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Username Post: renting out your home        (Topic#1579215)
TraciK
TraciK 
Governor
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Joined: 08-30-05
TraciK

Has anyone rented out their home and if so what were your experiences? Give me the good bad and the ugly. lol

We are in the process of building a house and are trying to sell our house. But, there are 2 brand new houses in our neighborhood that we are having to compete with. Our house is only 4 years old. We live in a good neighborhood with really good school district. There are several military families in our neighborhood. Dh is retired military. If we rented our house I don't think we would have too much of a probably renting it due to the military community. But, there is always that chance that we have to pay both mortgages at the same time. We could do that if we had to for a month or two but that is it. And we are nervous about the renters not taking care of our house. We are moving in the neighborhood across the street. So, we can keep an eye out on the outside.


 
Gelidy Gelato
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Gelidy Gelato
In response to TraciK

my only suggestion would be do a complete walk through with the renter and take photos.(like what they do when you rent a car) Discuss what would be considered normal "wear & tear" and give examples of things that might result in them forfeiting part or all of their deposit. You don't have to go nuts with the speech. A lot of it is common sense.

I think the one thing that catches renters off guard is scratching hard wood floors. A couple really deep scratches and they can lose their entire deposit.

Also you might want to go for "no pet" and "no smokers".

PS The deposit is your protection against damage, so if it's legal in your area, ask for 2 months.

And personally I would come up with some excuse to get a look at the inside of your home after a few months of renting. That way if you see something crazy you can act.


 
Tina scraps
Governor
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Tina scraps
In response to Gelidy Gelato

You should contact your city/state for some info on landlord/renter laws, that will help give you some insight. For example, in my area, you have to give the renter a minimum amount of time notice before you come into the house (unless it's a literal physical emergency), and I believe you can only come in for certain designated reasons.


 
ScrappyMama6
Mayor
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ScrappyMama6
In response to Tina scraps

The best thing to do is contact some local real estate offices and see if they handle rentals. We rent a home and the landlord goes thru an agency, they process the payments, mediate any problems that need addressed, leaky roofs, water in basement, sink needs fixed etc.....and will evict for him if necessary. They charge 6% of the rental fee. We had to sign a 30 page agreement that covered everything from who to contact with a problem, to regulating the number/type of pets we could have, outdoor play structures for the kids, sheds, driveway/snow removal services , how often we have to mow the grass etc......

This protects the landlord against "slobs/trashy" ppl living in his house. They handle the lease renewal every year, and can do a walkthru every month if they want with proper notice to us. (They never have in 3 1/2 years.)

In fact, we have NEVER contacted them at all for anything. We have a great reppoire with the landlord and he calls us and us him freely. They bring us a ham at Easter and Christmas!

Its a lot less stressful as the landlord to let them handle your business, and I think the 6% is reasonable. Especialy if you have someone who doesnt pay, they can and will start eviction services in *10* days. Im sure the fee is different in your area, but may be something to consider.


 
TraciK
TraciK 
Governor
Posts: 16294
Joined: 08-30-05
TraciK
In response to ScrappyMama6

Thanks everyone!

I had a friend rent their house through an agency and she said they charged so much for anything that needed fixing.

I don't think we would have too much of a problem getting the monthly rent if it is a military family because all we have to do is call their first shirt. They take that kind of stuff pretty serious.

But, I am nervous about them tearing up stuff and just not taking care of it. There is a couple in our neighborhood that rents and they do nothing to the yard except mow. It looks terrible. There are so many weeds in the yard and the flower beds are not taken care of. The shutters need painted so bad. I hate it because it makes our neighborhood not look as nice. UGH!!


 
Seaexplore
Governor
Posts: 20269
Joined: 06-16-05
Seaexplore
In response to TraciK

We have a rental. The renter has been in it for 3 years. At first DH went in every 3 months. It's been well taken care of so we don't really go in. Rent is due on the 1st, late on the 6th. She usually pays on the 5th. We mowed and kept up the front yard for a year then she just started doing it. We also pay $200 of the water bill every other month (we're billed bimonthly). We pay homeowners insurance and the HOA dues as well. We do not use a property management company. There's really no need to if you have a tight rental contract.

I used to do maintenance for a military housing area and the people TRASHED the places they lived. Don't know if the same would happen where you are but it was horrible. I'm talking food left in the fridge spoiled when they left, dirty diapers piled up, garbsge bags sitting around. It was DISGUSTING!


 
RedSquirrel
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Posts: 5763
Joined: 05-09-09
RedSquirrel
In response to Seaexplore

My advice?

Find an agent you trust, and keep a tight rein on them. It's good that you will be local and can keep an eye on the place.

Try to come along for the regular checks, and build up a rapport with your tenants.

No smokers, no pets, no social security (I'm not sure what your equivalent is in the US, but I mean people whose rent is being paid for by the state) and personally I would say no students because students = parties.

Make sure your place is spotless and freshly painted when the tenants move in - they are more likely to respect a clean property rather than a place where "they won't notice one more scratch".

Budget and prepare for:
- repainting and refurbishing throughout after the tenants have left.
- the best house insurance available for rentals.
- complete change of locks between and after tenants, and make sure you get copies of all the keys.
- the tax implications of owning a second property.

Can you tell we've been stung? LOL

Good luck to you!


 
TraciK
TraciK 
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Posts: 16294
Joined: 08-30-05
TraciK
In response to Seaexplore

  • Seaexplore Said:
We have a rental. The renter has been in it for 3 years. At first DH went in every 3 months. It's been well taken care of so we don't really go in. Rent is due on the 1st, late on the 6th. She usually pays on the 5th. We mowed and kept up the front yard for a year then she just started doing it. We also pay $200 of the water bill every other month (we're billed bimonthly). We pay homeowners insurance and the HOA dues as well. We do not use a property management company. There's really no need to if you have a tight rental contract.

I used to do maintenance for a military housing area and the people TRASHED the places they lived. Don't know if the same would happen where you are but it was horrible. I'm talking food left in the fridge spoiled when they left, dirty diapers piled up, garbsge bags sitting around. It was DISGUSTING!



How in the world did these people pass their housing inspection? That is just gross!


 
TraciK
TraciK 
Governor
Posts: 16294
Joined: 08-30-05
TraciK
In response to TraciK

Now y'all are scaring me! lol

We still have our house up for sale. Hopefully someone will buy it.


 
Seaexplore
Governor
Posts: 20269
Joined: 06-16-05
Seaexplore
In response to TraciK

  • TraciK Said:
  • Seaexplore Said:
We have a rental. The renter has been in it for 3 years. At first DH went in every 3 months. It's been well taken care of so we don't really go in. Rent is due on the 1st, late on the 6th. She usually pays on the 5th. We mowed and kept up the front yard for a year then she just started doing it. We also pay $200 of the water bill every other month (we're billed bimonthly). We pay homeowners insurance and the HOA dues as well. We do not use a property management company. There's really no need to if you have a tight rental contract.

I used to do maintenance for a military housing area and the people TRASHED the places they lived. Don't know if the same would happen where you are but it was horrible. I'm talking food left in the fridge spoiled when they left, dirty diapers piled up, garbsge bags sitting around. It was DISGUSTING!



How in the world did these people pass their housing inspection? That is just gross!



No clue but it was really nasty. I frequently had to go back outside for fresh air because the stench was so bad.


 
Henri Jean
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Posts: 28773
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Henri Jean
In response to Seaexplore

Tracey - if you offer it as a lease purchase that may help you sell it. That means a lease agreement and sales agreement are drawn up at the same time and go together. They can rent for 6 months or a year or 2 years and then they have to put their money down and buy. A lot of people who have credit issues to work on or not enough downpayment money are attracted to lease purchases.

A lease option is different - that is not tied in with a sales contract - it just means that at the end of the leasing period they have the option to buy it and you have the option of selling it - no committments up front.

Lease purchase is a definite commitment up front.

Main advice I can give you on renting your house - get references and check them thoroughly. Ask the condition of the house when they left, did they pay on time, were they quiet or rowdy. Were there complaints about them.

Bill rented his house in Colorado to one renter for over 10 years. There was a lot to do when the house was vacated in the middle of the night and it took about a month to get it in shape again but no complaints. It brougth in a good extra income and is rented again - the current people have been there 2-3 years.

We have a house we are renting here in Ocala but it is in a bad neighborhood and we know we won't get top quality renters. But it is okay - they have been there for 3 years and the guy works for a flooring company. He completely hardwood floored the house. Yard is trashed by his dogs but so is eveyr other yard in that neighborhood. We know we will have repairs when he moves but that is okay.

Just closed on another house on Monday that is going to be a rental. Its a cute 3 bedroom with a pool and hot tub. We actually have a mortgage on it which makes me sick - I hate having a mortgage on anything but it was a short sale and we will pocket about $700 a month after payments are made so it was an investment and Bill said we will pay it off in less than a year so then we will have an extra $1,000-$1,100 a month income. And if we decided to pay it off tomorrow, we can. Just want to keep plenty of reserves.

Our personal home and other rentals are paid in full so if they sit empty for a few months it doesn't really matter. Just makes me nervous having a mortgage on this new rental because then you can't afford for it to sit empty or have a lot of repairs.

We have a friend in Florida who has about 27 rental houses and he does have to do a good bit of maintenance but the income for him is worth it. He even cuts all the lawns and does the yardwork himself to avoid paying someone.

With our new house we bought yesterday we talked to a lawn guy and it is going to be $160 a month for lawncare and management - hedges trimmed, etc so we will add that to the rent.

You may want to think about that if you are worried about the yard.

As Gelidy said, get a first and last month's rent up front and a security deposit. Renters often leave in the middle of the night.

Put in your lease agreement who is going to make what kind of repairs. They should get renter's insurance but you will be responsible for the policy covering the structure and replacement. In fact if you have a loan on it, your lender will require you continue to carry the insurance.

Good luck whatever you decide to do with your house.

Bill's father died about 7 or 8 years ago and left them a house in Vero Beach near the beach - its an older 2 bedroom cinder block - typical Florida home. It's been sitting empty and the weeds are waist high and inside it is trashed from the renter that stayed a couple months. And now all these years of being empty - it has really gone down and needs paint and carpet badly.

I think Bill and I are going to buy out his brother and sister's share and put the paint and carpet in and Bill will haul out loads and loads of garbage and junk. Then I think we will have another good rental property but I want to do cash on this one.


 
TraciK
TraciK 
Governor
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Joined: 08-30-05
TraciK
In response to Henri Jean

Hey, Henri! Thanks for the advise!

The $600 we would make a month off of the rent sure does sound good. But, dang what a headache if things go wrong.

We still have the house up for sale, just going to give it a few more weeks and see what happens.


 
Henri Jean
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Henri Jean
In response to TraciK

If you do rent Tracey, just have a clear understand what your responsibilities are and what theirs and have it in writing.

Laws vary in different states regarding evictions. In most states you have to give 30 days notice after violation or non-payment.

Give it a bit more time. Renting can be very lucrative and it can be a headache. Depends on how careful you are selecting your renter and how well you have checked references.

At least 90% of our renting experiences have been very positive. My parents rented out 4 houses at one time and had very few problems.

I think it helps to have a good repoire with your renters too.


 
TraciK
TraciK 
Governor
Posts: 16294
Joined: 08-30-05
TraciK
In response to Henri Jean

ok, thanks Henri! We may end up having to go the renting route because we have not got a call on the house yet. If we do rent we are going to refinance the house to make the payments lower. And we want to do that before the rates go up.


 
Seaexplore
Governor
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Seaexplore
In response to TraciK

Be careful with the refi Traci. Many lenders won't loan on a rental, even if it's a refi.


 
PokeyMom
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PokeyMom
In response to TraciK

If you think you are going to rent, and need to refi, you should do it now while you are in the house, so you can get the low rate.
Time frame from application to signing -- 6-8 weeks.
Refi also costs money, a few thousand in fees so add that in as an expense. If you have not paid off 20% of your current mortgage, you might have PMI added onto your new mortgage cost.
You can add all these extra fees into your new mortgage, but it will increase your new mortgage also.

Other costs to consider in your rental plan --
who pays for the utilities (gas/oil or water (if you get a town bill))
Replacement of light bulbs (interior or exterior)!
Trash responsibility/costs (our town, we have to have special bins and bags per week that we pay for).
Landscaping -- who is responsible, who pays or you hire someone for a price and factor that into the rent too.

Snow removal responsibility -- if you have to add that in.

House insurance on a rental -- sky high so you will have to go out and shop around first, get some quotes, and then factor that into your monthly fee. (insurance costs divided by 12 plus taxes divided by 12 PLUS add 10-20% for increases plus your mortgage payment (house only)= monthly payment)
Currently what you pay, is designed for you, but for a renter, the insurance and taxes will be higher to cover increased costs.

Another cost you may have to add in also, is if you have public/town water and you get bills for those, in our state, renters cannot be responsible to pay this, the home owner is, so this cost has to be factored into the monthly rent also.

Keep in mind that some people use LOTS of water (maybe more than you have used) so you have to factor in those costs also or else you will be paying out of your pocket the increased expense.
This would also matter if you are leaving behind a washer or dishwasher appliance (frequency of use could increase or decrease water used).

The lease with option to buy is a good idea.

HTH


 
TraciK
TraciK 
Governor
Posts: 16294
Joined: 08-30-05
TraciK
In response to Seaexplore

  • Seaexplore Said:
Be careful with the refi Traci. Many lenders won't loan on a rental, even if it's a refi.



I talked to USAA about this the other day. We are using VA and she said it didn't matter if it was a rental or not. But, yes we do still live here. They haven't even started on the house yet.


 
TraciK
TraciK 
Governor
Posts: 16294
Joined: 08-30-05
TraciK
In response to PokeyMom

  • PokeyMom Said:
If you think you are going to rent, and need to refi, you should do it now while you are in the house, so you can get the low rate.
Time frame from application to signing -- 6-8 weeks.
Refi also costs money, a few thousand in fees so add that in as an expense. If you have not paid off 20% of your current mortgage, you might have PMI added onto your new mortgage cost.
You can add all these extra fees into your new mortgage, but it will increase your new mortgage also.

Other costs to consider in your rental plan --
who pays for the utilities (gas/oil or water (if you get a town bill))
Replacement of light bulbs (interior or exterior)!
Trash responsibility/costs (our town, we have to have special bins and bags per week that we pay for).
Landscaping -- who is responsible, who pays or you hire someone for a price and factor that into the rent too.

Snow removal responsibility -- if you have to add that in.

House insurance on a rental -- sky high so you will have to go out and shop around first, get some quotes, and then factor that into your monthly fee. (insurance costs divided by 12 plus taxes divided by 12 PLUS add 10-20% for increases plus your mortgage payment (house only)= monthly payment)
Currently what you pay, is designed for you, but for a renter, the insurance and taxes will be higher to cover increased costs.

Another cost you may have to add in also, is if you have public/town water and you get bills for those, in our state, renters cannot be responsible to pay this, the home owner is, so this cost has to be factored into the monthly rent also.

Keep in mind that some people use LOTS of water (maybe more than you have used) so you have to factor in those costs also or else you will be paying out of your pocket the increased expense.
This would also matter if you are leaving behind a washer or dishwasher appliance (frequency of use could increase or decrease water used).

The lease with option to buy is a good idea.

HTH




These are some good things to think about. I do know about the refinance costs. I really don't see why this cost so much!! UGH

If I'm not mistaken the renters can pay the water bill. I will have to find out for sure though. The renters would pay all utilities. The trash is in with the water bill here. They would also take care of the yard. I do have a big rose bush that I have to cut back 2 times a year because it gets so big. I would have to tell them not to touch it! That we would do that. I don't want them to kill it or cut it back too much!

I have never heard of renters getting their utilities paid or having the grass mowed for them. Except for apartments.



 
PokeyMom
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PokeyMom
In response to TraciK

Usual utilities, phone, cable, electric are paid by the tenants including new account set up fees.
Around here, some renters pay oil/gas and some don't, depends on conditions, ours do and they pay for whatever is in the tank when they moved in.

Our insurance on our house went up 75% because we are not the primary dwellers.

Most renters of homes don't own lawnmowers (expense and headaches at times) and sometimes, they don't want to mow, they want a service to come and do it.
Unkept property = little furry creatures moving in.
Landlords usually hire the service or they do it themselves to keep an eye on things (like my dh).


 
Henri Jean
Queen
Posts: 28773
Joined: 04-25-09
Henri Jean
In response to PokeyMom

For the house we are going to rent out - we are taking care of the yard. We are tacking the price of lawn service onto the rent to make sure it is done and the yard isn't destroyed. More and more landlords seem to be doing that instead of just hoping the renters take care of it.

If you are doing a VA refi there are limits. PokeyMom above seems very knowledgeable - I used to know what they are but I don't know anymore. Her recommendation and advice was very good. I've been playing and traveling for the past 5 years - not bothering with selling real estate so I'm a bit out of the loop.

But what that means is that you are allowed to have a certain amount you have financed with the VA. In other words, if you finance the first house and use most of what is allowed you won't have much you can borrow on another house until the first is paid off.

However, I don't know what percentage of your new home you will need to get a loan for but it can't exceed the limits of the loan amount you can have with the VA. Anything above that, you have to pay cash.

So make sure you can put this house on a VA loan and the new one on a VA loan.

The big advantage of a VA is that you don't have a down payment. Since you have equity, you can use that as your downpayment. FHA and VA loans are often the same.

If you have to borrow enough on your new house to max out your VA benefits, you may want to check into FHA for this one. Or even better, a conventional loan. Then if you don't have the 20% equity already and have to pay PMI, then you can get rid of it when you do get 20% equity.

Also keep in mind that every time you get a VA loan the funding fee goes up. And since it is based on a percentage of the amount of the loan, that would be another reason to look at a comparison between FHA, VA and conventional.

We bought our current house on a VA loan which he paid off in less than a year. We bought our next house conventional becuase of the escalation of the funding fee. I doubt we will ever use our VA again for buying a house.

VA is a tremendous help if you have no downpayment or are refinancing and have no equity, but we've gotten to the point where it isn't worth it to us because of the funding fee. Conventional makes more sense to us since we put enough down to not have PMI or MIP.

USAA is excellent - we use them too - they have our car insurance! But make sure you will have enough VA monies left for your new house if you are going to finance it through VA. If not, I would look at another means, FHA or even better, conventional, for your current house so you can use the VA for the more expensive house.


 
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