Recession leaves many in permanent cutback mode USA Today
The native of Guyana and former Marine carried balances on his credit cards, went out to dinner at least five times a week, and didn't pay attention to the price of gas.
Today, Hariprashad, owner of Ena's Driving School in Queens, N.Y., pays off his credit cards at the end of the month. He's making extra payments on the mortgage for the house he shares with his parents and hopes to pay it off in about 10 years. He shops around for the cheapest gas he can find and pays with cash to get a discount.
Hariprashad, 34, says the recession forced him to change his ways. Business slowed because customers didn't have as much money to spend on driving lessons. Faced with the threat of bankruptcy, he cut back on discretionary spending and used the money to pay off his credit cards. "Now, I have a clean slate," he says.
VIDEO: How to get an accurate credit score COLUMN: More homeowners shorten mortgage terms COLUMN: HowAre You Ready to Be a Landlord?
Becoming a Landlord is a challenge, are you ready for it?
By JESSICA SILVER-GREENBERG
Photo: jscreationzs
The pitch is compelling: Buy a vacant house or apartment building and rent it out to some of the throngs of Americans who have lost their homes to foreclosure. With interest rates near record lows and property values still slumping, getting into the landlord business is cheaper than it has been in years.
Investors turned off by paltry bond yields and the mercurial stock market are intrigued. Kimberly Foss, president of Empyrion Wealth Management in Roseville, Calif., says she has seen a surge of clients looking to purchase distressed homes and apartment buildings. Her clients have an average net worth of about $4 million, she says.
“Many of my clients are looking to use part of their portfolios to scoop up properties,” she says. “They see it as an alternative retirement plan.”
But aspiring property owners need to watch out for a slew of traps. Among them: prolonged vacancies, surprise costs, deadbeat tenants, difficulty refinancing and overestimating the rental potential.
It is easy to overlook those risks when the market conditions appear so ripe. Home prices have fallen to 2002 levels nationwide, according to the latest data from the S&P/Case-Shiller index, and financing remains cheap. For the week ending Nov. 10, the average rate on a 30-year fixed-rate loan was 3.99%, not far from the Oct. 6 record low of 3.94%, according to Freddie Mac data going back to 1971.
Rents are improving, too. The average monthly rent for all categories, including apartments and single-family homes, was $846 nationwide in the third quarter, up 2.5% from the same period a year earlier, according to Local Market Monitor, a Cary, N.C., firm that analyzes real-estate trends. That is lower than the long-term average gain of 3.5% a year, but better than the 3% decline in calendar year 2009.
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How safe is your bank? - The Columbian How safe is your bank? “People who are looking for the absolute cheapest rate in town, who are rate shopping, we’re probably not the right bank,” he said. |