Posted by Tim (CT) on August 24, 2004 at 08:53:02:
Personally, I haven’t done a Lease/Option yet. I think it’s a good idea but I just haven’t come across any properties where I could get into that situation (yet!). Although, there are lots of people on this board who have.
My adivce would be to buy a course for a couple hundred bucks and learn it the right way. This wouldn’t be the correct vehicle to teach you the entire concept. This site has some very good courses (I, personally, have Bronchicks course). And, I disagree with your CPA. There’s a good chance he/she doesn’t know anything about creative real estate. People frown upon what they don’t understand.
I have a rental that has been vacant since July 1 and I am wondering if it is not renting due to the color of the kitchen cabinets. I was asking $1050 with a $800 deposit. The house is a 80’s model and the cabinets are dark wood and the carpet is dark brown (sculptered shag). It has new vinyl/tile in baths and kitchen, new screens, paint, new tile in showers and tub and new fixtures. I have lowered the rent $100 a month and it is still not renting. The basement is 75 percent finished, sheetrocked but not painted or carpeted and needs false ceilings. I could change the carpets $1500+ and cabinets $2000 but this would not guarantee a renter. The renters I have had in the past wouldn’t know a clean house from a bad one, so I question should I spend the money to update the house just to get a renter who will probably trash it within a month. (They usually only stay one year)and have furniture That I would throw away. I have looked at the other rentals in my city and my house is better, other than it is an older home. The rent on those homes is either more or the same as mine. I turned down a renter with bad credit, 6 kids, 1 dog and only income was SS. That was the only offer I have received. Alot of lookers but no takers. The deposit has never covered the damages the renters have made. What could be the problem. It is costing me $200 a month to advertise in newspaper and $30 a week to mow the lawn, plus utilities and mortgage payment. Any solutions would be greatly appreciated.
If you’re only getting an offer from dirtbags, then your price/condition is not competitive.
As Tim mentioned, ask the people who’ve looked at it.
You might find some are still looking and may now be interested.
Yes, you will get some unreasonable/stupid feedback; however, you WILL begin to see some trends. IF there’s something consistently mentioned… act on it.
Another thing to ask: “Under what circumstances would you rent this house?”
If somebody makes a reasonable request, put the deal together.
Another idea, IF you have some time… take a look around at what’s available in your price point and see how you measure up… but you have to really be willing to look at things with an open mind… many people who do this have a tendency to try to find what’s WRONG with the other units, to “Justify” why theirs is better… what you’re looking for is what’s RIGHT with them: what are they offering that’s better, and how can I improve mine so it’s irresistable?
Posted by Frank Chin on August 24, 2004 at 12:20:02:
Breory:
I agree with Ken -its the price and/or condition of the rental.
Suggest you check out the price and condition of comparable properties in your locale offered for rent.
I rented my last rental out in one weekend because it was 10% below comparably sized units and in better condtion.
I could understand your not wanting to change carpets and cabinets. Unfortunately, if you have competitive units in your area with new carpets at a lower price as an example, why should people rent from you?? They got nothing to do with problems you have with prior tenants.
You can also try to include things not found in comparable rentals, such as:
1- Allowing pets
2- Adding more closet space
3- Include washer, dryer - other appliances
4- A month’s free rent
Posted by ken in sc on August 24, 2004 at 09:56:30:
If your house is not renting it is either price or condition. Or both. If you have not rented the house for an extraordinary amount of time, work on these two things. It is better to spend a little and get a lower rent than be vacant. You said “a lot of lookers and no takers”. Listen to the market, it is talking to you.
Do you have Craig’s List there. www.craigslist.org. I have rented three places using the site iand it is free. When I list I get flooded with emails. Although I am in the DC area. Have you thought about section 8. Gov pays and they always need landlords.
I have used section 8 in the past and one renter actually stayed there 12 years. But in that time, I had to fix every little thing. The yard went to the dogs and the rent stayed below rental value, because I felt sorry for her and only raised the rent $10 a year, even after extensive repairs. After tenant moved out, I was able to increase the rent from $500 to $700 a month. All I get with section 8 are single mothers with alot of kids and they do not take care of the yard. This house used to belong to my husband and his deceased wife and is in a upscale neighborhood and the neighbors want an upscale renter. My last section 8 left my other room with over $4000 in repairs. All the carpet and vinyl needed to be replaced after one year. The renter skipped. Sure I kept her deposit of $700, but she also left me a $150 water bill and lots and lots of damages. My rentals seem to get painted every year, and new carpet and the home I live in has only been painted once in 10 years and I would love to change the carpets.
One guy said that he needed a finished basement. What he doesn’t realize if that I finished the basement, he would be getting a 6 bedroom with a family room and rent of $1200+ rather than a 4 bedroom and lots of inside storage for $950. I think he wanted to move 2 families in the house. He wanted the upstairs for him and his wife and the basement for his daughter and her children. I have the blinds open so that renters can see inside the basement to see that it is partialy sheetrocked, but these renters called to see it anyway. The address is listed on the ad in the paper so that people can drive by the house and see it, before they call me to look at it. What else could be wrong? Do deposits of $800 scare people. I also tell them I want a $100 non refundable pet deposit for small pets (each)and $300 for large pets and no smoking allowed in the house. Could this be scaring the renters?
In my experience and that of those I’ve talked to, tenants NEVER take good care of yards. Arrange for that to be handled and tack it onto the rent. Also, minimize the amount of care that has to be done, with low-maintenance landscaping.
“the neighbors want an upscale renter”–maybe they should find one for you! Seriously though, if your tenants don’t break any laws and don’t damage the neighbor’s property, you’ve found a good tenant. I wouldn’t allow the neighbors much say into your choice of tenant.
Posted by Tim (CT) on August 24, 2004 at 08:34:15:
These dollar values seem reasonable to me in my market (CT) but I’m not sure about yours. Have you looked into Section 8? Some people like it. Some don’t. Unfortunately, it’s hit or miss. You could get a great tenant that takes care of the place and realizes the benefit they’re getting or a knucklehead that’s clueless. I, personally, like Section 8. I have two tenants and they’re both great. I’m lucky. There’s usually a waiting list for Section 8 and they’ll pay market value (especially if your unit/property is in good condition). I would look in this direction. The other option is to do a Lease/Option if you don’t mind selling the place a little while down the road.
Some of the people have asked if I would be willing to do this. I am not sure how this works. MY CPA says don’t do it. Any tips on rent to own would be greatly appreciated.
You CPA should stick to doing accounting and taxes. If he/she is a successful investor, then that’s ok, maybe you could listen to their advice. Maybe your CPA wants you to keep the place vacant so you can generate passive losses…
Posted by gymshoe (WA) on August 24, 2004 at 18:07:56:
Sounds like your CPA doesn’t want to complicate their job more come tax season. I haven’t done it, but I’ve read quite a bit about it and it’s a sound investing method. I have one rental (just vacant) and might consider Lease/Optioning it down the road, but I want to hang onto it for now…prop. values are and have been going up nicely last few years.
