Renting from Investor – Piggington's Econo-Almanac

This topic has 13 replies, 9 voices, and was last updated 16 years, 7 months ago by SD Realtor.

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October 1, 2007 at 5:58 PM #10470

backintown
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I am relocating back to SD in a few months with my family from Brazil after living for 9 years over there. Needless to say, the SD market has changed quite a bit in interim. Given the house prices I have seen so far, I have no intention to buy any property for the time being until the market comes down to earth. I sold a beachfront property in beautiful Buzios for close to $1m, but have been astonished to find that for the same amount I can only afford a crappy stucco house in a tiny lot in a depressing cookie-cutter neighborhood.

My problem: I have actually found a pretty nice house to rent in Solana Beach, but the owner is an investor. He had the house for sale for an obscene amount, but decided to rent it out instead “until the market recovers”. Since I have no interest in moving there to stay for just one year and then be forced to move my family again, I have been able to negotiate with him to sign a two year lease for slightly more. I am unsure about his financial situation, but he may be quite levered as he also owns another property (also being rented after he has been unable to sell) and he doesn’t appear to make that much money to service all the debt he probably has (he is an engineer at an IT company and in his late 30’s). I’m concerned he might end-up eventually missing some of his mortgage payments, go into foreclosure or something and I may end-up being forced out of the property before the end of the lease.

What are my rights in a situation like that? Is there a way to protect myself from such a risk? Any advice would be really appreciated.

October 1, 2007 at 6:45 PM #86654

PadreBrian
Participant

Don’t do it. It will foreclose with you in it, and he will just keep your rent.

Good luck

October 1, 2007 at 7:08 PM #86656

VoZangre
Participant

I was browsing these threads….

and this exact topic came up…
unfortunately I cannot recall
which one it was! Sorry!

Not that I am finacially savvy but….Listen to the gut…

What matters most
is how well you
walk through the fire…

October 1, 2007 at 8:41 PM #86668

greensd
Participant

I wouldn’t do it. Besides the risk of foreclosure, he’s probably got no idea what it means to be a landlord. Being a landlord (landlording?) is a business. Done properly, it’s not just “passive income”. He’s probably going to see you as someone to keep the squatters out of the place and cover part of the mortgage until the market turns. He’s not going to see you as someone that he has a responsibility to. I rented from an investor once, but never again. She cut every corner possible on repairs, raised the rent with gusto every chance she got, stuck us with inflated water bills, and then chiseled us out of the cleaning deposit when we finally bailed. From now on, I’m sticking with professional property owners/managers.

October 1, 2007 at 8:49 PM #86672

patientlywaiting
Participant

Ask a Realtor to find out what his carrying costs are. It should be easy enough to find out.

He maybe fine.. Do some investigations before your pass up a good deal.

October 2, 2007 at 12:08 PM #86730

SD Realtor
Participant

My advice is that I would not rent in a home that is going to be for sale or could be for sale imminently. Similar thoughts for a home that will be possibly foreclosing. Unless moving is easy for you (if you are single, no kids, and don’t mind moving) then I would pass. Otherwise go for it but be ready to move…

SD Realtor

October 2, 2007 at 12:22 PM #86732

VoZangre
Participant

Someone say investigate???

I know an excellent PI should anyone need a referral.

( No joke.)

October 2, 2007 at 1:57 PM #86740

(former)FormerSanDiegan
Participant

My problem: I have actually found a pretty nice house to rent in Solana Beach, but the owner is an investor.

I hate to be the first one to break this news to you, BUT no matter whom you rent from, the owner of that property is going to be an investor.

October 2, 2007 at 2:41 PM #86744

blue_sky
Participant

Not true at all, I recently went looking for rentals and most everything I found was not investors renting, it was people who had moved out to a new place (relocs, downsizing empty nest, etc), and they could not move their old house, so they rented it.

Makes for some sweet houses for rent, since they don’t have the rental degradation that tends to accumulate in detached homes that are serially rented.

October 2, 2007 at 3:20 PM #86748

(former)FormerSanDiegan
Participant

Not true at all, I recently went looking for rentals and most everything I found was not investors renting, it was people who had moved out to a new place (relocs, downsizing empty nest, etc), and they could not move their old house, so they rented it.

I was being sarcastic.

Your example is the exception that proves the rule. Those folks are reluctant investors.

October 2, 2007 at 7:02 PM #86776

The OC Scam
Participant

Backintown,

You should go for it! You have nothing to lose in fact I encourage anyone looking for a rental to fine a nice house with a owner that is way over there head in arm payments!! Just check zillow for the proper place and area you like. Then check sale dates between late 2004 and 2006. Then check the tax recorders office to see if their not making the payments the more behind the better!! I recommend atleast 6 months behind!

Sign a lease!! Make it for 10 years whatever their going to let the house go anyway. But only make your payments on a monthly basis. This is KEY!
Here is what to do next you go find the deed down at the local court recorders office and trace the bank that holds the loan(s) then keep an eye on the tax recorders office. As soon as the house goes into default and the guy skips town aka quits answering the phone or line is disconnected. It will be a good year before the bank comes a knocking at your door. Then the asset management company comes and finds you a nice guy from Brazil with a mil tuck away they will negotiate 40 percent off the original sale price in late 2006 before the MLS listing even takes place.

Then you find your self humming the national anthem while strolling down the board walk.

In God we trust!

October 2, 2007 at 11:02 PM #86802

SD Realtor
Participant

There is also this really cool book you can buy that explains how you can never pay taxes either! You can also buy this book called Ask Lesco who helps you figure out other ways how to con the government out of more money…

Soon you can be an undocumented alien and get a loan to go to school in the US!

Yay for social anarchy!!!!

SD Realtor

October 3, 2007 at 1:10 AM #86807

The OC Scam
Participant

SD,

Thats easy just watch that kid in the new Sean Penn movie “Into the wild”. Burn all your IDs then ride a boat down from the colorado river into Mexico. Then come back on a train and ask for help! A fresh start… This maybe a good plan after foreclosure?

October 3, 2007 at 8:41 AM #86820

SD Realtor
Participant

Some people advocate squatting… some people don’t. You and I have already been down this road in a different thread. You are advocating a way to take advantage of an imperfect system that does not provide a good long term solution for the tenant and will result in him moving again should the home foreclose. It surmises that the tenant will somehow be able to live in a home for free for a certain amount of time, then look around, move and do it again.

To you this is perfectly sound way of life. To me it is a squatters lifestyle. You can call it what you want and so will I.

You can put perfume on it but it is still a pig.

SD Realtor
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