Questions on leasing out a house

[Seraphim]

DW and I finally agreed that when I retire next year, it's road time. Inspired by other members' experiences here, we decided it was something we could do.

Starting to get rid of 35 years of accumulated stuff, but the question comes down to whether - in the current market - the house will sell. Leasing to cover the remaining mortgage was mentioned as an option, but I'm wary of the potential problems.

Has any one here experiences - good or bad - with leasing out a house?

Any suggestions should we choose to do so?

 

[dragonflyinthesky]

Advice, you can go with a company to handle it like 2 of my friends do. I handle mine myself.<br>In spite of background checks the companies do, my friends don't get their money half the time either. I guess I'm better off handling mine myself as opposed to paying a percentage to a rental company. None of us gets paid much of the time and the places get torn up. <br>I'm heading to court Monday. Won't matter if I get a judgement, and I most likely will, I still won't get back rent.<br>Sell it and don't even land contract. That is what I'm dealing with now.<br>Lease to a military family, I have heard you won't have problems.<br><FONT color=#ff0000 size=3><b>Dragonfly</b></FONT><br>

 

[judycmomx6]

<P>I was also considering leasing out my house, I was also going to use a property managment co., but if people don't have good luck going that way either I guess I'll just try and get the best price I can. It really makes me angry to think of what this housing thing has done to all of us.The bad part is we don't know if we'er ever going to pull out of it. </P>

 

[KatieinKansas]

<font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;">Hi Seraphim,</span></font><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;">I think I understand where you're at. &nbsp;Last year I was going to sell the house that I lived in for a little over 20 years. &nbsp;Maintenance was driving me nuts. &nbsp; I had to take off work to deal with things, get estimates, etc. &nbsp;However, after talking to a couple of friends who rent their houses, I decided to do the same. &nbsp;I have a property manager taking care of my house, so he takes care of maintenance problems. &nbsp;He finds the tenants and handles any problems. &nbsp;He's someone that I used to work with and I trust him. &nbsp;...And then I'm renting a smaller house and my landlord takes care of things if there's a problem. &nbsp;It's worked out great. &nbsp;It's worked out well because I have very responsible tenants in the house. &nbsp;</span></font></div><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;"><br></span></font></div><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;">However, since &nbsp;I decided to retire early, I'm going to move out of the house that I'm staying in. &nbsp;...As of June 1, I plan on traveling /living in my van. &nbsp;I don't want to pay the rent if I'm going to be living in my van for an uncertain period of time. &nbsp;I've already gotten rid of lots of items, and it feels good. &nbsp;Now, I'm getting rid of more. &nbsp;</span></font></div><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;"><br></span></font></div><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;">I haven't decided what to do with the house that I own. &nbsp;If everything continues to go well, it would be extra income for me. &nbsp;If things don't work out though, (renters leave, huge maintenance expenses, etc.), it would be a tremendous stress. &nbsp;It would also be a loss of income because I'd have to continue to pay insurance, property taxes, and utilities. &nbsp;So I'm leaning towards selling it. &nbsp;...Not definite, but most likely. &nbsp;I'd have to store a few things that I just can't depart with at this point. &nbsp;Or ask a relative to keep the sentimental items in their basement if they were willing. &nbsp;.....As of now, I'll be moving out of the house that I'm currently renting. &nbsp;I'll live in my van for at least 4 months. &nbsp;I won't have a home base for that period of time (and maybe longer.) &nbsp; ...And after that,... as the song goes "the rest is still unwritten."</span></font></div><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;">Katie</span></font></div><div><font class="Apple-style-span" face="Arial"><span class="Apple-style-span" style="font-size: small;">Katie</span></font></div>

 

[dragonflyinthesky]

Sorry I was so negative, my experiences are not good.&nbsp;There are good companies out there. My land contract that is falling apart, the realty company is a good company, before the properties are even shown, they require bank letters. Even that has not been enough to protect me.<br>Think about how fast many of us have gone under, myself included, it doesn't take long from being a contributing member of society with a good job and credit to losing ones job and being homeless. If your leasee has everything in order, fine, if one or both members of the household loses their jobs, where is your money that you owe on the house while the leasees live FREE&nbsp;in your home&nbsp;going to come from?<br>You still owe the taxes and upkeep, what if the furnace quits etc? I am in this shape because I decided to quit the stock market, which was a good choice, before I lost to many thousands. I paid cash for 3 forclosures, live in one. Thought I could get rent for the other two on a regular basis. You should probably have a good job already if you are going to do something like this so you can cover taxes and expenses.<br>If you get good renters, if I had good renters, everything would be smooth.<br>Think of your rental income as another job, which it essentially is. Renters get behind one month, can you afford that? Probably, but if they get behind one month, where will their money come from for the following month as well as their back rent?<br>It takes a while to evict, regardless of what you hear. Are they going to be pissed off and leave the final day with you major appliances? I had that happen and I felt like white trash standing out in the yard-again talking with the police. By the time of eviction, you are probably down thousands of dollars, taxes are behind and so forth. Then you get&nbsp; bills from DP&amp;L and the utilities company that you owe for their back services. How does that happen you ask? While trying to understand at the county offices it was explained that this happens all the time. They had the services turned back to me, the owner, a few months previous but explained that the bill came to the rental, which is my house. Understand? I didn't at first because I don't think like a low life criminal.<br>One house rental and one land contract and I'm close to broke but I will come back because I'm smart and honest. They will never have anything. The one I evicted this past summer used 3 months of rent that shoud have been paid to me to buy her own foreclosure. She is the one that changed the utilities over to my name and had the bills going to the rental.&nbsp;She has lost&nbsp;her foreclosure within a few months&nbsp;already.<br>Now I have money tied up, had to bow down and&nbsp;borrow from my Dad to get my electric upgraded after the fire and I'm not going to the RTR.<br>Hey, its a beautiful day and I have orders for art work to get out. Sorry I ranted.<br><FONT color=#00ffff size=3><b>Dragonfly&nbsp;</b></FONT><br><br>

 

[cyndi]

I'm in favor ofUsing&nbsp;a property manager. I've done it both ways. Do Lots of research/asking aroUnd to find a good one. Chances are someone yoU know can refer yoU to a repUtabLe agent. The one I Used had insUrance that covered non payment and damages to the property. That insUred that they did their part in finding reLiabLe tenants.<br><br>I shoULd mention that this was Long ago when economics and peopLe weren't so desperate.<br><br>Ask a few doLLars more for rent with the stipULation that if rent is paid on time/by a certain date, $$$ wiLL be dedUcted from the next months rent.<br>

 

[Seraphim]

Thanks Cyndi. I hear a lot of horror stories, but I also know people manage it successfully. The advice is appreciated.

Katie

That's the situation I'm in, but im just tired of doing all the upkeep. It used to be fun, but I'm older now. Just me and DW now. We still have mortgage payments which could be handled, but we'd paying on a house sitting empty. Selling is best, I think, but perhaps not possible in the current market.

Dragonfly

Yes, I deal with a lot of landlord tenant disputes over the years. By the time you get through the eviction process you're out three months rent, it seems. At least here. My friend's father owns a lot of rentals, and he's constantly getting the shaft. I dom't see how he affords it.

 

[stude53]

<p><span style='color: black; line-height: 115%; font-family: "Verdana","sans-serif"; font-size: 12pt; mso-fareast-font-family: Calibri; mso-fareast-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-theme-font: minor-bidi; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA;'><font face="arial, helvetica, sans-serif">If you are going to rent your property and travel away, be sure you have someone that can look in on your property, hire repairs when needed, etc.<br><br>A trustworthy relative, or a good property management company (usually costs about 10% of rent) can do this and ease your mind. Absentee landlords tend to have problems.<br><br></font></span><font size="3" face="arial, helvetica, sans-serif">A rental tip!<br>Set the rent $50 higher than you want for your rental, and write your rental contract to give a $50 discount for rent paid on time each month.<br><br>Example - contract says rent is $650 per month, with $50 discount for on-timepayment, yielding a fixed rental of $600. Gives <b>renter</b> an incentive to pay on time, and gives you an automatic $50 late fee if they don't.<br><br>I used this, and rented my three bedroom home to 3 <b>college</b> students(usually a no-no), and never had a problem with late rent or property damage. As students graduated, the remaining tenants always found me a new tenant to share the rent. I always made one of the students responsible to collect the rent from the other two, and pay me $600 by deposit into a checking account I set up at my credit union (for deposit only, unless I personally accessed the account).<br style="mso-special-character: line-break;"><br style="mso-special-character: line-break;"></font></p>

 

[Seraphim]

<FONT size=3>A trustworthy relative, or a good property management company (usually costs about 10% of rent) can do this and ease your mind. Absentee landlords tend to have problems.</FONT><BR>

<br><br>Thanks - I was curious about the rates a property manager would charge. Looking at ads in the area for rental homes of similar size and age, it seems the going rate would be more than feasible to rent the house and cover all normal expenses, plus some.<br>

 

[lampliter]

<P>FYI---If you have trouble renting or leasing---and want someone to watch your property while you're away, check out MindMyHouse.com.</P>

 

[Seraphim]

Lampliter

Thanks for the link. I tucked it away in my Favorites file for future reference.

We've been in the home 20 years and, foolishly, didn't pay it off early but left it on a 30 year mtg. At one time it was worth about 3x the balance of the loan, but now it's only worth about 2.5x. Just FYI, since you're being kind about offering info.

We need to downsize. The house is too big for us now. We wanted to get out from under the payments, as well, if nothing else. We Could put it in stasis, but I'd have to run the figures to see if making the payments for another year or two
was possibly worth it.

I'm ignorant of economics on a large scale, but I'm not that confident the housing market is going to return to previous levels. Just my natural pessimism lol.

Frankly, if my son was planning on living in this area, I'd just 'sell' it to him for the balance of the mortgage. Cheaper than him renting and he's going to get the equity anyway, in the long run *grin*

Then let HIM have the hassle of selling it.

 

[dragonflyinthesky]

Instead of court tomorrow, referring to the land contract for the other house, we are meeting at the realtor's office to try to come to an agreement. I could have my people out right away at this point but I am still down a lot of money I will never see. The buyers want the house badly and consider it theirs. Sounds strange for me to say, but one wants the renters/LC to take care of the place and if they think it is theirs, then they tend to do so.<br>I allowed myself to be a doormat by being 'forgiving' the first excuse for non payment. I didn't learn from&nbsp;previous renters that does not work. If you are gullible and think everyone is honest, or maybe just on hard times,&nbsp;as I tend to believe, do not rent or land contract.<br><b><FONT color=#00ffff size=4>Dragonfly</FONT></b><br>

 

[stillcan]

Include minor repairs in the rental agreement, such as light bulbs. You don't want to have a service call for a bulb! Set a limit the tenant is responsible for.&nbsp;Maybe $50-$100.<div><div><br></div><div><div>You will want to do an annual or semi annual inspection of the property. Do a furnace service, maybe. Change any filters replace the smoke alarm batteries.&nbsp;Smoke alarm batteries will last more that a year.&nbsp;If the batteries are missing talk with the tenant.&nbsp;Amazingly, smoke alarm batteries will fit a boom box and when the municipal inspector comes to do an inspection and the smoke alarms don't work you get the fine. Maybe your area doesn't have rental property inspections.&nbsp;</div><div><div><br></div><div>Agree on an amount of usage for water, if hooked up to city sewer/water. A tenant may not care if the toilet flapper does not seal. A toilet that runs and runs will double or even triple a water bill. Been there, done that and got a T-shirt on that one.</div><div><br></div><div>A you break it you pay to fix it clause in the rental agreement. FOR SURE!&nbsp;</div><div><br></div><div>Permission from the <u>owner</u> is needed to make <u>any</u> modifications to the property.&nbsp;</div><div><br></div><div>A $$ discount for on time rent is a must. Raise the rent you want by the discount fee as said in another post. Rent must be paid before the first of the month. The 30th or 31st is still OK. The 1st of the month is late. If not paid by the 10th a late fee is attached and spelled out in the rental agreement.&nbsp;</div><div><br></div><div>A GOOD management company is worth a 10% charge for all monies collected. They get 10% of any late fees also. &nbsp;Check their tenant rental agreement and read it line for line. Ask for clarifications if you are unsure of any stipulations . Maybe go as a potential renter and listen to their spiel.&nbsp;</div></div></div></div><div><br></div><div><div>These are just a few thoughts that come to mind from past experience.&nbsp;</div></div><div><br></div>

 

[Seraphim]

Thanks for all the great ideas!

I'm on a room by room mission now. Eliminate junk, minor repairs, etc. come spring, paint and whatever on the exterior lol.

Closing down unused rooms is a good idea. Mostly they're storage rooms, with stuff to get rid of.

We've decided on a 28 foot class C as the best compromise for us. Took us about a year of research. There's one down the road we really like, but we're not ready to get it yet.

If we can knock off the college debt completely by the time I retire, we can pay cash for the unit. If the house were sold, there'd be no debt.

Diane, I hope things work out at your meeting today.

 

[Seraphim]

Stealing light bulbs? You guys are scaring me lol.