22 Nov Rent To Own…or…Leasing One House and Purchasing Another
Becoming a landlord… doesn’t sound like a bad idea, right?
When a homeowner decides that they wish to keep their current home to use as residential income and move on to another house, that choice allows them to take control of charging for their crib – whether it’s a cave, crash pad or castle.
At the same time, it can be challenging! Where does one start? Well, if you need to gather some information, then it’s time to get schooled, and what does that mean? Homework!
Think about the most important factors in renting out your place
- Is it ready to be rented? Repair or replace anything that may be costlier down the road, especially if it could be a safety concern to the tenant
- What are the rents like in your immediate area? Apples to apples, are you being realistic? Check Zillow, Craigslist, your local MLS to see what Rent Rates really reveal.
- Once interested renters contact you, how will you vet your potential tenant? Criminal/Credit Check or employment contact info and references? If you saw Pacific Heights, in the 1990’s, with Michael Keaton showing what Resident Evil REALLY looks like – this would seem like a plausible step to protect yourself.
- Speaking of protection – Insure to be sure. Speak with your insurance company about policies to put in place to keep you safe
- Have a written lease with clear, concise expectations. Rent, deposits, lease terms, pets, repairs (who takes care of what), and ending the agreement (and if there’s an eviction). Be aware that a ‘lease’ can now be spelled L-E-G-A-L.
- Will it be easier for you to rent it, or do you need a Property Management Company?
Plans in place, preparation pushes forward and the property is put up with those two beautiful words, “For Rent”. Except, now… it’s time for YOU to move!
First things first, if you haven’t already spoken with your lender to see what your financial buying power is – DO IT! They will be able to explain any opportunities you may have with lending programs. You may want to speak with your accountant or CPA to understand how purchasing your next home and renting your current house may affect you. Before you begin viewing houses, get your docs in before you go, much like getting your ‘ducks in a row’.
That means getting a Pre-Qualification or Pre-Approval Letter. This will be submitted with your offer when you find the perfect place. You don’t want to waste time trying to get your paperwork in order when you find ‘The One’ – especially if others are looking at the same property and are already prepared!
Second, ‘Time is Money’, and you want to get your place rented. That means you need to find AND buy. Don’t waste precious energy by doing it yourself. Find a reputable full-time Realtor® that will work to find you a place with your specific search criteria in mind.
What are your “top 5 Must-Haves”? Now, what are the 3 that you CAN’T live without? There is no perfect place, but there are places that are perfect for you.
Third, once you’ve submitted an offer, and it’s been accepted, you better do everything you can to have your belongings boxed and be ready to bounce. Found the tenant to rent your house? Are you going to make them wait until you move (and possibly give them a chance to look elsewhere that has a closer move-in date) or are you going to put your personal effects in a POD to be transported, or use a off-site storage unit?
Gone are the days when good ol’ Mom and Dad will let you cram your collections into their garage “for just a little while”. Remember, you wanted to rent your place, they want to rent your place. It’s time for you to skedaddle.
Lastly, you own two houses but do you really want to pay two mortgages? Certainly not all of it out of your OWN pocket? Do what you can to keep your new house in great shape (who knows when you’ll decide to move on and rent out THAT place). At the same time, realize that you want to be a landlord, not a slumlord. Treat your tenant as a business, not just a body in the building.
Mutual respect and legitimate lease terms allow for happy tenants and happier owners, which equate to less vacancy time and track records of turnover rates.
Rent to Own, and then rent to own, again and again. This may have the potential for building a profitable property portfolio for you and your future.
‘House’ that for your pocketbook?
Elizabeth Cherry is a Buyer Specialist with Excelsior Associates at United Real Estate Southern Arizona, Tucson, AZ. Contact her at 520.808.1313
Find some of her current real-estate listings at: http://elizabeth.theparrishteam.com/