Just a quick comment here, then I have to hop off to a Family Easter celebration…
I have always believed that profits aren’t profits until you book em. Until you sell and have the cash in the bank its just more BS. Equity can evaporate faster than you can imagine and most people calculate their equity incorrectly. They just subtract debt from market value. Well, what about selling costs and taxes (that can steal up to 50% of your equity, depending on the quality of the gain — long or short term – unless you do a 1031 exchange.) Real net worth is cash (liquid and/or cash flow). The rest is just BS until you convert it to cash or cash flow.
I once heard an intersting concept that totally ignored the proverbial “net worth” calculation. It was called being “infinitely wealthy”, which means you have enough cash flow to live the way you want, without having to work and that continues indefinitely. For some its $ 50,000 per year, for others it might be $ 1,000,000 per year (or more, which is hard for me to imagine). You should determine what is it for you and then create it. The process of doing that is a good one and in most cases you will create more than you need, then you can share your wealth with others who might be less fortunate than you.
In answer to your other question, if you enter into a one year lease, yes any new buyer would have to honor that lease, unless the seller or the buyer bought you out of that lease, which is a pretty rare occurance in residential real estate.
If the house went to foreclosure, the lenders rights would trump the lease because they are senior to the lease. If your landlord gives you a year lease, he probably intends to keep the property as leased properties are hard to sell (unless it a great lease for the buyer and its a rental). If he doesn’t, he wants to sell, and that’s always the risk you run being a renter. Always secure a lease if you intend to stay for a while and if negotiated correctly, you can actually lock in some discounts on the rent…
