montly mortgage payment ? (Colorado Springs, Fort Collins, Winter Park: real estate, renters, insurance)

[milfeld]

I'm confused about something. Here in Fort Worth, our monthly mortgage payment is $1164 on a $124,000 home, 6.5% interest. That includes about $3800 in property tax and insurance annually. We have been looking at rental prices for single family homes in Colorado Springs, and rents on nice homes are around $1100-$1300, but the homes are WAY more expensive than they are here. How are folks making any money renting at that price? If we rented our home out, we would have to have $1200 per month just to cover the mortgage!

Are mortgage payments cheaper out there for some reason? Taxes lower? Are people getting 40 year notes?

[Lindenin]

Rental prices are driven by rental markets, not by the profit that the landlord needs. So, a guy who has owned a house for 15 years, or was able to put 50% down on the property, is probably getting positive cash flows. The person who bought last year with 5% down is probably having to kick in the difference each month between your rent check and his mortgage payment. Sure, they could instead charge $1,600 to cover all costs, but then you wouldn't ever rent from them (with better deals down the street).

This tells me that maybe it is a weak rental market. Maybe it is the type of city where most people buy if they can at all afford to.

[AMB8301]

Originally Posted by Lindenin

Rental prices are driven by rental markets, not by the profit that the landlord needs. So, a guy who has owned a house for 15 years, or was able to put 50% down on the property, is probably getting positive cash flows. The person who bought last year with 5% down is probably having to kick in the difference each month between your rent check and his mortgage payment. Sure, they could instead charge $1,600 to cover all costs, but then you wouldn't ever rent from them (with better deals down the street).

This tells me that maybe it is a weak rental market. Maybe it is the type of city where most people buy if they can at all afford to.

Yep, we have two rentals in CO, neither one rents out for what the mortgage is so we have to cover the rest.

[Mierkey]

There are so many college students in Fort Collins that people can charge that much. Plus you are not paying up keep on the house and that is all figured in the rent.

[Mierkey]

Originally Posted by AMB8301

Yep, we have two rentals in CO, neither one rents out for what the mortgage is so we have to cover the rest.

You need to rethink your rentals

[Luke9686]

Originally Posted by Mierkey

You need to rethink your rentals

Exactly. There are two types of landlords, and don't take this the wrong way. There are investors that know what they are doing, and never pay retail for a home. Therefore, they don't have negative cash flow on a property.

Then there are people who think it sounds good to own rentals. These people generally buy at market value, and have to "kick in" each month to cover payments. This is a fools game. What happens when someone sues you, trashes the house, you need to evict someone, etc. The list goes on and on. Mortgage, taxes and insurance aren't even close to the real life expenses on rentals.

Oh and to answer your question, taxes are much cheaper in Colorado.

If you are interested in buying rentals, join your local real estate investing club, and talk to the SUCCESSFULL people there that do it. I guarantee they don't buy at market value. The name of the game is motivated sellers and good deals.

[Fuzz]

What some of the posters here may not realize is that not everyone rents out to make a profit. A lot of people own second homes (usually a townhome/condo) in the Colorado mountain resort-towns. They own the property so that they can have their own place in the mountains. They rent out the place when they're not there simply to offset some of the mortgage costs. Their first priority is to have a place near skiing/hiking/biking -- making a profit is not their goal -- they simply rent to recoup some of the costs.

[milfeld]

Well, whatever the reason, it's good news to us. We'll probably rent until we can find a home we like, at a reasonable cost. We thought about renting out our home in Fort Worth when we move, but the more I read, the more I see that it can be a nightmare. Unfortunately, houses aren't moving here. We'll just have to be patient...I guess.

[randtbrown]

I hear you....we are moving to Colorado next week from Houston. OUr home here has been on the market for 6 months with no offers- and we are priced way low. We made it available for rent and it rented in 3 days. Several renters to choose from. I know it could be a disaster, but my husband got a job offer in Winter Park and couldn't pass it up, we needed to do something!

Now we can't find a rental in Winter Park! Crazy how that works. Good luck!

[Colomonter]

Good points...but, the two biggest factors IMO not being talked about are:

1) There are many tax advantages to owning a home in general and even more advantages when owning a rental property. So, depending on the landlords individual tax situation this can make or break whether a rental covers the mortgage and expenses.

2) Also, the landlord with a mortgage on the property is building equity each and every month and in general over the long term the house will appreciate either slowly or greatly depending on the location and current market. Obviously you do not want to buy a rental property at the top of a current market cycle and then try to sell it relatively soon in a down market as this is indeed an easy way to lose money.

Combine these two factors and one can see how it works financially when at first glance it may look like a losing situation.