Bought a new PR, have to rent our current home asap, now what?

Question

I've been casually looking for a bigger house for the family, then I saw our dream home suddenly have a 100k reduction by the sellers, so I shot from the hip and our offer was accepted 48hours later. The sellers got a divorce and just wanted out, so I couldn't go contingent. Since I qualified to keep my current house, I'm now going to need to rent it out. I looked into real estate investing a couple of years back, but now all of a sudden it's happened. I don't even know where to start, I just listed it for rent on Zillow to see what responses I would get. I can't get a property manager because it would cost too much. Any advice on where to start? What software should I use? Do I need a business license? Ahhhhh help! lol

Kevin Lugo · Answer

@Richard Herrera do you have to show your lender the signed lease, deposit, and first months rent for your old house in order to close the new purchase? Or are you okay with your finances without it? This was a major issue for me but managed to make it work for my first to second househack - now I am trying to plan for the next time so I am not such a rush.

Richard Herrera · Answer

I was approved without renting out my current house, so she didn't need to list it as being rented. My mortgage broker was planning on having me do all of that, but then I got approved without it. :)

Richard Herrera · Answer

@Janice Carter that makes a lot of sense, thanks Janice

Janice Carter · Answer

Richard, when I say “real estate professional,” I do not necessarily mean a full-service property manager. If you plan to self-manage, you can simply work with a real estate agent who has experience with rentals to handle tenant screening and placement only. Not all agents do rentals or have hands-on experience with tenant screening. Many focus solely on sales, so it is important to confirm that the agent routinely handles rental placements.

You do not need to hire a property manager if the cost doesn’t make sense for you. Tenant placement is a one time service and is often far more affordable than ongoing management, while still protecting you on the front end.

As for compliance, this typically includes:

• Proper advertising and screening in accordance with Fair Housing laws
• Consistent, documented tenant selection criteria
• Legally compliant lease agreements and required disclosures
• Understanding local and state landlord-tenant laws (security deposits, habitability standards, notice requirements, etc.)
• Correct handling of application fees, background checks and denials

Proper advertising and screening in accordance with Fair Housing laws

Consistent, documented tenant selection criteria

Legally compliant lease agreements and required disclosures

Understanding local and state landlord-tenant laws (security deposits, habitability standards, notice requirements, etc.)

Correct handling of application fees, background checks and denials

Getting the placement and compliance right from the start significantly reduces risk, stress, and costly mistakes later. Once a qualified tenant is in place, many owners find self-management very manageable.

Michael Smythe · Answer

You can't hire a PMC because it will cost too much?

Wow, ask yourself how your scarcity mentality will work if:

1) You place a bad tenant who doesn't pay you a penny for the 6+ months it takes you to evict them?

2) You naively discriminate against an applicant and they sue you for $50k?

3) You're too busy to properly chase a slow-paying tenant and the next thing you know, they're several months behind on their rent?

4) Tenant starts making major changes to your house?

5) Tenant moves additional occupants in or gets a pet without getting your permission?

6) Your lease has more holes in it than swiss cheese?

7) Tenant is trashing your home?

The list goes on and on...

Janice Carter · Answer

Richard, congrats on getting your dream home under contract. That is exciting, even if it feels overwhelming right now. Since this happened quickly, I would slow down before placing a tenant. The biggest risk for new landlords is rushing tenant selection which can become far more expensive than proper setup. Start by confirming local and state requirements, set clear screening criteria and use a solid lease. Zillow can generate leads but it doesn’t replace thorough screening or local compliance.

You may want to at least consult with a real estate professional for assistance with tenant placement, even if you plan to self-manage. Getting this right on the front end can save you significant time, stress and expense down the road.

Richard Herrera · Answer

Thank you so much for your response! I just have a couple of follow up questions… by real estate professional do you mean a property manager or should I talk to my realtor? Are you saying I should hire a property manager for tenant placement? And by compliance, what is involved in that typically.

Bought a new PR, have to rent our current home asap, now what?

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