Hi, Relocate from Rancho to Folsom for school district - is it a better option to buy a 2nd house & rent 1st one or short-sale? Can afford 1?

Asked by Ranchoparent, 95670 Thu Feb 23, 2012

mortgage Bought our home in peak time (Fall 2005) and still current on house payments. Did not research on the school aspect while buying 1st house..;(. Looking for some kind of advice or direction!

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Jay Emerson, Agent, Fair Oaks, CA
Thu Feb 23, 2012
Hi Parent. Sorry you learned too late. A Short Sale could affect your ability to purchase for a couple of years. If you can afford carrying two mortgages, my opinion is that you rent it out as long as your monthly rental income exceeds your monthly mortgage, taxes, and insurance. Call, text, or email me if you want to sit down and discuss it further -- no strings, no charge.
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Lauren Schen…, Agent, Folsom, CA
Thu Feb 23, 2012
I live in Rancho and work in Folsom, so I can see your dilemma! It's a great time to own a rental if you want to. Homes are renting quickly because so many homeowners had to short sale and are now looking for rentals.

There are a lot of things to consider. First, I would recommend you speak with a mortgage lender to discuss whether you could afford the mortgage on both properties. Ask your mortgage lender what the qualifications are to have a rental unit. You may need to have 3 months of rental income from your rental home before you can qualify for another property...so that would require moving twice. A good mortgage lender will educate you on all the facts and figures. While you're speaking to your lender, be sure to ask them if you qualify for any of the upcoming government assistance programs that may qualify you for a refinance - even if you are underwater. If your loan is owned by Freddie or Fannie, this may help you down the line.

Consider whether the rental income on your first home would cover the mortgage payment, insurance, taxes, vacancies, and repairs...or at least cover enough of it to make sense to hold both homes. Then, decide as to whether you want to be a property manager...it's a good source of income but it could be a good source of stress as well. Would you hire a property management company to do it for you? I'd recommend you speak with Homepointe to see what their services are and how much that would cost - they could also let you know what the home would rent for.

Short sales are a whole different story. You'll need a valid hardship to complete a short sale - and a relocation from Rancho to Folsom wouldn't be a valid one because the cities are so close to one another. A valid hardship in the bank's eyes would be a job loss, divorce, medical illness, etc that causes you to be unable to make your mortgage payments. Plus, a short sale would impact your credit score and your ability to buy for the next three years or so. Please consult a real estate attorney such as Steve Beede if you were considering a short sale - he has a one time consultation that is very affordable where you can discuss the impacts to your life. Then, speak with a realtor to discuss the process of a short sale - see if it's something you'd be interested in. It's important you know all the facts.

I'd be happy to help if you're considering buying in Folsom - I know the area well and my one piece of advice is to have patience. The inventory in Folsom is low right now, so it may be a while before you get in a home you want to be in. Start with the mortgage lender to see if it's something you even want to pursue...and then go from there!

If you have any questions or need a realtor to help you through the process, please give me a call - I'd be happy to help! Good luck!

Lauren Schenke
Better Homes Realty
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