Whenever I hear of “lofts” and “Houston” this building tends to come to mind (in no small part because it’s somewhat ugly from the outside). Now that I can see what the inside looks like I’m really impressed. Given the option I prefer the minimalist aesthetic.
I have a pretty nice historic house + pool in the westmoreland subdivision of Montrose and my payment isn’t $2,500/month (though after property taxes it’s a bit higher, but then again after mortgage deductions it’s under).
.
Money has never been so cheap in the history of this country. Why more people are not trying to buy blows me away. I realize mortgages are hard to get, but if you CAN get one, BUY SOMETHING. If you decide you want to move, rent it out (which will likely cause cash flow to support another place)
Nathan Jr.
Cody,
Your post assures me a little bit as I’m in the process of buying a second home that fits my lifestyle and renting out my current house. Tell me though, by renting out my house I’m having to give away a whole month’s rent to my agent which is getting expensive if I potentially have to find a new lease agreement every year. What should my thought process be on this????
Ben
rents are out of control and should drop soon with all the new luxury apartments around town coming online.
Nathan, there’s no reason to pay an agent if you don’t mind doing a little work and if you price your rental fairly.
I’ve got 30+ units inside the loop… some 4plex, 6plex, 8plex… some houses. Here’s the trick to (a) not having vacancy and (b) not paying commissions.
1. Make sure your lease agreement requires you tenant to give you at least 30 days notice–before the first day of the last month of their lease–if they do not intend to (a) renew the lease or (b) continue on month-to-month. If the choose (b), require them (in the lease) to give you 60 days notice. (For example, if their lease ends June 30th, they have to give their 30 day notice by May 31st if they do not intend to renew the lease or continue on month to month. If they do not give that notice by that date, then make it clear that they have become a month to month tenant and thus have to give you 60 days notice (from any date) to terminate the lease.
This makes sure that you have plenty of time to find a new tenant–and thus avoid vacancy–which costs you WAY more than a real estate commission over time.
2. The day your tenant gives you that 30 or 60 day notice, start creating Craisglist postings for your property immediately. Then start showing the unit immediately. You don’t have to wait for your current tenant to move out to start showing the unit–in fact, if you do, you are guaranteed to have vacancy.
Your goal is to have a new tenant lined up for your unit BEFORE your current tenant moves out. You want the start date of the new tenant’s lease to be as close to the move out date of your current tenant. (Unless your current tenant trashes the property, it shouldn’t need more than a deep cleaning and a little paint touch up to get it ready for the next tenant.)
If you do these things–and your unit is priced fairly in the market–there is no reason to pay a commission. I haven’t used a realtor in the past 10 years at least and my vacancy rate is as close to zero as you can get–and my rents are higher than they’ve ever been. It just takes some planning and effort on your part.
JM
commonsense
I don’t think I’d want to rent my place to someone I found on Craigslist, your apartment may end up on To Catch A Predator.
Scott
@ Nathan Jr. – My first question I urge you to answer would be – what is driving the long-term value growth of my property? My land, or my improvements? If it’s predominantly the land (and thus, your location), then your general strategy would be to ask rent that covers your PITI with a few extra bucks every month for repairs. Try to forecast how long it will take you to pay off the in-place mortgage using a) rental income and then b) additional money out of your pocket.
If the improvements are the predominant value-driver, then juice that rent.
These are just general ideas. If your location is great but the house is old, don’t overcharge rent.
Without knowing in which part of town your current home is located, all I can tell you is to be conservative in your “downtime” assumption – if vacancy in your area is a little higher, you may want to assume your rental home will be vacant for 2-3 months between leases. That’s very conservative. Bust your ass and find a tenant!
Good luck!
Scott
Edit: if the house is old AND needs substantial repairs/updates, don’t overcharge rent.
anon
Rents are high because cerdit is tight and no one can get financing. Therefore even people who can nominally afford to buy have to rent, ergo more competition for rentals ergo the RENT IS TOO DAMN HIGH.
Bethsheba
I understand that markets drive rental prices, and demand has made the prices go up, but affordable housing is a fundamental necessity of survival like being able to buy food. It’s a good thing grocery stores don’t say “there’s a lot more hungry people out there this year than a few years ago, let’s raise the price of food”.
Whenever I hear of “lofts” and “Houston” this building tends to come to mind (in no small part because it’s somewhat ugly from the outside). Now that I can see what the inside looks like I’m really impressed. Given the option I prefer the minimalist aesthetic.
$2500? Know how much house that can buy?
Houston is over $2.50/SF rents. Nuts.
Nice. Great bachelor pad.
Great bachelor pad if you’re a bachelor clearing $200k/yr. $2500/mo.. sheesh.
I have a pretty nice historic house + pool in the westmoreland subdivision of Montrose and my payment isn’t $2,500/month (though after property taxes it’s a bit higher, but then again after mortgage deductions it’s under).
.
Money has never been so cheap in the history of this country. Why more people are not trying to buy blows me away. I realize mortgages are hard to get, but if you CAN get one, BUY SOMETHING. If you decide you want to move, rent it out (which will likely cause cash flow to support another place)
Cody,
Your post assures me a little bit as I’m in the process of buying a second home that fits my lifestyle and renting out my current house. Tell me though, by renting out my house I’m having to give away a whole month’s rent to my agent which is getting expensive if I potentially have to find a new lease agreement every year. What should my thought process be on this????
rents are out of control and should drop soon with all the new luxury apartments around town coming online.
Nathan, there’s no reason to pay an agent if you don’t mind doing a little work and if you price your rental fairly.
I’ve got 30+ units inside the loop… some 4plex, 6plex, 8plex… some houses. Here’s the trick to (a) not having vacancy and (b) not paying commissions.
1. Make sure your lease agreement requires you tenant to give you at least 30 days notice–before the first day of the last month of their lease–if they do not intend to (a) renew the lease or (b) continue on month-to-month. If the choose (b), require them (in the lease) to give you 60 days notice. (For example, if their lease ends June 30th, they have to give their 30 day notice by May 31st if they do not intend to renew the lease or continue on month to month. If they do not give that notice by that date, then make it clear that they have become a month to month tenant and thus have to give you 60 days notice (from any date) to terminate the lease.
This makes sure that you have plenty of time to find a new tenant–and thus avoid vacancy–which costs you WAY more than a real estate commission over time.
2. The day your tenant gives you that 30 or 60 day notice, start creating Craisglist postings for your property immediately. Then start showing the unit immediately. You don’t have to wait for your current tenant to move out to start showing the unit–in fact, if you do, you are guaranteed to have vacancy.
Your goal is to have a new tenant lined up for your unit BEFORE your current tenant moves out. You want the start date of the new tenant’s lease to be as close to the move out date of your current tenant. (Unless your current tenant trashes the property, it shouldn’t need more than a deep cleaning and a little paint touch up to get it ready for the next tenant.)
If you do these things–and your unit is priced fairly in the market–there is no reason to pay a commission. I haven’t used a realtor in the past 10 years at least and my vacancy rate is as close to zero as you can get–and my rents are higher than they’ve ever been. It just takes some planning and effort on your part.
JM
I don’t think I’d want to rent my place to someone I found on Craigslist, your apartment may end up on To Catch A Predator.
@ Nathan Jr. – My first question I urge you to answer would be – what is driving the long-term value growth of my property? My land, or my improvements? If it’s predominantly the land (and thus, your location), then your general strategy would be to ask rent that covers your PITI with a few extra bucks every month for repairs. Try to forecast how long it will take you to pay off the in-place mortgage using a) rental income and then b) additional money out of your pocket.
If the improvements are the predominant value-driver, then juice that rent.
These are just general ideas. If your location is great but the house is old, don’t overcharge rent.
Without knowing in which part of town your current home is located, all I can tell you is to be conservative in your “downtime” assumption – if vacancy in your area is a little higher, you may want to assume your rental home will be vacant for 2-3 months between leases. That’s very conservative. Bust your ass and find a tenant!
Good luck!
Edit: if the house is old AND needs substantial repairs/updates, don’t overcharge rent.
Rents are high because cerdit is tight and no one can get financing. Therefore even people who can nominally afford to buy have to rent, ergo more competition for rentals ergo the RENT IS TOO DAMN HIGH.
I understand that markets drive rental prices, and demand has made the prices go up, but affordable housing is a fundamental necessity of survival like being able to buy food. It’s a good thing grocery stores don’t say “there’s a lot more hungry people out there this year than a few years ago, let’s raise the price of food”.