Charleston's accidental landlords
Some people just hate to lose money and I don't blame them for that. After all, who would want to lose money. But, in an effort to avoid losing money, some people may be doing exactly that by renting their homes because they can't sell them for what they paid or even worse, what their home might have been worth at the top of the market even if they paid less. I call them accidental landlords.
Let's look at a similar psychology at play in the stock market and then relate it to Charleston real estate.
Back in the old days of the tech bubble, let's say you bought Cisco (or any other high flying stock) near it's market top and in the case of Cisco, let's use $80 per share. Now Cisco dropped all the way down to single digits at the trough and while it has recovered into the $20's and is now even a member of the prestigious Dow 30 Industrials, it's been "dead money" for the past decade for the person who wouldn't sell it until they broke even and in fact, if someone was unfortunate enough to have bought at the absolute high, they are still down by around 66% to 75%.
Now what could someone have done rather than buy and hold. Well, perhaps they could have taken their loss and invested in something that might have done better (like Google for example).
Back to Charleston real estate.
I know for a fact that there are homeowners who are waiting to sell when prices get back to where they were and are renting in the interim. Say they are renting at something close to their monthly obligation including their mortgage payment and possibly their taxes and insurance as well. Maybe they are even bringing in more income than their monthly expenses.
But that's assuming that the home is fully rented at all times while they wait it out and that the tenant is maintaining it in pristine condition and that when the time comes to sell their home, that they won't have to update, replace the carpeting, make necessary repairs, etc., and all those things cost money.
And what are the odds against that.
And how long will it be until prices get back to what they paid or what their home was may have potentially been worth.
My question, do you really want to be an accidental landlord or do you think it might be better to deploy your money in more strategic ways.
Under no circumstances should this be taken as investment advice. Please speak to your trusted financial advisors before making any financial decision.