Buying a home as a (rental) investment?
I see some of my friends buying a home as a (rental) investment? I'm still trying to understand how they could have a positive cash flow at the current prices?
Someone that I know just bought a 30-year, 1450+ sqft home that's not been updated for $500k (in Redmond). That's well over $340/sqft!! The most rent he can expect is $1500-$1600/month.
How did it make sense for him to buy this home as a rental investment? Is he only betting on appreciation OR am I missing something very obvious?
Someone that I know just bought a 30-year, 1450+ sqft home that's not been updated for $500k (in Redmond). That's well over $340/sqft!! The most rent he can expect is $1500-$1600/month.
How did it make sense for him to buy this home as a rental investment? Is he only betting on appreciation OR am I missing something very obvious?
Comments
I have a friend here who purchased a home at peak (late 2006), a 5 bedroom house in Ballard. He planned to rent out 4 of the 5 rooms to help cover the mortgage.
He feels the home will go up in value (speculating) and is just biding his time until this event. Let's hope he can keep the rooms filled until 2020 or so.
Tom Kelly: Investment opportunities come with responsibility
http://display.kitsapsun.com/SS/Page.as ... tid=530093
Also interesting about the article is how Mr. Kelly says,
....Cheap money and incredibly flexible loan programs offered by many lenders sparked overbuilding by lenders, a flip-and-run mindset for speculators and unrealistic expectations for first-time homebuyers blinded by the low payments of a short term loan. While the equity gained by rising home prices can cover many ill-conceived loan mistakes, a flat or sinking market only compounds those lending problems.....
Wow! This observation made by someone in the real estate industry!
http://seattle.craigslist.org/see/apa/317392407.html
The $50,000 question in 2007 is how many can afford to hold onto a $500K rental property that's not making them any money?