Excellent post David! There are many ways to succeed if you're willing to roll up your sleeves and do the work! Like Mary, if I have any clients in your area, I'll definitely be sending them your way!
David how valuable information, if you were an attorney you could charge for this. More people need to hear about this.
Greetings from Florida, David.
I have seen some markets in my State plummet 75%. And, I have family in Scottsdale AZ; they can echo what you are saying.
What a great Blog with good information - thanks for Posting It!
Wow, Thank you all for your kind words. First blog ever, anywhere, guess I'll do it again!
To Mary and Melba, I would be honored to work with your clients. I am able to offer financing nationwide not just in Arizona, so give me a call or email and let's talk.
With the new housing sales numbers and unemployment numbers that came out this morning not looking to sparky, I think it is important to realize that it is not all doom and gloom out there.
If you know the rules (guidelines) you can create niche markets regardless of the economic times you find yourself in.
Thank's again.
Conversion of primary residences to rental property has many different considerations. There are the obvious tax considerations having to do with capital gains (hmmm, underwater home, probably no gain). There are IRS rules regarding renting homes over the long term, the most interesting one could be a 1031 Exchange in the future were there to be appreciation in the homes value where the owner when selling could face substantial tax consequences resulting from the sale.
But the elephant in the room that no one seems to address when leaving one home for the next and deciding to rent it rather than sell it, is determining if the market rental rates will cover the mortgage and maintenance costs and HOA/Condo fees depending on the community the home is in. It might very well make sense to lease out a property for $1800/month, but, if your combined payment is $2000/mth, then you've got a monthly loss of $200. While that might not seem significant at first, it will add up.
The reason that owners consider renting the "old homestead" is that they cannot sell the home for what its worth, or worse they are struggling to cover the current mortgage payment. Defaults on rental properties could be a significant and toxic side effect.
Stephen, Thank you for adding your insights. You bring up some valid and thought provoking points.
One in particular is the mind set. I find that most of those inquiring are looking to cut their losses by buying a new residence at a deep discount and counting on its appreciation to make up for the loss on their current residence.
They figure as the original homes value increases coming closer to break even, the new house is appreciating over purchase price so on balance over time they may cut their overall loss, break even or maybe have a little combined positive equity.
Time will tell.
This is a great post! I don't live there but if I have clients moving, I'm sending them your way.