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Lol. Okay, okay, you guys have convinced me--this is not the way to go for us. I think part of it is a little bit of sentimentality on my part. This is the house my kids grew up in. If we make a mistake in moving and still own the house, we could always come back. In some ways, though, I also feel this is like the storage unit we rented for five years because we moved across the country and couldn't get back to reclaim our stuff. A big waste of money when we should have just cut our losses to begin with (most of the stuff in the unit we wound up throwing out anyway and, with all the money we spent in rental fees, we easily could have bought new stuff right from the get-go). Thanks again!
I get the sentimental part. My kids grew up in my old house and I was sad when we decided to sell but once you start looking at houses and find one you like you get excited about moving and starting new somewhere. It takes time. It's a process and the old house where all the memories were made becomes just that, a wonderful memory to look back on. You'll have memorable moments in the new house too.
If you don't stand to lose too much money if you sell I would just sell it and move on.
Some area's have gov't refi programs designed for those that are upside down on their mortgage. I don't know if you need to refi or not. I'm just throwing that out there.
We've been landlords for over 20 years with minimal problems, and I can honestly say that we have never lost money on any tenant. I would never rent the house out that we currently live in. We have rehabbed properties with tenants in mind vs our house that we have restored and put high end finishes in. I would never consider being a long distance landlord unless it was a vacation rental with on sight management.
You need to talk to an accountant because once your house becomes a rental and is no longer a primary residence you will be liable for capital gains if the property values come back. The positive side is that you may also be able to claim a nice loss if the property values don't come back. Our last accountant did that with some vacation condos he did a short sale with. He was able to write off 100k, although it really didn't cover the actual financial loss.
Being a landlord allowed me to retire at 58 and yes, there were a couple of difficult times. All in all I would do it again. Think long and hard before you do decide to rent your house out and talk to a good accountant before you decide on anything.
I owned a couple dozen rentals at one time, including the home I'm now living in. Like Elliedeee says, it's a crap shoot. Most of my tenants were great. Some were HORRIBLE! If money is tight, I wouldn't gamble with your only large investment. I've seen them do damages that exceeded $10K in a year. I'd have been better off letting it set vacant. In fact, sometimes I do just let it set vacant. Being a landlord can be very frustrating! Oh, and the ones who do the worst damage always leave owing rent, so $1K in deposit doesn't even pay the back rent, let alone repair the damages.
You can't afford the risk. Sell at a loss if you must, but don't risk the house. If your net worth is $10K, don't bet $100K on craps.
I agree.. I rented my house for 19 months. The tenant always paid late, wrecked the carpet, destroyed walls that were painted right before she moved in. She broke the brand new dishwasher. She brought in cats that destroyed the subfloor.
Her security deposit did not cover the damage.
If I did not have savings to cover the cost of late rent and damage, it would have been a huge financial disaster. If you can't cover the expenses without rent, don't do it. Cut your losses and sell. Which is exactly what I am doing. $20k loss.
Let me ask a very simple question: let's suppose you did not own this house and you lived in a different area, would you buy this particular house, for the price you could sell it for (minus costs), for the purpose of using it as a rental? My guess is no. Why is this different than keeping it as a rental?
An exception is if you wanted to move back to this house at some point.
Not every house makes a good rental. I don't have any good stats but there seems to be a very high dissatisfaction level of people that converted their home to a rental and people that are absentee landlords. Compound that by inexperienced landlords and I think you are really shooting the odds of this being a positive experience.
Yes, once a house becomes a rental, it is a business. It is depreciated at a set rate every year per IRS and taxes and once you sell, that depreciation must be recouped by deducting from the base price of the house, thus you pay more tax on the "profit". And, remember, as a house ages, more things go wrong and more maintenance is needed.
We rented a house for 5 years. It had been our home so we had it fixed up very nicely with many extras, not the sort of house that makes for a good rental. A renter will not appreciate all the extras nor will they take care of them.
We have had to update many things that were ok when we first rented. But things go out of style and people want to buy new and improved, not old fashioned. Plus we had a ton of dirt to clean out and lemme tell you this surely isn't easy. Plus, if they do bad damage inside, like holes in walls, etc., guess who gets to fix it all?
For those of you who are saying don't do it, have you ever rented in your lives? Were you that terrible?
First little house I rented was when I was barely 21 years old. Before we moved out, I noticed that the paint looked dingy and feared we'd maybe made it dirty and I washed down all the walls. It looked the same, was a bad paint job! But I did my best to leave the place nice.
Next place I rented was a house in another state. Went back after we got our stuff out and cleaned everything neat as a pin.
Next place was an efficiency apartment. On moving day we cleaned as we moved out, replaced an overhead light fixture that we'd broken.
Last place was a trailer and I went back the day after and cleaned it thoroughly. A couple weeks before I had pulled all the weeds in a very big garden alongside a privacy wall. Owner's son came by very very surprised, with our security deposit, and said he was surprised how nice I left things. Ah, what exactly did you expect?
No, I was never as terrible as the tenants I had. Not even close.
You should contact several real estate agents and have a frank discussion with them about your situation.
If you hire a good agent I’m sure he/she will price your house accordingly and make good presentation. Also, they could offer advice, so you can be better prepared for selling. Homes in bad locations sell all the time.
Oh this house is in a good location, the 1st time we tried to sell it was a huge down market in real estate and nothing was selling. We weren't going to give it away. I've already talked with my niece who is an agent and she will be listing it for us as soon as we get all the repairs, upgrading etc. done. It's finally looking pretty nice. Our market is up so we will probably come out ok this time.
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