HT – Daytrip, Happy Easter to you and your family! A story about buy-and-hold, which is highly recommended (buy as many houses as you have kids, in case prices get way out of hand).
An excerpt:
Buyers who bought at the bottom of the market in 2009 got a bargain. Then came years of opportunity to refinance into record-low interest rates. That means many owners can rent out their home for more than it costs them each month, even with taxes and other ownership costs figured in.
With the tenant covering the note, they can build equity — especially if home prices continue to rise.
“It’s a market-based decision,” Henson said. “They know they can get really high rents right now. If I’m locked in on a 30-year fixed [mortgage] at 4%, and if home values are going up, it can make a lot of sense.”
It did for Brian Darcy. The 36-year-old and his wife recently moved to North Carolina to be closer to her family. Instead of listing their three-bedroom in Manhattan Beach for sale, they signed with First Light and put it up for rent. Within a week they had a tenant and a lease that paid more than enough to cover the mortgage, Darcy said.
“The confluence of events kind of blew my mind,” he said.
Darcy and his wife bought the house in 2010 and always planned to move to something bigger. With two growing children and regular visits from relatives, it was getting to be that time. But the houses they were eyeing in Manhattan Beach were going up in price just as fast as theirs was.
They had enough savings for a down payment in North Carolina, and he could work from there as easily as in California. So off they went. They’re looking for houses now and finding that their money will go a lot farther in their new home.
The timing, Darcy said, couldn’t have been better. He estimates that his house in Manhattan Beach is worth one-third more than he paid for it four years ago, and he refinanced into lower interest rates. Now rents are rising.
“We bought at a good time,” Darcy said. “That’s what makes the mechanics work.”
Many of the new landlords are affluent and financially savvy, Haberle said. They’re not necessarily in it for the long haul, but they see a chance to profit right now.
“These amateur landlords aren’t people who are doing this for a living,” she said. “They just kind of happened into this opportunity.”
If this trend holds, it could mean even fewer homes for sale in an already tight market.
Read full story here:
IMHO, there is no Bubble Burst coming. The reasons people will sell are: death , divorce and job transfer. Death; with the cost of homes going up the kids may decide to keep mom and dad’s old place and rent it or move in to it themselves. Divorce; If the one paying alimony has to pay a higher mortgage on a new one somewhere else or rent for more than their current mortgage don’t you think that they will stay put and just let the Ex keep it? Job transfer; for every person moving out of state for a job someone is moving here. Buyers if you see something today that hits 80%-90% of the buttons jump on it, because it probably won’t be there tomorrow. Sellers if you need to sell, “get good help.”
Since when is breaking even the goal?
Better move: Sell that MB house (which probably nets about 3% after taxes and expense) and buy a few cheap house in North Carolina — and rent THEM out. Much higher return.
And when you sell someday, it’ll be for a nice gain. Cheap houses in No. Carolina currently sell for less than replacement cost.