When all else fails...Rent it?
One of the first properties I got to manage was a cute little condo in Virginia Beach. It was owned by Justin, a military personnel who bought at the height of the market just before the crash in 2008. Right after purchasing it he began to make improvements to the property. It was completely adorable and he had take such good care of it. When he called me in 2014 to sell it, I had the unfortunate job of informing him he was "under water" and he owed more on the property than it was worth. This actually happened a lot to me that year as most
sellers who had bought in the last 10 years were in this same boat, lucky to break even. (The average cost for a seller to sell is about 10% of the home sales price.) In Justin's case he was military and was being relocated to Texas and had no choice but to move. Since the time he bought the condo he had gotten married and had a baby. Moving to Texas to start school on a medical path, he would be taking a significant pay cut and he did not want to rent it for fear it would sit vacant and he would be responsible to make the mortgage payment. He was willing to sell his truck to bring the almost $20,ooo to closing for the loss he would take if it sold. I pleaded with him not to do that. I was confident the place would rent quickly and if he could hold on to it, maybe the market would eventually turn and he could at least break even. Besides, even if it did sell the first day on the market he would ultimately be responsible anyway for the mortgage payment until it closed which typically is about 2 months and if it didn't sell fast he would be shelling out even more. Since then it has been constantly rented and with good tenants. So far, I think he is happy with the decision.
Renting can be a risk and you have to be prepared for anything. You still own the property and are responsible for its upkeep even while its being rented. A few things to consider before renting...
1.) Set aside a chunk of money incase of vacancy.
2.) Set aside a chunk of money for unexpected repairs.
3.) Inform your insurance company that you are not occupying the property. This will actually make your insurance go down a little. And make sure you have enough coverage for a catastrophic loss.
4.) Every few years you will need to paint. Tenants constantly moving in and out create a need for this. You also need to ensure the smoke and/or CO detectors are working properly and always address potential safety issues immediately!
5.) Make sure the tenants are responsible for cleaning carpets upon move out & regularly maintaining the yard if there is one.
6.) Be cautious about allowing pets and the breeds. I am in the position its not the breed its the owners but some insurance companies have policy restrictions about "aggressive breeds" and if your tenants dog bites someone the victim could sue you for it as well as the tenants.
7.) Require renters insurance and make sure they name you as an additional insured on the property so you know if the policy lapses.
8.) Run credit checks, verify employment, & call previous landlords for prospecting tenants. Also get an emergency contact for them incase something happens. <--- people have died in homes before.
8.) KNOW THE LAWS! Judges are sympathetic to tenants so document everything and make sure you follow the laws properly. Check here for more information on that.
9.) Speaking of documenting, Perform a move-in/move-out inspection with your tenant present and take a lot of photos (with a date stamp on them)
10.) Be a good landlord, not a slumlord. If you don't respect your property, your tenants won't either and it will prevent you from getting top dollar.
11.) Hire a good property manager...Like me! :)