployed. We clawed and fought tooth and nail to hang on, suddenly infltion hit and we had two houses worth 4-5 times what they had been and a job paying three times as much. My experience is hang on.
I disagree totally, at one poiint in the 1980s I was stuck with two houses and unemployed. We clawed and fought tooth and nail to hang on, suddenly infltion hit and we had two houses worth 4-5 times what they had been and a job paying three times as much. My experience is hang on.
Problem with Americans is that they want the quick fix now. And government enables them with these gimmick mortgage and forgivness act laws.
But on the flip side. Americans are mad. They are mad at banks. They are mad are business/financial policies that government let slide. Like Lehman Brothers being over leveraged 40-50 to one making huge beats. Same thing with AIG collecting all the fees to reinsure mortgage securities with fake money they couldn't cover cause they never accounted that they may have to one day pay for those bad loans.
Renting at a loss is not a great option. But as the poster said. You keep at it eventually you will recover. But that goes back to my point that Americans mood these days is for the quick fix. Dump the house and move on.
Thank you for the post, actually. I can't agree more.
We are in the similar situation, had to move quickly and now renting our house out, below market rent and for about half the mortgage. It's a pain, and I'm willing to take a loss to rid myself of this pain ASAP. Luckily, we are not talking about being 150K underwater - our mortgage is less than that.
The house is on the market for almost a month and we had one showing. We will lower the price pretty soon and will keep cutting it until we get buyers in the door. I'm simply not doing this landlord thing for the next year or two or three. Cut your losses!
90% of people can't cut their losses. Heck. I've seen short sells where homeowners are less than 20-30k underwater. Americans still have very little savings. And that's the problem.
I cut my losses. 137k loss. First home. Never got to make profit from selling during boom. So I was not some move up buyer taking equity from one home during the boom yeas and buying another home at peak and than seeing the property go down.
I brought during the peak. But I have income and savings to get myself out of the house by cutting my losses. Like I said 90% of people cannot do what I did.
My experience with clients who suddenly become landlords is that they have a 50/50 shot at finding a tenant that will actually pay and not damage the house. I've heard of extensive remodeling geared towards a sale totally ruined by medical students; you never know who/what is coming into your house while you are away.
I brought during the peak. But I have income and savings to get myself out of the house by cutting my losses. Like I said 90% of people cannot do what I did.
Of course, everybody's situation is different. For us, yes, I think we can handle the loss, we have the income. I'd rather sell for loss, and sleep well, concentrate on OTHER things in life, not being a landlord. And I will be healthier and more sane, and then I can probably excel at my job that insures my income! At this point our combined anual income is more than what we owe on the mortgage. So we will lose 10-20K on a house. 30k with realtor's fees. We saved about 2K a month this past year, not counting 401k. So a little over a year of our usual savings rate, and we will pretty much recover from the loss. But most importantly - move on.
I don't want to be concerned about my house that is 1000 miles away, risking 130K I owe for it, every day, because yes, you can screen your potential tenants all you can, and you can rent to people you know, but in the end, you still don't know what's going on there, when you are 1000 miles away.
That is exactly what the OP is talking about. I don't want to be in a landlord business. I'm in a business of software engineering (so far as I keep myslef sane and keep performing at my job) and that is how I earn my living. Not by specualting on real estate.
You may say that it is a quick fix - yes, probably. But it's all about what is worth what. My peace of mind is worth 30K to me.
I enjoyed that house and lived there for 8 years. So I bought it for more than it is worth now. We didn't do any silliness with interest only mortgage or the like, so we have some equity in it. If my loss will eat all my equity and I have to bring a check for realtor fees to closing - so be it. I enjoyed the house, paid for that enjoyment, now it's time to move on. I never believed that "house always appreciates". No, it's supply and demand, just like anything else.
Now, for people who are more than 100K underwater, all I can say is "my sympathy". I wouldn't be able to absorb 100K loss. I wouldn't have the savings. So I understand those that rent out. But in my case - nope. I'm selling.
... suddenly infltion hit and we had two houses worth 4-5 times what they had been ...
Given enough time, that will happen again.
However, doing that, you were no longer a homeowner, you were a real estate speculator. It worked out for you.
Given enough time, everyone with a $XXXk - mortgage will own a $X,XXX,XXX house.
Inflation is coming because it is the only way that governments around the world will be able to pay off their debts.
The thing is; you can make money off of inflation other ways than speculating in real estate that generates less stress.
I go for the lower stress method every time.
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