Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Renting while on the market?
We put our house on the market 2 weeks ago. DH accepted a new job so we moved about 2 hours away. There are 15 other houses on the market in our area between 125,000 and 150,000 (ours is listed at 139,900). We are in a bedroom community to a larger metropolitan area. In the two weeks there hasn't been a single showing. Our realtor e-mailed today and said another agent asked her if we would be interested in renting while it is on the market. Has anyone ever done this? Pros/Cons? We will probably drop the cost in the next week or so, but can't go too far down because we need to clear 125,000 to break even and we can't afford to bring any money to the table. Thoughts? Suggestions? I haven't found a job yet, so the thought of mortgage payments is starting to stress me out!!
Re: Renting while on the market?
Here are some things to think about:
1. Your tenant would probably want a minimum of a 12-month lease. Are you prepared for that? What if they wanted a longer lease?
2. What are the rental occupancy rates like in your old area, where this house is? Is it likely to be rented quickly--and stay rented?
3. Would you hire a property management company to manage this for you? That will cost you--but maybe not as much as you'd think.
In my area (metro Atlanta), single-family detached houses for rent are going FAST. They are staying rented. People who get foreclosed on need a place to live, so they rent. Their credit might be a little spotty, but they are employed and can pay the rent.
Another phenomenon we're seeing here is the lease/purchase option. People rent the house with an option to purchase it at the lease term's end. A portion of their rent is set aside for the downpayment on the home, and if they choose not to exercise the option, then you get to keep the money. Is that a possibility for you?
Lastly--check what your mortgage note or security deed says about leasing the home so you're not out of compliance with your lender. Some of them forbid that, or leasing is only OK with lender approval. Some people ignore this, but I think it's better to be safe than sorry.
You will have a really hard time finding someone who is willing to pay you rent while living in a house that is still on the market.
Living in a house that has to be show-ready at all times is a hassle. And no one in their right mind is going to move into your house and agree to pay you rent knowing that they could get kicked out at any time if the house sells.
Our house was on the market for close to 6 months before we decided to give up and rent. But in our area, rentals are HOT......we had applications - from nice families who just weren't interested in/able to buy - within hours of the property management company putting out the sign.
We are embarking on this right now. While under contract to sell, we are renting our place at a reduced rate as an incentive for the person to keep it in show condition (it also has that in the month-to-month contract). We are only allowing month-to-month until the end of our contract and then they get the first option to lease at a greater price (if we take it off the market). If they don't want it, then they are out within 30-days and we go for a long-term lease option.
We listed as such on craigslist and already had about 10 people reply. Most are older professionals who wanted a short-term place either for a class they are teaching or due to seperation with a spouse, or b/c they are also looking to buy and don't want to commit to another year lease and just need 3-4 months to transition.
It could work out, but we haven't had someone in the house yet, so I can't speak from experience.
Good luck.
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We rented a house that was for sale while we were waiting to close on the house that we bought. We were in it for 6 weeks, and we kept it clean and left every time there was a showing. Houses that are lived in sell more quickly than empty houses, plus, we were paying this guy's mortgage, so I think we were helping him more than he was helping us. We just needed a temporary place to stay, and since most contracts involve at least 30 days til close, we knew we'd have time to get out if the house sold (and we wrote this into the lease).
If an agent is asking if you'd rent the house while it's for sale, he/she probably understands that you don't want a year lease, and that it would probably be a short-term sort of situation like mine was. If you find good tenants and write the important things into the lease (like 24 hours' notice for a showing, tenants will leave the house spotless for showings, you will give tenants 30 days' notice to vacate if/when a contract is signed, etc), I think it would be fine, and you'd be saving a lot of money on mortgage payments for an empty house.
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If you are going to rent it, I recommend having them sign a lease for 1 year and take it off the market. I have had several homes which I placed renters in and it is difficult to sell them. The don't care if it sells and will not likely be interested in showing it and often the home is not in show condition.
Ask if they want to lease with an option to purchase? Make sure you get 1st and last months rent plus a deposit. I have have tenants who moved out and did not pay the last month rent. I recommend hiring and property managment company, that way there is a buffer between you and the renters. They also handle contracts, credit checks and repairs. It is not required, but very useful when dealing with tenants. They usually charge 10% of the monthly rent. The tax deductions you will get from the rental are always good. Talk to your CPA to get more info.