A recent ad in our MLS says thie:
Rent Only: 5000 sq ft home on 5 ac. 1000 sq ft master suite. 5 bedrooms and a den. Two year lease preferred. $2395 per month.
THIS IS NOT MY LISTING, but it is a real one, and it got my attention.
Realtors are not going to want to hear this, but this may be a good time to RENT. Before you have a stroke, understand that I am talking about folks in special circumstances, not the average person who is looking for a home where they plan to stay for many years.
Yesterday I was talking with a family who may need to sell their large home because of a change in their circumstances. They own a beach house that they have been trying to sell with no success and are finding the load of owning two homes to be too much for them. They asked me if I thought it would be a good idea to sell their primary home and rent a less expensive place for a while.
First I went apoplectic, but when I calmed down I had to admit that they might have a point. By taking the equity out of their primary home they could pay down the mortgage on the beach house so that the payment would be at a very manageable. Several things work in their favor.
- Even though they will sell the home for less than they paid for it two years ago, prices in our area have dropped less than 20% from their highs.
- They are in a relatively high price range where homes are not selling well, which means that there are very nice rentals available for less than their mortgage payment.
- They will be staying in the area and with careful monitoring of the market they may be able to buy again if they see that prices are trending upward.
Of course they are also taking some risk.
- What if they miss the upturn in the market? Sell low, buy high is a real bite!
- What if circumstances change and they find themselves unable to qualify for a new mortgage when they are ready to purchase.
- There will be fees and costs associated with the sale of this home, and with the purchase of another one later. It could take a long time to recover those costs.
Still, as a stop-loss measure, in their situation it might be the best thing to do.
Would YOU be better off renting, and what is available if you decide to take that path?
It goes back to basics, doesn't it. This might be an option you should consider if:
- you are going to be in the area for less than two or three years
- you don't have the cash available to make a substantial down payment
- you expect to make a career change that will allow you to buy a better home in a few years
At lease in Central Pennsylvania where I operate, the larger the home, the more likely that you can rent for less than the mortgage. Homes that sell for $120,000 may rent for over $1000, while a home that might cost $700,000 is available for under $2400 per month!
Pretty good deal for an executive who expects to be transferred again in 2 years........ not such a good deal for the everyday Joe who just wants a home to call his own.
By the way, do contact me if you want to rent that awsome home above! Just make it snappy; those are not available every day.
