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Thinking of pulling off market and finding renters...
Our house has been on the market since April. We had a buyer back out in August (I posted about my bully buyer around that time) and a couple of really low ball offers since then. I'm getting nervous since our new house is going to be finished in December. We've lowered our price to the market price and are going to have to bring a large check if we finally sell. I'm thinking we should pull it off the market and rent it out.
I have no experience with renting out a house and neither does my husband. What do you look for in a property management company? How do they handle repairs and maintenance? What kind of reassurance do you have that a renter won't trash the place? My husband is very hesitant because his parents rented their house to a cousin who completely destroyed it (ex. walls had to be replaced).
I appreciate any advice you may have. This is unchartered territory and I think we have to do it to avoid paying for an empty house.
Re: Thinking of pulling off market and finding renters...
We have a property manager for our house that we are renting out. We moved out of state for a 2 year post for DH and didn't want to sell in this market.
They handle everything....they posted the ads, screened renters, did the lease, etc. We did have final say over who the tenant would be and special conditions like accepting pets, etc.
They take care of all repairs and stuff. We have an account with them with $500 in it for small things like service calls for the furnance, emergency calls to a plumber, etc. If anything big were to happen they would give us 3 quotes and we get to pick (ie if a new furnance were needed, etc). But they take care of setting up the appointments, letting the people in if the tenants aren't home, etc.
You don't have reassurance people won't trash the place to be honest other than past history, etc. That is the risk with renters....we do have their security deposit in escrow and you could always sue if it was too bad I suppose, but that's why they do a pretty good check on past history. It is a risk, but hopefully it'll all work out for us.
You could require your renters to carry renters insurance with a certain amount required for liability coverage (like the cost of the home). If they damaged the home, their policy should cover the repairs.
I would ask the property management people about the laws in your area on this.
We just went through a similar thing. Had our house on the market since April, but with no offers. We finally decided to pull the trigger on putting an offer on the house we had been eyeing for awhile and planned to rent ours. We had multiple rental offers within days. We were very careful about checking credit and income.
We decided to not go through a property management company for on-going maintenance, as our new house is still in the same town, so we will be close by. Also, our lease states that the tenant is responsible for lawn maintenance and snow removal. Our lease also had specific language regarding repairs (anything under $25.00 is the tenants responsibility).
We listed on the MLS as a rental, and our realtor worked out all the details of the agreement (credit check, income verification, wrote the lease), so that was very helpful.
Consider all your costs. and then figure out if you can cover your costs with a renter. If so, it may be worth exploring, but there is no guarantee that the renter won't damage the property or neglect it......they don't own it after all. The key is finding the RIGHT renter, which is easier said than done.
It also may be difficult down the road to sell a house with a renter in it. The renter has no incentive to keep it clean and tidy when showings are taking place. It definitely won't be STAGED the way you would want it to be. You may have to end the lease, repaint, clean rugs, etc,etc,etc, and then list it, and once sellers see a house is empty, the offers will be even lower. During this time you are not getting any rent either.
If you are still going to be negative month after month when renting (and remember you have to pay taxes on your rental income), it may be worth it just to dump the property since prices don't seem to be heading anywhere but down in the near future.. You mentioned lowering it to market pricing......perhaps drop it just below and that will do the trick since you will be the best value in town. Really think this through. I know taking a loss sucks, but if you can afford it, it may be the most inexpensive option to you right now.
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