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If someone wants to rent something, he should rent it. Your lease signature guarantees his $2100/month, so pay it monthly.
Never rent "up front". They tried this baloney on me at the gym. "pay some dough up front and get a few months free this year!" I said "OK, I'll take the free months starting now!" I got a blank stare from the dimwit gym rat guy.
You write a check for $25,000 to buy something, never to rent anything. OK, to rent Blue Heron Farm in Chilmark for one week and you are Michelle Obama you may write that check. Otherwise, forget it.
Houses that are underwater are all over the place, they are flooding the market and more are coming. Guys who can write a CHECK for $25 large are not so common. Keep your "powder dry" is what I would do.
I'd take that $25,000 and put in in a Vanguard bond fund, e.g. high yield tax free, you can get 3% or so on it.
Others will probably comment with the various things that could "go wrong" with this weird arrangement.
B.A.C.A.H.
2012 Jan 29, 2:58am
Dad,
1.8k per month, 2.2k per month, 25K check to buy something, 3%, etc.: A couple of decades from now, these are gonna be trivial details compared to how things turned out for your kids, with respect to the schools they went to, the peers and friends they made there.
Making a wrong choice for your kids because of 1.8k here vs 2.2k there, etc., is the "what could go wrong".
Join the PTA's at your kids' schools. Spend as much time on the campuses as you are able, volunteering, observing classes, etc., to assess the situations. It will give you a benchmark to compare to.(*) To do so may very well require burning your vacation days from your job a day here, a day there, instead of building up a vacation hours balance for a Cool and Hip Jet Set trip. Oh well. You can do Jet-Stting in a different stage of your life.
(*)disclosure: I do not subscribe to The Gaokao Culture as we are talking about the United States of America, not the United States of Asia; and, I do not genuflect to the API. Do not Outsource your parenting to Realtors® and others by superficially assessing your kids' schools based on the API. API is a statistic, your kid(s) results may vary.
tdeloco
2012 Jan 29, 4:18am
If I have the lease signed, wouldn't I be untouchable for at least the first year?
That's assuming the bank doesn't take the property. I assume the lease is between you and your landlord. Does it have anything to do with the bank? What happens if the short sale goes through or the bank takes possession within the year? Even though this is not likely, you need to make sure you agree with what the contract says regarding that situation.
Â¥
2012 Jan 29, 4:37am
This looks rather dodgy but read this:
http://www.nolo.com/legal-encyclopedia/renters-foreclosure-what-are-their-30064.html
TMAC54
2012 Jan 29, 7:41am
If you lease the property knowing ownership is in the process of changing, You risk losing possession. Even if you did not know. The recorded owner does not have to honor the subsequent unrecorded agreements.
Your only recourse is sue the guy that may no longer be in possession of your rent money.
HOW MUCH - In/back/risk
You put IN $25K plus the time, money & effort of little details to move.
You get BACK , larger living quarters, etc.
You RISK losing all your initial investment and the larger living quarters and the cost & effort to relocate yet again.
I omitted time cost & effort of fighting eviction.
I wouldn't touch this with your money.
Ok, even though I don't agree with all the viewpoints of the average poster on here, I recognize that there are some very bright folks that read and comment on these boards. So here is a potential situation, I'd like to know if I'm missing something. This situation is becoming more and more commonplace.
I currently rent a small 3/3 home in a good neighborhood (good school district) for a couple hundred bucks under market value, about 2k. I would like a much bigger home as I have 4 kids, and I would like my brother to live with me. It would be cost effective for both of us, and he can help with my kids as I am primarily a single parent. A house is "available" about 3 miles away. Still a good neighborhood, but different school district. The market value on rent of this house, a large 5/4, is about 3k. The owner was considering a short sale as the house is upside down maybe 200k. I don't know all the details, but as an alternative they want to go into litigation against the bank. The house is empty. One option being thrown around is me paying 25k up front (not a lease option) and signing a one year lease. This works out to about 2,100/mo. WAY below market, and barely more than I'm paying now, and the owners would have a chunk of money towards their litigation. If I have the lease signed, wouldn't I be untouchable for at least the first year? If the litigation persists, after the first year, how long can I renew the lease for after that?
I'm seeing this happen quite a bit around this area (not the big chunk of money up front, but people renting their upside down house for under market because they are not paying the mortgage anymore) . I'm not interested in buying at this time, I figure 2014 or 2015.
Just looking for feedback on any kind of negative recourse. Thanks.
#housing