Long-term "rentership" versus owning quandry

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recovering_homeowner_IHB

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Hi all,

I just wanted to solicit IHB regular's views on being a long-term renter, if any of you are long-term renters.



As some of you know may, I bought my house in Tustin Ranch at the peak in 2005, read the writing on the walls and unloaded my albatross for a loss in August, 2007, and currently renting a cheap house in Garden Grove in order to build up my down payment funds starting from 0...in-laws live in GG, so had to rent near there for babysitting convenience.



After renting again, I have come to appreciate better the pros and cons of renting versus owning, so I don't need any lectures on that. My quandary is...i now like the convenience of renting (not having to do yard work, not having to fix sh*t when something's wrong, not having any urge to upgrade stuff around the house since it's not really my house, and overall not having to spend unnecessary money on housing related stuff except rent and utilities), but my wife and I had always assumed that we'd eventually buy a house in Irvine or Tustin Ranch in either 2009 or 2010 when prices are more reasonable.



Is it possible or even feasible to consider long-term rentership in a house, since the house could be sold, foreclosed, etc. during the time that you're there, then you have to start moving to a new place? I asked my wife if she was agreeable to just renting a nice house in Irvine for 5 or more years, and she says she's fine with that if the house is nice, the price is reasonable, the landlord was responsive and they're not going to get foreclosed on or kick us out after a year.



In this case, if I don't need to buy a house, I could put the bulk of my down payment fund and my monthly savings eventually into something with more growth potential than my WAMU savings account earning 3.3%, and stop caring what the prices of houses are and start looking at what rental prices are going for.



Any thoughts on this matter from more experienced pros?
 
If you have a wife that is OK with renting, you are very lucky. When the cost of ownership exceeds the cost of renting, there is a tangible financial advantage to renting. The problem with renting long-term is a feeling of groundlessness. IMO, the concerns about being evicted are overblown. If you rent from a stable, responsive landlord, you can usually rent for as long as you like, and rental increases are rare or measured.
 
There are many, many landlords that are looking for tenants like you right now. If you have good credit and no pets (or a big security deposit) you will have no shortage of choices.



Make sure you are up front with your landlord about your intention to stay long-term, and that they have the same intention. GL
 
As long as the landlord didn't buy the place in the last 5 years, you should be fine signing a 5 year lease.



I know my father-in-law would love tenants like you. He bought the rental house years ago and its 100% paid off. He likes good long term renters. I would recommend his place but it is currently occupied.
 
Thanks everyone for their replies.



I'll have to give long-term rentals some serious consideration then. Life would be much simplified with only rent and utilities in the housing budget, and the rest of my money could go towards long-term savings (via equities market versus CDs), baby college funds, vacations and other non-housing related quality of life considerations.



We make a very decent income, so we can afford to rent a much better house than we can buy at this time!



Thanks!
 
I used to think that renting is a waste of money. But compared to owning, it's not a bad option for the past few years. However, whenever cost of owning comes close to cost of renting, I would buy. Much better in the long run.
 
I do want to buy in the future but renting has it perks. The last three apartments I have lived were under two years old. All were upgraded with granite, paint etc. If a lightbulb is broken I call to get it replaced. My friend was over tonight and she said how she missed renting. She just spent $3K on a new slidding door.
 
<blockquote>I do want to buy in the future but renting has it perks. The last three apartments I have lived were under two years old. All were upgraded with granite, paint etc. If a lightbulb is broken I call to get it replaced. My friend was over tonight and she said how she missed renting. She just spent $3K on a new slidding door. </blockquote>


We love renting as well. The sprinklers were broken last week - landlord fixed them in a few days (no cost to us). Ants invading the house - landlord called someone to resolve the issue (no cost to us). Gardener just finished maintaining the backyard - landlord got the bill (no cost to us).



We spend all weekend enjoying life instead of maintaining a house. One doesn't realize how much a house can suck energy and money from you until you own one.
 
CalGal,

yep, I owned a small place in Chandler AZ 3800sqft, 61000sqft lot. It was lots of work keeping the weeds out.



good luck

-bix
 
[quote author="biscuitninja" date=1209773443]CalGal,

yep, I owned a small place in Chandler AZ <strong>3800sqft</strong>, 61000sqft lot. It was lots of work keeping the weeds out.



good luck

-bix</blockquote>


Wow, 3800sqft is small?
 
One thing you might consider for a long term lease is recording the lease (like you would record a mortgage). Then anyone who takes a security interest in the house after the date of the recorded lease is junior to you...in other words, if they foreclose on their mortgage, they take it subject to your leased interest in the property and they can't kick you out (for the most part).



Doesn't help much tho against a prior recorded mortgage, unless they are willing to subordinate their interest to you...but I doubt that would ever happen.



But in the situation where the landlord's mortgage is all paid off, it may give you a nice sense of security. No one will be able to kick you out unless you agree to subordinate your interest to them.



For example, if the landlord wanted to take a new loan against the house, the new lender <u>will</u> require the landlord to obtain a subordination agreement from you before they will lend the landlord money. If you negotiated the original lease properly, you can agree to subordinate on the condition that a "non-disturbance" clause be included such that even if you subordinate and they foreclose, you still get to stay in the property so long as you live up to the terms of the lease agreement (e.g. pay rent on time, don't trash the house, etc.)
 
As long as you are at the Recorder's office, file a Request for Copy of Notice of Default regarding the house you are in. http://www.ventura.courts.ca.gov/vn193.pdf



This will give you early notice if your landlord is running into trouble. Then, you can talk to them or try to straighten out the problem. Or, you'll have at least 90 days to move. The bank might even pay you to move peacefully and by a particular date.
 
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