We've already talked about Turbo-Tax Timmay and his Larchmont, NY house.
Here's an update.
The real estate market's troubles are hitting close to home for Treasury Secretary Timothy Geithner.
After reducing the price on his house in a tony New York City suburb to less than he paid for it, Geithner still couldn't sell and recently rented it out instead, according to real estate agents familiar with the deal.
Geithner put his five-bedroom Tudor near leafy Larchmont on the market for $1.635 million in February, after heading to Washington for his job as the nation's top economic official.
A few weeks after the asking price was dropped to $1.575 million, the home was rented for $7,500 a month on May 21, said the agents, Scott Stiefvater of Stiefvater Real Estate and Debbie Meiliken of Keller Williams Realty New York.
Neither was directly involved in the rental; the name of the broker and agency that arranged it were not immediately available.
Although $7,500 might seem like a lot of rent, it probably falls a bit short of the monthly mortgage payments on the Geithners' two loans totaling $1.25 million, plus $27,000 a year in property taxes.
Records show Geithner and his wife, Carole Sonnenfeld Geithner, paid $1.602 million for the home in 2004.
And this man is the Secretary of the Treasury. He can't do basic financial literacy on his own home!
No wonder the Chinese students are laughing at him.
TIMMMMMMMMMMMMMMMMMMMMMMAAAAAAAAYYYYYYYYY!!!
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3 comments:
Well, there is really no reason the rent should be as much as the mortgage payments plus taxes and insurance. If you could get that much rent, it would effectively mean you could buy the house for the downpayment plus the duration of the mortgage. What if the downpayment was zero? Free house!
That much rent doesn't seem unreasonable for a house of that value, to me. Maybe he thinks the value will appreciate.
Throughout history, rents have always been higher than ITIM (interest, taxes, insurance and mortgage.)
You are supposed (theoretically) to derive economic rent (profits after expenses) from being a landlord.
People have forgotten this during the bubble. The point is that the rent doesn't even cover a 1/3rd of the expenses.
TTT is speculating, and is gonna get his ass handed to him just like the rest of the FB's.
And in your example, the house isn't free. The person signing on the mortgage is taking on the duration risk.
Rents can easily drop if incomes drop (take a look at Rochester in the 1990's, or Syracuse, or even NYC in 2002 or 2009.)
Rents in my neighborhood have collapsed 30%. If your "plan" was for a renter to pay the stuff, and it doesn't cover it, you're still on the hook. That's not "free" in my book.
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