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Author: MaestroCindi Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308463  
Subject: When Renting is Better Than Owning Date: 9/19/2005 10:02 AM
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So I realized on Saturday while watching Suze Orman's special on people effected by the Katrina Hurricane and what everyone else needs to do to prepare for disaster, that in this one case renters are in a better position than owners. Even if they didn't have renters insurance (would that cover hurricane and flood damage?) and least they can just walk away and start a new life if they want to, instead of worrying about making mortgage payments while their house is being repaired/rebuilt and is uninhabitable.
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Author: OldSwede Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210945 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 11:43 AM
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(at) least they can just walk away and start a new life if they want to, instead of worrying about making mortgage payments while their house is being repaired/rebuilt and is uninhabitable.

Generally that's true but some leases have clauses that will cost a renter something through at least part of a disaster like this. For example, a lease may give the landlord X amount of time to bring the property back to habitability before the lease is voided. The renter may not have rental payments while the property is uninhabitable, but they may still have a binding lease when the place is available again. The landlord may not feel like going to court to enforce such a clause, but, money is money, and a renter could have some hassles to deal with.

Still, your point is well taken.

OS

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Author: exeter17 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210948 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 12:28 PM
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I would venture my $.02 that breaking the lease consequence is still cheaper than mortgage default.

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Author: mew5280 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210949 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 12:34 PM
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I have thought about this a lot. What about the people whose homes are unsalvageable and their homeowner's insurance doesn't cover water damage? Do they just lose everything? If that happened to me right now, I don't think I could recover. I would be so devastated, and to think this might happen on top of losing so much else. Maybe I'll sell my house and rent now!

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Author: jrsmith13 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210950 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 12:40 PM
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I have thought about this a lot. What about the people whose homes are unsalvageable and their homeowner's insurance doesn't cover water damage? Do they just lose everything? If that happened to me right now, I don't think I could recover. I would be so devastated, and to think this might happen on top of losing so much else. Maybe I'll sell my house and rent now!

If you're in an area that MIGHT get "rising water damage" (either from storm surge, rivers rising, or just a low-lying area that might fill up with rain) you should GET FLOOD INSURANCE. Then you're home will be covered from both directions in case of a major storm (wind from above, water from below).

Julie

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Author: mew5280 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210953 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 12:44 PM
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Is it worth the money to have flood insurance? Think of all the investing you could do! : )

I live in Colorado, nowhere near any rivers or lakes or any water, we have drought here most of the time.

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210954 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 12:47 PM
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The obviously answer is to carry appropriate insurance. Flood insurance was available to New Orleans.

It is necessary to protect the assets that you own and that includes insurance for major losses.

Debra

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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210956 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 1:03 PM
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You have to remember that the floods hit the poorest areas of New Orleans - where people couldn't leave town because they didn't have a car or couldn't afford to put gas in it. These are people who were struggling to put food on the table and living paycheck to paycheck to house and feed their family. There was no way they could afford significant homeowners insurance, particuarly not what must be a significant premium for flood insurance in an underwater, oceanside city with known levee problems.

So the real point here is, that if you cannot afford to properly insure your property, renting should be an even more serious consideration. But there's a darn good reason why these properties weren't properly insured, it wasn't out of ignorance or laziness.

And yes, unless the gov't decides to help rebuild uninsured properties, those people are left with nothing, and, worse, serious debt at that.

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Author: mew5280 Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210957 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 1:18 PM
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I have heard the majority of people in the flooded areas were renters but what really makes me sad is that there were people who had worked very hard to get out of their poor situations, improved their lives, made money and did purchase homes. For those people I feel especially sad and really hope and pray that they have the fortitude to start over again and not just give up.

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Author: MaestroCindi Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210959 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 2:03 PM
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Flood insurance was available to New Orleans.

The important issues about the Suze Orman show was that it pointed out flood insurance doesn't always properly insure you. Sometimes you're not insured at full-replacement value, but instead of X% over what you paid. Some banks don't even require insurance for 100% of your mortgage. And flood insurance covers the dwelling, not your possessions. For those in MS where their whole house literally blew away, those with Hurricane insurance most likely have a hurricane deductible, which could mean they have to pay $10K's first. And there's also the issue of lost equity. It just made me realize that in this instance, renters probably faired off better, especially those with renters insurance.

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Author: RingwraithV Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210960 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 2:07 PM
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Just a couple of quick thoughts:

Flood insurance usually only covers $250K. Before I get flamed, I did say "usually". It's been a problem for folks on the gulf coast who had it and lost a several hundred thousand dollar property.

NOLA was a place where a renting culture prevails...more like Europe than the rest of the US. Many folks in the ninth ward probably did own property, but the vast majority were renters (granted SOMEONE owned the property and should have had some kind of flood insurance, but I digress).

What will be interesting to see is whether NOLA -- or parts of it -- will be declared unisurable after this. It sits in a bowl, has been hit by two devastating hurricanes in 30 years, and may yet get hit again this year. Not a matter of if any more. Just a question of when.

RingwraithV

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Author: Catleen Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210970 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 3:29 PM
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Actually the rentor should have an agreement in place, and I believe that the rentor will still owe his rent, just like the home owner still has to pay the mortgage every month (even though the house was destroyed.

If you buy a car and then total the car, you still have to pay off the car.

catleen

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Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210973 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 3:32 PM
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Actually the rentor should have an agreement in place, and I believe that the rentor will still owe his rent


If my house were destroyed I would still get rent from my tenants. I would also still be legally responsible to house them somewhere, and my insurance has a rider to cover just that problem.

Tenant/landlord law varies greatly from state.
I'm in MA; I have no idea what the laws in MS and LA are.

- Megan


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Author: CoffeeInBed101 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 210997 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/19/2005 6:50 PM
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If my house were destroyed I would still get rent from my tenants. I would also still be legally responsible to house them somewhere, and my insurance has a rider to cover just that problem.

I would be curious to see this enforced. Is there a specific acts of god clause in the contract? While I realize that laws vary from state to state, I would think that the tenant would be able to break the contract based on the fact that you have "failed to provide" the agreed upon property? Did you agree to provide them with a specific type of housing for a fixed fee and period of time or did you agree to let them use a specific property? In my experience the contract has always been for a specific property whose address is listed on the contract. It never says, “or comparable residence”.

Just trying to understand.

CiB

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Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211024 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/20/2005 12:05 AM
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Just trying to understand.

It's not a matter of the lease, it's a matter of MA law as far as I understand it. MA law is strongly weighted in favor of people having a place to live, something I'm happy with.

- Megan


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Author: MaestroCindi Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211050 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/20/2005 12:16 PM
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Actually the rentor should have an agreement in place, and I believe that the rentor will still owe his rent, just like the home owner still has to pay the mortgage every month (even though the house was destroyed.

In most states if a rented dwelling is unlivable (such as from fire) the renter does not have to pay rent while the owner makes repairs on the dwelling.

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Author: jmcjls Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 211070 of 308463
Subject: Re: When Renting is Better Than Owning Date: 9/20/2005 3:51 PM
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Actually the rentor should have an agreement in place, and I believe that the rentor will still owe his rent, just like the home owner still has to pay the mortgage every month (even though the house was destroyed.

Though the landlord will fail to fulfill his/her part of the rental agreement which is to provide a place to live (or have a business.)

An owner will still own the lot. A renter doesn't rent the lot but what's on it.

jmc


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