As a long time homeowner and after relocating to North County I have chosen to rent for the past two years due to the obvious turmoil in the RE market.
I am looking to rent another home that is a brand new custom home. The owner is the builder who lives in Orange County. The home is presently on the market and has stagnated so he is looking to reduce the bleed. It was originally on the market for $849-$949k and was reduced to $849 with no value range.
I investigated the property and found that the owner just refinanced this past month and has a first of $680k and a 2nd of 85K with same day closing of loans. He is asking $2,500 a month in rent which I consider a value for the quality and size (3,400 sq ft) of the home. When I run the numbers the owner has a monthly payment of about $5,900 a month including taxes. This leaves him with a negative of $4,500 a month after renting.
I am looking at signing a two year lease. BTW, his wife is a RE agent and he is a builder.
My question is considering the financial fragility of many in the RE profession today, what is the worst that can happen if this property becomes a first payment default? I know it would take a minimum of 6 months for foreclosure but what would my rights as a tenant be if the home went into foreclosure?
I think as renters we need to be more on guard than ever and better understand our position and not just take at face value. The builder was quite taken aback that I was questioning his financial position instead of just being a renter and his only concern is my financial position.
I thought it is $3400 difference. Anyway, with such a large discrepancy, they may at some point sell the house. Do they own other properties? Did they buy the property for $760k?
Yes it is $3400- pulled the $4,500 from another doc I was working on- sorry
Yes, he claims to own other property in OC although I have only checked the SD info. He built the property with a partner who intended to move into the property. His partner is now moving out of state so the property was deeded back to the builder. He claimed he only had about $100k into it before refinancing and he refinanced to pull out cash so he can invest in the down market?? I can’t fins any info that supports the 100k only the Aug/07 financing.
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