pinksunshine
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Joined: Jun 21, 2011 8:50:08 GMT -5
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Post by pinksunshine on Jun 21, 2011 9:04:48 GMT -5
Hi all! I used to post on MSN way back when (like 2007). It's been a long time.. Anyway, I'll get straight to the point. My husband and I purchased a condo in 2004 and can't sell it now. It's worth half of what we owe on it. It's only a one bedroom and we recently had our first child. We're trying to deal with the lack of space but we just have no room. We need to move so we are considering renting the place out. We live in IL. All I know about becoming a landlord is that we need to run background checks on possible tenants, and collect a decent security deposit. We aren't thrilled about renting our condo out but we don't see any other option. I am looking for any help,advice or resources that any of you out there could offer. Hubby and I would like to start the process ASAP and know we need to tread carefully. Thank you!
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swamp
Community Leader
THEY’RE EATING THE DOGS!!!!!!!
Joined: Dec 19, 2010 16:03:22 GMT -5
Posts: 45,617
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Post by swamp on Jun 21, 2011 9:09:48 GMT -5
Go to a lawyer to get the overview on eviction laws in your state and assistance in drafting a lease.
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Deleted
Joined: Oct 5, 2024 13:21:45 GMT -5
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Post by Deleted on Jun 21, 2011 9:23:40 GMT -5
Welcome Sunshine, Being an LL is one of our favorite subjects here so you'll get a lot of advice, some of it good! What state are you in? Be aware that real estate law differs state by state so be careful about the advice you get from well meaning folks who are not familiar with your exact state laws. That said a lot of it is similar (and common sense). As I am fond of saying, it ain't rocket science but you do need to do your homework. You will find a lot of information on the web. A good place to start is your state's Landlord tenant website. I also recommend that folks purchase Nolo Press' Every Landlord's Legal Guide. They also have common forms you'll need such as leases, Move In-Move Out forms, change in terms et cetera. When you hear horror stories about tenants it's usually attributable to the Landlord/agent failing to screen the tenant carefully (i.e. make sure they fill out an application and actually call employers, and the last TWO landlords), LLs either are greedy, desperate or don't do their homework on pricing and take any tenant who is breathing, failing to inspect the property on a regular basis and make timely repairs, finally when a problem happens (e.g. tenant stops/short pays rent) the newbie LL doesn't address it right away hoping it will get better. I'm curious, what will be your negative cash flow? Have you thought about doing a short sale instead?
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kdamron
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Joined: Jan 17, 2011 10:52:02 GMT -5
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Post by kdamron on Jun 21, 2011 9:30:39 GMT -5
Hi Sunshine! I leased my house out about a year ago when I moved in with DF. My advice would be to get a real estate agent that knows your neighborhood and have them list it. It will cost, but they run background checks, credit checks, employement checks etc. (at least good one will). Typically if you want a property management company to manage it you will pay 10% of the monthly rent. Since it is just one house I manage it myself. I haven't had any problems, but I'm sure that's due in part to good screening. My first round of tenants moved out the beginning of this month and I had three apps on it within a week. Rental market is hot if you've got a good property at a good price. As others have said do your due diligence and good luck!
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pinksunshine
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Post by pinksunshine on Jun 21, 2011 9:35:11 GMT -5
Thanks for the post. I am in IL. We don't want to do a short sale for two reasons. 1. We both have credit scores over 800 and want to keep them that way. 2. I know people who have their condos for sale and cannot sell them even in a short sale! They are not moving at all in my area. If we could sell I believe we would lose about 50K.
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kdamron
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Post by kdamron on Jun 21, 2011 9:42:54 GMT -5
Will you be able to lease the condo for the payment?
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pinksunshine
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Post by pinksunshine on Jun 21, 2011 10:07:21 GMT -5
Yes, I think we can lease it for the payment and even the assoc dues. That would be $950 per month. That covers all outside maintenance, plus water, garbage, etc. The only thing the renter needs to pay for additionally is electric and cable. Everything in our unit is electric which means no gas bill in the winter (which I will really miss when we move!). It's very affordable (last month our electric bill was $65).
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Clifford
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Post by Clifford on Jun 21, 2011 10:34:22 GMT -5
Before you move, you might consider a refinance while it is your primary residence. Refinancing an investment property is much more difficult and the rates are not as good. Run the numbers and see if you can reduce your monthlies now to increase your cash-flow once you rent it out.
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Deleted
Joined: Oct 5, 2024 13:21:45 GMT -5
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Post by Deleted on Jun 21, 2011 12:53:05 GMT -5
I don't think they will be able to refi if the value is 50% of the loan value. It won't appraise. The OP might be able to call the existing lender and see if they can get a lower rate claiming some kind of hardship but she can't let on about their plans to move.
O.P. be prepared for a lender denying a loan for a new place even if you can afford it. They are so paranoid about strategic walk aways that it's very difficult to borrow if you have an upside down property.
Also do set up a separate checking account and EF for your rental property. This will be your cushion in the event you do have to do an eviction/significant repairs or problems finding a quality renter for a couple of months.
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pinksunshine
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Joined: Jun 21, 2011 8:50:08 GMT -5
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Post by pinksunshine on Jun 21, 2011 13:42:00 GMT -5
I am prepared for having trouble getting another loan for a new place. I know someone who did what my husband and I want to do and he had his parents cosign on the mortgage. There is no way we would ask my parents or his to do that. I just hate being so STUCK!!! We could buy a house cheaper than what we paid for our 1 bedroom condo. Makes me so sick!! We can refi the mortgage, if we pay 3K in closing costs it would save us approximately $75-100 per month. We called our lender already. They will do refis without an appraisal.
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cronewitch
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I identify as a post-menopausal childless cat lady and I vote.
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Post by cronewitch on Jun 21, 2011 14:44:55 GMT -5
Move to a rental yourself so if worse came to worse you only have one mortgage. Save about 6K as a condo emergency fee so if you are between tenants or need to replace carpet and paint you don't get behind.
If you rent you don't need to maintain the new place or update anything so will save some money. I would choose a tiny house like two bedrooms and a tiny yard for the baby to play in. Lower rent and utilities than a larger place. Then you can save more for the new place and buy when you sell the condo.
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2kids10horses
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Post by 2kids10horses on Jun 21, 2011 21:38:19 GMT -5
Pink,
I am going to tell you what I tell all new prospective landlords, go join your local Real Estate Investor's Association. They will tell you what kind of leases are best for your area, what the rents are going for, and how to manage.
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