Oct
21
The Dreaded “R” Word: Renting
October 21, 2007 |
Fairly uneventful week in real estate land, as I continue to plug away at House #2, prepping kitchen countertops for granite tile, finalizing tile/paint colors, finishing out the framing for the two walls I opened up, getting the existing bathroom ready for tile, yada yada yada.
I did get our landscaping/trash haul-off guy out yesterday, who has been a life-saver on assorted projects. Not only does he work cheap, but he actually, you know, works. Met him at 10 in the morning to outline what I wanted, paid him, and by six he and his crew were finished with the bulk of the work. Which shouldn’t be amazing or surprising, but is increasingly so, as I can’t get a freaking contractor of any sort to freaking return a phone call in this town.
Ahh, the bitterness. Mmm…
Which I suppose is part of the price you pay for living in a small town of approximately 10,000 souls, as far as occasionally having to get into line and wait when you want something done, and there’s a relatively small number of people who can do it. But I never thought it’d be this difficult to line a contractor up for what’s a relatively simple job. I’m honestly to the point where I may just tackle the framing for the bathroom addition myself, as the list is dwindling anyway as far as the work I was going to hire out, since I’ve knocked out a good bit of it myself already (and axed a few other things from the plan).
I’ve got good contacts for plumbing and electrical work, and the only thing really holding me back is the framing. I swore I would avoid trying to do all of the work myself, for the sake of speed, but I’m not sure what else to do, when I can’t get anyone out to do the work. I wanted all of this finalized and ready to roll before leaving for another business trip on October 24th, but that’s looking less and less likely. So, you know, boo.
Spoke to our realtor last week about possibly renting House #1, as his broker had a client who was interested in renting it and wanted to know what my thoughts were on the subject. While I feel like renting it out now would be an admission of “failure” of sorts, it’s probably the smartest thing to do, given the circumstances. It’s been on the market for nearly two months with no offers, and it’s getting late in the year, with more listings popping up in the last few weeks that I don’t like to see, as far as REO/HUD properties that are priced essentially the same as House #2 but are much newer 3/2s.
The rental market is pretty tight here, so I could very likely rent it pretty much immediately, and it should cash flow about $200/month if I hire someone to do the property management for me, and around $275/month if I do it myelf. Which isn’t bad for a SFR, and I’m not at all opposed to renting in theory, as I wanted to pick up some rental properties. I just kick myself as far as not renting it immediately after buying it, as I could have made the necessary repairs and gotten it rented in a few weeks, instead of going the route I did. Such is life, though, and this whole thing is a learning process for me, so chalk one up in the “know better next time” category.
Comments
3 Comments so far
you might think about “rent to own” scenario. I wrote about it at
http://extremeperspective.blogspot.com/2007/09/rent-to-own-lease-purchase-real-estate.html
I get rents 20% above market rents, the tenants take care of all repairs and I get a large up front option payment. I get literally hundreds of calls in this area just putting up a sign.
I just returned to reading your blog after a couple of months sabbatical. I like the results of your rehabbing visually-speaking, but it sucks that you’re having difficulty getting bites.
If you did rent the place, would you still try to sell it? Or would you get back into landlording and hold the property as an investment? A downside of investment, to us readers, is we don’t get the opportunity to see how the complete deal netted–and you don’t either, until you finally sell it. Being able to sell it would give you a real indication of the actual monetary value of the improvements you have made.
Another thing I’m curious about is your monthly burn rate at this point; how much are you paying in carrying expenses (eg mortgage interest) that you do not beleive are contributing to equity in the property?
I am fine with the idea of renting since a long time holding a rental is sure to bring in more $$ in the future. We just bought some property that we were not sure of whether to rent it out or sell once we were done. We’ve decided to fix it up, paint it clean it and rent it for a few years and go back and consider a sale than. It will bring in enough to cover the mortgage on it plus taxes & insurance.
I hope you can find peace with this and know that you have not failed but are taken another route.