We've been renovating a house that has extensive termite damage (not recent) and I'm working under the house replacing sections of joists that have been eaten up. Got a phone call today from a woman who is looking for a place to live and is familiar with the house since her parents live next door. She acts like she could live in it in the un-refurbed condition. It would be her and her 15 year old daughter. She would probably stay there 3 years as her daughter is starting her sophomore year. There are almost no rentals available in this county as the schools are desirable. I'm going show the house Monday and if she is ok with it, we would love to have someone in it. She is currently living next door with her parents so her kid can start school Monday in the county. My wife and I have discussed it some and are trying to decide how to rent it. We certainly wouldn't expect to get "market rent" for it in its present condition but I don't know that I want to give her a low priced contract and then scare her when the price gets jacked as renovations are completed. My thinking is to come up with a number and then give her a "discount" until certain aspects are completed. How would ya'll approach this situation.
The house is "rough" but livable. (my daughter stayed there several weeks recently). It doesn't have central heat or air, just gas space heaters and window ac units. There is a nice electric flattop range and a standard fridge. It's a two bed 1.5 bath but the tub/shower is in the bath off the bedroom. The house was built in 1900.
You could rent it if you are fairly certain they will not fall through the floor and the property is habitable. If there is not much else available then you might get market rent in either case or above market rent.
I would either refurbish it, or only make absolute necessary repairs and rent it as-is. I would not try to refurbish it while she is in the house. If she has the credit and the income to rent it, I would just consider it a rougher home as long as it's livable, and maybe make it a little cheaper than market (but only a little). Let's say market is 1500, rough condition without rehab is 1000. I might rent it to her for 1350 or 1400, taking some off of what it should rent for, recognizing that her getting in there early (that's not your problem that she wants to get in the school by Monday) will prevent you from rehab and getting full market value. Someone should pay for that consideration, and the someone should be her.
Assuming she gets along well with her parents, I wouldn't be surprised if she stayed a very long time. Having support systems nearby is huge for a lot of people.
Again, I would not be doing any rehab that involved the living spaces of the house while she's there. Necessary repairs and that's it. Putting a new roof on or siding, things that don't affect the inside living conditions, that is another story.
PS: I would not rent an unsafe house under any conditions. If there is a danger she could fall through the floor or have the ceiling fall in on her, I wouldn't rent it, period.
Good info. Thanks for those suggestions. The house is safe and habitable. She viewed the house this afternoon and is willing to take it in the "as is" interior condition for a lower rent. I ran some numbers and the spread between market rent is not that great, especially when factoring in several months of vacancy while the rehab is going on. The rehab essentially gets "deferred" until a later date.
Since most of what I need to do to this property is outside the house, it would give us some cash flow and let us do the exterior stuff a bit at a time around our busy schedule. I told her I would email an rental application and we'll go from there.
I would have to agree with JD. She approached you, just remember that. She knows what she is getting into. Leave a little meat on the bone, but not too much. Sounds like an all around win. You get consistent rent and can save on renovations until you build up a little cash, and she gets a discount. Everybody wins.
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