This is a sore topic for me. I bought a home in 2013 at 25. I did it because the rent for the attached duplex was 1600, and my mortgage was 900 at the time. Now my mortgage is 1300 and their rent is 900. I was constantly told I could sell or rent it, within five years. So I bit.
Five months after I bought my home a medical condition came out of remission. I lost my ability to drive, and the area was extremely difficult to live without a car. Jobs were limited without a car, etc. So I wanted to move, so since 2013 I've had it on the market for rent or sale.
"Nonsense! If you want to travel and be free, then rent your house out and have someone else pay the mortgage while you’re away."
Renting has got to be the worst experience in my life. I had my house listed for two years, I was priced losing 300 a month with property managers. I moved 5 hours away, by transit (20 minute drive) and was living off couches. So I could be within 20 minutes of work. I owned a home and lived out of a backpack for 1.5 years. It was a massive time sink showing the property. I blew so many weekends traveling, for one or two showings.
A majority of the people said I was priced too high. I was just 100 above market in the area, and taking a loss each month. I finally placed tenants last December, and evicted them in April.
The tenants paid a single month of rent. Destroyed all my appliances, windows, floors, etc. In short they rendered me completely bankrupt, flushed my saving and shackled me with debt. I did reference checks, budget review, background checks etc. But you can't account for the fact that they were laid off several weeks after moving in, and people react badly to that situation. They fell into drugs, using and dealing. I can't even espouse the stress I had to deal with receiving calls from state police about my property while I was at work. I practically had panic attacks when my property managers called me. Wondering what was broken now, and seeing money just fall away from my savings. December of last year I had 35k in the bank, now im 21k in debt. Having worked for six years that should be more. But there were a number of costs, each time I tried to sell the home, sprucing and cleaning it up.
It doesn't end the other day I finally got the water company to send me a bill, as they hadn't sent one since Decemember of 2015. The tenants had racked up a 800$ water bill in one quarter, all on me now.
This is just one case. I have a friend who owns and rents 8 properties in the same city. All of his tenants have been there for pretty much their life. Pay on time no damages, some light maintenance etc. All in it's a positive income with just the effort of mowing lawn, and occasional repairs. He bought his homes at foreclosure and repaired them. He was in his 50s and had been a contractor a majority of his life.
This brings up another ancedote. In my state you have to be licensed to do pretty much any house repairs. Electrical for example, last I reviewed has a clause where if you're not a licensed electrician doing repairs you're liable for your entire mortgage up front. The biggest benefit of owning a home, is buying cheaper and repairing. But with all the regulation that's pretty much out the door. How feasible is it now, to buy land and build your own house unless it's also your career? You can redo the electrical, and leave the walls open. Then pay to have it inspected by an electrician. Then a contractor to approve the drywall patch. But that's close to just having the electrician do it all.
I have another friend who bought a home 15 miles from me. Unable to rent it, unable to sell as it needs to be modernized, but not worth the money. He just accepts 1800 a month is gone into the ether. He changed jobs and now lives about 1.5 hours from the house, so it's empty. If it's marked as vacant there are some tax benefits, but insurance increases.
The only way I can even see rent as viable, is buying a home rather under market. Then repairing it and renting it out. Usually you''re looking at a 10% cut each month for property managers. This usually entails buying a slight fixer up. Which back to regulations adds up quickly, because you'll be lucky if you can do much of anything in your own home. You can try a FHA 203 renovation loan, but those usually use pricier contractors, and take a while.
I'm not saying buying is all out a bad idea. Just approach it very very very carefully. Rent is not a guarentee, selling is not a guarentee. You're rolling the dice. I am now looking at bankruptcy or foreclosure. I have pretty much burned working in Philadelphia, turning down so many job offers. Because the salary didn't allow for an apartment + mortgage. I know this is long winded, and sorry for the diatribe. But I want to provide insight from a negative vantage point, and what is the worst case scenario.
