Woman evicted after she pays her rent on time

Posted on | March 25, 2009 | No Comments

So it’s a story that has played out over and over again in this economy.  Landlords who bought rental properties as investments and when their ARM loans reset they couldn’t make the payments or the tenants we leaving and leaving the landlord holding the bag.  Now imagine the paying your rent on time every month and you get a knock on the door and it’s the sheriff telling you that you need to go.

All your stuff is out on the street and you have no place to live and the worst part is, you did nothing wrong.  It’s an unfortunate situation to be in for the renter and the rentor.  Let’s focus on the landlord for a second.  The landlord was attempting to build wealth through property ownership.  However, with the ease of credit many of these places were purchased without any down payment.  When this happens it always makes it easy to walk away from it all.  Why not?  You have very little exposure to the loss whereas the bank is in up to its eyeballs.

So as the credit markets tighten up the prospects of your average Joe having enough money to buy a rental property is slim.  I was looking at a place in Phoenix that was sold originally for about $250,000 and is listed at $150,000 now and I’d guess the bank would take $115,000 or less.  It’s a great deal but at the same time, I need to front 20% and that’s $23,000 in cash plus closing costs.  I don’t know about you but prying $23,000 out of my hands is not easy.  However, when the market in Phoenix comes back in 10 years (or more) I’ll have something worth more than double what I paid for it in today’s dollars.

Now your lawn mower isn’t going to appreciate, if anything it’s like that car in your garage, it’s going to be worthless in five years.  But it doesn’t have to be.  Imagine if you could earn back a bit of the money you spent on it every summer.  Say $10 a week for a good 12 weeks.  $120 a summer for a $200 lawnmower isn’t too bad.  So you get five years out of it which is very conservative.  In five years you’ve made $600 on a $200 lawnmower netting you $400 and your yard is looking good all summer.  Now I’m not saying this will happen but it’s a possible scenario if you list your lawnmower on Crowd Rent.  Make money on the things you already own.

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