I think now’s the time to own rental property. Recessions = foreclosures and people looking for places to rent. My area still hasn’t recovered from the housing crash back in the early 2000’s, and rents reflect that. A lousy apartment in a not-great neighborhood will set you back more than $1,000/month.
That’s, btw, what I was thinking of when I pointed out that housing costs eat into your budget for buying new cars unless you get a raise to compensate. The cost of living has skyrocketed for those not fortunate enough to own their own house, and wages have not. Less money coming in means less to spend on a car loan, and that hurts car sales.
This is one small example of why policies designed to funnel money upward end up hurting everyone, including those at the top. The CEOs of GM/Ford won’t get as much in their bonuses if profits are down because too many people are too poor to buy their products.
But those people probably don’t have any money! Around here, it is easier to foreclose and boot someone from a house than to evict renters for non-payment…
They’re finding it somewhere. The reason rents are so absurdly high where I live is because a hoard of foreclosure recipients descended on apartments, and then never left. That’s compounded by the fact that it doesn’t cost much more to build “luxury” apartments than it does to build affordable ones, but you can charge a lot more, so no one’s building apartments that normal people can afford.
That is not the model for the market I see. When an area’s economy goes south - people move. Rent and housing costs usually run parallel. When housing costs are up, rent is up. When housing goes down, rent’s usually go down. An area like Boston and southern NH where unemployment is low…housing costs are very high…so is rent. I’ve been buying/selling and renting out property for decades. It’s always worked that way.
That’s true in normal, localized housing collapses but this one was nation-wide. Where were they going to move to that was any better than where they were?
Plus, housing costs never really went down a ton. They declined, but not as much as they probably should have. My house lost maybe 30 grand in value when the crisis hit, so housing prices were still very high - it’s just that a lot of people lost their houses and now they had to rent if for no other reason than that no one would give them a mortgage right after their foreclosure.
I’m no real real estate expert by any stretch but I was living in Bridgeport CT (total dump) all through the real estate bubble. Prices fell by half or more by 2010. 300k house a few years earlier was now 150k or less. I saw that in all the less desirable towns. The desirable towns fell a lot less in price. I was house shopping back then when the bubbles burst.
Even during the great recession housing prices dropped, and so did rental prices. Yes - many people lost their homes…and a good number of them where income property owners. I know because I bought 2 from the banks (at a very very very good price) after the housing collapse. Rental prices nation wide DROPPED.
I have worked for many who own properties and they basically tell you there are two main ways to make a rental property work.
Leave them as dumps that only meet minimal standards, if that. The lower end renters tear them up anyway so why make them decent, only to have the carpet, copper pipe, and fixtures removed.
Make them nice/luxury type apartments and charge more for them. The people who want these are typically less destructive and pay on time so it is worth putting more money into these and keeping them nice to keep attracting nice renters. This is the route I would take as I have no patience for dealing with entitled nuts.
I guess you can also do middle of the road stuff but it is a lot harder. You have to really do a good background and credit check though.
Property management sounds like a pain in the butt if you ask me and that is why I don’t want to have anything to do with it. An HVAC guy was telling me how he was repairing a unit on top of the roof and found his ladder missing when he needed to come down. It was some low-end subsidized place. Someone on drugs stole it, cut it up to fit it into a car trunk, and sold the aluminum as scrap metal for drug money.
There certainly seems to be a problem of haves vs have nots but because there is such a broad DMZ between the extremes where a great many people are able to keep their heads above water remaining certain that they will soon find themselves ringing the bells of success that a majority of US feel we are in the middle class. Problem is those in that DMZ are just one medical catastrophe or layoff away from being among the poor if not for support from extended family members, etc. And the real estate crash was the result of tens of thousands in the DMZ thinking that the boom of 15 years ago was their ticket to the good life. Currently there seems to be a misguided conviction that a sheep skin will ensure a meteoric rise to middle class comfort and living the good life on credit in the mean time is trending. How bad will that dream burst be? And what will the Fed do with all the worthless titles to $100,000 pickups and what will the former owners drive to their part time jobs flipping burgers holding their degrees over their heads for cover when it rains.
Minneapolis wants it both ways though. They want the dumps well maintained and licensed but want the rents cheap and affordable. Then so many units have to be set aside for section 8 renters. Can’t understand why there is a housing shortage. All can be fixed though if the city just takes over all of the rental properties. Then of course there are those who bought a house but never thought to insure it before the tornados came through. Two years later there were still blue tarps on the roofs when I drove through. Must have paid cash though because mortgages require insurance.
I didn’t rent to low income, nor did I have luxury apartments. All were middle class income. Mostly young families. I always did a background check (including employment). I found the best tenants were white color workers in their mid 20’s to early 30’s. They’d rent for 5+ years then buy their own home. Never a problem getting rent, and they never had any problems with them trashing the place. Some of the property I owned was near Saint Anselm’s college in Goffstown. I REFUSED to rent to college students. I even turned down rent paid fully in advance by the father that included a $2,000 security deposit. Still wasn’t worth it. The previous owners of the duplex use to rent to college students. It was only 3 years old when the bank foreclosed on them. I then had to spend over $50,000 fixing the place up. And this was back in 1980.
Two years can easily be because insurance companies were being as slow as they could. My house got heavy damage in that big hail storm a couple years back. Roof and siding destroyed. We argued with insurance for almost a year, and had to threaten legal action before they would agree to pay out, and by that time the contractors were slammed and it took another several months before ours could work us in. They finally did the siding last winter.
Once again, private insurance under laissez-faire government oversight does its best to screw the public.
There are still people who lost their home during Hurricane Sandy that are fighting their own insurance company. 7 years later and people are still fighting claims. Insurance companies always do this on large disasters.
We have lots of college students here and military as well. It seems like most of the military ones are great but there are a few REALLY bad apples from the nearby Army base as well.
The low end people are notorious for trashing the place, making/selling drugs, stripping stuff, not paying rent, and figuring out a way to work the system so they don’t get evicted.
I think a lot of it depends on the demographic of the area.
Bringing it back to, cars…One indicator to me was the vehicle they drove and the condition it was in. Told me what kind of lifestyle they lived and how well they kept their vehicles also translated to where they lived.
I was talking with one of my local bank presidents about loans on luxury products such as lake homes. He said these were always risky because people are more apt to walk away from something like this rather than you home in town if things go badly.
I would assume the same applies to cars. If you get in a bad place, you let the expensive car go and buy some used beater for cash. I hear this happens in Saudi Arabia and such. Abandoned supercars are actually a problem there. Is making a loan on a car like this more risky than a Corolla?
Someone was also telling me that rental companies have trackers and disablers on high end cars. They don’t want them exported so shut them down if they go outside of an authorized area. I guess this isn’t a concern on the basic Versa.