Would you rent?

KTdidit · June 2014

DH and I are planning on putting our house on the market this summer after we do some repairs. We will be renting my gma's house from my mom, we plan to stay about 2 years. But I'm terrified that our house won't sell. Its tiny and old, and needs A LOT of work by anyone who buys it....floors need work, windows are all original from the 1920s and half don't open/close properly.

We've briefly discussed renting it out. I was originally totally against it because I don't want to have to worry about renters and repairs and affording both if we don't have renters at the time. (We can afford both for a short period of time but not long-term) But money-wise it makes more sense to rent it out rather than sell, houses in our area rent for the amount of our mortgage PLUS the amount we'd be paying in rent to my mom.

WWMMD?

brij2006 · June 2014

If it were me, I would sell the house. Especially if it's something where you wouldn't be able to make it as well if you went without a renter for 3-4 months and had to make repairs to the home that a renter damaged.

KTdidit · June 2014

brij2006 said:

If it were me, I would sell the house. Especially if it's something where you wouldn't be able to make it as well if you went without a renter for 3-4 months and had to make repairs to the home that a renter damaged.

**STUCK IN THE BOX**

If we were to rent though house out, we would definitely have to keep the first 3 months of extra to build up an E-fund for those types of things I'm wondering if that would negate the benefit of have the extra cash.

brij2006 · June 2014

Do you have any other debt besides the mortgage? Also, do you have a 6 months emergency fund? That would sway my decision a little.

Xstatic3333 · June 2014

As long as you'll break even, I'd sell too. In my area at least, houses like you described can get snagged up quickly by cash buyers who flip them, especially in a good school district. But then, I've never wanted to be a landlord.

jessica490 · June 2014

Xstatic3333 said:

As long as you'll break even, I'd sell too. In my area at least, houses like you described can get snagged up quickly by cash buyers who flip them, especially in a good school district. But then, I've never wanted to be a landlord.

This!

KTdidit · June 2014

@brij2006 no we don't have a 6mo Efund, and we have a lot of other debt that we need to get paid down. We have been struggling to pay off debt, we only have about $50/mo left in the budget to put toward paying down debt. Getting out of this house will be really good for us.

@xstatic3333 I'm not sure that the house will sell to break even. We don't have the funds to bring to the table if we had to sell at a loss. Which is why I'm even entertaining the rent idea in the first place.

brij2006 · June 2014

If that's the case, then I would sell the home. Yes, you may have an overage of $700/month with the rent, but if your budget only has $50 in wiggle room per month, then it isn't worth the added stress if the furnace were to go out or you didn't have renters for 3-4 months and had to pay the mortgage on top of your rent.

goldiemu · June 2014

One thought is to rent it out with an agreement that you will doing some improvements and give the renters an idea of what this means. Then take what your saving and put it into the house so you can maybe make some money rather then losing money.

CuriousKiddosMama · June 2014

yeah, don't rent!!! I had a horrible experience with my first tennant- they trashed the house and my property manager was an idiot, so I wasn't even able to keep all their deposit because she was afraid that the one guy was a lawyer and was threatening to sue. I was just ready to be done with it, so I gave in. So after a year of lease, I probably spent all our rental income on repairing the house and replacing the AC that they had f'ed up. (They never changed the filters, even though it was in the lease, and this apparently caused the coil to crack after a year of them running it 24/7 to keep the house 'cool enough' at like 65. Since it was an old freon system, we chose to upgrade the a new system. I had had the system inspected before they moved in, and it was working properly. The same guy came out the next year and said they screwed it up- I didn't even know something like that was possible.).
Now however we have an amazing tenant. She is a friend and takes amazing care of the house. However if you end up with my first experience in your situation this house would be nothing but a curse.

KTdidit · June 2014

Vikingsfan 71713 said:

yeah, don't rent!!! I had a horrible experience with my first tennant- they trashed the house and my property manager was an idiot, so I wasn't even able to keep all their deposit because she was afraid that the one guy was a lawyer and was threatening to sue. I was just ready to be done with it, so I gave in. So after a year of lease, I probably spent all our rental income on repairing the house and replacing the AC that they had f'ed up. (They never changed the filters, even though it was in the lease, and this apparently caused the coil to crack after a year of them running it 24/7 to keep the house 'cool enough' at like 65. Since it was an old freon system, we chose to upgrade the a new system. I had had the system inspected before they moved in, and it was working properly. The same guy came out the next year and said they screwed it up- I didn't even know something like that was possible.).
Now however we have an amazing tenant. She is a friend and takes amazing care of the house. However if you end up with my first experience in your situation this house would be nothing but a curse.

This is what I'm afraid of!

formerlyGDaisy09 · June 2014

I'd sell it, use renting as a back-up plan if it doesn't sell and you need someone else covering that cost.

vlagrl29 · June 2014

I would plan on selling it first and only rent it out if it's taking longer than planned to sell

Sisugal · June 2014

SELL. Talk with a local realtor and have her give you a price estimate what your house might sell for in your market. Also ask for advice as to what, if any, of those repairs are worth doing (would you recoup your repair costs, help sell the house etc?) It may not be worth taking on those repairs.

Can you get second PT jobs to help pay off some of your debt?

theholmanherd · June 2014

KTdidit said:

@brij2006 no we don't have a 6mo Efund, and we have a lot of other debt that we need to get paid down. We have been struggling to pay off debt, we only have about $50/mo left in the budget to put toward paying down debt. Getting out of this house will be really good for us.

@xstatic3333 I'm not sure that the house will sell to break even. We don't have the funds to bring to the table if we had to sell at a loss. Which is why I'm even entertaining the rent idea in the first place.

If that's the case, just sell it to make headway on your debt. If I were you, I would do whatever it takes to dump that debt.

KatieCutie05 · June 2014

SELL!! Just get rid of it - its not worth the added risk. Especially with that old of a home. So long as you can get what you owe on it and you don't have to do a shortsale to get out of it. And I wouldn't move until you've got the house sold (if you can help it) Your renting from your mom - so can she wait a few months while your home sells?

KTdidit · June 2014

KatieCutie05 said:

SELL!! Just get rid of it - its not worth the added risk. Especially with that old of a home. So long as you can get what you owe on it and you don't have to do a shortsale to get out of it. And I wouldn't move until you've got the house sold (if you can help it) Your renting from your mom - so can she wait a few months while your home sells?

We will only be paying $100/mo to my mom for rent, just to cover property taxes. It would be better to move out before listing the house, it is so small (850 sq ft) that all of our stuff makes it look even smaller and unappealing. Plus I know there's no way I could have it show-ready if we still lived there. Knowing my mom she probably won't even make us pay anything until it sells anyway, but we can make it work, although TIGHTLY, if she does.

KTdidit · June 2014

Sisugal said:

SELL. Talk with a local realtor and have her give you a price estimate what your house might sell for in your market. Also ask for advice as to what, if any, of those repairs are worth doing (would you recoup your repair costs, help sell the house etc?) It may not be worth taking on those repairs.

Can you get second PT jobs to help pay off some of your debt?

we have already been talking to a realtor and she cut out a lot of our planned repairs already, which is great, saying that either we won't recoup that money, or its unnecessary. So we only have small things like painting, fixing the plaster on the ceiling in spots, etc.

DH has been working a ton of overtime whenever possible to help us get ahead. With my commute I don't have time to get a PT job during the week. Maybe the weekends I guess I could

brij2006 · June 2014

Consider posting your budget here. Everyone is great at helping figure out what things could be cut or what is missing. An extra $50/month isn't much when trying to get out of debt.

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