Moving: sell or rent out current home?
Joaniepoanie
6 years ago
last modified: 6 years ago
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Renting current home to purchase another
Comments (12)We have been landlords for 10 years now. We needed to move and buy a house quickly but did not want to sell the acreage with mobile home we were living in (we knew we would want to build on it some day) so we decided to rent. It was a 'modest' house -to say the least- but an awesome location. In the beginning we were 'nice', rented to a couple with 2 kids who were 'friends'. We were grateful to find such nice people who were willing to live in the mobile home...no deposits just pay us the rent please. Well it didn't work out so well with them - they took advantage. So we lived and learned and got more businesslike. Each tenant has taught us something new. At times it was alot of work and alot of emotional stress. When we needed to move again the market was soft in our area so we ended up making our last home a rental too. We just sold it and our primary home and will be moving back to the acreage once our new home is built-funded in part by all the work as landlords. :) For the last 2 years our rentals have been on 'auto-pilot'. Very little time or expense and payments consistently on-time and deposited into our account. We have learned over the years what we need out of our tenants and what we can live with. Our screening process is only half-after awhile your gut tells you alot about who to accept and who not to. We have found that you need to start out as you intend to go on and be firm and clear with people right up front. Do not let little things go or you will fall into the 'give em an inch and they'll take a mile' problem. NO tenant is PERFECT. We are renting right now and I'm sure we will not be viewed as perfect in our landlord's eyes-we had the nerve to suggest their rent was too high for the size and condition of the house, and bugged them about little things like a broken thermostat and non-functional smoke detectors. But, you can find a 'good enough' tenant. One of our biggest mistakes, and one we have seen other's who rent make over and over is this: it is not a charity, it is a business, you cannot make someone else's problems your own. There is a segment of the population who will see your generosity as weakness and they will prey on it. That may sound harsh, but it is reality. Perhaps because someone close to me was a 'con-man' I have a pretty fine-tuned 'BS meter' and a lack of sympathy for hard-luck stories. For the most part DH & I operate as 'Good Cop, Bad Cop'. Guess who gets to be bad cop? LOL! Once when I was feeling soft - I was pregnant and so was our applicant couple, my DH said, they have a shaky financial picture, will you be able to evict Dad, Mom, & brand new baby in the winter when they can't pay the rent? We went with the 2 guys who both had full-time jobs. Hittlets, whatever you decide I hope something in this long post helps! You might check into your local community education classes, in our area they offer classes on rental management. There are some great books on the subject that can help you avoid many mistakes and if you know anyone who has been a landlord they will probably have plenty to share. You should also get a copy of the landlord/tenant law for your state-ours are available online, and find out the federal laws that you are also subject to. Being a landlord is not for everyone and even if you are good at it you may not 'enjoy' it. For us it was definately the right thing to do and we are fortunate not to have any True Horror stories like KathyG reports, ours pale in comparison! Good Luck!...See MoreBuy house, rent it out for a year, then move in-Mortgage options?
Comments (5)Vamppire, If this particular property, and its timing to market, are really this important to you... you may have some other creative options at your disposal, (especially since it is also very likely that the seller is sitting on their thumbs w/o a whole lot of buyer activity at the moment.) If you are ready & willing to make the payments of ownership for a full year ANYWAY......... Why not approach the seller & ask for a Lease-to-Buy... or, alternatively, a seller-carried land contract with a sufficient non-refundable down payment (should the seller be uncomfortable with the potential that you could backout of a lease/purchase agreement.) Going about it this way you can; A) Avoid paying investor interst rates, B) Potentially pay even LESS than if you got your own loan (at least for that 1st year,) C) Avoid paying an additional set of financing closing costs, D) Qualify for preferential primary residence refinance rates & terms after that 1st year, instead of purchase rates & terms. This is something you'd likely need assistance from someone experienced in lease/purchase contracts or seller-carried land contracts... not a typical average real estate agent's forte'. Hope that is also helpful! CHeers, Dave Donhoff Leverage Planner...See MoreRent Out or Sell?
Comments (5)We have about 50% equity in the property, and net about $300 profit on it per month after mortgage and water are paid Thoughts from someone who was a longtime landlord and after 2008 swore to stay out of that market forever. Which makes the three rentals I currently have a bit hard to explain... How much money you clear after mortgage is really not important. You need to look at your net change in financial position. It is easy to clear more money on a rental property, just buy it with an interest only loan and you can make tons more than your mortgage, at least until the balance comes due. On the other hand, you can take a five year mortgage be losing money every month and still be in a great position. You have to consider three things (1) your net rental receipts (including paid repairs) (2) the increase or decrease in sales price, and (3) the increase or decrease in mortgage notes. The increase or decrease in sales price should reflect current condition. After you do all that reflect on how much you made and how much you worked, see if it is worth it. The three houses I currently own as rental properties are in a great school district which is building a new state of the art school and a new very upscale boutique type shopping center is going in, both only through an adjacent small park. I am making most of my money in appreciation. Also note that the IRS homestead tax exemption requires that you live in the property at least 2 of the last 5 years, so really you must sell three years after you move out or worry about that....See MoreTo rent out or not to rent out...
Comments (6)In my state, the deposit can be whatever amount requested by the landlord instead of the traditional 1 months rent. I would suggest offering a deal to your prospective tenant for a lower monthly rent and an increased security deposit. I wouldn't advertise the lower rental price because you want to attract potential tenants who are financially stable and able to pay the high end of market rate. Also, consider asking for lease of more than one year as having to find a new tenant can be costly. It would be expensive to leave the property empty, due to lack of rental income and the insurance on a vacant property is much more expensive than for an occupied property. Years ago, we faced a similar situation but without the financial incentive and we chose to leave the property empty and hired a neighbor to keep an eye on the house. I don't think he was much good at checking on the house but he appreciated the extra money in his pocket. I think, in the current age of improved wireless cameras with online video, keeping an eye on the house would be much easier than 20 years ago. I would lean toward renting it out and put the money towards your remodeling budget...See Morejill302
6 years agoJoaniepoanie
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