A friend of mine considered selling their house. Not because they wanted to, but because they had to. As a school teacher trying to live the American dream, he and his wife purchased their home in a picture perfect neighborhood, complete with kids playing ball in the street, basketball hoops at every third house or so, and neighbors that baked apple pie and welcomed them to their neighborhood when they first moved in.
Well, unfortunately, I think we all know where this story is going to end. We hear it everyday on the news, read it on the internet, and see it happening right before our eyes. So the decision to sell their perfect home was simply a matter of time. After sitting down with a real estate agent, however, and discussing the neighborhood comps, market conditions, and current state of the lending crisis, the end result for a quick sale while getting out with some money out of the initial investment seemed bleak.
How many more times are we going to hear stories like this? But before we write off another family in crisis story, let me tell you how the story really ends. Yes, like many in this market, my friend owned a house that he owed more than what the house was worth. Consequently, due to the adjustable that was now adjusting…up, he was faced with payments he could no longer afford.
Look, I’ve been through markets both good and bad…but I’m no rain maker. I can’t change the market and make people buy any more than any other agent out there. I knew the agent they met with and as a favor, I reviewed the information that was presented to them to arrive at a suggested listing price. Unfortunately, there wasn’t much I would have or could have done differently to get my friends a higher price any faster. But what I could do is suggest a compromise based on my experience from markets past.
Historically, when the housing market is down, the rental market, and I’m only talking residential, makes a pretty good return. I recently did an internet search looking for stats on the current state of the residential rental market across US markets, and I have to tell you…it isn’t all that bad! With most markets posting positive gains over the last couple of years, I gave my teacher friend a call. Since selling the home at a short sale price seemed liked the only option at the time, I suggested utilizing one of the rooms and bringing in a tenant on a month to month basis to help off set his rising monthly payment due to the adjusting loan.
His argument was that he has no experience being a landlord. Did you know that almost 90% of the
How about this…nearly two dozen people called in the first three days, and over half of those people filled out the preliminary rental application. Three days and almost a dozen interviews later, I’m happy to report the room mate, a male graduate student from the nearby university, is set to move in at the end of this month. It may not be the perfect situation, but certainly a good temporary fix to what could have been a much worse situation for my friend and his family.