Posted on 04/10/2008 9:18:12 AM PDT by bstein80
Investor vs Speculator.
Your situation is a perfect example.
We have speculators, which includes the banks, who ASSUMED prices would never go down. The lenders thought the worst case was a flat price.
IOW no down only up.
Now that they have overhauled the Bankrupcy code to preclude lien stripping for undercollateralized portions of ortgages we have debtors who find it better to walk away from their properties rather than renegotiate at the fair market value.
It USED to be lenders who were undercollateralized were pulling fast ones to forclose on the property in a hot market.
That's only true if the rent is high enough to cover the property taxes. If competing rentals are priced below the level necessary to cover the taxes, the owner is paying the taxes and taking a loss. My wife rented our 2nd house to a local police officer who was having problems in his household. She priced it at $350/month. The taxes alone were $360/month. The monthly payment to the bank is $750. It's a 2068 sq ft house with 3 br, 1 BA on 1/4 acre. According to the IRS, the median rent for that size house in Bannock county is $825. The IRS provides that data as a "heads up" to owners who aren't charging "fair market" rents and showing a net loss on the rental property to avoid income taxes. The IRS permits a deduction for property tax, mortgage interest, maintenance and depreciation against the gross rental receipts. If the IRS gets hard nosed about requiring rents to be high enough to cover the costs, be prepared for an impact on rents...in the up direction.
What kind of sick freak would do that to a 73 Impala!
There oughta be a law!
Depends on the market you're in. Some areas you can rent a really nice place much cheaper then you can buy similar. People talk about equity and ownership, but in some areas the smart decision is actually to rent and wait for either housing prices to go down or rental prices to catch up.
actually not always.
In commercial leases the property tax and renter tax is seperatly stated and chaged and if the renter defaults it is converted to rent due and owing.
In residential leases the rent and property taxes are included as seperate clauses in leases where the landlord is astute enough to put it in.
this is important as property taxes may go up and the landlord needs to pass that cost through to the renter.
It is not a question of “covering the cost in the rent” it is a question of drafting the lease to ensure the taxes are paid by the renter.
Yeah, I hope he didn’t strain himself lifting that brush.
I rent because the home I own, and that is currently paid for, is in the country and I have to live in town for health reasons. I’m hardly poor. I choose to rent b/c I’m a senior citizen and I’m not into lawn mowing and other “house” projects.
By the same token, I fail to see why I have to lose money on interest income because the Fed wants to cut rates so that more unqualified people can buy a house they can’t afford and why I should care about bailing out these fools.
Let ‘em sink or swim on their own. Maybe they’ll learn something in the process.
If you can stand it, google “Donk” and gaze in wonder at all the other poor, mostly forgotten cars that have been subjected to this kind of abuse.
That's YOUR CHOICE to rent your property at a loss. However, most people rent it at a rate that includes all costs. That was my point. Renters DO PAY property taxes, indirectly.
Most people rent at the price the market will bear—whether half or 2x the owner’s actual month-by-month costs.
Renters of the world, unite!
I used to move a lot while making good money. I rented. Owning a house would have been cheaper, but then I'd have been buying and selling houses every couple years, which I didn't want to do. I wanted to be able to simply pack up and move to the new job.
One problem here is that there a lot of poor people who couldn't afford a house but got one anyway who are getting this largesse. We are still paying for their bad decisions.
Go ahead, be my guest. I have a back yard and y'all can have one square millimeter each for $10 and be a property owner eligible to vote. One square meter at the back of the lot could net me $10 million.
For voting criteria I prefer Starship Troopers, perform service for your country, then you can vote or hold office.
Depends on the individuals.
You get a renter who
(1) has a quiet lifestyle
(2) has never been late with the rent by one day
(3) takes care of the property like it was his own -
you do not necessarily want that renter to walk when you tell him you are passing through a tax increase.
I'm that kind of tenant. I have rented a home three times in my life, each time for 4+ years. I have only been hit with a rent increase once, when a new owner bought the property and decided he needed to recover his total purchase price in the next five years. I moved out in three weeks.
Last I heard he had been through four tenants in the next 30 months. Always did want to ask him how that was working out.....
We sold our house in 2005 and will buy again when prices get back to historical norms.
Anyone who bought a house they couldn't afford, or spent "home equity" on bling bling, can go pound sand as far as I'm concerned.
>>I find it hard to believe that there are people that knowingly purchase a house that they can’t pay for.
I find it hard to believe that there are people that vote Dem year in and year out, but then you have the reality. And that is that there are a lot of idiots on the loose out there.
It was a good concept. It is wrong for people who aren't paying the bills to be able to vote to steal money from those who are paying. The bottom 50% of taxpayers only pay 4% of the total income tax revenue, yet they have the ability to vote for politicians who are happy to write legislation to lay exorbitant taxes on the top 5% and hand that money to the bottom 50% in the form of government largess. It's wealth redistribution where the low income majority can vote to steal from the high income minority using the full force of the government. That is just plain immoral.
Lots of renters around here. Half of them are hanging on by a thread and some not even hanging on. Most haven’t decided to stay in Alaska or leave. The rest are students and have better cars than average and will be gone in a couple years. Maybe one in twenty is building their own house and renting only until they get a roof on their own place.
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