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What you Need to Know if you Decide to Rent out your Home

The economy has changed the way people are handling their homes.  Most specifically, many people have not been able to sell due to an upside down mortgage so they rent out their home and wait it out.  People often decide to rent out their home until they have enough equity in the home to sell.

In general this can be a great way of making sure you have money coming in and aren’t at risk of losing your home.  It seems like every other person these days is renting out their home and honestly, rental homes are in huge demand these days due to people having poor credit or not enough money to buy a home.

An ideal situation is when you can get a tenant who would like to sign a rent to own deal.  You are renting the home out, but the possibility of those same people buying your home after a certain length of time increases due to the lease you put together.  If the renters decide not to buy, you get an amount of money that is non-refundable because the renters changed their mind.  It’s more of a win-win situation.

The problem arises when you have a renter sign a long-term lease (say for two years) and then want to sell the home before the lease is up.  Sure you might be able to sell the home depending on the way the lease is written up, but the renters can still stay in the home until their lease is up (unless you wrote something in the lease to the contrary).  This means that any potential buyer has to agree to be a landlord for a particular amount of time before they can take over the property.

There are times when this might not be a bad solution.  If you have a starter home that would make a great investment property, having a renter occupying the home might be a plus.  If you have a bigger home though, you won’t attract the investors and most buyers will look elsewhere.

I encourage you to always contact an attorney and have them write out a lease if you decide to rent out your property at any time.  Make sure you understand all of the issues that could arise if you want to sell at some point down the line.  Just because every other person is becoming a landlord these days doesn’t mean they understand all of the implications of what they are doing.

Research as much as you can.  Get expert opinions and make sure you fully understand what you are about to undertake before you decide to rent out your home.

 
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Posted by on February 8, 2013 in business, how to, rental property

 

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The Psychology of the Client

Not too long ago I was working with a family who was looking for a home to rent.  I understand making sure you have the perfect home to buy.  Possibly going round and round comparing different homes to make triple sure that the home will make you happy for years to come.  I never realized that people might get this wrapped up in a rental that they could walk away from in as little as 6 months.

Look, for those of you who are looking to make real estate your career, rentals are time-consuming and will not make you any money.  The way a rental works for your commission is one months rent is divided between you and the other realtor.  On top of that, it is divided again between you and the company you work for.  When all is said and done, you might walk away with $200.  When you figure the amount of time it took to look at homes and the miles on your car and the gas, it really is a losing proposition.

The way I choose to look at rentals is that there are many people in bad situations who need to get back on their feet.  Helping them out makes me feel good.  Another thing to keep in mind is that some day they might want to buy a home.  If you clicked with your client, the possibility that they will call you again is good.  All in all, it’s about looking at yourself and deciding how you want to promote yourself.  Do you want to be seen as someone who puts people before the money?  Or, do you want to be seen as a person who is all about the money and the people don’t matter?

Back to my story.  So this family has looked at 12 properties at least in a three week time span.  The third home they saw they liked enough to put in their paperwork and see if they would get approved.  Not only did they get approved, but the owner of the property was willing to make some major adjustments for their comfort.  Example, they were willing to paint the rooms colors that the family would find to their liking (currently the walls in the entire home are white).

Well, for some reason after getting everything that they had asked for, it was almost like they couldn’t believe their luck and had to test it.  They became determined to see ever property possible before the day we had scheduled for the owner and renter to finalize the paperwork.  It got so out of hand that they wanted to see properties that didn’t even slightly meet the criteria of what they had been looking for.  The home would be much smaller than what they were willing to live in or there wasn’t as many bathrooms and bedrooms as they needed.

Towards the end, a desperateness overcame them.  I began receiving emails before 8:00am.  Within 15 minutes, I would get another email asking why I hadn’t replied to the original email.  The emails went on past 11:00pm in the evening.  I had maintained a good repore with the family.  Even so, I had trouble keeping their emotions in check.

The paperwork for the rental originally chosen hasn’t been finalized yet.  The last conversation I had with the family was in regards to driving the 30 minutes to the home they might rent just to look at it from the outside to make sure they still liked the way it looked from the street.  At this point, I was working with another client and had to mention to the family that the home was vacant and there would be no problem if they chose to look at the front of the property on their own.

I am hoping that the family realizes that this really was the best home they had seen.  That they are lucky to be dealing with a landlord who is so willing to accommodate them.  Only time will tell how the situation will unfold, but it is a new lesson for me in learning how to deal with the psychology of people in all sorts of situations.

 
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Posted by on October 17, 2012 in advice, career, opinion, people, personal

 

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