Renting a home will not help get it sold.

[Axiom]

We sold our house about a year ago and are currently sitting on the sidelines in a rental.

I'd have to have some pretty serious concessions from the owners if they wanted me to make the house available at a moments notice, always have it "show ready" etc. all the while knowing the goal was to sell it out from under me.

We had an incentive to do those things as owners... as renters, not so much.



Interesting note:
The owners of the house we're in now tried to sell first, but decided to rent it out because they felt the offers were too low (even though I know one of them was for almost 3x what they paid less than 10 years ago)

Then the first folks who rented it decided they were ready to buy, so about 6 months into their 1 year lease they made an offer on the place. But since prices had declined, it was for less than the owners had been offered before. They said no, so the renters promptly broke their lease and bought something else.

A few months after we moved in there were some major problems discovered that are going to cost a huge chunk of change to fix. The owners asked if we were interested in buying the place and offered it to us for significantly less than the previous offers they had received.

I imagine in their minds it was quite the deal and I understand they were shocked when we said no thanks. But why in the world would we want to pay more than we're paying in rent to own a place that is located in a declining market and that we know needs major work?

I'm thinking the rent it out and wait for the market to turn around thing isn't working out too well for our owners.

[lvre411]

Always fun stuff and when we get into these conversations with sellers.. we have to carefully analyze and consider the sellers situation and the actual house. Getting too creative can certainly do more harm then good. (For the thread that this question pertains to, I'll stay out of that one since there are so many unknowns going on. Those are situations that nobody enjoys and I hope it works out.)

To answer the question for this particular thread, renting out a house while selling it depends on the actual rents the home can generate to the relationship for the price.

Could it cash flow for an investor without having to put more then 10% down if a tenant is in it paying X amount in rent? If so, I would not hesitate to get a renter in there because I've got the investors that would purchase it under this type of scenario. But... that's our market and does not apply everywhere.

Now.. if the before tax cash flow is nowhere near break even (and certainly not if the after tax cash flow is negative) I would not suggest putting a renter in a home and trying to sell it but once again, this depends on the seller's financial situation.

(Real Estate tip for buyers -- can you rent it out and come close to covering your mortgage if this situation happens to you and you need to sell?)

The tenants are going to get annoyed (50/50 experience on helpful tenants cooperating when we get into this), buyers looking to purchase as their primary (just look at the comments on what people think about this) are not going to go through the hassles and the real investors certainly are not going to come around..etc.. etc..

True investors are a different story - if the numbers are right, my clients prefer to already have tenants in the property when they buy it. Of course... we have our own due dilligence that we do for screening the tenants and verification that they are paying rent, etc..

It's always tough to comment on something that is different in other markets because it may not apply so keep all of that in mind.

Something else to consider are lease options but that's a whole other topic...

[lvre411]

Originally Posted by 70Ford

Do you guys think this is true? It is true for me. I won't rent a house that is for sale. It costs a lot of money to move.... Why would I choose to incur that cost in say 6 months to a year? And then have to find a new place..and all the running around and hassle that entails.

I wouldn't do it.

Would YOU do it? And why?

Your rental contract can't be broken in our state because somebody sells it unless there is a clause in the contract that allows this (never seen it and I would never put one in).

And... we can put the home up for sale after you've rented it. We just can't kick you out and make you move until the end of your lease agreement. (Homes that go into foreclosure are a completely different and very sad topic for the owners that do this.)

Our MLS sheets specifically state if a tenant is in the property and how much they are renting the home for. This is a whole different game anyways and not your typical sale.