Rent vs sell

[Parsnip Totin Jack ★]

The house in Ohio isn't moving. We've had a few open houses and private showings but no offers. The feedback we're hearing is that the house needs updating. We'd like to do some updating, new shower in master bath for one and the basement isn't finished, but we don't have the money to put into these projects. I'm thinking of renting the place for a year or two and bank the money to pay for the updates down the road. Anyone with experience as a absentee slumlord?

[petitepedal ★]

I tried that once....granted I was young and the house was old....I am not so sure I would do it...unless you screen them very very well...and have someone who can be on site for you if necessary.

[Tizeye]

The comeback to that excuse is...

1) It is priced to reflect the lack of updating and provides a "clean slate" for the new owner's update preferences.

2) Sure, I can take off market, update and return to market at a higher price, but the new owner will have to live with what I choose.

[bikeman564™]

I personally would not want the BS of renting. Yes, you can get great renters, but the chance of getting ahole renters turns me off. If I ever did rent I would have a management company deal w/ everything so I would not have too. My neighbor rents his condo to his Aunt, and that works out fine. The people he had in there before were noisy AF I know what he rents his condo for, and its a decent amount (for him).

[Randomguy]

Everybody wants easy and done.  Update, remove reasons to pass your house over. That said, lower your price?  It would do you good to cut all ties to Ohio. 

[donkpow]

Every home I have seen under management by an absentee landlord has been victimized by the tenants.

[Randomguy]

Does LAJ need a place to rent?

[Dirtyhip]

Renting has been lucrative for us.  Laws are changing.  They are slanted toward the renters and less protections for the landlords.  You can't turn away people like you used to be able to.  You have to give them their number in line as you run their checks.  You can have high standards, but they have to be the same for all. 

Also, you can't find people with decent credit these days.  This is why they are all renters.

We have been very lucky.  The renting has helped to pay off our other house.  Money in the bank.

Note:  We are probably selling our other home this year.  The renters are going to freak out.  We have been very kind to them.  They really like us, and I don't think they will find a place of the same standards, when we boot them. 

[Airehead]

I say lower the price and sell.  Have your agent do the wording for realtor.com and other places that says motivated seller, priced to allow buyer to update to their satisfaction.  Absentee landlord is just asking for trouble.

[Dirtyhip]

1 minute ago, Airehead said:

I say lower the price and sell.  Have your agent do the wording for realtor.com and other places that says motivated seller, priced to allow buyer to update to their satisfaction.  Absentee landlord is just asking for trouble.

unless you pay a prop manager.  The problems arise when you can't get to the place to repair. Being the handy person for your rental is a way to pocket more of the money.

[Green Grass]

1 hour ago, Old#7 said:

Anyone with experience as a absentee slumlord?

Boy, do I.  And it was by no means a slum house.  Here goes:

My house sat on the market for 10 months with little action...not a single looker came back a second time.  So, I decided to hire a prop manager and lease it for a year.  After a year, feeling market conditions had improved, I elected to not renew the lease.  When I got the house back, it was a filthy mess.  FILTHY.  Just under $5,000 of damage had been done to walls, doors, built-in's, and fixtures.  But the big deal is how absolutely filthy the place was.  The property manager proved to be incompetent and unethical...disavowed any responsibility to do any work to bring the house up to salable condition (I wasn't expecting any $ from them, just coordinating workers).  They turned over the tenants deposit (way inadequate) and basically said "you're on your own".  

It took a month and a half to get it back in condition.  The commercial cleaning crew I hired took almost 3 days to clean it up.  And they did a fantastic job. 

This is on a house that rented for nearly $4,000 per month.

My advice:  lower the price and get it sold.   No matter what you change, the new buyer isn't going to like it anyway....

[Parr8hed]

I have friends that rent some houses.  But they are houses that they bought specifically to rent.  At the level of the house that you are trying to sell I would advise against renting just from hearing my friend's stories.  I agree with Goat.  Lower your price and sell.  Offer to throw in some free hookers and blow for the first month for whoever buys it.   

[Parsnip Totin Jack ★]

Thanks for the great responses. We would have to use a property manager and it sounds like there is too much that could go wrong and not enough to balance the threats out to a positive outcome. If we lived near there it would be different. We will look into dropping the price to sell. I want to close and be done with this.

@Random dickbag LAJ is barred from the property. Do you remember that a bill collector came to our house looking for him once? He hid upstairs in his room while my wife yelled at him and the bill collector simultaneously. I took the bill collector out front and explained that LAJ is a worthless POS and the debtor can have him. But, if the lender makes one move to place a lien on my house (which he threatened) for LAJ's debt I would own that bank within a year.

[jsharr ★]

10 minutes ago, Old#7 said:

Thanks for the great responses. We would have to use a property manager and it sounds like there is too much that could go wrong and not enough to balance the threats out to a positive outcome. If we lived near there it would be different. We will look into dropping the price to sell. I want to close and be done with this.

@Random dickbag LAJ is barred from the property. Do you remember that a bill collector came to our house looking for him once? He hid upstairs in his room while my wife yelled at him and the bill collector simultaneously. I took the bill collector out front and explained that LAJ is a worthless POS and the debtor can have him. But, if the lender makes one move to place a lien on my house (which he threatened) for LAJ's debt I would own that bank within a year.

So what you going to do with the bank when you own it?

[Green Grass]

15 minutes ago, Old#7 said:

I want to close and be done with this.

So, when I got it market ready and put it back on the market, it sold within hours.  There were some unique circumstances on the buyers part and I had lowered the price...but man oh man was that a happy day.

This happened last summer.  I still feel gratitude when I think about having it sold.  

[Razors Edge ★]

Lots of reasonable feedback in this thread.

I'd say, first and foremost, the "clock is ticking" on a couple of fronts - the normal "paying for an empty house" clock and the "when does the market swing" clock.  I would personally worry most about the second one, since holding a home as a rental (purely because you couldn't sell it at your current price) leads to a real horror situation if the real estate market goes belly up while you still own. This current market is a weird one (at least in the NoVA area) where there is a limit on inventory but also some sort of constraint on buyers. Sort of like the folks who want to buy can't find the right homes available even though there are homes on the market???

Anyway, I imagine you know the "numbers" - what your mortgage is, what the equity is, how long you can afford two homes, etc..  If you are a reluctant landlord, I'd be seeing what my lowest acceptable sale price was and going there. In your home's neighborhood, where is the market going, and if it is going up, why is your property missing the rise. If it is staying steady, I would not want to hold too long there. Even more so if it is going down.

Tom 

[Randomguy]

I think April is the biggest buying month, right?  Someone will bite soon, probably.

Can we see the listing?

[Parsnip Totin Jack ★]

1 minute ago, Random dickbag said:

I think April is the biggest buying month, right?  Someone will bite soon, probably.

Can we see the listing?

I'll post a link when I can.

[Wilbur ★]

I need a new crack house/ grow op location.  What is the rent? How close are the neighbours?  

[Razors Edge ★]

Just now, Wilbur said:

I need a new crack house/ grow op location.  What is the rent? How close are the neighbours?  

Meth labs and grow houses can make a home unfit for re-habitation. An actual risk if a property manager is sketchy or not used.

Tom

[Longjohn ★]

Everyone already said pretty much what I was going to say. I had rental properties for five years. I had the renters from hell. After I would get them out I would renovate the property and then try to screen the new renters the best I could. Even the ones with a clean credit report were destructive slobs. It works for some people but I would suggest against it considering the distance you live from there.

[Razors Edge ★]

6 minutes ago, Longjohn said:

Everyone already said pretty much what I was going to say. I had rental properties for five years. I had the renters from hell. After I would get them out I would renovate the property and then try to screen the new renters the best I could. Even the ones with a clean credit report were destructive slobs. It works for some people but I would suggest against it considering the distance you live from there.

We've been exploring buying a rental property in our area. Talking to my wife's father and our a real estate guy, we learned two things - set the credit score requirement high (800+) and go for military folks.  What we also know is that good renters are golden, so once you get a good renter, KEEP THEM at almost any cost. Don't raise rents (or only very moderately raise them) and work to keep them in year after year.

And our real estate guy said the worst thing he did was buy properties in a lower priced market. He said it was impossible to find folks with clean credit and the renting hassles were non-stop (late and missed payments, security deposits actually being used, more replacements of things like carpet and appliances).

Tom

[donkpow]

2 minutes ago, Razors Edge said:

We've been exploring buying a rental property in our area. Talking to my wife's father and our a real estate guy, we learned two things - set the credit score requirement high (800+) and go for military folks.  What we also know is that good renters are golden, so once you get a good renter, KEEP THEM at almost any cost. Don't raise rents (or only very moderately raise them) and work to keep them in year after year.

Tom

My BIL hasn't raised rent on tenants who have lived in the property for decades.

[Longjohn ★]

1 minute ago, Razors Edge said:

We've been exploring buying a rental property in our area. Talking to my wife's father and our a real estate guy, we learned two things - set the credit score requirement high (800+) and go for military folks.  What we also know is that good renters are golden, so once you get a good renter, KEEP THEM at almost any cost. Don't raise rents (or only very moderately raise them) and work to keep them in year after year.

Tom

I didn’t have the military option, no bases in the area. The advice I was given was to only rent to working people. That helps but situations change. People that don’t work are the worst renters.

[Green Grass]

32 minutes ago, Razors Edge said:

We've been exploring buying a rental property in our area.

Some people are so much more cut out to be residential landlords than others.  I knew I wasn't one of them so I hired a property manager.  They took 10%.   Turned out the PM wasn't worth a shit.  

Unless you are a hardcore SOB, and a talented fix-it man, I'd consider all other investments before rental homes.  

[Thaddeus Kosciuszko]

A few suggestions:

Look around the house, objectively, for low cost items that could make the house more attractive.  For example, if some rooms haven't been painted in years, put a fresh coat of neutral color paint up.  If the faucets in the kitchen or bath look 'dated', update those as it's a relatively easy project.  Hire a cleaning company to make the house spotless, make the floors gleam, make the 'dated' kitchen, appliances, and bathrooms sparkle.  Change all the lights to LED's, which can make the house seem brighter.  Maybe even change some fixtures out, particularly exterior ones seen from the street.  Consider a yard once-over by a landscaping company to touch up lawn bare spots, remove overgrown shrubs, and other items to make the yard more appealing and seem like less work to maintain.

Consider getting a home inspection done so the buyers know exactly what they are walking into (and so you know what their inspectors might find!).  This could be key in helping get to closing, as there could be less haggling over what the buyer's home inspector found.  You can get estimates in advance for what your inspector finds, and when the buyer wants to negotiate you'll already have the dollar number and a contact.  You could even hand him the estimate to save him the trouble of getting a contractor.  It makes your house more attractive because it's one less thing a buyer doesn't have to pay for.  And by knowing ahead of time what the possible sticking points could be it puts you more in control of the sale and closing process, because it takes away some of the 'unknowns' that could (should I say always?) pop up.

To go with the inspection, consider adding a home repair policy, like an added insurance policy that covers appliances, furnaces, hot water heaters etc.  You're telling what the buyer what the home inspector found, now you're handing him a safety net in case any of that stuff goes wrong.  Now, in reality, I think most of those kind of 'home protection' policies are pretty worthless for a number of reasons, but there are some decent ones that would actually work for a buyer.

Lastly, consider throwing in a security system by a company called SimpliSafe ( https://simplisafe.com/ ).  It's a wireless system that's easy to install, the monthly monitoring is cheap, it's very reliable, and there's no long term contracts.  If your think your house will be on the market for a while, and you're out of town, you may want to install one for your own peace of mind especially if your house is vacant.  You can easily remove it when you sell or you can make it a 'freebie' as part of the negotiations.

[Razors Edge ★]

Everything TK wrote.  I didn't address that part of the equation at all, and I would say there are a couple other "important" pieces (@Tizeye is an expert) and that is the staging and the photography of the home.  TK got it right that a relatively inexpensive clean-up & refresh can help immensely (fresh neutral paint, shiny fixtures, neat yard), and a properly staged (correct amount of stuff per room) and photographed (big for getting traffic in the door) home will help in the long run.

But this is all where running the numbers really helps.

Tom

[Parsnip Totin Jack ★]

New paint, professionally cleaned, all lights are LED including the exterior lights. We replaced all the outdoor lights with new fixtures that color coordinate with the house. New shingles three years ago with Leafguards installed on the gutters. Home warranty thru 2018 and an alarm system ready to go. A home inspection would point out what I already know, but I'll ask the realtor what he thinks.

[smudge ★]

The home inspection is usually on the buyer/the buyer's dime.

[Tizeye]

2 hours ago, Thaddeus Kosciuszko said:

 

Lastly, consider throwing in a security system by a company called SimpliSafe ( https://simplisafe.com/ ).  It's a wireless system that's easy to install, the monthly monitoring is cheap, it's very reliable, and there's no long term contracts.  If your think your house will be on the market for a while, and you're out of town, you may want to install one for your own peace of mind especially if your house is vacant.  You can easily remove it when you sell or you can make it a 'freebie' as part of the negotiations.

Adding to what TK said. Be careful with a security system that records audio and definitely put a security notification sign out front. Had an issue where the eventual buyers learned that they were recorded as they discussed the purchase of the house, strategy etc. Invaluable information, but they ended up taking the sellers to court who didn't note that security system in place, much less, audio recording capability and the buyers won the case as it violated State laws related to involuntary recording of others.

[Tizeye]

2 hours ago, Old#7 said:

 A home inspection would point out what I already know, but I'll ask the realtor what he thinks.

As a Realtor would resist the buyer getting a home inspection, and in Florida it is on the SELLERS dime. In fact, the way the standard contract is written, their last opportunity, other than mortgage denial, to back out with deposit return is "not liking the home inspection"...even is was pristine, they don't have to give a reason. As a Realtor, I don't want to know what the home inspection says as it then becomes knowledge I would be obligated to divulge.