High End rentals

4 Replies

I've rented high end houses furnished years ago for $2500 and have 4 groups interested in a current house ($250k range) at $1350. We rent 4 bedroom 2-3 bath upscale homes for $1650---but just this year and we're in the south where the boom didn't hit hard up or down. Rents just went up last year after being flat for 5 years.

Cheaper houses rent better if they have at least 3 bedrooms. Two bedroom small houses are price pointy. It's hard to get more rent as other small houses around them stay at about the same market rate. They don't appreciate very well either over time. Moderate only.

Four bedrooms are the best houses to rent right now. Everyone is looking for space and value. You see more roommates even among young professionals.

It's very important to check around with large local property managment folks -- see what they consider fair market rent for their 2/3/4 bedroom rentals. That way you know you can duplicate or (with enhancements) do even better.

This TOTALLY depends on the local market where the property is located. Check the ads; check with the local MLS to see if they have any rental listings of that type.

Count on the fact it will take significantly longer to find a qualified tenant. Keep in mind that if they can afford to rent an executive home, they can probably just as easily buy something, so either they know they are only renting 1 - 3 years and just don't want to go through the hassle of buying/selling, or they don't believe a purchase in that market will appreciate in value over the short term. Of course there are SOME people that just don't want to own, but only a small percentage.

Another point to consider, is the fact that this type of tenant, although generally will take much better care of a home, also generally expect a higher level of response and quality of repairs and upkeep from the landlord. Many are extremely demanding, and they have the money and frequently the connections to make their point.

Roommate situations are not so great, especially for a larger home. It is rare to get 4 or more roommates that can get along for the term of the lease. Somebody moves out, and you get new tenants without proper screening etc. then when its time to evict, you don't know who to serve or where (if) they work! Oh, and of course there are the arguments over who paid what portion of the security deposit. They NEVER understand that they are ALL responsible for the total amount if someone can't pay or skips out. Add to that that (usually) you basically have a group of "children" or at best "new adults" that really don't "get" responsibility. It's always someone else's job to mow the lawn, clear the snow, take out the trash, clean the house, control the guests, etc. etc. Care to guess who ends up doing most of it? Or at least nagging them until they do?

Sure, this does not apply to all roommates...but why set yourself up? More bedrooms = more people, whether its kids or adults, no matter. More people = more wear and tear on the property; higher maintenance costs; more noise; more trash; more cars; more headaches of all kinds. Given a choice, I would not invest in a rental with more than 2 bedrooms.

Thanks for reading...

Jay,

Everything CAN rent, even multi-million dollar apartments and mansions. However, more expensive houses can also stay vacant a LOT longer because these tenants are often renting only for the short term (as Beachbum said).

I think that the best rentals are in the lower middle and lower income neighborhoods in most markets. People in these income levels are mostly renters, because they can't afford to buy. Therefore, there is always demand in this income class. Additionally, it is much easier to get cash flow from these lower cost properties than from expensive houses.

Mike