My family has outgrown our house and we cannot sell it. We decided to try renting it out. Apparently you need to have your place rented for two years before you can buy a second home (assuming you still owe on your mortgage).
Since we couldn't' sell for over two years we decided to put up a "for rent" sign. Much to our surprise we already got three seemingly good candidates.
We haven't really prepared to be in this position so soon.
Any advice of any kind? Sans any additional input, we are planning on going to legalzoom to look for a rental agreement. We should ask for first months rent, last months rent, and a deposit...right?
How much of a deposit should we ask for? Should we ask for an additional deposit if they have a pet? One candidate has a Shiatsu Dog. Will a pet depreciate our house?
We are kinda at a loss because we were so used to not hearing from anyone and did not expect so many responses. We are not going to rush or be rushed into a decision.
Posted by MattP (Member # 10495) on :
Pets are a huge gamble. It's possible to have an immaculately clean house with a pet, but it's also possible that you'll have to replace your carpet when they move out. (I have seen this in a friend's rental) Get a sizable deposit for a pet if you're going to allow it.
Make sure you have an arrangement for taking care of the yard in place. That's not always included in the contract but it can be another big source of headaches if you're both expecting the other to be in charge of that.
Another anecdotal thing - In my experience, the people that have the most trouble coming up with a deposit are the ones you'll most likely need it for.
Posted by Stone_Wolf_ (Member # 8299) on :
Take tons and tons and tons of pictures. You might need to show in a court of law why you kept a renter's deposit, and time/date stamped pictures of "before" are a good idea.
Posted by Speed (Member # 5162) on :
I don't have any experience with renting, so take any advice I give you with a grain of salt. But I have a friend at work who rents out a house in a different state. He uses a property management agency, and he says he wouldn't do it any other way. Of course, they take a cut. But they can help you get the best price for your place, and deal with any day-to-day problems that your tenants give you.
I guess it matters how much time you have on your hands. If you know how to negotiate, and you have the time and ability to sort out tenant issues (late payments, repairs, etc.) you could probably get more money out of the deal by skipping the middle man. But it might at least be worth looking into.
Posted by Jhai (Member # 5633) on :
We rent our townhouse out in NoVa.
1. Credit checks - the best method we've found is using mysmartmove.com.
2. If you're not going to be living nearby, then find a handyman in the area that you can trust to do a good job when some random thing in the house breaks and the tenants call you up on a Sunday evening.
3. If you plan to accept pets, then a pet deposit is a must. So far, we've had a very good experience with our renters with pets, but I know (having two semi-destructive dogs of my own) that pets can do a LOT of damage.
4. How much you charge for a deposit depends on the rental market in your area. In our area, $500 is about the going rate for a pet deposit, and only first month + one month's rent as a security deposit is normally charged.
5. Be sure to call previous landlords - that's absolutely key. Legal issues limits what they can tell you - the question to ask is "Would you rent to this person again?"
Posted by scholarette (Member # 11540) on :
quote:Originally posted by lem: My family has outgrown our house and we cannot sell it. We decided to try renting it out. Apparently you need to have your place rented for two years before you can buy a second home (assuming you still owe on your mortgage).
Is this always true? I am looking in to renting and my bank said I can either rent or sell my house and buy the new one. And several realtors have told us to just rent our house out rather then sell it and then buy the new house (including the realtor that is helping us find a new home).
One piece of advice I have been given is to get a home warranty- like the ones you provide when selling a house. Anything breaks, the renter calls them instead of you.
Posted by lem (Member # 6914) on :
This is really great advice. Our place is a detached town home, so yard work is not an issue. Our HOA covers it. Btw, I am paying the HOA dues myself and upped the rent to compensate.
We have no carpet. We only have tile and linoleum.
I will look into a property manager. Thank you so much everyone. I definitely would have forgotten about taking pics.
Posted by Stephan (Member # 7549) on :
Who said you have to rent out for two years before buying a second home?
We were looking into that a couple of months ago, and both our realtor and mortgage broker were on board. We just decided we didn't want to worry about two properties.
Posted by advice for robots (Member # 2544) on :
Don't forget to run a background check on the renters. You might end up getting someone you're quite uncomfortable with if you don't.
Posted by dkw (Member # 3264) on :
The house has to have been rented for 2 years before it counts as a positive rather than a negative when you're being evaluated for a mortgage on another home. If your income is high enough to qualify for both mortgages without the rental income you can get one earlier.
Property manager, property manager, property manager. Unless you're okay with adding a part-time job as a landlord/manager, get someone else to do it.
We've twice rented out homes that we couldn't sell after a move -- the first one without a property manager (but thank heaven that one sold when we tried again a few years later) and one with, which we still own. In both cases we moved out of state, so having someone else find and evaluate potential renters was invaluable. And he gets to be the heavy if the rent is late or there's other problems.
Posted by AchillesHeel (Member # 11736) on :
Dont rent to my brother, it may not seem relevent but that is excellent advice to anyone who hears it.
Posted by lem (Member # 6914) on :
lol
Posted by katharina (Member # 827) on :
Don't rent to my step-sister. My father sold the house out from under her to avoid evicting a step-daughter who REFUSED to pay rent.
Posted by Juxtapose (Member # 8837) on :
I'd contact a local cleaning service and ask for an estimate for doing a top-to-bottom on your house. That'll give you a minimum for the deposit.
What state are you in? Your state's website may have helpful information.
Personally, we found the costs of a property manager were not worth the value added. In our area of NoVa the going rate was first month's rent entirely plus 10% of each month's rent. Even though we're on the West Coast now, it'd be cheaper for us to *fly* out there every other month to deal with problems than to have a property manager. And that's not counting that the flight and other costs would be tax-deductible. A good handyman we know will get the problem fixed plus semi-annual trips back (which we'd probably be doing anyways for work + friends) is working out just fine.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by lem: Any advice of any kind? Sans any additional input, we are planning on going to legalzoom to look for a rental agreement. We should ask for first months rent, last months rent, and a deposit...right?
The only advice I can give, having managed a shared flat in the past, is to have an ironclad and very clearly worded contract regarding the nature of the deposit. For my part, I had a landlord essentially treat the deposit like a prize that he would attempt to plunder for its maximum possible value, ei: charging a ridiculously high cleaning fee after I had scoured every inch of the place with a burning hot rag and soap. On that score, all I can say is: don't be an asshole.
ETA: But then again, all my flat rental experience comes from living in a country where the concept of a "contract" is more akin to a suggestion of how things might be in some perfect future. In this country, a contract is about as valuable as a handshake. Sad, but true.