Meet The New "Landlord Class"
One suspects the reporter for this Boston.com piece had to conceal her amusement. The writer examines the move by under-25 "investors" into the landlord biz. "Between 1997 and 2004, homeowners under the age of 25 jumped 11 percent; and now these youths make up one-quarter of all property owners in the Northeast."
"'I am young and property values are soaring,'said 19-year-old Rayford Kelley, who bought a $560,000 fixer-upper in Roxbury with no money down. He had trouble leasing several units after he forced out tenants who refused to pay rent. Kelley agreed to lease one apartment to friends..He's already worried about the number of visitors coming through the house, into which he has put more than $10,000 in repairs, but doesn't want to say anything to his friends."
"25 year old Paul Phadungchai said he probably overspent with $50,000 in renovations that include a whirlpool tub and granite kitchen countertops.'For a kid like me who had college taken care of and was able to save money a lot of the time, not being able to save money ever is really a life change. It's all gone and now all I'm stuck with is a huge mortgage. You have to really think about that.'But it won't stop him from buying another home by year-end."
2 Comments:
The 560K price of the apartment building mentioned in the article works out to a principal + interest payment of $3,006 at 5% interest rate, for an investment property ?!. I don't know how a bank reviewing an applicaton from a 20 year old with no credit history (other than a car loan)could lend so much money, and at that rate ! I guess it's because the loan is insured ? Right ? Just sounds wrong.
I assume his parents co-signed. I don't know banks that well, maybe someone can tell us how that loan would work..Ben
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