Stieg Strand

Stieg,

Whatever you do, don't buy another house until you have sold and closed (or at least have adeuquate provisions in the new PA to get you out should the sale fall apart on your present home) on your present one. Take some time and read through some of the posts here and Trulia where people have had the same idea but are now in foreclosure because the renter didn't pay or they couldn't find one or . You are operating under a couple of flawed assumptions:

1. The market will rebound quickly - most people say they will rent their house until the market turns. That doesn't make sense though - the turn will be the bottom and the market will not rebound quickly. Some estimate that values are down 25-40% since the peak. Figuring a 5% appreciation rate (which will likely be high) it will take between 5 and 8 years to get back to break even for some people. That also assumes that we are at or are near the bottom - nobody knows where the bottom is and if prices continue to fall then we can add more years to most people's rental careers. Renting will not be a short term fix.

2. Renters always pay. I can tell you from experience that this is not true. Consider that if you have a decent job (money) and you know how to manage money (credit) and for some reason you don't own a house - you would be buying one right now (some say this is the best time to buy real estate since the great depression). Everyone else is renting. That means that people that will be renting from you won't have income or they don't know how to manage money very well. While this is a gross generalization it will hold true 90% of the time. The pretty significant gamble when you will be counting on that income to pay the mortgage on your present home.

3. Renters leave the house in the same condition as they found it. I can't tell you how many time I have had to pursue a renter's damage deposit for things that they consider "normal wear and tear". Doesn't every house have holes in the wall after living in it for a few months?

There will be plenty who disagree with what I have to say here, but my best advice is to either sell, sell short, or stay put.

Cameron Piper - Mon Jan 5 2009, 14:13