UPDATE:On the verge of renting instead of selling...

[WatchingThemGrow]

We're landlords now!!! Tenant came over tonight and went through the whole lease. It's all good and we have a check to deposit now.

Now we need to go find a new house for our family!

___________
is there any advice you have for us?

Our house has been on the market for 3 mos. JUST now coming into the selling season in our academic area, and we're tired of living in a staged place, feeling like no one wants our nicely updated home that backs to a pretty major *45mph road. Last week, our mortgage broker determined that it is possible to rent out this house and still buy a new one in the range we've been looking at. I told a neighbor who shared it with her DH and he shared it with a coworker (medical resident) who now wants to rent it out with his (soon to be) wife (also resident) starting in June.

SO...we have some rental contracts from my SIL and our buyer's agent realtor, some applications, checklists, etc. but the house is still on the market right now. We've gotten feedback from a showing today saying that the buyer who saw it today has not ruled it out. Our RE agent sent out a message saying we are seriously considering a renter and to bring any offers to the table before it is too late.

We'll get all our ducks in a row (applications, lease, deposits, 1st months rent, etc) in order before taking it off the market, but do you have any other advice for us? I've talked with the ins. co. about changing it over to a rental policy. What else should we do/consider? Oh, we'd be getting $1200/mo when the costs for us are just a touch over $800/mo. We should be able to build up a little each month for repairs/unrented time. They want it for a year at least.

[ha98ed14]

I've never done it but if you can deal with being landlords, go for it! A house in a student/ university neighborhood is a good investment! Steady stream of renters!

[kbud]

We are looking in to renting our house too. Different reasons, we are in FL and can't sell because we are seriously underwater. We will also can't rent it for as much as or mortgage but maybe someday! One thing to consider is if the property is homesteaded or not. All states are different and in FL we get a property tax break if the house is homesteaded, meaning your primary residence. Also, you will probably not be able to deduct your mortgage interest on your federal income taxes. There are other tax laws that apply to rentals. I'm still looking into this. For my own knowledge what did you find out from the insurance stand point?

[WatchingThemGrow]

We are looking in to renting our house too. Different reasons, we are in FL and can't sell because we are seriously underwater. We will also can't rent it for as much as or mortgage but maybe someday! One thing to consider is if the property is homesteaded or not. All states are different and in FL we get a property tax break if the house is homesteaded, meaning your primary residence. Also, you will probably not be able to deduct your mortgage interest on your federal income taxes. There are other tax laws that apply to rentals. I'm still looking into this. For my own knowledge what did you find out from the insurance stand point?

LOVED that $25K homestead exemption in FL (I owned there before I bought this house) but I don't think my current state has that.

For insurance, the cost will be about the same, maybe a few $ different. There's a something and fire policy you get instead. And a friend suggested personal liability ins. so the tenants can't come get your other properties if something happens - maybe $15/year. The tax office said nothing changes on their part, but I'm guessing Turbo Tax will have something to say about it. Need to find out more here.... Good to know about mortgage interest deduction.

My neighbors are underwater as well b/c of home equity loans, but they're going to rent also while they move into their new construction house.

[BillK]

It's a dwelling fire policy you need for a rental property.

Make sure you require your tenants to carry renters insurance that names you as an additional insured.

www.thelpa.com looks cheesy but there's a ton of great info for landlords. I've paid for a membership for about 4 years now.

[noodle]

We did it for similar reasons, found an awesome tenant and ended up in court.

DH will NEVER be a landlord again. I might consider it, but we would have to use a property management company.
Our experience started out so well, but how it turned out was not at all pleasant.

[KLD313]

We did it for similar reasons, found an awesome tenant and ended up in court.

DH will NEVER be a landlord again. I might consider it, but we would have to use a property management company.
Our experience started out so well, but how it turned out was not at all pleasant.

This is what scares me. I just rented my house yesterday to what seem like great tenants. Now the panic is setting in. If I could have sold the house I totally would have because all the thoughts running through my head are not worth it.

My attorney told me if the rent falls into being one day late after the grace period to start the eviction process.

[WatchingThemGrow]

Bill, thanks for that site! I haven't joined yet, but may...
noodle, tell us what went wrong.. yikes.

[Trigglet]

I rent out my apartment in the UK and have done for 5 years. Only one set of cr@ppy tenants, but the damage they caused (through condensation dampness - not ventilating the place in winter etc) was paid for by their security deposit. I always use a property management company (who charge 10% of the monthly rent) and they deal with everything. It's worth every penny to me to have someone else dealing with all that. I happen to have a tenant in there at the moment who is a bit OCD, I think, because he keeps ringing the property managers about every little thing, but on the upside he is keeping the place very clean and tidy!!!

We are thinking about doing the same thing with the house we have here, because whilst we aren't underwater we would still have to bring money to the table for closing, and that just feels too painful. I will definitely do the same thing - use property managers and make clear what my requirements are for tenants. I've never seen figures for the number of tenancies that end acrimoniously, or litigiously (is that a word?!) but I'm sure it's smaller than you might think.

Being a landlord is like anything else - there are risks and benefits and you just have to weigh them against each other and ask yourself what level of risk you're happy taking. I know people who happily rent to tenants on social security etc (who are normally excluded from a significant proportion of private rentals) because they know they will never be short of a tenant, and as long as you factor a bit more money for repairs etc then it can be worth it. (I'm not saying you should rent to those people, just using it as an example of balancing costs and benefits.)

[noodle]

I'm being a little vague because our former tenant has exhibited vengeful qualities.

I believe our tenant had something of a breakdown, but I do not know for sure.

The tenant was wonderful for about a year. Then little things started to happen and snowball. The tenant took in a roommate about whom we were not notified; changed the locks and refused service providers (yard care, e.g.) access even when access had been previously arranged; started paying less rent than we agreed upon (this is when we started the eviction process, after which we learned about some of the additional troublesome things that had been going on). Rental laws tend to be heavily skewed in favor of the tenant. The tenant refused to move out and sued us for harassment. We prevailed, but it was not cheap, and the damage inflicted on the house was shocking -- and expensive to remediate.

If you proceed, document every single agreement/transaction. Check references and do as much as you can to check out prospective tenants. Photograph every part of the house before the tenant moves in (sinks, walls, ceilings, EVERYTHING...). And yes, if the rent is even one day late after the grace period, start eviction. It is not a speedy process. You must not be friends or try to be accommodating or you will most likely get screwed.

For us it was extremely stressful. I know for some people it is great, but I cannot recommend it.