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I totally understand where you are coming from - we were pretty much in the same boat. We took both a $8k federal tax credit and a $10k state tax credit - both of which we would have had to pay back if we had sold the house vs. renting it out.
Our current plan is to rent it out a couple more years and then see where we are at - the market value of the house, if we are moving back to the area, etc...
It didnt work out for me. It wasn't a good experience. I went through 3 tenants in a year and half. The last two did quite a bit of damage. No recourse as they were broke and already had a long list of people after them. I lived out of state but had the neighbors and family keeping an eye on things. If I hadn't, I would have been in worse shape. I was not landlord material and sold the property at a loss.
Thanks, everybody. Right now we're just in the "what if...?" stages of this process. We don't really want to be landlords, but, given the fact that we bought less than three years ago, we'd probably be looking at (between paying the gov't back its $8,000, a realtor's fee, and paying for any demands the new owners might have--closing costs, etc, for "taking the house off our hands") owing around $30,000, and we're just not willing to do that. My company's standing right now is not good, so I'm going to look around for another job in this area before the lay-offs start and hope that I find something. My wife and I have no particular ties to this area, so, if something good comes along somewhere else, we'd like to be free to go. A property manager is sounding like a really good idea...
Regarding refinancing (something we never actually thought we'd own this house long enough to consider)--how much does something like that cost and what are the (general) advantages vs. disadvantages? Also, didn't I hear something about a new plan that is supposed to help underwater homeowners refinance? Anybody know anything about that?
So many questions--thanks guys.
Not sure about the rules of that rebate, whether it was owner occupied conditional. You might want to check before you rent.
Regarding the help for underwater homeowners, I have heard there is a Fed program that Obama started few mths ago. You might find something on HUD govt pages.
ASAP. I researched and found this link....Hopefully it has some answers for you re: avoiding foreclosure: http://portal.hud.gov/hudportal/HUD
Last edited by JanND; 02-25-2012 at 05:58 AM..
Reason: added link
It didnt work out for me. It wasn't a good experience. I went through 3 tenants in a year and half. The last two did quite a bit of damage. No recourse as they were broke and already had a long list of people after them. I lived out of state but had the neighbors and family keeping an eye on things. If I hadn't, I would have been in worse shape. I was not landlord material and sold the property at a loss.
The most important task you have as a landlord is screening your tenants to find a good one. Check their credit score and check for criminal backgrounds, require phone numbers for previous landlords so you can call and check references, require a reference from their employer to make sure they are not about to become unemployed. Make sure you check that they are not giving you phone numbers to a friend who will give you a bogus recommendation. Require a substantial deposit, first months rent and if common in your area, last months rent paid in advance. Use a good lease written for your state laws. Read up on your state laws so you understand what your rights and obligations are as a landlord.
When you find a good tenant, treat them well and make repairs promptly when needed. Make sure everything in the house is in good repair before renting it out. Take photos and do a move in inspection with the tenant documenting the conditions before the tenant moves. When the lease is up and the tenant moves out do another move out inspection with photos documenting any damage. Send the tenant an itemized list of repairs needed and make sure you send it before the time limit for your state is up. It varies from 30 to 60 days depending on the state. That is another reason you should read your state laws.
We have leased out our first home for about 10 years. For the most part it has not been too problematic, we have had only two tenants in it, the first one skipped out on paying the last months rent. I should have taken him to small claims court for it but I was too busy with the demands of my job to find out what was involved. They did not do much damage so the security deposit covered most of the costs.
I live a few miles away so making or arranging for repairs is not much of a problem. This can be a little more problematic if you do not live in the area. Compile a list of reliable repairmen in your area for use when you need them. Best of luck to you.
I've been involved with income properties for a long time. Single family homes can be treated a little differently than a multi unit apartment/community. My husband and I leased out a single family home, we did everything ourselves, I am a realtor and in no way was going to pay another realtor half month's rent for finding someone. I just put a sign up on a weekend with balloons, along with some online marketing, received a couple of applications and did my own screening; which consisted of rental history and credit checks. My MAIN concern was no evictions, broken leases, and they had to EARN at least 3x the rental amount, so job verification was very important. In the lease (depends what residential lease agreement you decided to use) I made sure to put that they are responsible for repairs under a certain dollar amount ie; broken window, plumbing, etc; if it's something major like the a/c, heater we will of course repair because it is OUR property. The rental amount does also include landscaping simply because we don't want HOA problems and it helps to keep an eye on things. Security deposit was a little more than 1/2 one months rent plus a pet deposit. Many of the single family homes that I have leased here, (Houston) have it written that under a certain dollar amount the renters are responsible for the repair, this keeps the owners from having to deal with small and constant repairs, it also encourages the renters to take care of the home. You have to consider that if they want someone to come and unclog their toilet, they can go live in an apartment community, most renters that rent single family homes want to be left alone.
I've been involved with income properties for a long time. Single family homes can be treated a little differently than a multi unit apartment/community. My husband and I leased out a single family home, we did everything ourselves, I am a realtor and in no way was going to pay another realtor half month's rent for finding someone. I just put a sign up on a weekend with balloons, along with some online marketing, received a couple of applications and did my own screening; which consisted of rental history and credit checks. My MAIN concern was no evictions, broken leases, and they had to EARN at least 3x the rental amount, so job verification was very important. In the lease (depends what residential lease agreement you decided to use) I made sure to put that they are responsible for repairs under a certain dollar amount ie; broken window, plumbing, etc; if it's something major like the a/c, heater we will of course repair because it is OUR property. The rental amount does also include landscaping simply because we don't want HOA problems and it helps to keep an eye on things. Security deposit was a little more than 1/2 one months rent plus a pet deposit. Many of the single family homes that I have leased here, (Houston) have it written that under a certain dollar amount the renters are responsible for the repair, this keeps the owners from having to deal with small and constant repairs, it also encourages the renters to take care of the home. You have to consider that if they want someone to come and unclog their toilet, they can go live in an apartment community, most renters that rent single family homes want to be left alone.
Texas sounds very different than my SF Bay Area experiences over the last 30 years of rentals...
The Landlord is on the hook for just about everything... even if the tenant breaks a window... the landlord must repair it promptly and then has the option to bill the tenant...
I had one unit where the tenant owned stove didn't have all the burners working... I was issued a 72 hour repair order on a stove that I didn't own... much of this is due to increased rental inspections... anywhere from once a year to once every 5 years can be typical.
There are strict habitability requirements and then add state and city requirements plus my local Rent Control Board and Business License for each rental...
As the burdens increased... I have transitioned into commercial because it is much more straightforward when it is a business to business transaction.
We currently rent out our home and have it handled through a property management company. typically they charge 6-7% of the monthly rental as a fee. Look, that home is probably your biggest investment, its worth 6-7% to protect it. Our manager handles everything, collects rent, repairs, etc. Best of all, we know someone is looking after it on a regular basis AND the tennants know someone is looking after it.
Its too big an investment not to have a professional manager!
I am regretting the property manager we chose to find us tenants. We have had nothing but issues and have spent way too much money getting the house in even better shape that it was when we bought it. After the lease was signed the tenants had two walk throughs, one with our agent, we are hearing that the tenants who just unpacked have a 5 page list of items. I am puzzled and thought that is why the agent walked them through to note the things that they will not be held accountable for. I think we sell next year. Sign.
Your lease outlines each parties responsibilities... subject to applicable law.
Sometimes, I will find a tenant is just testing the waters to see how far you will go... they are fishing for upgrades.
Other times... the tenant is just being thorough and making sure you are aware of deficiencies... no matter how small... so they will not be an issue at move-out.
One of my best tenants both in terms of housekeeping and taking care of business was meticulous at move-in... I received a one page room by room list noting scratches and nicks... they were just very conscientious and had no issues for the 3 years they rented.
Your lease outlines each parties responsibilities... subject to applicable law.
Sometimes, I will find a tenant is just testing the waters to see how far you will go... they are fishing for upgrades.
Other times... the tenant is just being thorough and making sure you are aware of deficiencies... no matter how small... so they will not be an issue at move-out.
One of my best tenants both in terms of housekeeping and taking care of business was meticulous at move-in... I received a one page room by room list noting scratches and nicks... they were just very conscientious and had no issues for the 3 years they rented.
Thanks so much for the input. Good to know. I have not seen the list nor heard any from the p.m,,,,so I am hoping they are finally settled in now.
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