Is it financially logical? buy a house in '07, move in '11, rent it out. (apartments, lease)
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Someone bought a house in 2007 and had, say, a 30 year mortgage.
And the house was worth about $200,000.
They moved out of state, in 2011.
In the new location, they do not own the house, they are apparently renting.
Does this make financial sense?
Have a 30 year mortgage on a house in one state, decide to move across the country, and instead of selling the old house, rent it out.
Then, when you get to your new location, you are a renter.
So, it is very possible that the mortgage on the house is $500 a month, just as an example, and they are renting it out for $800, etc. a month?
Is this common, to buy a house and 3 years later turn it into a rental?
The amount of rent you can get, makes this feasible?
It seems just as logical to sell the house you are leaving behind, and use the money to get something in the new location. Unless the value of the first house is too low, due to real estate prices, to be able to sell it for profit.
I've never rented a house myself or rented one to someone else.
So, I do not have a good feel for the numbers in dollars, that make the above scenario quite common:
buy a house in 2007,
move out in 2011,
and rent that house,
and go across country,
and rent one for yourself.
perhaps they could not sell it or did not want to sell it at current low prices, and without the money from it would not be able to afford to buy in a new location
perhaps they could not sell it or did not want to sell it at current low prices, and without the money from it would not be able to afford to buy in a new location
That may be the way it worked out.
A letter got returned showing the new address in Ca. but they still paid the property taxes on the old house in Ga.
They do not own the house in Ca.
What can people get from renting a house?
$500-$1000 a month or more?
Where I live most decent single-family houses rent for $1500 to $2500, but they're still not wise investments. Too much damage can be done to a home by renters to ever make much profit at it, and too many homeowners desperately rent out their homes as a last resort when moving that rental rates are still too low to make them good investments.
Chances are the scenario you described is due to the homeowners being upside-down on their property. They can't afford to sell it for the new, lower market price, so they rent it for enough to make the payments and, hopefully, pay for taxes and insurance. It's not likely that they're getting enough to cover depreciation and maintenance, and it's highly unlikely that they're getting a reasonable profit on their investment.
Some people also want to hold onto their home when they move in case they decide to move back.
I'd guess that mortgage payments (principle, interest, taxes and insurance) on a $200K house bought in 2007 are well over $1,000. That doesn't mean they aren't renting it for $800. Desperate people do desperate things.
There are a lot of if's, and's and but's, but yes it can make sense if rents are high enough, or resell values are depressed but you expect them to improve in a few years, or you expect to move back, and rents are low where you are moving to or home sales prices are rediculous there. Its all a matter of doing the numbers and your personal situation. If you can't sell it for what you owe, renting it at least gives you some income against your debt. If you are loosing money on a rental you can still deduct some of that loss on your personal income taxes. It all depends...
So, I do not have a good feel for the numbers in dollars, that make the above scenario quite common:
buy a house in 2007,
move out in 2011,
and rent that house,
and go across country,
and rent one for yourself.
Thanks.
We just bought a house halfway between his school and my work because we want to settle down and we're tired of moving once or twice a year, paying ridiculous rent prices (equal to or more than what we're paying for our mortgage), living in apartments with difficult parking and playing roulette for neighbors, etc. We don't want the stress of worrying how much they'll take out of the deposit this time even though the apartment is spotless, or if our landlord wants to sell his house halfway thru our lease and brings in parades of potential buyers to invade the home that we paid for.
That being said, my husband and I might be in this sort of a situation soon (within the next few years). He'll graduate with his pharmacy doctorate then we'll have to see where he gets a job, since he's not sure what route he wants to take at the moment. His getting a job will double or triple our overall income, so if we end up somewhere else, it'll still probably be worth it. If we sold in a year or two years, the price of the home will probably be flat or a little lower or higher. Nothing extreme. Selling it that soon would probably be eating a huge loss (after paying a real estate agent and any repairs the buyers want and such). Alternatively, if you can at least rent it out for what your monthly mortgage is and get enough of a security deposit to address any repairs you'll need to make due to the renters, then you at least are paying down your mortgage at not too much extra cost to you.
Now moving to the new city, if we wanted to buy a house, we'd have to show enough income to afford the new house and the old house together. I think you need to show rental income for a year or more for it to be counted towards your income, so if we purchased right away we'd have to show income to cover both mortgages. Probably most people have a hard time doing this. So, if we rent for at least the first year, then the rental income will count towards our income and we'll have an easier time buying. But then again, maybe he might not like his new job and might want to try something else, so renting would be okay until we find somewhere we'd like to settle for good.
Things are kind of unpredictable as far as jobs and the economy goes right now. If you can rent out your house for equal to or more than your current mortgage and have a good paying job while you rent another place that's acceptable to you, there's nothing wrong with that!
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