Renting for less than fair market

4 Replies

In February, my son will be renting out the 3/1 house he bought in September. Ultimately,in a few years, this house will be one of many of homes in an Autistic intentional community within an already existing community, but in the meantime it will be a regular rental.

He would like to rent the house for less than fair market value.  He is thinking renting it for about $500 a month with the tenants paying for all utilities except for the security system and trash pick-up. [ which are not actually utilities] These, along with insurance and taxes, will cost my son about $182 a month. 

The home has been renovated [actually, we are still working on it]and the roof, plumbing, electrical etc. are all in good condition.

Do you think he can rent it out at this price and not lose money?

There are a lot of things missing here. How much is he paying in debt service (mortgage payments?) How much are his insurance and property taxes running him? What is fair market rent in that area? Is it normally for tenants to pay for all of those things in your area?

Full disclosure, I'm inexperienced. From what I've read and heard from others, it depends on the questions I asked above and a number of things I probably don't even know about yet. There is a website I use to run the numbers on different deals I've played with. What I would recommend is use this, and if you have a question about what one of the numbers is it's easy enough to google and learn what it means. It's not a promise that things will work out that way, but it will give you a more detailed picture.

http://deancraneproperties.com/rental-property-cal...

Hope that helps.

there is no mortgage[he started saving at 9 years old] Insurance, property taxes, security system, and trash pick-up come to about $182 a month I think.

I'm just curious as to why he's been saving his money since he was 9 to buy a property that he wants to immediately rent out for less than market value? Aren't there better investments you could be pointing him towards? Is this just his way of being charitable or is he just trying to make the rent cheap to bring in tenants more quickly? If it's the latter, I would be wary of trying to attract tenants with unusually cheap rental rates. Subpar rent can often times = subpar tenants from what I've seen and read on here.

I think you need to rethink your goals. Yes, your goals. Not your son's. Clearly your son is not posting this topic. Does it bother you that he may be throwing away his money/gains? Your son may not care. But it seems like you do.

There are other ways to reach the perceived goals your son seems to be trying to accomplish. I think you need to communicate with him and offer financial alternatives.

My 2 cents.

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