All the permanent WFH’s announcements for tech workers are making me nervous in anticipation for real estate rental market after 3-4 years.
We have a history…lol…We bought our first house in FL in 2007 and lost our jobs in 2009 recession and had to move to bay area. We couldn’t sell or adjust our 6.75% mortgage rate (wellsfargo opted out of bailout) or refinance due to lower appraisal. We rented it out and were negative for many years. Luckily that property was only 300k and we could afford to cut our losses. The cherry on top, it’s still underwater.
Fast forward to current situation…We upgraded a couple of years of ago from our second house in fremont and rented it out. Our rental house is about 2100sqft with 6000sqft lot and is in a good schooling district and fetches 4k rent. The house mortgage+real estate taxes cost us around 3.5k. So far, we have been $500 cash positive every month. Our original intent is to have this property as nest egg.
The house is completely upgraded and very much in line with the current trends and is estimated around 1.2 to 1.25 mil based on redfin and zillow. Our current tenants might not vacate for another year or two.
We were running scenarios when they eventually vacate after a year or two, what if the property is vacant for several months and will need to reduce the rent drastically to match market rate. It will be too late to sell as the price falls and we can contribute only about 1K out of pocket towards the mrtg+taxes and cannot afford to rent below 2.5k rent.
Given the situation and changes, my spouse and I are very bearish. Fremont might only be as charming as Mountain house or Sacremento. Given our florida house experience, spouse is considering selling this before the golden moments melt away. While we can still take benefit of the bay area housing boom and capital gains. At the same time, I am thinking this is all a stress response and if we hold tight we will be fine in the long run.
I understand none of us have a crystal ball. But, I appreciate some discussion and your knowledgeable opinions.