Market Conditions in Elgin>Question Details

Maitreyee, Both Buyer and Seller in Northwest Suburb

What is the risk of putting your townhome on rent and buying a single family home now?

Asked by Maitreyee, Northwest Suburb Mon Mar 24, 2008

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7
Unprofessional my butt.

People are not stupid. Speaking the truth and not tap dancing around issues is necessary to get answers.

You blindly give an answer without knowing the background of the person and what their financial situation is. To make a statement to NOT do it because you think your heard something about foreclosures and are trying to convey the thought to someone in an inane manner is useless.

Again. Do the math.
0 votes Thank Flag Link Tue Mar 25, 2008
Maitreyee,
I would never give a consumer bad advice. My opinion was not uneducated, nor was it dopey. To even make a statement like that just shows how unprofessional some realtors are.

The mortgage industry is only ONE reason there are so many foreclosures. Many of these homes that are sitting vacant are rental properties that are not rented. When people were buying these rentals, many of them purchased them with no money down with an adjustable mortgage. Now to cover that rent, with no equity in the home, the rents were high. A lot of the homes were rented, and now the renters are gone. Due to the fact that the mortgages went up because the loan amount on the adjustable rate went up. Good luck to you whatever your decision.
Web Reference: http://www.idamccarthy.com
0 votes Thank Flag Link Tue Mar 25, 2008
Remember, risk = reward.

Where is your townhouse located? Most of the naysayers here must live in depressed areas where people don't pay the rent!

This person below me states that the reason for foreclosures is because people made investments and could not find a renter. Wow, I never heard a more uneducated opinion in my life.

The reason for forclosures is the mortgage industry. NOT people buying investment properties. Forclosures are happening to people whom were told of these great 3 - 5 year arm mortgage and these people bought way too much house. They never refinanced and the mortgage rates went through the roof and they got screwed.

Absolutley nothing to do with a smart investment like you are thinking about doing. Unless you live a place where there is a 50% rental vacancy rate, or a place where people have no jobs and can not pay the rent... DO THE MATH. The math will always be the answer. Finding a tenant.. o.k. go put up a flyer in the following, police stations, fire houses, medical bildings, hosptals, bus depot lunch rooms... places where people that have jobs are and may be looking for a place to rent. there. I told you how to do it.

Yes, a renter may not work, then get another.

It is not really that risky if you use your brain. To just say don't do it and use a dopey statement about foreclosures is ridiculous.
0 votes Thank Flag Link Mon Mar 24, 2008
It's a big risk I would say. Unless you are guaranteed the rent, I would not recommend it. That is one of the reasons we have so many foreclosures now. Because they did just what you are thinking of doing, and look what happened. If you have 100% equity in your townhome, (which means you paid cash), you will not ever be guaranteed a renter would work out.
Web Reference: http://www.idamccarthy.com
0 votes Thank Flag Link Mon Mar 24, 2008
Lets get a response that makes sense.

Risk? If you can get a tenant, then as long as you can over your mortgage and taxes and maintenance with the rent, you are good to go. As with any investmetn property there is risk.

Can you afford to pay for both your new house and the Townhouse if the tenant skips out?
Not that this will happen, but sometimes it does. Crazy things happen. But, in most cases, you are thinking correctly. If you can cover your expenses with the rent and buy another property, go for it.

When the market gets better you may be able to sell your place or use oit for collateral to buy another.

Think it through and do the math.

Good Luck.
0 votes Thank Flag Link Mon Mar 24, 2008
if you paid too much for you townhome then rent will not cover the cost.
do you want to subsidize your tenant?
just because you are paying $2000 / month for your townhome
doesn't mean that a renter would.

first see what it would rent for

anyways


good luck
0 votes Thank Flag Link Mon Mar 24, 2008
You need to screen your applicants. Get a recent credit report on your potential tenant / applicant, call and verify their job. Call their current landlord and ask why they are moving and if they would re-rent to them again. I can also provide you with real estate rental services, if you like. We can list your townhome for rent in the MLS and work with you on the rental application process for tenants. Thank you, Jim Starwalt
0 votes Thank Flag Link Mon Mar 24, 2008
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