The Landlord Thread

[Bonny]

Mar 8, 2015 19:52:18 GMT -5 lurkyloo said:

Mar 8, 2015 17:37:35 GMT -5 Bonny said:

OK Just make sure you know what you're doing. The biggest trade-off I see is if you have a lot of equity in your home converting it to rental property service after 1/1/2009 means bifurcating the capital exemption even if you move back to take advantage of the 2 out of 5 year rule.

Can you clarify that?  It looks to me like that kicks in if we rent it for more than 3 years, at which point the capital gains exemption of $500K is multiplied by the fraction of time we used it as our primary residence, correct?  That doesn't change based on PM or no, does it?  Also looks like claiming depreciation might limit the capital gains exemption, so I'll need to be careful about that. I'll read up on it before April 2016 rolls around, but I don't really see much that we can easily do differently--it's not practical to use it as our primary residence anymore; even if we returned to CA in a year or two it would be a vacation home at most.  Also, if we did sell right now, we wouldn't get back much more than the purchase price; most of the equity is from the down payment or paying down the mortgage.  

This is why you want a CPA and not DIY.

As I understand the rules, as soon as you put the property into service as a rental after 1/1/2009 you must bifurcate the cap gain. You are entitled to a cap gain exemption of up to 250k/500k by virtue of living in it 2 of the last 5 years but you're going to bifurcate the gain. This why I'm saying if you have a big cap gain make sure this is what you want to do.

I throw my house out as an example. Keep in mind that the reason we put the house into rental service was;

1. Afraid we couldn't afford to move back to CA if we sold and I hated AZ. This was 2003. C[mon I was moving from summertime temps of 60 degrees to 115.  I was a wimpy coastal creature. I needed an exit strategy.

2. Given that we bought the property in 1995  we benefited greatly from Prop 13. We were being taxed at a value of half FMV.

2012 (nine years later) reality check;

1. The tax rules changed effective 1/1/2009. Now there was not quick move back into the property, fix it up for sale and get the $500k exemption (for a married couple).

2. Given that the estimated value in 2012 was the same as when we left in 2003 we were "giving up" a portion of the appreciation we "earned" prior to conversion. Ouch.

On the positive side I can add the following;

1. We always planned on moving back to the house for a period of time. But had we sold we never could have found our house again. This little subdivision rarely comes up for sale short of going feet first. There were no houses that came up for sale from about 7/2003 (a $900k fixer upper) until 3/2014 (tiny ocean view and 2/3rds the size at $850k).

2. We need to be here. We are the mid point for our remaining aging parents. MIL is in Portland, OR and Dad is in NE San Diego county. An hour and a half flight away or a day's drive.

3. We forgot what a really beautiful spot we're in. If you PM me I'll give you a link to our web cam. We ain't fancy but we're darn lucky.

4. It's actually "cheap" for us to live here. Gas and electric? Annual average is $100/mth. We don't need A/C. And thank you Prop 13. Property values have bounced back up to 2005+ levels. Our taxes would be triple what they are now.

5. Buy not selling we weren't tempted to buy a huge house in AZ. We had a couple of friends do that. It wasn't pretty when the market crashed.

There's no perfect answer here. You sound a little tired of CA and I understand that. I enjoyed our moves to AZ and Germany. But I'm a native so CA will always be home.

Good luck with whatever you decide.

ETA: I used the wrong term in my earlier post. I should have used the word "appreciation" vs equity. Sorry, they are very different and I'll correct.

[lurkyloo]

I guess I'm not clear on what you mean by bifurcate.  Dr Google isn't bringing much clarity either!  Is that the bit where the usual exemption is multiplied by the fraction of time it was used as a primary residence?

I think my reasoning reads easier in bullet points:
--We're keeping the house long-term because like you, it's not a given we'd find another like it and we'd consider retiring here (20+ years down the road)
--No jobs in the area for DH, not willing to go back to the sole relevant local company for my career, therefore not practical to live here while we still want to work.  Also, crappy school district.
--Don't want to sell, so we can either rent it or leave it vacant.  
--If I thought there was a significant chance we'd be back to LA in a year, we'd go with the vacant (caretaker) option, but I don't think there is.
--If there's a way to structure it so we don't have to partially give up the capital gains exemption, I'm all ears!  But there's little to no appreciation right now, certainly no more than realtor fees and what we've put into it, so at least we're not losing existing appreciation.
--Paying more taxes sucks, but at least it means we made money 
--Thanks for all the food for thought!  I might check with my friend the all-but-licensed-CPA to see if she has any thoughts.

Oh, and I'm still interested if anyone wants to share any tips on picking a property manager?  I have this nagging suspicion that a PM might actually take better care of it than we have... all our spare time ran away when DS arrived.  

[resolution]

I asked around for recommendations from people I knew with rentals, and didn't get very far since they all went super cheap and hated their property managers. I decided to pay the going rate and not try to get the cheapest one.

I googled property management companies in the area looking for complaints, and I rejected the ones with multiple tenant or landlord complaints. Some of the bigger operators had tons of tenant complaints, and I wanted happy tenants.

I went to the BBB site and looked at length of operation, rating and complaints. I recall there are a lot of sorting options that can be a good place to start. I looked at the company web sites to compare services and prices. Talked to them on the phone and then had them come out and look around the house to meet in person. I ended up with the highest rated one on BBB that had been around for a significant length of time.

I gave a lot of weight to length of operations because I converted my home into a rental during the height of the real estate crash and at that time a lot of realtors were hanging up a shingle as property managers without knowing what they were doing. That is probably less of a problem now.

[Bonny]

Mar 9, 2015 1:45:06 GMT -5 lurkyloo said:

I guess I'm not clear on what you mean by bifurcate.  Dr Google isn't bringing much clarity either!  Is that the bit where the usual exemption is multiplied by the fraction of time it was used as a primary residence?

Bifurcate just means splitting something in two (not necessarily equal) pieces.

I use my house as an example and I'm oversimplifying the numbers. This calc assumes I've met the 2 out of the 5 years exemption rule.

Years owned = 20

Years in rental service AFTER 1/1/2009 = 2.5

Cap gains= $500,000

$500k / 20 x 2.5 = $62,500 which will be excluded from our exemption and need to be taxed at cap gains. This of course is in addition to the depreciation recovery. In our case because we only had the property in rental service for a couple of years after 1/1/2009 the amount of cap gains tax we will pay will not be a big deal. But the point I want to make is that those folks who think they are going to reap a big cap gains exclusion by moving back into their rental houses for a couple of years are going to be very disappointed.

Like anything there are trade offs. I just want you to be fully informed about some changes that have happened. It's one reason I strongly urge the use of a CPA whose job is to stay on top of these changes. Mine has kept me out of trouble over the years. Well worth the money. 

[lurkyloo]

Okay, that's what I thought you meant.  (I know what the word means; just wasn't sure if it was a technical term with additional meaning in this case  )  I was aware that the rules had become more stringent around that time, in fact I think that was one reason why the owners of our then-rental suddenly went nuts.  

What if anything would you have done differently to preserve the capital gains exemption on your house?

[lurkyloo]

Mar 9, 2015 7:19:17 GMT -5 resolution said:

I asked around for recommendations from people I knew with rentals, and didn't get very far since they all went super cheap and hated their property managers. I decided to pay the going rate and not try to get the cheapest one.

I googled property management companies in the area looking for complaints, and I rejected the ones with multiple tenant or landlord complaints. Some of the bigger operators had tons of tenant complaints, and I wanted happy tenants.

I went to the BBB site and looked at length of operation, rating and complaints. I recall there are a lot of sorting options that can be a good place to start. I looked at the company web sites to compare services and prices. Talked to them on the phone and then had them come out and look around the house to meet in person. I ended up with the highest rated one on BBB that had been around for a significant length of time.

I gave a lot of weight to length of operations because I converted my home into a rental during the height of the real estate crash and at that time a lot of realtors were hanging up a shingle as property managers without knowing what they were doing. That is probably less of a problem now.

Thanks!  This is helpful.  I did the same as your second paragraph to come up with a shortlist of two, but hadn't looked at the BBB.  I know both have been around at least 8-9 years; I remember seeing them when we moved to the area.

The one that came out rubbed me a little the wrong way, I think because he gave the impression he thought the house needed work.  (No argument that the yard does, and the carpets will need professional cleaning, but he was getting kind of bent out of shape at chips in the paint.  It's a very nice house especially by the standards of the area, but it's a 1980s model and we're not pretentious or anal about making sure things are perfect.)  On one hand I think they'd probably do a good job taking care of the house, on the other, well, his attitude rubbed me the wrong way.  DH called the other company this weekend but hasn't talked to them yet.

[Bonny]

Mar 9, 2015 10:23:55 GMT -5 lurkyloo said:

Okay, that's what I thought you meant.  (I know what the word means; just wasn't sure if it was a technical term with additional meaning in this case  )  I was aware that the rules had become more stringent around that time, in fact I think that was one reason why the owners of our then-rental suddenly went nuts.  

What if anything would you have done differently to preserve the capital gains exemption on your house?

Nothing. The actual tax isn't going to be that much when it's all said and done. We still have carry forwards from when DH's income was so high. And the denominator keeps getting larger the longer we're here.

But we were definitely doing the math on our Oceanside (N. San Diego County) house. At one point it was actually cheaper to pay the cap gains taxes than the cost of moving all of our stuff!  That's probably changed now that prices have gone up. But it's certainly a lesson not to invest simply for tax purposes. 

[Bonny]

LOL, alwaysbeoptimizing I think you have a real estate addiction.

Would the in-laws consider doing an owner carry back? Why are they selling?

 I'm a real estate enabler.

 

[Bonny]

Mar 9, 2015 13:10:38 GMT -5 alwaysbeoptimizing said:

Mar 9, 2015 13:04:48 GMT -5 Bonny said:

LOL, alwaysbeoptimizing I think you have a real estate addiction.

Would the in-laws consider doing an owner carry back? Why are they selling?

 I'm a real estate enabler.

 

They'd probably do a carry back, with a cash out date that was within a few years.

They're older and FIL has some medical needs.  They don't "need the money" right now, but they do need less things in life to stress them out.

Even though it's an easy rental, it's becoming too much on them to keep the books together/etc.  They want (and I want for them), to just be free of this to go enjoy their time at the nice senior condos they've moved to.  They've worked hard and invested all their lives, and are in a comfortable position to enjoy their years ahead.

The problem with carry back is that then i'd never be able to get the loan to expand our house or to borrow to build the house on the lot we want to develop (my DTI would end up at 60-70% or something crazy, even though a lot of it is covered by tenants).

Also, i'd like to lock in today's rates, so if I did buy with a partner, i'd write up the deal so that they'd secure permanent financing now and we'd jointly own the LLC that owned interest in the house and had a contractual obligation back to the partner holding the debt to make everyone whole).

A stream of income for them may be more valuable than a lump sum. Think of it as a 30 year annuity to them at 4.5% or whatever you can agree on. I assume these are your wife's parents? Does your wife have siblings? The note can be inherited but if there are siblings you might want to structure it a certain way.

I don't think you're calculating your DTI correctly. You're supposed to include all your streams of income including the rentals.

I'm concerned that bringing in a partner will make the deal even more complicated. Even having my husband as a partner can be a PITA.

[TheHaitian]

Got a hold of the building inspector.

It is possible to do it into a in law suite or separate apartment but is more complicated than just finishing my basement.

I would need to pay an extra fee for the privilege and go in front of the planning board. He was running into another meeting but will call me back with more details in case I want to move forward with it.

[TheHaitian]

Now alwaysbeoptimizing got me thinking about another aspect my wife proposed: adding a garage with an apartment on top...

She send me this:



While I would not mind another car garage I was worried about losing more of our yard space to that... After all we are only 0.37 acres.

[Bonny]

Mar 9, 2015 14:17:37 GMT -5 TheHaitian said:

Got a hold of the building inspector.

It is possible to do it into a in law suite or separate apartment but is more complicated than just finishing my basement.

I would need to pay an extra fee for the privilege and go in front of the planning board. He was running into another meeting but will call me back with more details in case I want to move forward with it.

What is the purpose of doing the in-law suite?

You're likely going to be requesting a variance. Your neighbors will be sent notification and they can either write an objection or also go in front of the planning commission. Off street parking is usually a concern.

[TheHaitian]

Mar 9, 2015 14:54:25 GMT -5 Bonny said:

Mar 9, 2015 14:17:37 GMT -5 TheHaitian said:

Got a hold of the building inspector.

It is possible to do it into a in law suite or separate apartment but is more complicated than just finishing my basement.

I would need to pay an extra fee for the privilege and go in front of the planning board. He was running into another meeting but will call me back with more details in case I want to move forward with it.

What is the purpose of doing the in-law suite?

You're likely going to be requesting a variance. Your neighbors will be sent notification and they can either write an objection or also go in front of the planning commission. Off street parking is usually a concern.

Two purposes :
- extra space down the road if we need it
- rental income if we don't

We haven't decided how many kids we will eventually have, somewhere between 1 and 3 depending on the day of the week.

So if MIL stays with us forever which is a possibility, we would like to be able to provide her with her own space , where she can retreat to. Also would make an extra bedroom available for either extra kids or guest bedroom or office.

The rental income only came up recently when MIL said she probably won't need it and why not rent it instead.

We have 2 multi family homes across where tenants park on the street so shouldn't be an issue. Also our driveway is big enough to accommodate 1-2 extra cars without creating a puzzle for people to get out in the morning.

[TheHaitian]

Mar 9, 2015 15:19:17 GMT -5 alwaysbeoptimizing said:

Oh, Carl, if you do this, get ready for your "rich" friends and relatives (who are all broke) to look down their noses at you because you're so low class as to have a (shudder) renter! on your homesite.

That said, figure out if Bonnie's question applies... what do you really want to do and why?

I only had 1 request when we were house hunting:
- 2 car garage

That is the 1 thing I did not get (that is what happens when you have only 1 thing on your list) and my wife felt bad about that.

So from Day 1 we have been trying to figure out the best way to add either a 1 or 2 car garage on our lot.

Cheapest route seem to be a modular garages and those you can also make it come with a second story/apartment.

[TheHaitian]

Mar 9, 2015 15:19:17 GMT -5 alwaysbeoptimizing said:

Oh, Carl, if you do this, get ready for your "rich" friends and relatives (who are all broke) to look down their noses at you because you're so low class as to have a (shudder) renter! on your homesite.

That said, figure out if Bonnie's question applies... what do you really want to do and why?

LOL my mom said the same thing...

Her home has a fully finished basement that is basically a 1 bedroom apartment. She rented it out the first couple of years and got snarky comments about that!

Anyway our goal when we were first house hunting was a duplex or 2 or triple decker but we couldn't find any that met our requirements or price.

I don't care what other people will say unless they will be paying my bills.

As timeframe: we plan to live here as log as we need too... And my wife would like to keep the house as a rental afterwards but I am not 100% sold on that.

[bean29]

We have a MIL suite in our basement. My house is Similar to Carl's, Except mine is a ranch with an exposure and his is built as a bilevel.

We pulled permits, and b/c the house has an exposure on two sides, we have two legal bedrooms in the basement.  B/C our house is newer, they made DH connect the smoke alarms to the existing wired smoke alarms for the upstairs, it was not a problem as we stared out having pulled the permits, and they told DH from the beginning he had to do it, so he pulled the wires. The only issue was they asked for one extra one, he was not planning on, so he snaked the electrical wires under a heat vent.  He said it would have been a major issue if he did not have the wires pulled before he closed the walls though.

We created a MIL suite "just in case" MIL would choose to live with us.  This is basically part of our living space, just created with the intent that MIL could live here if she so chooses.  I have always been pretty amused that the city seems to want to consider it a MIL unit.  The assessor's description pretty plainly says it is a MIL unit.  Like Bonnie indicated, I thought we live in a single family subdivision, and didn't think they would describe it as a MIL unit.  I know we could get a separate address if we wanted, our house is on a corner and we got to choose which street our mailbox would be on.  They told us the exact address we would have on either street. 

I think Carl's house might be wired and plumbed already for a kitchen...it seems to me the builder was working ona basement kitchen when he made is offer.

[TheHaitian]

Mar 10, 2015 10:52:02 GMT -5 bean29 said:

We have a MIL suite in our basement. My house is Similar to Carl's, Except mine is a ranch with an exposure and his is built as a bilevel.

We pulled permits, and b/c the house has an exposure on two sides, we have two legal bedrooms in the basement.  B/C our house is newer, they made DH connect the smoke alarms to the existing wired smoke alarms for the upstairs, it was not a problem as we stared out having pulled the permits, and they told DH from the beginning he had to do it, so he pulled the wires. The only issue was they asked for one extra one, he was not planning on, so he snaked the electrical wires under a heat vent.  He said it would have been a major issue if he did not have the wires pulled before he closed the walls though.

We created a MIL suite "just in case" MIL would choose to live with us.  This is basically part of our living space, just created with the intent that MIL could live here if she so chooses.  I have always been pretty amused that the city seems to want to consider it a MIL unit.  The assessor's description pretty plainly says it is a MIL unit.  Like Bonnie indicated, I thought we live in a single family subdivision, and didn't think they would describe it as a MIL unit.  I know we could get a separate address if we wanted, our house is on a corner and we got to choose which street our mailbox would be on.  They told us the exact address we would have on either street. 

I think Carl's house might be wired and plumbed already for a kitchen...it seems to me the builder was working ona basement kitchen when he made is offer.

Yep...

The people they were building the house for (financing fell through) wanted to finish the basement and add a bedroom, living room, a bathroom and a small kitchen there for their mother.

When we came in to negotiate, the asking price was 25k to buy it finished which at the time we decided not to do since at 306 we were 56k over what we originally wanted to spend (looking at the 39k now...25k sounds freaking good too me).

But now that we live there we can see how finishing the basement into extra space or MIL suite would be beneficial to our family (extra space or somewhere for MIL).

Just in the meantime until we really need it (kids are here, grandma needing space) we could rent it out and make some money.

[TheHaitian]

Just spoke with the town and they said I would require a special permit and the best/fastest way is to schedule an appointment with the planning board and go over exactly what I want to do in my basement.

Once approved it would be up to the contractor I pick to pull the appropriate and necessary permits

[bean29]

  Carl, Unless you have a detailed proposal for what they were going to do for $25,000 you don't know if you would have got everything your current quote has for the same price.  Chances are there would have been upgrades etc.

You had quite a few issues with that builder...you probably would be in jail for murder if you had had to deal with him on the basement buildout.  Lol.

[bean29]

Carl, I took my plans for my house to Office Max and shot a few copies of my house plans, then I drew in what we planned to do with our basement. I indicated electrical outlets and plumbing and windows and doors exactly like they had the upstairs plans drawn. They issued the permits based on my pencil sketches.  Also you can use a chalk line to lay our proposed rooms or where your cabinets will be.  That's how we figured out what would work and what wouldn't in the kitchen and bath areas.

We were able to pull plumbing and electrical permits for work on our own house w/o hiring a "professional". My FIL is pretty good with plumbing and my Dad was an electrician.  DH worked with Dad on a few of our earlier properties so he pretty much knew what he was doing.

DH should not have done his HVAC, but it works, it's just that I think he tapped into the wrong run. Electrical and plumbing are fine, in fact DH is pretty mad b/c he "fixed" issues created by the "professional" contractors who did the upstairs as he went along.

[TheHaitian]

Mar 10, 2015 11:17:30 GMT -5 bean29 said:

  Carl, Unless you have a detailed proposal for what they were going to do for $25,000 you don't know if you would have got everything your current quote has for the same price.  Chances are there would have been upgrades etc.

You had quite a few issues with that builder...you probably would be in jail for murder if you had had to deal with him on the basement buildout.  Lol.

lol, you said the same thing as my wife

We are still waiting on him to fix a few things and we bought the house what? 9-10 months ago???

Now I let my wife handle it and she is ready to kill him too

[TheHaitian]

Mar 10, 2015 11:27:19 GMT -5 bean29 said:

Carl, I took my plans for my house to Office Max and shot a few copies of my house plans, then I drew in what we planned to do with our basement. I indicated electrical outlets and plumbing and windows and doors exactly like they had the upstairs plans drawn. They issued the permits based on my pencil sketches.  Also you can use a chalk line to lay our proposed rooms or where your cabinets will be.  That's how we figured out what would work and what wouldn't in the kitchen and bath areas.

We were able to pull plumbing and electrical permits for work on our own house w/o hiring a "professional". My FIL is pretty good with plumbing and my Dad was an electrician.  DH worked with Dad on a few of our earlier properties so he pretty much knew what he was doing.

DH should not have done his HVAC, but it works, it's just that I think he tapped into the wrong run. Electrical and plumbing are fine, in fact DH is pretty mad b/c he "fixed" issues created by the "professional" contractors who did the upstairs as he went along.

I wish we were than handy

[Deleted]

The probable future RE agent / PM saw the studio today, and she was absolutely delighted with it! The state of the building, not so much. 

I have an appt with the agency this Fri at 4 pm to sign the papers. We are going to use them to both find a renter and manage the studio. Between work, our house, DS3 and getting older, I admit it, I can't manage anything besides managing the PM.

[Wisconsin Beth]

Mar 11, 2015 18:33:04 GMT -5 alwaysbeoptimizing said:

Well! I guess when it rains I pours!

Good stuff:

- survey updated for subdivision (now owe them $1k), so that project is moving along

- Worked with two potential business partners to put together a deal for the duplex.

Crazy stuff:

- there are like three things wrong with my car (none prevent driving, but are annoying).  I'm sure it'd be $1,500 at the dealership to fix them all, so i'm going to fix two and have them fix the one that I can't)

- last night, our furnace detonated.  At first we were panicked, but I did more research and it appears to be something that is often caused by dirty burners, so need to clean tonight and see how it does after that)  if not, i'm in for a furnace, two years before I have to replace it to accommodate the new addion!  ARG

If you have to replace it, can you get one that would accommodate expanding to the addition?  We replaced our furnace in fall 2013 but it was a fairly standard replacement of 25+ furnace with current model with some bells and whistles. 

[Bonny]

Mar 12, 2015 10:57:43 GMT -5 alwaysbeoptimizing said:

I need advice on a partial release. (sounds dirty, but I promise, this is YM, not an EE topic    swamp and other land attorneys...

So, we are subdiving our primary property (2 acres)

We are slicing off about 9% of the land to create a separate lot that would have no buildings on it.

I understand I might need to get my lender to agree to a partial release, to allow me to sell that lot.

Is it likely I need to get their permission to even record the subdivision, or is it more likely I only need them to play ball when I go to sell it?

Play ball when you sell it.

ETA: Depending on your rate you might want to think about refying the loan once you've subdivided and only encumbering the parcel you want to keep.

[Bonny]

Mar 12, 2015 14:26:19 GMT -5 alwaysbeoptimizing said:

Mar 12, 2015 14:13:04 GMT -5 Bonny said:

Play ball when you sell it.

ETA: Depending on your rate you might want to think about refying the loan once you've subdivided and only encumbering the parcel you want to keep.

Yes, it's a jumbo at 4%, but you're right.  the right idea is to subdivide, then refinance our primary house into a construction loan, do all the additions and then convert that to a fixed loan.

Then, have an unencumbered lot that we could borrow against if needed, or just let it sit there.

you're so smart! 

Why get a construction loan if you already have a good fixed rate. I'd probably do a HELOC for the improvements (less than $100k?) then pay off the HELOC with the extra income. Avoid the refi costs of the bigger loan.

[swamp]

Mar 12, 2015 10:57:43 GMT -5 alwaysbeoptimizing said:

I need advice on a partial release. (sounds dirty, but I promise, this is YM, not an EE topic    swamp and other land attorneys...

So, we are subdiving our primary property (2 acres)

We are slicing off about 9% of the land to create a separate lot that would have no buildings on it.

I understand I might need to get my lender to agree to a partial release, to allow me to sell that lot.

Is it likely I need to get their permission to even record the subdivision, or is it more likely I only need them to play ball when I go to sell it?

You will need the lender permission to sell the lot.

Not sure why you are recording the subdivision now? If you still own it, you don't need permission from the lender to split the lot, although you may run into a problem with your lender where the mortgage requires the lien be on primary residence. If you split a lot off, it's no longer your primary residence.

[Bonny]

You'll be adding value so the lender won't call the loan if you subdivide. The scarier scenario is when someone does a tear down because the lender could call the loan for "wasting" aka devaluing the original security for the loan. That typically isn't a problem unless you default.

What I'm not clear on is how easy it is to get a partial release from FNMA or Freddie Mac loans. Is your loan owned by either governmental entity? Logically they should do a partial release if your main house has appreciated and your loan balance was reduced in proportion to the value of the "new" lot. Or allow a pay down to the same proportion. But that's not a mainstream request and they may not allow it thus forcing you to refi if/when you sell. You want to research this BEFORE you're in escrow to sell the lot.

And of course your final option is going to depend on what interest rates and your loan balance is when/if you sell the lot.

[lurkyloo]

Met with the second property management company today.  They liked the house, but the person in charge of PM was kinda a sales type, which made me a little uncomfortable.  Bigger problem was that I think their charges were excessive.  First company I talked to charged a $100 fee for tenant screening; this one wanted 35% of one month's rent (aka around $800  ) every time they placed a new tenant.  They also had a clause in there that if we happened to sell the place to a tenant they chose, we would owe them 4% of the purchase price    They struck that out when I objected, but while she was doing that she also tried to argue that it was for our benefit since realtors would charge 6% (conveniently ignoring that 6% is for both buyers and sellers agents, and that realtors actually can provide service beyond just finding a buyer).  They did however have some interesting takes on things, like hiring the landscape company not only to maintain the yard but to report back if they saw anything hinky going on.

My (minor) issue with the first guy was that I felt like he was judging our house and seeing all the minor flaws, but at least I didn't feel like he was trying to sell me on things that didn't make much sense.  Need to review his paperwork in detail, but it'll be a few days before I get to it...little busy trying to buy a new house here 

[Deleted]

Lurkyloo, here it's a complicated formula that works out to one month's rent, so 35% of one month's rent seems like a good deal to me!

The studio is finished, except for the switches/plugs which DH plans to do this weekend. This afternoon we have an appt with the agency to sign the papers so they can find us a tenant, and then we meet the painter at the studio to see it finished and get the keys back.

We still haven't decided about using the agency to manage the studio. They charge 7%, or 9% including insurance for unpaid rent. We'll probably decide when we see who the tenants are. Hopefully they'll find tenants quickly. We are charging 575e, the other studios for rent in the area are 470 for a smaller one, and 690 for a bigger one. But none at our price, which is good.