Why would someone ever rent a cashflow positive property instead of buy it himself ?? (countertop, prices)
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In general, it can make more sense to rent if you are not particularly sure you will remain in the area/job for the long term, if you don't happen to have the capital to put down a decent down payment, for whatever reason, or just for operational flexibility.
It is true that in many cases owning is a better financial deal over say a 5 or more year period. My current abode is a very good deal for me as a paid-off house that I initially bought for $63K, in 1991, and now worth at least $250K, maybe more. Although the property has improvements done mostly by me, sweat equity if you will.
Many times a partial bit of knowledge or information can make people think they are far more knowledgeable and versed in something then they really are.
Unfortunately we only know what we know and our brains can’t deal with all the things we don’t know
With 3% down loans widely available, the downpayment on a $40k house is one month's rent, so that's a moot point.
So, is the main reason for renters choosing to pay 50% more per month because no one will lend to them?
Those loans are widely available but not everyone qualifies.
1. Got a job? Do you meet the minimum income requirements?
2. How is that credit score? Low score? Judgments?
3. Got that 3% downpayment plus closing costs?
4. Got money for the insurance?
5. Got money for the remodel, immediate needs of the property?
Answer NO to any one of those questions and you suddenly can't get financed! Other issue is the banks don't like small loans, with low interest. Some banks won't finance any loan below 50K. Think about it, what is their profit over the next 30 years at 3%? Its peanuts.
Also factor in some people don't want to own anything, they would rather have $5000 rims on their $1000 car, the latest sneakers on their feet and new Iphone in hand! It is priorities........home ownership isn't one of them.
With 3% down loans widely available, the downpayment on a $40k house is one month's rent, so that's a moot point.
So, is the main reason for renters choosing to pay 50% more per month because no one will lend to them?
You still have to qualify for the loan! You need credit to do that. There's more than just a downpayment needed in your bank account for several months as well.
This house is a fixer upper. Many people will not tackle a project like this. They don't have the knowledge, skill, patience, or time. Living in a construction zone is a nightmare.
If he self insured, I would imagine that he did buy it himself. Banks are not likely to allow people to self insure.
This thread just doesn’t make sense to me. Do you mean actually live in the place himself?
Yup. You can't self insure when you have a mortgage. The mortgage requires home owner's insurance with certain minimums written into your loan docs. They normally pay the insurance out of the escrow as well. They require a document from the insurance company annually stating that the policy is active and what it covers. This was included in the 3 mortgages I've had.
I'm thinking that many coming out of this rent moratorium, after 'choosing' to NOT pay their rent ... are going to find themselves in a real pickle, as landlords who have been stiffed, file claims and complaints:
These renters are going to be hard pressed to find another landlord willing to trust or carry them.
They are also likely going to find few banks willing to finance new mortgage loans.
You still have to qualify for the loan! You need credit to do that. There's more than just a downpayment needed in your bank account for several months as well.
This house is a fixer upper. Many people will not tackle a project like this. They don't have the knowledge, skill, patience, or time. Living in a construction zone is a nightmare.
Depends what repairs are needed. Many empty homes get vandalized. Copper pipe and copper wiring get stolen. The roof could leak, etc. These sort of fixers are for professionals who can get the work done not for someone who barely has the money to get a loan and not have the funds to do the repairs.
I rehabbed properties in a town in Texas where if the power was off for 6 months or more the city inspected the property with the code enforcement people before the power could be turned on. And they checked everything. In one case I had to have a new breaker box installed outside where the fire department could shut it off as well as numerous upgrades to the electrical. You have to know what you are getting into and have the extra money to fix whatever is needed.
I did go to a garage sale in SE Kansas in a town there two years ago. The guy who had the garage sale said he bought the home a year before for a little over $2,000. It was an older two story home with 5 bedrooms. It was ugly and still needed work. The neighbor next door owned the home. He claimed he gave him $200 down and paid him $200 a month until it was paid off and had a clean deed to it. He rented 3 of the rooms out for cash flow. SE Kansas is one of the cheapest real estate markets. But this was very cheap even for that area. The man was a pastor and was trying to help people get their lives together which might have made the low priced deal possible. And the man had read numerous books on buying houses by contract for deed, etc, he had bought a couple other similar properties in the past. So with time and motivation and picking the right area really good deals are possible for little out of pocket.
I'm thinking that many coming out of this rent moratorium, after 'choosing' to NOT pay their rent ... are going to find themselves in a real pickle, as landlords who have been stiffed, file claims and complaints:
These renters are going to be hard pressed to find another landlord willing to trust or carry them.
They are also likely going to find few banks willing to finance new mortgage loans.
Unless this administration imposes bans on unpaid rent or evictions during this period from being reported or used against you.
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