Warning

 

Close

Confirm Action

Are you sure you wish to do this?

Confirm Cancel
Member Login
Posted: 4/2/2006 8:22:33 PM EDT
Ok, here's the story. Our current house flooded from Katrina, and also in 2001 (about 6" of water each time). It also flooded in 1995 (about 1.5ft.) before we bought it (the house was about 21 years old at the time, and had never flooded before). My wife has had it... she does not want to deal with this every 5 or 6 years. Last week we spotted a house we've always liked that is not too far from our current house, and it's never flooded, even with the 1995 flood that was quite a bit worse than the past two floods. We made an offer, and it was accepted. While there are, of course, no guarantees that this new house won't ever flood, the chances are substantially less than our current house.

We have enough cash on hand to put down about 25% on the new place, though this would drain most of our savings. Instead, we were going to do something called a "bridge loan", which, as it was explained to us, means the bank will accept the equity in our current house as the down payment, and they get this money once the house sells (and yes, for some reason houses in this flood-prone neighborhood are still selling). With this, plus some of our savings, we can put down 35-40% on the new house.

However, we haven't ruled out the possibility of keeping this house and renting it. I've been told that comparable houses around here are renting for $1,600 - $1,800 / month. Our mortgage payment, with insurance and taxes, is around currently $650/month. Even with a repair / rainy day reserve taken out each month, we'd still be looking at, say, $700 - $800 / month of income (as long as it stayed rented, of course), not to mention continuing to build up equity in this house.

However, I've never been too keen on the thought of renting out property to strangers. I dunno... just the thought of trashy people destroying the place, having to pry the rent out of them each month, etc., is a bit of a turn-off. But a neighbor (who intends to rent out his house when he moves out-of-state for his job soon) says it's not that bad. You collect first month / last month rent, and a hefty security deposit, and can even write in certain provisions into the lease if you want to (no smokers, no pets, periodic inspections with immediate lease termination if the place is damaged, etc.).

I'm capable of maintaining the place, and can do the flood repairs if (when) it happens again. The A/C is new, as is the roof. The house is in pretty good condition overall.

But, in short, not selling this house would be somewhat of a strain financially in the short term. I don't mean that we'd have to rent this place immediately or we'd go bankrupt... it's just that things would be a bit tight for the next year or so until we built our savings back up again. We've got a very good interest rate on this mortgage, the payment is pretty cheap, and the flood insurance is inexpensive as well (because the rate was grandfathered... ironically, we'll be paying substantially more for the new house, which has never flooded, than this one that has flooded several times). We have roughly 50% equity, and the house will be paid off in about 16 years.

So my question to those who own (or have owned) rental property is this... is it worth the hassle to rent out a house? Or is it more trouble than it's worth?

--Mike
Link Posted: 4/2/2006 8:23:20 PM EDT
not
Link Posted: 4/2/2006 8:27:19 PM EDT
For that kind of rent you should not have to worry about the trashy folk as much.
Link Posted: 4/2/2006 8:29:13 PM EDT
Won't try and tell you what to do ,but
I had a three family house I bought as a investment to rent out.
I kept it for about 5 years. I will never be a landlord again.
As much as you try to screen tenants alot of them turn out to be nothing but problems.
Link Posted: 4/2/2006 8:29:58 PM EDT
I had a friend that did it. Disaster.

Bought the house brand new (under construction). A couple of years later the Navy transferred him to the other end of the U.S.. He rented it since they decided to live on base at the new assignment and thought they would come out ahead on the deal.

6 months later the place was nearly destroyed. Carpets ruined, linoleum trashed, walls full of holes and the kicker... the fucktards that rented it painted over all the SOLID OAK cabinets in the kitchen.

Given the rise in market value they dumped it without loosing their asses on the deal.
Link Posted: 4/2/2006 11:42:32 PM EDT
You can hire a property management company to do all the BS work for you. They often have a warranty service as well, that pays for minor repairs. I assume they take 10-20% of the rent money.
Link Posted: 4/2/2006 11:57:16 PM EDT

Originally Posted By mattja:
You can hire a property management company to do all the BS work for you. They often have a warranty service as well, that pays for minor repairs. I assume they take 10-20% of the rent money.



This is the way to go. I own three properties and they are great. Then again, I don't have the flooding issue.
Top Top