Hi, my name is Frank. I'm in a situation where I will be heading out of state for school for two years. My father has a negative view on renting out and managing my SFR.
I'd like to start a discussion on what can be done to convince him otherwise.
Why would you rent it out?? Have you lived in it for the last two years or more?? If there is a lot of equity you could sell and take up to 250k tax free from the proceeds.
Being out of state as a landlord trying to go to school seems to me to not be that great of an idea.
Why can't you sell this property?? Are you underwater in value on it and have to rent it out until the value improves??
You need to do a sell/hold analysis along with demands on your time to see what makes the most sense.
Thanks for you time/ reply Joel
Property was purchased last May, so not even a year yet. Probably $30-$40k in equity.
My parents live across the street from property and I wanted them to help manage while Im in school. I thought it was a good idea but my dad is all negative.
Thanks again for the comments!
My dad is a great guy, but would feel the same way as yours. He was a 30-yr gov't employee and doesn't get it. We still talk and everything, just not about real estate. Ever. Get a different person to manage your investment. "Those convinced against their will are of the same opinion still." Don't make your house his problem.
I'm with @Steve Vaughan , it sounds like you want to eat your cake, but have your dad bake it while you're off at school. I'm a big fan of holding onto property rather than selling it if the numbers make sense for you.
Do you have a friend or another relative in the area who might help manage it for you? And/or are you offering some money for them to help do work for you? If not, a little spending cash might increase the incentive for them to lend a helping hand.. Your dad has probably heard a couple horror stories and doesn't want 3am phone calls. It's really not that bad though, most of the time.. Good luck!
You are offering your dad a chance to pick his neighbors and, I hope, earn a property management fee. If he doesn't want it just sell the house. If he agrees to do this because you talked him into it he is not going to be a very good property manager and he will blame you when something goes wrong.
why not just let a professional property manager do it? Sure you won't make that much money after management fees but the tenant will be paying the fees and the principal of your mortgage down for you. Plus you get to see how others do it so you can learn from them.
Is there someone else in your family you could rent it to at a reduced rate to house watch??
You cover the mortgage etc. with the rent and they take care of the place.
No legal advice given.
@Frank Rubio Your dad probably heard a few horror stories about renting. Mid-night phone calls. Having to evict tenants, etc. Your dad's generation is mostly about home ownership and rental property is probably new territory to him.
It's your property and you have complete control over it, unless he was an equity partner or gave /loaned you money for the property. If your local real estate outlook is positive, then definitely hang on to the property and rent it out.
Please don't ask pops even one more time to do something hes made clear he not want to do! He would be horrible at it for that reason alone. Not to mention resentful. As I would be if my son wanted to dump managing his rental on me. Especially across the street from my private oasis. Maximum ugh! to being my neighbor's landlord AND the owner's relative!!
@Joel Owens I'm going to respectfully disagree with you on your response...getting a family member at a reduced rate...au contraire. Stick a fork in me, I'm so done with deals to friends or family!! They are not pros, forget that it is a job and a responsibility, and end up feeling entitled to cheap rent for doing nothing.
My hope is that Frank goes with a pro!
Who paid the deposit/equity in the first place? If it was your dad, let him turn it over and hopefully set aside the (increased?) equity for your next time around. If you paid for it though, it is now just your opinion against his, in which case, YOU decide. Cheers...
if you decide to keep the house @Frank Rubio then i would hire a property manager to take care of it
30-40k would help pay for school if you sell then start your investing career when you graduate
Do you have any experience in buy and hold investing? If this is your first investment of this type, my two cents would be to either sell the property and use the money for school, or use that equity to buy a duplex near your school and live in one side and rent the other out. Is there something special about this property in particular that you want to keep it?
Do you have a good relationship with your parents? If you do, that would be another reason to sell. If your parents manage it, you won't get most of the valuable experience of being a landlord- your dad will get it, only he won't get any of the profits. I'd be annoyed and resentful. Business and family truly don't mix.
I'm all for buy and hold, but don't see an upside here for you.
Best of luck!
Corby Goade, Real Estate Agent
Eva everyone's family is different. Some are great and some are a nightmare. Only the poster knows his situation.
I think dad in this case should be left alone. Sounds like dad is enjoying his golden years and doesn't want any BS.
I can't stand SFR rentals. I do not want the drama and love my life now. I like the idea someone else made about selling off and buying where he is going to school. In fact he could buy a 4 plex for better break even occupancy. He holds for two years and then if he leaves the area 1031 exchanges where he is moving to if he likes that area for investment.
People need to remember not everyone wants to watch over residential tenants and deal with the crap. They would rather remain passive, own other investments, etc.
I think your best bet would be to find a professional property management company to handle it. You may not have much for cashflow left, but you will have the loan paid down, and you wont have a strained relationship with your family.
Do you have a friend or other family member that can manage your property while you are away at school?
If not, did you look into using a professional management company? The one I used only charged me $100 a month, and they their fee directly out of the rent check.
Hope that helps you.
Hi, Id like to thank everyone for taking the time for discussion. There is a wide range of experience on this form and I value everyone's opinion. This has been very helpful.
I'd like to hold on to property as I see the city making very positive moves towards infrastructure. the city is expanding and I see rent rising every month.
The property is 100% mine. I came up with deposit ect.
If rent is growing then you can afford a professional PM company. Make sure the company ONLY does PM work.
In residential there are at times a lot of brokers / agents that try to be a jack of all trades. They position things as an "all in one" service. That can be a bad thing sometimes. I have heard nightmare stories of agents doing PM work on the side and when a house sale comes along then the PM starts going downhill. So in short make sure the PM company spends almost all their time doing PM work.
In commercial real estate I do transacting and let others do PM. Specializing in my opinion gives more value to the client because you are focused on doing the very best in the one aspect of R.E.
I have to agree with @Eva Salas . The family member at reduced rent might become a family member occupant paying zero rent, which leads to eviction and lots of discord in the family. So no family members as tenants unless you are willing to let them live there for free.
And the rest of Eva's post is spot on. I would add that in many localities, in order to manage a rental, one must either be the owner (or employee of a company that owns) or one must be a licensed agent. My guess is that the OP's father is none of those and as such should not be managing a rental. What would happen if he were and things did not go smoothly?
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