12-05-2012 10:27 AM
This was me, a year ago: http://forums.redfin.com/t5/Seattle/How-do-nearby-
But because of circumstances, we're going to be moving elsewhere in Seattle. I have enough cash to buy a second house with less than 20% down, and rent out the current one, with plans to move back in a decade or so. Or I can sell my current house and purchase a new one. (The new house is going to be an "affordable" one anyway, because I don't really want to stay in it for that long before turning it into a rental.)
What's people's general idea of this?
Renting: I love the house, and put quite a few nice things in it. I would like to move back, and am slightly worried I'll be priced out in a decade. And I would have positive cash flow renting it out, even after giving 10% to a rental management. I've only lived in it for a year, so I think it's not good to buy and sell so quickly. Ballard is full of younger professionals, who love renting nice places, and I think the price will go up (faster than Seattle metro average).
Selling: More cash to buy, no mortgage insurance on the new house. No landlord woes. No worrying about the glut of apartments that are supposed to come on the market. Buying and selling in a year is not good--but at this point am I just throwing good money after bad?
How do people generally evaluate these choices? Is it just how hands on you're willing to be? (We'll be local, and my partner and I are both handy people who are used to being oncall.) Or is there some other consideration?
12-05-2012 11:40 AM
If I could buy a SFH for $350k in Ballard in the condition I know my home is in (I fixed almost everything because I planned to live in it for a long time) with guaranteed financing, I'd be there in a heartbeat, even if it's just to rent it out.
I guess that means I should keep it.
12-05-2012 01:21 PM
Yes, keep it and rent it, would be my advice too.
I am in a slightly similar boat. Kind of curious what the 10% cut from property management gets typically. Is it just routing problems to owner, or do they fix it themselves after getting approval??
12-05-2012 02:00 PM
I contacted Ballard Realty. They give a free estimate and more detailed papers about what they would do.
For this particular company, they hire their own handyman (at $75/hour) to fix it. I'm trying to figure out if that's worth it or not, since I'll be in town to fix things. They'll also make sure that the rental is to code, and take care of twice yearly yard cleanup, and pest extermination.
12-05-2012 02:16 PM
Kind of curious what the 10% cut from property management gets typically. Is it just routing problems to owner, or do they fix it themselves after getting approval??
It should cover the property management taking care of the problem themselves after getting approval (either physically by themselves, or they will hire a contractor for you). You should never get a call directly from the tenants---the tenant should work through the property manager for any requests that they have (and the tenants should not take on most work for the house themselves, unless they have prior permission from the property manager and owner, especially if they expect reimbursement from the owner). The property manager will usually collect rents (often they can direct deposit it to your bank account; some will even pay mortgage or other house-related payments for you from the rental income), deal with late rent payments (e.g., pester the tenants to pay), negotiate/execute the lease for you, etc. If they hire outside contractors, some managers will just pass the contractor's cost on to you directly (no additional markup). But, when we talked to property managers, some of the managers said that if they had to hire an outside contractor, they'd charge an extra 10% fee of the contractor's cost (this was in addition to the 10% of the monthly rent). We have two property managers in two different states. One charges 8% of monthly rent (that one is in the Seattle area), while the other charges 7% of monthly rent.
12-05-2012 07:32 PM
I think most management companies charge 10% for the management aspect. But they also usually have a 1/2 to 1 month's rent "placing fee" every time they have someone sign the lease. So it adds up to quite a lot.
Also, this does not include the actual repair work, yard work, pest, etc arrangement. The "management" part is just arranging for those, collecting rent, and pestering the tenants to pay rent. I already have pest control arrangement, and I'm happy to be hardassed enough to push people if they don't pay rent. So I think I'll try to be a landlord and hire a company if that doesn't work out.
12-06-2012 09:15 AM
If you have good/honest/reliable tenants, then being a landlord is something you can tackle yourself with ease. A couple of bad/difficult/insane tenants will have you marvelling at the value offered by property managment services.