What Happens to the Renters?

Posted by: Chris Palmeri on October 15, 2007

In researching our recent cover story on builder price cuts I met Sara Evans, a bartender at the ESPN Zone on the Las Vegas Strip who was packing up a Budget rental truck at her home in the Vegas subdivision of Huntington. Evans said she got wind that her landlord and his partner were going to lose the three bedroom home she was renting and so Evans and her two roommates were moving out.

forrentEvans said she felt sorry for the landlord, a healthcare aid who went into partnership with a Realtor to buy the property. She said she didn’t think the $1,400 a month in rent the three were paying was covering the mortgage. “I think this was his first real estate investment,” she said glumly.

A sign in the home next door advertised that it was for rent. Evans said it had been empty for the entire year that she’d lived in the community. The owner was asking $1,350 a month for a three bedroom house, likely less than his mortgage.

Evans says she’s found a new home not far away owed by a woman who’d bought it for her daughter who was having trouble making the payments. Evans and her little brother are renting the much bigger house for $1,500 a month. She and her new landlord have discussed renting with an option to buy.

Elswhere in the Huntington subdivision I spoke to broker John Izzo who’d just gotted a listing on a house that was about to be foreclosed on. A previous Realtor almost had a sale but it proved too difficult to coordinate the sale between the owner and the lenders that held the first and second mortgages. The owner lived in California and had been renting the house out. He hadn’t paid the mortgage in months. “He’s still collecting the rent checks though,” Izzo said.

 

About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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