I miss the days when I could walk around my neighborhood and know the names of the people who lived in each home. With rental prices skyrocketing, a growing number of homebuyers are snapping up properties so they can rent them out. It’s a trend that is changing the dynamics of many neighborhoods including my Florida community. According to a recent article by The Street, 39 percent of homebuyers surveyed said they planned to rent out the properties. I’m not at all surprised. As soon as a home in my neighborhood comes out of the foreclosure process, it’s only a matter of days before the “for rent” sign goes up and the advertising appears on Zillow.com. From an economic perspective, I understand why so many people want to become landlords. Some experts say once a neighborhood goes “rental,” it can never go back.
Defying the trend
I could turn my home into a rental property and move into a better neighborhood, but I’m not going to become part of the latest real estate fad. About 10 years ago, everyday investors were buying homes to flip for a profit. It became impossible for someone like me to find an affordable home to raise my family, even after I flipped my townhome for a profit. It seems to me homeowner landlords are taking advantage of people who are forced to rent because of bad luck during the housing bust. I’d feel bad about charging a jacked up rent. And, I’d feel bad about turning a neighborhood of owner-occupied homes into a community of rental homes.
Being tempted by the numbers
Some people can’t resist the temptation to make a profit whether it’s flipping homes for a profit or becoming a homeowner landlord. I’ve noticed the people who have fixed up homes to sell them invest a lot more time and money into the process compared to the ones who just want to rent out the properties. If I put my home up for rent, I could charge $1,500 a month. I’d likely pay $100 a month to the property manager. I’d put another $100 aside for repairs and maintenance. With a mortgage of $900 a month, I’d make $400 a month. Once my home is paid off, I’d only have to pay taxes and insurance as well as the property management fees and maintenance costs. At that point, I’d net about $1,100 a month or more than I’d make in Social Security. Of course, I’d also have to pay for another place to live.
Trading one problem for another
It seems to me there are always problems associated with home ownership. When I was a child, my parents were stuck in the same home because of double-digit interest rates. In my 30s, I bought an overpriced home during the housing bubble. A recent article by the Wall Street Journal addressed the question of whether real estate is still a good buy. Experts looking at price/rent ratio say homebuyers might not make a quick profit, but owning still beats renting in most areas.
Ten years ago inventory was tight because of the home flippers. Now inventory is tight as people become landlords. I don’t think greed is ever good for the economy or the local real estate market no matter what form it takes. Maybe it’s as simple as the fact that people paying $1,500 a month for rent can’t afford to eat out, shop for clothes or even make their rent payment. With interest rates still low, it’s a shame more people can’t buy a house to turn into their forever homes. Even if a homeowner doesn’t live in their home forever, just owning one gives them many more options over the long run.
More from this contributor:
What We Gave up to Buy Our Dream Home
I’m Happy in our Smaller Home
Why I Should Buy Real Estate Like my Grandparents