Should I sell or rent out single family home?

Question

I have a single family house in N Las Vegas which is on the market but not getting any viable offers. It's paid for and the people across the street offered me $1800 to rent for her mother and brother. Mother has a pension and brother is looking for work. I'm not sure if my neighbors would come up with the rent if needed. How does that work? Would they have to be co-signers on the lease? I'm hoping it will appreciate in value over the next 5 years. I live out of state and would give it to a PM.
Or should I just leave it on the market longer and sell?

Bill B. · Answer

I’m at least a little confused by your post. $1,800/mo is reasonable rent for a $300k home but homes under $400k are selling in days. Is it possible the price is too high or the rent is too low?

If you have a property manager ask what rent they would ask and what you would net after charges. If you don’t have one you need to hire one or sell. I assume it wasn’t your primary home 2 of the last 5 years to avoid the taxes as you say you live out of state.

If you decide to sell figure out if the problem is your price or your pix/advertising. If you decide to rent it out get a professional PM involved.

Good luck.

Nathan Gesner · Answer

I definitely wouldn't rent it to the neighbors that aren't employed. That's just asking for trouble.

If you want to consider renting it, focus your energy on finding a good property manager, then follow their advice.

Remember: cheaper doesn't mean you'll make more money.

Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Try interviewing at least three managers.

1. Ask how many units they manage and how much experience they have. Feel free to inquire about their staff qualifications if it's a larger organization.

2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, especially if they violate the terms of your agreement.

3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, a leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.

4. Review their lease agreement and addenda. Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.

5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.

6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. A tenant complaining online might indicate that the property manager handled them appropriately, so be sure to ask the manager for their side of the story.

7. Look at their marketing strategy. Are they doing everything possible to expose properties to the broadest possible market? Are their listings detailed with good-quality photos? Can they prove how long it takes to rent a vacant property?

This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!

Adam Bartomeo · Answer

Anytime you can hold on to a home you should, compounding interest will always be your best strategy. Renting to your neighbors who just threw out a rent price... probably not the best idea. You are off to start interviewing PM's to get a better understanding of what market rents are and if these folks are qualified to rent your property.

Theresa Harris · Answer

Ask your realtor why it isn't selling. How much are the expenses and is $1800 fair market rent? If so, you could rent it to the neighbour's family, but check their references and get them to co-sign the lease.

Michael Sloan · Answer

@Eileen A.

It’s paid for? Then it would be a great rental.

Hire a professional PM and let them lease it out. You could even negotiate into the contract that if the neighbors qualify you don’t have to pay the full leasing commission

If needed some cash you could always do a cash out refi and take a small amount out. (Don’t go to big so that the property will still cash flow)

Stephen DeThample · Answer

Is it listed around the comparable prices for homes sold? Bill is right about homes in that price range. It should have a lot of interest. Did you / your agent hire a professional photographer?

Should I sell or rent out single family home?

Should I sell or rent out single family home?

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