Extra House. What would you do with it?

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RPM

RPM

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Hey gang,
I just thought I would post this to see what kind of opinons you all have. I seem to be unsure of what I need to do.

I got married a month ago or so and well.... I have ended up with a extra house. We both owned homes and we decided to live in hers as it is a little bigger then the home I was in. Here is the problem. As I had to buy my home when the market values were VERY high I ended up upside down in the house. Not by a lot now as the market is coming back up. Its a nice little family 3 bd 2 bath 1300 sq foot home. Nothing fancy, but very quaint and nice with a beautifully landscaped yard. Basically after talking with my realtor I still cannot ask for what I owe on the home. I am around $15K off and that is if I got top dollar for the home, which is unlikely. I dont have a extra $15k to just dump on it to clear it. Now, I should be able to come up with the difference in about 11 months or a years time. I would then put it on the market. What do you do with a house for a years time ? I am currently making payments on it and maintaning it. My newly acquired wife thinks we should rent it out for a year. I HATE the idea as I have seen what some renters do to homes. I would have to have a property management handle the business end as we are just too busy. So they would take a cut of the money, I would have to have a outfit maintain the very nice yard which costs more money, etc.. etc.. and the chance that someone will destroy property doesnt appeal to me too much. My brother said he could move into it for a year and keep the home up and yard up which I know he would. However he cant afford the rent. He could only produce like $200 a month and pay the utilities. He would however take care of it and work on some things it needs. I really dont know what to do. The wife doesnt like my idea of my brother doing that as she thinks renting it out would be the way to go. The rent around here would only bring in like $700 which wouldnt clear the $1000.00 payment per month.
I almost just want to keep paying it down and add some to it to make it sellable in the years time.
Whats your thoughts ? If you actually read through all this you must have a opinon. I would be happy to hear any suggestions if you had the same situation.

Thanks !

-RPM
 
I would also rent it out, but be very particular about who you rent it to. Sounds like you'll still be covering a portion of the note yourself, but the right renter can be nice to have. That or have your brother move in as a 2nd option, you know him and he said he would keep it up, and if he gives you $200 that's better than paying all the note yourself!

Good luck with whatever you decide, Geof
 
I would rent it to your brother. It's better than the house sitting empty or someone you don't know trashing it. Also, you can stop by anytime you want with your brother there and call it visiting. Can't do that going through a property manager.
 
Rent it but as I learned renting mine be careful and take your time picking a renter. The 1st guy I rented to had cash in hand and wanted immediate move in. Dont do that. It cost me thousands in damage and an eviction. The 2nd time I rented I showed it to alot of people had cash in hand offered turned it down made phone calls to employers and finally made what I feel is a good choice the renter and I are both happy and I have offered him 1st chance to buy it if he decides he no longer wants to rent and would rather own.
 
I say rent it out. But being $300 per month short on your mortgage payment would be a "no-go" in my book. Couldn't do it. How 'bout re-fi it and get the payment down really low?......OR.....look for someone who would want to "rent-to-own" or something similar?

I'm sort of in the same situation. I'm living in a nice house and I landscaped the yard into a fairly high-maintenance deal, so I feel it's almost a terrible setup for a rental. That.....and I also worry about renters destroying the house. It's 11 years old and still beautiful inside and out. Knowing how I am, I might flip if I saw it get trashed by some renters. Tough decision.......me myself, I'm thinking about selling. I'm pretty sure I could finally walk away with some cash.
 
Like everyone else said...I'd rent it...even just to pick up some of the tab and free up some $$$ for you to put back into it in upgrades, etc.
 
Well you could try a short sale. If you have a good relationship with your banker they may fore go some of the interest, meaning they will loose some money. But you could come out of it with payoff.

IF they would do it make darn sure there would be no deficiency that you would be obligated to pay AND it doesn't damage your credit.

Explain your circumstances and that you want to walk away clean without loosing money for them or you.

Most times a short sale is used for people approaching foreclosure, but they might do it if it's in both parties best interest.
 
If you rent it to your brother, you still should have him sign a lease.
(Hope you'd never need it, but...if you do, you're pretty screwed without a lease)
 
Be careful with renters. My brother used to have some rental houses for section 8 people and they would not take care of the houses. One of them, he put a new storm door on the kitchen and when the tennants moved out, it was torn off it's hinges. they denied responsibility, but it was brand new when they moved in, there is only one possibility as to who broke it... Duh....


He got sick of the bs and sold them all.
 
krazykuda said:
Be careful with renters. My brother used to have some rental houses for section 8 people and they would not take care of the houses. One of them, he put a new storm door on the kitchen and when the tennants moved out, it was torn off it's hinges. they denied responsibility, but it was brand new when they moved in, there is only one possibility as to who broke it... Duh....


He got sick of the bs and sold them all.
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I wouldn't rent to Section 8 people for the most part. I have had a couple of good ones but most were nothing but headaches that were impossible to get their co-pays out of. I only had one that damaged the place beyond normal wear and tear though.
 
I rent my second house and I just levied a hefty security deposit and first and last month to move in.And in the lease I have signed it says I have the right to walk the property with a 24 hour notice and renters are responsible for damage. I would think youd lose more leaving it empty than repairing wear and tear from use with rent accrued.Dont understand using property management either. No one will look out for you like you.
 
I say rent it also. People rent for different reasons. My buddy just went through a divorce and needed a place to stay for a year or so while he straightens out his life. He is a meticulous house keeper and likes to keep his yard nice. He is a dream tenant and there are others out there like him, you just need to weed through the trash to find them.

I agree with using a property management company. They handle the lease and collecting of the rent payment, that alone is worth the price they charge. You can shop around for one of those also and find one who has a good reputation in your area.
 
Renting it out is not really a big deal.

How old is the house and what condition/construction type?

We spend about three days all total per year dealing with ours, averaged over the 6 years we've had it in service, but excluding the turnaround time between tenants, which averages about 2 weeks, but not all full 8 hour days, plus we do 80% of our own repairs.

All major repairs and materials costs are write-offs, so it really can be a win/win, (unless you're horrible managing things)as someone else makes your payment and you write off repairs.

We average about $2000 a year net. Not nearly enough to get rich on, but we'll end up with an extra house pretty much for free in about 15 years.

In fact, we're looking for another one.
 
Just a quick question for all those who have said they own rental properties currently. How much more is the insurance on a rental property vs. a primary dwelling? I have always assumed they would charge more, but never really knew for sure.
 
It's actually less.

In our area, when my wife lived in the house, it was about $800 for 1200 sq/ft block construction.

Insured as a rental it's closer to $550.
 
I would turn it over to HUD to rent and your worries will be over. but you will have to put it up to there standards which isn't bad and they take it from there and usually get better rent money for them you will if it gets torn up or broken up they fix it from there on.or at least they used to.you will get your money every month whether they pay or not.every month same day for as long as they have control of it.I wish we woodhave keeped ours but sold it to for a bigger down payment on the one we have now,I call it my 8 acres of heaven on the MT.:cheers: and have:violent1::violent1: kICKED myself in the *** every scene that's my thinking............hope this is a help Artie
 
I would rent it or dump it now and take the loss. Throwing more money at in hopes the market will continue to improve is foolish IMO.
 
sorry to say this but never ever rent it to family or friends if you expect to be payed rent. Don't matter who the person is or how well you think you know a person, this is a business deal. And with that you are there to make money or break even. (in your case of the house being upside down carry a bit of the loan) Sooner or later it's going to come down to you having to carry the note yourself instead of the family member/friend paying it.
 
I have to ad,I tried the family deal to a family member that was pickier than I will ever be.and they tore that sob up big time holes in the walls from doorknobs and or feet god only knows whate burnt the stove up and put gas in the furnace are you kidding me!!!!!.A da.and was always late with the rent sed I could afford it :violent1: well ya but that's not the point stupid!!that's when I thought about selling it sheeeeee Im glad my friend told me about HUD or at least that's what they call it here.and you can inspect it wer ever wen ever you whant.and they will take care of it.my taxes are included in with the house payment so I never had to worry about that ether.....Artie
 
mr68gts said:
sorry to say this but never ever rent it to family or friends if you expect to be payed rent. Don't matter who the person is or how well you think you know a person, this is a business deal. And with that you are there to make money or break even. (in your case of the house being upside down carry a bit of the loan) Sooner or later it's going to come down to you having to carry the note yourself instead of the family member/friend paying it.
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Absolute, total truth.....and what I call "rule #1". You could rent to a family member and let them stay there for a year for free, then finally kick them out and be "the bad guy" among your family. Don't ever do it. No reason to....
 
cudavert said:
Absolute, total truth.....and what I call "rule #1". You could rent to a family member and let them stay there for a year for free, then finally kick them out and be "the bad guy" among your family. Don't ever do it. No reason to....
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X2 I still have famly members that whont talk to me because of that.....and that was 20yrs ago owell sorry about there luck.I cant live thers and mine too too!!!
 
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