My friend had to go through a short sale on his home, and now he is renting. He told me he is going to rent for the rest of his life since he got “burned” so badly on his last home purchase. I have told him that I don’t think that he should think that way and that he should save to buy another home. He said he would rather buy boats and cars and just rent forever, like his grandfather did. What should I say to him?
You are a good friend to be concerned. You are right that he does not have a good long-range business plan. According to the chief economist of the National Association of Realtors, “on average (nationwide) homeowners have a median worth of nearly $200,000, while renters are essentially living paycheck to paycheck, with only $4,000 in net worth on average.” This is not just a problem for your friend — there are 6 million more renters today than a decade ago, according to the National Association of Realtors. Many are by choice, but many lost their homes to foreclosure and short sale. The good news is that they can check with a Realtor who will put them in touch with a caring mortgage broker who can help them get on a plan to be able to buy again in a relatively short amount of time. By planning and taking care of credit requirements, they can often shorten the time.
As far as the “desire” to buy again goes, there are many factors he needs to consider that he is not looking at right now:
• As a renter you are subject to the rental market and your landlord’s pricing. The rental market is getting tighter so rents will go up, and he has no control over that.
• Boats and cars seldom go up in value. Usually, they cost money to maintain and continue to depreciate;
• He may actually be fortunate that he is no longer paying on a home that was so overpriced for the market. He might be able to buy a comparable home for much less money next time around.
It is understandable that he is upset right now, but hopefully he will see the situation with clearer eyes in the not too distant future. Also, you could try to get him to talk to a knowledgeable Realtor to discuss his options. If not, maybe you should talk to the Realtor and see about buying some rental property that he can occupy, and then you will have a lifetime tenant to pay your mortgage!
Joan Harned is an owner/broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team. Harned has been selling real estate in Eagle County for 27 years, is a past chairman of the Vail Board of Realtors, past Realtor of the Year, past director on the Great Outdoors Colorado Board and a member of the Luxury and Land Institutes. Contact Harned with your real estate questions at email@example.com, 970-337-7777 or www.skiandteehomes.com.