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Home > Advice Needed on Rental Property Situation

Advice Needed on Rental Property Situation

July 29th, 2007 at 01:47 am

I'm interested in some feedback regarding a situation we're facing regarding our rental property. It is our original starter home purchased in 1992 for $130K. In January of this year it was valued at $330K. We own it outright and have a mortgage now on our primary residence.

Ok, the situation now: our last tenant moved out in Dec 06 and was paying $1,350. A family member lived there from Jan to June paying our cost ($300/month for taxes and $44 for insurance). Here rental properties are sitting and not moving at all. We had a prospective tenant drop into our laps -

this is a couple returning from South America missions - husband has a 3-year contract teaching in a private school making $45000. The most they can afford to pay is $1,000 plus utilities (which will be in their names). They will sign a one year lease and pay six months cash rent up front. They will have to buy a mower and do lawn maintenance on their own (we take care of exterior maintenance). We had decided we'd probably have to drop the rent because of how many things are on the market.

Do we take these tenants (no credit history as they've been out of country 20 years) but have strong local ties and come recommended from a friend of the guy across the street at $1,000 (probably $150 per month less than we might get)? (Of which I can put $6,000 in the bank and make 5%-ish.) We are spared advertising cost and the month(s) it might take to rent. Or do we place the ad in the paper and hope to make $1,350?

Just wondering what your thoughts are on this. Thanks in advance for advice.

Posted in Uncategorized | 9 Comments »

9 Responses to “Advice Needed on Rental Property Situation”

  1. wyozozo Says:
    July 29th, 2007 at 01:51 am 1185673871
    1185673871

    My thought is a sure things beats a maybe thing anyday.

  2. LuckyRobin Says:
    July 29th, 2007 at 03:48 am 1185680918
    1185680918

    I think I would rent to them. Anyone who has spent 20 years as a missionary is going to be responsible and dependable, hard-working and honest, I'd think. They have a guarnteed job for 3 years so there will be the income to support the rent. They have good references. And if the market is cruddy, it sounds like a good bet to rent to them. Not to mention good karma. But I have a soft spot for missionaries. And teachers. So cutting them a bit of a break is not something I would resent, myself. I think you should go for it.

  3. baselle Says:
    July 29th, 2007 at 04:52 am 1185684741
    1185684741

    Since you own the place free and clear, its not like you have to rent it out to make that house's mortgage, so you have a bit of flexibility on the rent. By leasing to them you would be spared the cost of finding a new tenant, the cost you would incur the months that its not rented (maybe you will get $1,150, maybe you won't, but with even a month at 0$ the difference between $1,000 and $1,150 is minimal), and if they are dependable they will keep its value up and provide you with piece of mind. The person who recommended them is a friend of yours, right? You've talked to them? What is your impression of them?

  4. Carolina Bound Says:
    July 29th, 2007 at 02:02 pm 1185717733
    1185717733

    A bird in the hand is worth two in the bush! You wouldn't necessarily have any guarantees on a new tenant, either.

  5. madhaus90 Says:
    July 29th, 2007 at 02:25 pm 1185719119
    1185719119


    Thanks all for the feedback - I am inclined to agree with all of you but needed some unbiased feedback. We have relatives (not quite like-minded) who thought it might not be prudent. I have only spoken to the man on the phone, my husband met him in person when he came to look at the property. My only hesitation came from the fact that he said the most he could afford was $1,200 and then after looking at it was the most he could afford was $1,000. Etc., etc. I'd have been far more likely to be less hesitant if he'd been more upfront. I get the feeling that he might be trying to low-ball because he used the "I am a missionary" statement far too much. And I want to help the missionary as much as the next guy ... and I do want good tenants, of course. I will let you know how it ends up, he is calling us this afternoon (there was a possibly offer to live for free with other relatives and that was going to be finalized this AM) so we are really the 2nd choice for the couple.

  6. Ima saver Says:
    July 29th, 2007 at 04:58 pm 1185728300
    1185728300

    I think you should rent to them and not let the house sit.

  7. Joan.of.the.Arch Says:
    July 29th, 2007 at 07:43 pm 1185738238
    1185738238

    Well how often do you get some one to pay six months rent in advance? That sounds like a huge plus. I second the bird in hand theory, and say take these renters now, before someone else gets them and your house just continues to sit empty earning you nothing.

  8. YOUCANDOIT Says:
    July 30th, 2007 at 01:38 am 1185759514
    1185759514

    I would also rent it now. They seem like good people and you never know how long it will take to get other tenants in there. Don't pass up a good thing.

  9. fern Says:
    July 30th, 2007 at 06:59 pm 1185821955
    1185821955

    it sounds like a pretty good bet all the way around.

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