Well.....if we were to sell our Belcamp, Md home we would lose so we have decided to hold it as long as wel can.....in the meantime we are looking for tenant asap and wait for the market to bounce back. Right now.....selling is not an option.

I hope that the "bounce back" you are waiting on doesn't turn out to be a "thump".

Translation= We are priced in forever and hoping for the next greater fool to bail us out of a poor decision (kind thought for your fellow man). So we will sit for the next decade until finances, divorce, or the magical mystery bus bails us out.

as a potential buyer we're still looking...with all the short sales/foreclosures and the average listing time approaching 3 months, a lot of properties are on the market during what would traditionally be 'off-peak' months.

"selling is not an option"... Good for you. You know the numbers you are dealing with. Financial suicide is simply stupid. Screen your potential renters well.
I'm fed up with the snarky comments about people who are not ready and willing to sell right now. That's a rational decision for many in this market, just as much as trying to get bottom prices is a rational expectation of buyers.

@Lisa:

It's one thing to avoid committing "financial suicide." It's quite another to be irrationally optimistic about the housing market "bouncing back" any time soon the way quartey is. Most economists agree that housing prices/values were artificially inflated for quite some time and that current prices are more reflective of true market value.

I agree with Lisa. Why do people jump all over someone who is sharing their personal experience? I'm not sure why someone choosing to rent their property rather than go into financial ruin is insulting to people, but the comments are pathetic.

I am wondering what those who think that renting a home is financial suicide think is the surefire way to "make money.

We rented when we could not sell, and when we finish paying off the loan soon, we will be making about 6% yearly on the approximate amount of money invested in the home. (Yes, this is after paying insurance, taxes, and a budget for repairs). At this point the value of the home is dropping that amount (or more) per year. There is certainly some risk, but as an investment it does not strike me as being too bad.

I seem to have a struck a chord with regard to my comments. If you take a step back though, i think you should be insulted by this unspoken rule that every subsequent purchaser of RE should pay more than the previous owner did. In what other transaction is this metric assumed? It is bizarre to me that people are still out there hoping for higher home values. What is the point of this? So you can pay more for the next home? So you can pay more in taxes? Please- can anyone explain to me why "equity" benefits anyone other than your heirs or those that want to relocate to less desirable areas.

elweedz, Fine for anyone who absolutely must sell because of a move, or retirees who wants to downsize now. But for anyone with a 5-10 year horizon, especially including those with underwater mortgages, renting makes good sense.

I'm with elweedz on this and I'm a landlord. If you took good care of your house and did a bunch of upgrades, it's very tricky to rent to the right people, such that you have enough money left over after mortgage, taxes, and insurance. Why? a) depreciation and b) you're supposed to declare the rental income on taxes.

My rental houses are nowhere near as nice as my personal house. Unless you have perfectly angelic renters who don't scuff the walls or floors, who clean the HVAC filters, and keep up the landscaping, it's really hard to make money renting out a personal residence. Unless the personal residence was average or below average to begin with.

I can't imagine renting out my personal residence someday. The whirlpool tub would probably get clogged up, the wood floors scuffed, I really doubt renters would fertilize, prune, and water the landscaping--some of the few of the shrubs or accent trees dying could run $1000 to replace. And, if I did the maintenance or paid to have it done, then I'm trading my time or money to upkeep something I'm not living in.

The real solution if you want to be a landlord? Sell the 500k house and buy a bunch of small, average or below average condition houses. Better cash flow, much less depreciation and upkeep to worry about. With a nice house, 5+ yrs of an owner not living in it will really not pay off when you go to sell it. And it's significantly harder to sell with renters in a property, all things being equal. You can't expect the renters to depersonalize and stage the space. Heck, you're lucky if they mow the lawn and put away dishes and laundry, etc. Don't fool yourself, this makes a big impression on buyers, when they consider the fact that the home was not owner occupied.

People need to stop thinking we're back in the 2004-07 property bubble era, where people will trip over themselves to buy any house in any condition. Being underwater isn't the end of the world, but if you think housing is going to go up versus inflation in the next 5 yrs, can I sell you the Brooklyn Bridge?

Another relevant comment to recent posts here on Jamie's blog-- if you rent out your house, you are supposed to notify the state and then you lose your Homestead tax treatment. This can cause a big hit, often over a thousand a year nad sometimes quite a bit more (depends how long you have lived in the house). For right now, the state isn't cracking down hardcore on people who are double dipping (The Sun has written about this) but its starting to get more attention and by the end of 2012, the state will be actively auditing and checking up on Homestead status.

Plus, the property insurance bill will get larger once you go from owner occupied to rental. This is because even if the owner is naive, the insurance company knows that more problems happen in rented homes.