Real Estate

Maybe I should rent my house if it doesn’t Sell.

Continuation from my last blog….My House isn’t Selling in a Seller’s Market.

So what happens if you are one of the 439 homes that were removed from the market in the under $200,000 price range in the last 30 days. Perhaps you have decided to wait until the market improves (inflation catches up with your desired price) or you have decided to wait until you have paid more down on the house so you have more equity. 

But what if you really need to move and so you decide that it might be better to rent the house than sell at the current market value. I understand. I did that one time when we were young.  We bought a house in April of 1992 and got orders to move to Oklahoma in December of the same year.  We had no equity and no money to bring to closing, so we chose to rent the house for about 4 years.  At that time we were able to sell the property and walk away without bringing money to the table.  And while I currently own rental property, I never want to be a long distance landlord again.  Just too much stress.

First, you need to understand tax law.  If you own a house that you have lived in 2 out of the last 5 years and sell for less than $250,000 as a single person or $500,000 if you are filing married, you do not pay taxes on the money from the sale of your primary property. You do not have to reinvest this money. It is yours to keep.  If you turn this house into a rental, you will want to discuss the capital gains tax and the recapture tax of any depreciation you take from the house with you CPA. You could incur more in taxes than you pay to walk away, so please discuss this matter with a professional accountant.

Second, there will be maintenance. Things break in houses and tenants want those things repaired in a reasonable time frame. And some repairs like heating are mandated by law that you repair in a certain time frame. The tenant is not going to want to wait until you can save up for the new roof, air conditioner, plumbing repair. So make sure you have some savings to make those repairs.

Third, tenants don’t always take care of other’s people’s property the way you would. Not all of them are going to change the air filters regularly, clean up after themselves or take care of the yard the way you would.  When they move out of the house, you will most likely need to paint, clean or replace flooring, trim bushes, and other minor maintenance items.

Forth, it may take you some time to find a good tenant. I would advise you that it is better to wait to get a good tenant than to just take the first one with cash in their pocket who you may need to evict. So you will want to have some money saved to pay the mortgage while you wait to get that tenant. And hopefully they pay every month and on time.

Finally, If you are out of state you might consider hiring a property manager to look after your property.  Make sure the rent is sufficient to pay the management fees, mortgage and any repairs. Also make sure you get a good recommendation for the property manager, since some of them are better than others. Ask questions as to whether they have an in house maintenance person or other contractors.

After reviewing all the costs decide if you really want to become a landlord. I do believe there is money to be made in rental property if you that is what you want to do. It is a job. If that is not what you want to do as a job, I would suggest you cut your losses and sell the property at fair market value in this great market.

If you are looking for a great realtor with experience who can get your house sold, call me today. 405-213-2992 or visit my website at equityhomesteam.com.

Real Estate

Maybe I should just rent it

In my last post I talked about pricing a home right to sell even if it means bringing money to the table. While there is nothing illegal or immoral about a seller bringing money to the table to clear the note and sell a property, it just seems wrong to many people. This is an investment and as an investment, it ought to make you money or at least cause you to break even.
So sometimes people think that the alternative is to rent the property. The renter can pay down the mortgage and then they can sell the property without bringing money to the table. That is understandable. However there are some things you will need to consider if you chose this path.
1. Either study the landlord tenant act and know it or hire a property manager. You need to know the law and follow it.
2. Make sure you have a separate bank account for the rental property and the escrow.
3. Have some savings for repairs. While you may be ok living with a broken a/c or garage door opener until you have the funds to fix it, your tenants will not.
4. Have some savings for times of vacancies or when your tenant is late paying or doesn’t pay at all. You still need to make the mortgage payment.
5. If you are going to manage your property yourself make sure you know how to properly screen a tenant. Just because they have the deposit and first month’s rent doesn’t mean they will have the next month’s rent.
6. Drive by your property and check on the inside occasionally. Your lease should give you authority to inspect with notice.
7. If you are moving out of town or state, hire a property manager. It will cost but it will be worth it.
8. Plan on painting and making some repairs when the tenant moves out. The security deposit may not cover all of it.
These are the basics considerations when considering whether you should rent out your property rather than selling it. There is also emotions that will come into play. This may have been your first home or one your fixed up. It is heartbreaking to see others not taking care of your house the same way you might. So decide if you are willing to do all these things or if it might be better to just sell it and move on. I personally have rental property. My very first rental property was one that my husband and I bought in Omaha, NE and then learned a year later we were getting transferred to Oklahoma City. We didn’t have the money to sell the house and decided to rent it. And of course we did it ourselves out of state. So I have been there. It was a learning experience. The education cost me some money. I will never personally have a rental that is not within a 20 mile radius of me. But that is me.
If you are thinking of selling and would like an experienced Realtor to help you with the transaction, please contact me at 405-213-2992 or visit my website at http://www.sandiwalker.com

Real Estate

I didn’t know the dog would eat that??

dog damage
The rent was do from my tenant who always pays on time, so I knew something was wrong when I didn’t get rent this month. I have been in the house many times over the past four years and everything was fine. This tenant always paid on time and took good care of the property. Floors looked fine until I went in the property today.
So I was shocked to see that the dogs had eaten through the pergo (lamanite) flooring. This stuff is suppose to be scratch and dent resistant but obviously not completely dog resistant. I can’t imagine that this tasted good. Or maybe they were just digging to see what was below the wood flooring. Either way, I now have to replace the floor.
I have been a landlord for a long time. And nothing really surprises me but it still makes me frustrated when people and animals destroy my property.
Lots of landlords do not want to allow pets into their rental property because of potential damage. While other landlords such as myself have decided to allow pets into the property but with a pet deposit. But how much should you charge for a pet deposit. A $200 or even $300 pet deposit is not going to pay for this damage. maybe I should start charging a $500 pet deposit. This is the problem with pets in a rent house. The floor is probably $700-$800 to replace and that is if I do it myself.
So I will take the next several weeks to do some updates and clean the property as well and change out the flooring. Maybe I will put ceramic tile in the livingroom to replace the pergo flooring. Surely the next animals will not eat through it. I could always deny animals in the rental but it has been my experience that they will just sneak the animal into the house.
Investing in rental property can be a way to increase in wealth. Whether you choose to allow pets or not in the rental is a choice only you can make. Pet deposit’s help to pay for some of the potential damage in the property but will most likely never cover all the damage. If damage such as this occurs you may have to file a suit in court to recover the additional damage.
If you have questions regarding investment properties or other real estate questions feel free to contact me at 405-213-2992 or visit my website http://www.sandiwalker.net