Vacant house, out of town owner, and renovations... (tenants, 3%, investment)

[Mercury Cougar]

I own a house that I don't wish to sell at this point, but I don't want to live in it and I don't want to rent it out because I want to gradually work on renovating it. I can't do the renovations outright because of cash flow right now. I also do not live in the city where the house is, which is another reason I don't want tenants in it.

I would like to find a property management company that will keep an eye on the vacant house, keep the lawn mowed etc, and oversee renovations from time to time as I acquire the funds to hire in contractors. Is this a feasible option, or not? And would it be a property management company, or some other kind of company?

Ideas/suggestions?

[Silverfall]

I think a property management company is your best bet for what you are needing. Normally their fee is a portion of the rent, 10% is common out here, but you'll have to work out an individual fee for what you want them to do.

[chet everett]

Sounds kinda tricky... I mean I can understand the predicament you are in, this could drag on for quite some time. Most property management type firms are going to do everything they can to limit their liability / exposure. They generally will do OK reporting back that the lawn and other exterior stuff is being done as you requested, but providing security is not something they can really be expected to do. I mean even the larger construction sites have to hire a guard service to make sure that no one leaves the site with a truck full of materials for another job... When it comes to reporting back on even the actual work done by contractors the property management firm woukd be in an awkward position, of taking your money, giving it the contractors, then if something is not done to your satisfaction who is really to blame?

I might try pressing a trust worthy retired neighbor or relative into being kind your "on site representative". The way I would see this working is that some one wtih lots of time and a vested interest in in either helping out their family or keeping the block looking good would be willing to do this as sort of a partnership. You would reward them with some minor stipend, but their real motivation would be to help move this along ASAP....

[art_teacher_mom]

Your situation was exactly like ours.
We moved from our house in 2008 and couldn't list it because of it needing so many repairs/renovations.
We ended up hiring a trusted neighbor as our "property manager". Her son mowed the lawn, she went over once a week and flushed toilets, cleaned up bugs, let in workers, etc.
Her service was invaluable and we could not have afforded to pay for renovations AND a real property management company. If you know ANYONE who would do this for you, I would pursue it.

I will warn you, it was a financial and emotional drain to renovate a property that is out-of-town.
It consumed our weekends for 2 years.
Good luck! ( I don't mean this sarcastically. Really, good luck.)

[Mercury Cougar]

Originally Posted by art_teacher_mom

Your situation was exactly like ours.
We moved from our house in 2008 and couldn't list it because of it needing so many repairs/renovations.
We ended up hiring a trusted neighbor as our "property manager". Her son mowed the lawn, she went over once a week and flushed toilets, cleaned up bugs, let in workers, etc.
Her service was invaluable and we could not have afforded to pay for renovations AND a real property management company. If you know ANYONE who would do this for you, I would pursue it.

I will warn you, it was a financial and emotional drain to renovate a property that is out-of-town.
It consumed our weekends for 2 years.
Good luck! ( I don't mean this sarcastically. Really, good luck.)

Well, I could list it, it's in liveable condition. I'm just reluctant to do so because I don't need to sell it, and owning a house outright (it's paid for) is a real safety net.

I don't know any of the neighbors there that I'd trust enough to give control over to, which is why I was figuring an actual property management company would be a better risk.

[art_teacher_mom]

Originally Posted by Mercury Cougar

Well, I could list it, it's in liveable condition. I'm just reluctant to do so because I don't need to sell it, and owning a house outright (it's paid for) is a real safety net.

I don't know any of the neighbors there that I'd trust enough to give control over to, which is why I was figuring an actual property management company would be a better risk.

I know what you mean about your paid-for house feeling like a safety net.
My husband felt the same way at first.

Another side is that it can actually it can be a liability, too.
Not sure if you've checked into it yet, but it's quite a bit more expensive to insure an empty house. Are you going to keep the water and electricity on?
If there's a sudden cold front, will your property management company get out there quick enough to drip faucets?

Do you plan on moving back there in the next five years? If not, and you sell it later, do you know about the tax considerations? (I believe the tax code states you have to live in it 2 of the last 5 years to not pay capital gains.)
Don't forget the cost of property taxes. Where we live they're high.

Will you be coming back to stay in the house occasionally? Do you think word will get around your neighborhood that the house is vacant?

You may be very aware of all these things. I don't mean to patronize you in any way! These are all things we've learned in our recent decision-making process, and I just wanted to share. Best wishes.

[Mercury Cougar]

Originally Posted by art_teacher_mom

I know what you mean about your paid-for house feeling like a safety net.
My husband felt the same way at first.

Another side is that it can actually it can be a liability, too.
Not sure if you've checked into it yet, but it's quite a bit more expensive to insure an empty house. Are you going to keep the water and electricity on?
If there's a sudden cold front, will your property management company get out there quick enough to drip faucets?

Do you plan on moving back there in the next five years? If not, and you sell it later, do you know about the tax considerations? (I believe the tax code states you have to live in it 2 of the last 5 years to not pay capital gains.)
Don't forget the cost of property taxes. Where we live they're high.

Will you be coming back to stay in the house occasionally? Do you think word will get around your neighborhood that the house is vacant?

You may be very aware of all these things. I don't mean to patronize you in any way! These are all things we've learned in our recent decision-making process, and I just wanted to share. Best wishes.

Thanks for all your input. Yeah, I've considered most of those things, and I think it's highly likely I'll be back within five years. I lived in the place for ten, but I hate renovating when I'm in residence. I'm sure you know how THAT is!

[Zyngawf]

Why not sell it and put the money toward a house where you are now living and have your residence be owned free and clear?

[Mercury Cougar]

Originally Posted by Nocontengencies

Why not sell it and put the money toward a house where you are now living and have your residence be owned free and clear?

Because that wouldn't be financially smart. First off, I don't want a house where I'm living right now, because real estate is too expensive (and I don't intend to stay here more than five years). If I sold the house I own, the disparity in real estate prices between there and here would only net me just enough to be a down payment on a house here. Why trade that for a house I already own? There's no reason to sell a house I already own outright, just to get into a mortgage. If I hold on to the house that I own, then in the future if I ever have some massive financial setback, I have somewhere to live for free.

My concerns are to keep the house without having the responsibility of being an absentee landlord, and to have it properly maintained so it doesn't look vacant so I don't cause problems for my neighbors.

[beachmouse]

Is the area the house is located a place where you expect to see increases in prices in coming years? Do you have sentimental attachment to the home or does it have something unique for the area you wouldn't be able to find again if you were back looking on the housing market?

If not, I'd be inclined to sell the house and park the money in a low risk investment like money market, CDs or bonds that gets you 3% a year. Because you probably aren't going to see more than 3% gross appreciation in many housing markets in coming years, and by the time you add in taxes, insurance, management, utility fees (my electric company charges you $25 a month to have an account with them, even if the amount of power you use in a month is essentially zero) it takes a pretty strong belief in future real estate appreciation to have it make sense to deal with the carrying costs when you can sell it and park the proceeds in a low risk investment that is still likely to get you a better return.