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Renters... your opinion?

February 19th, 2014 at 05:55 pm

So, we have a house that is being rented by a great family. Payments are on time, house is kept up, etc. Only problem is that we settled on a rental amount that is short of meeting our mortgage on the property. We tried to sell the house 1.5 years ago with no luck and we were fortunate to find this family that would rent it from us ... better to have the majority of the mortgage paid by someone else than for us to have keep paying the entire amount. Anyway, their lease is up for renewal in a few months. The difference between the rent amount and the mortgage amount is $347. Hubby says that we need them to pay the full mortgage amount or we should try to sell the house again kicking them out... I am not so sure. I think we should increase the rent by like $100 and let them lease for another year (doubt they could afford an additional $347). They love our house and have treated it like it was their own... They would buy it but they foreclosed on their last home due to other issues and so now can't get a mortgage to buy ours. What are your thoughts? Ask them to pay the entire $347 additional each month or else kick them out and try to sell it? This wouldn't be so hard except that they really are good people...

Posted in Uncategorized | 15 Comments »

15 Responses to “Renters... your opinion?”

  1. snafu Says:
    February 19th, 2014 at 06:28 pm 1392834503
    1392834503

    Do I understand correctly, you've subsidized your renter for $ 6,246. for mortgage plus property tax and any repairs needed? Ouch. Have you been in touch with the realtor who initially listed the house? What has happened to the housing market in your community since that property was last listed? What did the agent say were the top three issues that kept the house from selling? Is your rental underwater? With changes to housing legislation, can your tenants now [18 months later] qualify for a mortgage?

    Many people offer the house for sale while rented. It would be up to new owners whether they wish to continue the arrangement. I suggest first checking with a top realtor to assess value based on 'solds' in the community over the past 4-6 months as a starting point. The agent can likely tell you the market rate for that rental. I believe facts help you make the best decision. .

  2. Joan.of.the.Arch Says:
    February 19th, 2014 at 06:40 pm 1392835233
    1392835233

    If I'm understanding correctly, that sounds like too huge an increase. When we rented from individuals in my city, back when inflation was higher than now, they had auto' rent increases of 7% written into the contract, so we knew ahead of time what the yearly increase would be. But $347 is 7% of $4957. Are they paying that now? I think that big an increase could drive your renters elsewhere....What percentage increase would the $100 be?

  3. LuckyRobin Says:
    February 19th, 2014 at 06:57 pm 1392836259
    1392836259

    $347 a month more would be really hard for most people to come up with. Almost no one is getting raises and some people are still struggling from taxes going back up last year. If you tried to raise the rent by that much out of the blue, I think they wouldn't be able to pay it and would have to leave. Finding a good family that takes care of your home, when most renters would trash it, is hard in this day and age. You have no guarantee that you would get such good people again or that the house wouldn't sit empty at the higher rent. You certainly have no guarantee that if you tried to sell it again it would sell. "They" say that houses are selling again, but I haven't seen it in my county. Houses sit for ages. A more modest increase in the rent is appropriate.

  4. TashaC. Says:
    February 19th, 2014 at 07:42 pm 1392838972
    1392838972

    I agree that $347/month is way too much of an increase. The renters found/chose this house because it was affordable. For $350 more they could probably move on and find something better. I don't think its unusual to put the house on the market while its being rented. It might not show at its finest- but I doubt the difference in showing it empty vs occupied would result in an offer that justifies all those mortgage payments.

  5. creditcardfree Says:
    February 19th, 2014 at 08:35 pm 1392842115
    1392842115

    I think Tasha makes a good point...leave the rent as is, or slightly higher, and try to sell while it is still occupied. In our state renters are required to receive 24 hours notice before a showing.

  6. baselle Says:
    February 19th, 2014 at 09:27 pm 1392845266
    1392845266

    I would bump up the rent a bit, but the peace of mind in finding tenants that you can depend on is worth thousands really. We all know of places that sat and sat and sat after the tenants left. And when the tenant leaves they will pay $0 leaving you to pay the full monthly nut which is even worse.

    Showing it with tenants, especially good ones, shouldn't be a issue. While its not 'pristine' empty space, a buyer would know that the place is occupied and wasn't a squat, a meth lab, or a shell with all the pipes and appliances ripped out. The only twist I would think about is that if the tenant was onsite while the buyer was there ... well, when I was buying I always asked friendly questions to "fish".

  7. Kiki Says:
    February 19th, 2014 at 10:29 pm 1392848949
    1392848949

    Not knowing what the base rent is, I think an increase of $100 a month sounds fair. A jump to $347 a month is to much and you will likely lose them. Finding good, solid, paying, and responsible renters can be difficult.

    Good luck!

  8. wisewoman Says:
    February 19th, 2014 at 11:13 pm 1392851611
    1392851611

    You might want to check with your local housing authority to see what percentage is allowable by law. Sounds like you have great renters. The are few and far between. I'd hate to see you lose them due to a large rent increase.

  9. NJDebbie Says:
    February 20th, 2014 at 12:31 am 1392856300
    1392856300

    We had a rental property and some states limit the amount you can raise the rent each year.

  10. wowitsawonderfullife Says:
    February 20th, 2014 at 12:44 am 1392857092
    1392857092

    I agree that you should list but also bump up about 5%.

  11. marvholly Says:
    February 20th, 2014 at 01:43 pm 1392903833
    1392903833

    It does NOT matter a fig what your mtg/taxes/insurances costs are.

    What matters is what comparable properties in the SAME neighborhood & school district rent for. Check that out and go to 90-95% of similar properties since these are especially good tenants.

  12. Looking Forward Says:
    February 21st, 2014 at 06:29 am 1392964150
    1392964150

    marvholly has a very valid point.. you need to know what rents are in that area.

    Even $100 more per month could create a burden that would force your good renters out to a cheaper place.

    It might be a good idea to try to list the house again this spring if the market is picking up in your area.

  13. Tabs Says:
    February 22nd, 2014 at 06:47 am 1393051675
    1393051675

    I would increase it if they were bad renters, but considering that they are good, well, I would not raise it much, if at all. But that's just me....

  14. creditcardfree Says:
    February 22nd, 2014 at 02:06 pm 1393077975
    1393077975

    What did you decide to do? I sure think a real estate agent or a couple could tell you what the home would sell for in this market. I think that information can help you decide whether to sell or not. Also consider that if you don't live in that home for two of the last 5 consecutive years before the sale that it is no longer considered your primary home for tax reasons. You might look into the tax consequences.

  15. Rachael777 Says:
    February 23rd, 2014 at 01:07 am 1393117672
    1393117672

    No one has mentioned this yet but since you want to get sell and they want to buy (but can not get a loan right now. and by the way they CAN get a loan 1 year out of foreclosure w the FHA back to work program).. Anyway.. what about 'lease optioning' it or 'rent w option to buy'.. how it works. they put up a lease option fee (not sure what the house would sell for.. but between $2-10k.. for the OPTION to buy in the future. You set the price now though. Their rent goes up (maybe by as much as $347 but YOU credit them each month some amount (negotiable) towards the purchase IF they purchase. If they do. you have sold it without realtor fees.. if they do not you KEEP the lease option fee and they get no credit. Also with this arrangement.. renters do take care of like their own (as they appear be now) and pay all repairs (starting now) as if they owned it.. All you pay is mortage and real estate taxes. I have done this before successfully.. Let me know if you have questions.. I can help more w specifics... or take a look on the web for info

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