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Renting out one's condo while in school?

Discussion in 'Finance and Investment' started by bornguitar, Jul 24, 2006.

  1. bornguitar

    bornguitar Member
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    Alright, fortunately for me, I was able to buy a condo prior to starting med school and while the payments are sometimes a hassle, I am managing just fine. Only problem is that I want to move to a more attractive area for people my age, which is also closer to friends and the city's main hospital. I would have to wait a few months before I could sell my condo and I have a feeling that if I held on to it all throughout med school I could stand to make quite a profit 3 years from now.
    That got me to thinking whether or not I could rent out my condo while I subsequently started renting in the area I would rather live in. I have no idea where to begin, what potential problems one has to deal with, and difficulty in finding people to keep it occupied. I could probably charge the same amount per month for rent that my mortgage+taxes+hoa fees would come out to, also enabling me to probably live cheaper each month by paying rent with a roommate. Best of all, I would get to hold onto it and let it continue to gain value in an area which is still growing.
    Any input would be greatly appreciated.
     
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  3. Jocomama

    Jocomama Make 'em bleed!
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    I just went through this - moving back to Chi-town; had condo rented and though about keeping it rented, and I find a cheaper 1 BR. Nope.

    OK - so I move back in, but then I own house in Mich that I cannot unload (market is bad).
    But because market is bad for selling - everybody is renting.

    Unless you are in a different city - or the area you are in sucks real bad - hold tight.
    I've been a landlord of a couple places since 2000. It ain't no picnic.

    Look in paper - see what you can get in the low range (i.e. local paper, Crains). Better wait to rent your place before committing to another place.

    Oh, and do you rent on your own, or give up 1 month so realtor/rental company does it for you? Don't forget credit check, condo rules and regs for renting, references, blah, blah.


     
  4. bornguitar

    bornguitar Member
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    Thanks for your input. I wasn't planning on signing a lease of my own until I already had someone sign a lease under me. I guess I will talk to my real estate guy on advice because luckily he is already renting out a place in the same complex.
    One more question, what were some the headaches brought on by being a landlord? Having to worry about renters trashing the place? Difficulty in keeping it occupied? etc. Thanks
     
  5. LADoc00

    LADoc00 There is no substitute for victory.
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    The market is project to go down for the next 5-10 years (aka soft landing as opposed to crash). Personally I would price to sell if you want to get rid of it because you could see a large equity loss in the near term.
     
  6. Jocomama

    Jocomama Make 'em bleed!
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    Had S Beach condo - tenant became nitpicky and kept complaining about screen door not sliding. Well, hello - you are on the Ocean - just have to use WD40. Had screen company check it - no problem - I said, just do something and charge me. Tenant still not satisfied.
    Rather than pay last month, said to keep security deposit - huge no-no.
    Chicago - carpet trashed - need to review exact terms with attorney about what I can hold back on deposit.
    Chicago - A/C coil went out - water leaked. $2000 to replace boiler w A/C coil and $200 to repair water damage.
    Overall - I came out ahead. But you have to be available and prepared.

    Renting is a great thing - Especially if you are in the same city.
    But -when lease is out - gotta find another or you are holding an empty mortgage.



     
  7. mshheaddoc

    mshheaddoc Howdy
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    They've been saying this for the past 4 years. Certain areas will go down, others won't. This will be strongly area dependant. Overall the US market is not expected to go down to the levels it was previously unless there is a huge crash of all the markets for some odd reason.
     
  8. LADoc00

    LADoc00 There is no substitute for victory.
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    You mean something like a giant recession brought on by federal mismanagement due to something like maybe a billion dollar/day war? Crazy, but it COULD happen. :laugh:
     
  9. mshheaddoc

    mshheaddoc Howdy
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    :laugh: Something like that but with a little more "oomph" ;)
     
  10. etf

    etf
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    i'm not a real estate expert, but i don't see how the market could suddenly "crash", considering that houses are generally illiquid investments (if you call them investments). I mean, most people buy houses because they need some place to live. Also, there isn't anything akin to short-selling in the housing market, although apparently there's a new derivative that tracks housing prices in top markets (pretty neat) that you could theoretically use to hedge against a decline. Although, I live in San Francisco, and 1 earthquake could cause this market (and everything in the city) to crash...
     
  11. Jocomama

    Jocomama Make 'em bleed!
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    It can happen, it has happened, and nobody here is saying what will actually happen.
    But - you must know about the 1634 crash of the Dutch Tulip Market, and oh, how similar it was to those that owned tech stocks in late 1999.

    http://www.ricedelman.com/planning/investing/tulipbulbs.asp

    This is a great article.

    What is illiquid??





     
  12. etf

    etf
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    lol, yeah i know about the tulips, as well as the south sea bubble that took isaac newtons cash and prompted him to say "i can calculate the movement of the stars, but not the madness of men."

    oh, and liquidity simply refers to how easy it is for something to be converted to cash. stocks (particularly those in the s&p 500) are considered highly liquid, since you can trade them pretty much instantaneously and get the money quick. houses on the other hand take time to sell, so it could be months before you see the proceeds of a home sale.
     
  13. LADoc00

    LADoc00 There is no substitute for victory.
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    Yeah, but also remember in many places in California, up to 40% of the housing market are second homes...if those get dumped in large numbers especially when the baby boomers start dying in droves, the prices will drop faster than anyone has ever imagined.

    I got my eye on a place in Pebble Beach, 3000SF, on the water, going to jump in when it hits sub400K...and it will..oh it will.
     
  14. etf

    etf
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    i don't think the san francisco market will crash, simply because supply is limited. normally when land gets scarce, people tend to build up. but here, we don't build upwards because of the earthquake risk. so sfo real estate will always be at a premium.
     
  15. Jocomama

    Jocomama Make 'em bleed!
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    This is difficult reading if you don't have some business background. However, it is from the guru and worth sharing:

    http://www.pimco.com/LeftNav/Late+Breaking+Commentary/IO/2006/IO+August+2006.htm





     
  16. etf

    etf
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  17. mark-ER

    mark-ER Senior Member
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    Where is your place in Michigan that you have such problems in selling? Are you at least re-couping your purchase price? I know it's though over there with the car industry contracting, but still...

    And wow, 3 properties... not too shabby.


     
  18. ncalcate

    ncalcate Senior Member
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    Before I post this let me say that the level of intelligence and financial know-how displayed on this particular Finance forum is miles ahead of what I read on some of the other forums (pre-allo, etc.) when it comes to real estate and investing.

    A lot of people are simply are too young (or in other cases too ignorant) to remember that there was a major real estate bubble that crashed beginning in 1989. At that point, prior to the crash, everyone was putting forth the same arguments: homes aren't liquid, you can't sell real estate like you can stocks, population growth and immigration will sustain these prices, etc...

    Fact is, many markets suffered 20% declines and took years to recover. In Los Angeles, homes lost 20% of their value from 1989 to 1996. And it took a total of 9 years on average for prices to recover to their 1989 levels (http://www.sandiegorealestatereport.com/calamity.htm).

    I can speak from experience: I bought a condo in 1999 right outside of Boston for $130,000. That was only $2000 more than what the sellers paid when they purchased it in 1988. For 11 years, the sellers only captured a gain of $2000 (ignoring broker fees, depreciation, etc.). And for much of that time period, had they sold, they would have lost money.

    I am not saying with certainty that there will be a crash of this magnitude in the near future. But many people, including many naive pre-med 22 year olds on this board, seem to ignore the risks. They hear stories of people doubling their investment in 4 years in San Diego and become convinced that it will happen again. It reminds me of the people who claimed that Cisco at nearly $100 a share in 2000 was a great deal.

    For those looking to purchase real estate now hoping to make a quick buck or only hold onto a property for 5 years, I suggest you evaluate the risks. Especially if you're looking in a market that has experienced significant appreciation in the last 6 years or so.

    And etf - I am not picking on you - your post was just the most logical one to respond to.

     
  19. Jocomama

    Jocomama Make 'em bleed!
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    Even without - this is happening across the country.
    I am in a great Ann Arbor neighborhood.
    I will re-coup, but losing on remodelling.
    Read Bill Gross link from last post - it may explain what is going on.
    Thanks
     
  20. Jocomama

    Jocomama Make 'em bleed!
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