Newest solution to, "I can't afford my mortgage!"

Glad to hear people are thinking outside the box. I am sure this is helping your area. I see it in my area also. Also, it is very common in my area for builders and condo developers to do the same thing, just waiting for the market to turn around.

Yes I have seen that here. I have a client who is getting ready to this very thing!

Unfortunately, most homeowners I know doing this don't have the discipline to pay the bank. They just increase their lifestyle support and use the money as discretionary income. 

Also, I dont know about Dade / Broward but here in Lee, Collier and Charlotte counties, the rents are no where near what they are paying in debt service to the banks.....just doesnt cover it.

Actually we've seen more scams where the homeowners are not paying the mortgage and the tenants are being visited by the sheriff with some not so nice news.  I would work if the owners have the fortitude to keep making the payments.

If it works I say go for it.  The fraud I see happenning is people renting out the home and not paying the mortgage.

Obviously, there are pitfalls. But I think it's wonderful to read about people taking action to solve their own problems rather than waiting for someone to do it for them.

20+ years ago that's exactly what people did... funny how the previous generation seems to have forgotten so much... or is it that we are all being deluged with one-track mindset from politically-bent news stations who only report what they want the public to hear...???

Walking away from your home and sticking the bank with the loan used to be unthinkable if you have a job and can put a renter in the home to cover at least some of the debt service.  So many people today are just walking away because they are upside down on equity.  Unemployment and emergency situations should be the only allowable circumstances to justify letting people walk away from a financial obligation. 

Countless inquiries come across my emails asking for advice... most people just don't seem to be able to figure out on their own that as long as they are still employed, they can move out and rent their own little apartment somewhere... put a renter in the old place... take some amount of negative cashflow which, when added to the cost of their lower apartment rent ends up putting them in a better cashflow situation than the were at the start.  But once they start missing payments or getting close to foreclosure, their credit scores tank... and, guess what?  You CAN'T RENT DECENT PROPERTIES FOR YOURSELF because property managers don't want to rent to people with terrible credit, especially when the bad credit is directly related to housing. 

Tell your employed clients to "get smart" and stand up for themselves.  Move out before their own credit gets bad and "suck it up" by getting someone to cover some part of the mortgage payment... the carry-over tax benefits can also be very helpful in the coming years.

This is a great solution. I did this when I purchased my first home. I was a Bachelor at the time and I didn't mind living in a cheaper rental property down town where the partying was happening. I rented it and had someone else pay the mortgage so I could have the best of both worlds. It turned out to be one of the smartest investment decisions I ever made. As long as the rental income can cover the mortgage and taxes etc you a good to go.

Oh yes, but we have mortgages so high that there is no way to make it up in rent. Too bad

Karen,

I'm in a secondary beach market.  Most of our rental season is only the summer.  Winter rentals are very resonable, but not enough to cover a mortgage.

Glad to hear it's working in your market place.

It is definitely a great option.  Owning a rental property is as scary as so many people believe it is.

Haven't seen this much here in the La Quinta, INland empire area.  We too have the snowbirds who pay high rents, but only for short stays or at best seasonal..would not support the owners moving out and keeping the homes.  I bet it does go on here on some of the golf ocurses, but as you answered Aaron..it could become very hairy and certainly not something I, as their realtor, would want to handle!  Too much liability and risk for too little money..

Around here, generally, rents are lower that mortgage payments. That is not a viable option unless you can make up the difference.