Selling vs. renting vs. rent-to-own

[IrishLake]

So, my husband starts his schooling to become a Columbus firefighter on December 27th. He will be staying with his parents monday-friday for the duration of his schooling OR until we find a place of our own. Finding a place of our own depends on one thing - selling or renting the house we own (mortgage) in a Cinci suburb.

Selling is obviously ideal, but we are about 99% sure we won't get out of the house what we owe (that's our only goal at this point, we don't want to have to take money to closing just to get out of/sell it, because we don't have much). So that leaves us with renting or offering the house on a rent-to-own basis. There are actually quite a few houses that are rental units in my neighborhood now, so I have no doubt that we could rent it. I'm just leery, because we will be so far away if the tenants need something. Plus, our house, while old (post WW2), our house is really nice. We've put a lot of effort into making it that way (we're DIYers, so cost was on the low side at least). We don't want tenants treating it badly. Most of the rentals around us are not in top shape. Also, we do eventually want to sell it, so selling it while there are renters there would be a problem, right?

We've also heard about rent-to-own, and I've heard lots of bad, with a little bit of good. But I'm still not entirely sure how rent-to-own works.

Any GCers out there who own rentals, or have suggestions and/or advice? My goal is to just be in another place in central OH by the time my daughter has to register for kindergarten next summer. (We will have to rent a place of our own when we do move, we won't have the 20% down most likely needed to get another mortgage).

[agzg]

Live-in's mom does rent-to-own with her house, but she's only 20 minutes away. It's worked out well for her (at least in terms of having stable tenants for the last two years), but please remember that just because you do a rent-to-own does not mean that the tenant HAS to buy the house at the end of the terms of the agreement. She's facing that predicament herself now, and doesn't know if they'll end up actually buying. True, they've paid more in rent than they would have if they just rented it without a rent-to-own, and she gets to keep that if they break the agreement, but she'll still end up with a house that's just too big for her to live in alone, and hasn't been able to sell and get what she owes out of it.

A pro of renting-to-own is that the tenants (at least at first) tend to care a little more about the house and take better care of it. Live-in's mom's tenants actually did a lot of landscaping work, painting, sprucing, etc., and the house looks great. She's only replaced the washer and dryer for them since they moved in.

For caretaking, if you have family in the area you might be able to make it work if you make an agreement with them in advance of signing a lease/rent-to-own agreement with a tenant. You may also consider contacting a caretaking service.

I would suggest contacting a realtor about the ins-and-outs of renting v. selling v. rent-to-own.

[DrPhil]

If I understand your post correctly, I highly recommend not renting your house. I know that you have to do what you have to do.

Here's what I recommend based on what my parents had to do with one of their homes that they rented out:

1) Be very critical of whom you allow in your home. If you have any doubts about whether the person/people can pay the rent OR whether they will tear the house up, don't do it.
2) If you have a really great neighborhood with really great neighbors who are home owners (not renters), let your neighbors know that you have to rent out your house. They will keep an eye on it and call you if the person/people aren't cutting the lawn or are tearing your house down.
3) Have the house in good shape so that the renters cannot claim that the living conditions were crappy. They know that they are not renting an apartment where there is a leasing office, so they won't expect you to do everything.
4) Tell them that they cannot alter the home without prior WRITTEN approval from you.
5) Keep the contact info updated and let the renters know that you can and will show up unannounced; and you have a key. LOL. It sounds strange but they need to know that they don't OWN the property and they can be evicted for the following reasons: 1) they don't pay, 2) they don't take care of the property, 3) they don't heed your warnings and/or 4) they don't update their contact info or don't respond when contacted.

I hope my response wasn't left field. LOL.

[agzg]

Originally Posted by DrPhil

5) Keep the contact info updated and let the renters know that you can and will show up unannounced; and you have a key. LOL. It sounds strange but they need to know that they don't OWN the property and they can be evicted for the following reasons: 1) they don't pay, 2) they don't take care of the property, 3) they don't heed your warnings and/or 4) they don't update their contact info or don't respond when contacted.

In some cities, landlords are required to give 24 hours notice. I know that as a tenant I always make sure that that's in writing, in the lease, because, frankly, I don't want my landlord showing up unannounced because it's a royal pain in the ass.

I have never denied a visit from the landlord if he or she gives 24 hours notice, however, and usually will work around 12 to 6 hours notice, as well. Notice is nice since we have a dog, and don't know what he'll do at any given time if a stranger comes into the house without us home. Usually notice gives us a chance to make other arrangements so that he's either not home or closed in a large enough room with enough water to get him through the day whenever someone comes in.

In cases of emergency, no notice required.

[DrPhil]

@agzg

True.

But, renters who have done any of the above don't really deserve notice if the law doesn't require it.

We had renters who wouldn't pay regardless of how patient we were with them. They kept promising payment and then just stopped responding completely. That is audacious! They got kicked to the curb.

[agzg]

Originally Posted by DrPhil

@agzg

True.

But, renters who have done any of the above don't really deserve notice if the law doesn't require it.

We had renters who wouldn't pay regardless of how patient we were with them. They kept promising payment and then just stopped responding completely. That is audacious! They got kicked to the curb.

Yeah that is definitely shitty. In my experience, the tenants that make a fuss over needing 24 hours notice tend to be the ones that actually read the lease word-for-word, make exceptions to the standard lease language (with the agreement of the property owner), and can't ever say they didn't know when the rent was due/how much it was, so they tend to be the ones who pay.

It's really important to us with the dog especially, because we'd face liability if he bit one of them, and both we and the landlord would face liability if he bit a worker that came in when we were not home.

[IrishLake]

Originally Posted by DrPhil

If I understand your post correctly, I highly recommend not renting your house. I know that you have to do what you have to do.

Here's what I recommend based on what my parents had to do with one of their homes that they rented out:

1) Be very critical of whom you allow in your home. If you have any doubts about whether the person/people can pay the rent OR whether they will tear the house up, don't do it.
2) If you have a really great neighborhood with really great neighbors who are home owners (not renters), let your neighbors know that you have to rent out your house. They will keep an eye on it and call you if the person/people aren't cutting the lawn or are tearing your house down.
3) Have the house in good shape so that the renters cannot claim that the living conditions were crappy. They know that they are not renting an apartment where there is a leasing office, so they won't expect you to do everything.
4) Tell them that they cannot alter the home without prior WRITTEN approval from you.
5) Keep the contact info updated and let the renters know that you can and will show up unannounced; and you have a key. LOL. It sounds strange but they need to know that they don't OWN the property and they can be evicted for the following reasons: 1) they don't pay, 2) they don't take care of the property, 3) they don't heed your warnings and/or 4) they don't update their contact info or don't respond when contacted.

I hope my response wasn't left field. LOL.

No ma'am, you are not off base in the slightest. With the husband taking the new job in Columbus, he HAS to live in Franklin county, or an adjacent county. We prefer to be in one of the adjacent counties, that way my commute to my place of work is doable (if we find a place where we plan to look, I'll be about 45 minutes away from work, and he'll be about 25 minutes from Columbus proper).

In response to DrPhil:
Renting or rent-to-own is our last option. We have to paint one bedroom, hang some door trim, and pack some clutter into storage, get both kids twin beds (daughter is in a queen now, and it makes her room look really small. son is in a toddler bed now, and he just needs an upgrade). Once we do those things, the house will be ready to sell. IF it doesn't sell by next June, we will likely have to go the rent/rto route.

1. I have been told to ask for proof of household income for the last 3 months. I have also been told to look at potential renters cars, as the condition a car is in is a good indicator of how well they will keep a house. And even though we have dogs, we won't allow any pets. I've also been told to ask for the first and last months rent up front, plus a security deposit. Is that too much to expect a renter to pay up front?

2. Both of our neighbors are wonderful homeowners. The elderly couple is extremely nosey, and I'm betting we would get a weekly report on what the renters are doing. lol...

3. I've been told to take pictures of the house once all of our stuff is out of it, burn them to a CD, and give a copy to our family attorney, or real estate agent.

4. Noted. Makes sense!

5. I was under the impression you have to give 24 horus notice before showing up at your rental? Or does this just depend on what the renter/tenant agree upon? Is there a way to make it so they don't make copies of the keys, that they have to go through us or a delegate of ours to get a copy made?

[agzg]

The first and last month's rent + security deposit varies. Many places in the city here do a security deposit of a month's worth of rent or a month and a half, and then first month's rent upon handing over the keys. Some places in the suburbs do first and last plus a lower security deposit. Just remember if you do first and last plus a full security deposit, you're asking for 3 to 3.5 months of rent in advance. (Depending on what a fair rent is in your area, this could get up to as much as half a down payment on a house. I know Chicago is way different than Cincinnati, but that's upwards of $5,000.00 in advance for my apartment, and this is only for a 2 bedroom apartment, not a whole house).

I would give a copy of that CD to the renters, as well. If only to prove that you have documented the condition of the house.

24 hours notice depends on your municipality, I believe. For your first time renting, I'd ask a realtor about that. You can also get standard lease language at the library, or someplace ridiculous like Home Depot, I believe. I don't know about the keys - I've never had a landlord worried about making copies of the keys. Perhaps you can have it punched with the "Do Not Duplicate" in order to discourage it? If you do this, make sure that you have keys made for each person in the house that would need one, including kids probably age 5 and above.

I'm not an expert at renting out my own place, I'm just a super awesome tenant/landlord's dream.

[Alumiyum]

Originally Posted by agzg

In some cities, landlords are required to give 24 hours notice. I know that as a tenant I always make sure that that's in writing, in the lease, because, frankly, I don't want my landlord showing up unannounced because it's a royal pain in the ass.

I have never denied a visit from the landlord if he or she gives 24 hours notice, however, and usually will work around 12 to 6 hours notice, as well. Notice is nice since we have a dog, and don't know what he'll do at any given time if a stranger comes into the house without us home. Usually notice gives us a chance to make other arrangements so that he's either not home or closed in a large enough room with enough water to get him through the day whenever someone comes in.

In cases of emergency, no notice required.

That is true of where I live. In my lease our landlord is only allowed to show up without notice if there is an emergency (a real one) unless we have 24 hours notice. The lease I have gives tenants basically no rights, so IrishLake, you should totally use it as a model. . Accordingly to the lease we can be evicted for very little...if I were a landlord I'd like that.

Among the things my father has drilled into my head, (read before signing, ask attorney's advice, cover your ass, seal every loophole) taking pictures is at the top of the list. When I (as a tenant) move in I take pictures with a high quality camera of every room before furniture, and when I move out I do the same to prevent any discrepancy about what I did or didn't do to the apartment. I've had landlords attempt to cheat me out of my deposit. Pictures seem to keep them from thinking I'll be easy prey. Maybe do the same with your place so that no one can try to weasel out of forfeiting a deposit or paying damages if they ARE at fault for something (and hopefully you'll find responsible tenants, but just in case).

Documentation is always a good thing if problems arise later.

[Alumiyum]

Originally Posted by IrishLake

No ma'am, you are not off base in the slightest. With the husband taking the new job in Columbus, he HAS to live in Franklin county, or an adjacent county. We prefer to be in one of the adjacent counties, that way my commute to my place of work is doable (if we find a place where we plan to look, I'll be about 45 minutes away from work, and he'll be about 25 minutes from Columbus proper).

In response to DrPhil:
Renting or rent-to-own is our last option. We have to paint one bedroom, hang some door trim, and pack some clutter into storage, get both kids twin beds (daughter is in a queen now, and it makes her room look really small. son is in a toddler bed now, and he just needs an upgrade). Once we do those things, the house will be ready to sell. IF it doesn't sell by next June, we will likely have to go the rent/rto route.

1. I have been told to ask for proof of household income for the last 3 months. I have also been told to look at potential renters cars, as the condition a car is in is a good indicator of how well they will keep a house. And even though we have dogs, we won't allow any pets. I've also been told to ask for the first and last months rent up front, plus a security deposit. Is that too much to expect a renter to pay up front?

2. Both of our neighbors are wonderful homeowners. The elderly couple is extremely nosey, and I'm betting we would get a weekly report on what the renters are doing. lol...

3. I've been told to take pictures of the house once all of our stuff is out of it, burn them to a CD, and give a copy to our family attorney, or real estate agent.

4. Noted. Makes sense!

5. I was under the impression you have to give 24 horus notice before showing up at your rental? Or does this just depend on what the renter/tenant agree upon? Is there a way to make it so they don't make copies of the keys, that they have to go through us or a delegate of ours to get a copy made?

Re #1...that is not too much to ask. I've had to pay that as a tenant every place I've rented, except for one which had no lease.

Our current landlord used to make the keys with the "DO NOT COPY" on them so that you couldn't just take it to the local hardware store and have a copy made. Is that something you could put in the lease?

I haven't been the landlord at this point in life, but if I were I'd make sure to have an attorney make sure the lease was airtight and favored ME. (Which is what I do as a tenant, as I have one handy. But I would do it even if that weren't the case if it were my property on the line...).

[Alumiyum]

Originally Posted by DrPhil

Please, tell us more! Tell us more! Did they give you details regarding that or just tell you to watch your back at all times? LOL.

I'm doing this from memory since my copy of the lease is buried in my files somewhere but...

Let's see:
1. They can kick us out at any time for: loud parties, messy conditions, any illegal substances at all, not reporting maintenance problems, having an animal of any kind (except fish in a bowl, not an aquarium...but that's verbal...in the lease it's NOTHING), wasting water (he pays the water for the building). None of those things are defined, so a "loud party" or "messy conditions" could be dangerous ground.
2. If, say, the oven catches on fire and his insurance won't cover the damage, I have to pay it. Like, for the whole building.
3. Without 60 days written, signed notice, our lease is automatically renewed.
4. Subletting can get you kicked out (which I think is reasonable but...) and so can having a guest without permission.
5. Unless it is an actual health hazard, they don't HAVE to fix things in any reasonable amount of time. This is the only one that has ever been a problem for me...and it is constantly a problem, but I like the place so much I've learned basic maintenance on my own.

I remember there being at least 10 things my dad objected to (he had to co-sign since I had no income, and I probably still don't make enough to sign it on my own), but a) the landlord permitted written and notarized changes that made both parties happy and b) I've rented different properties from him before and he's used to college students, so he adores me solely because my rent is never ever late and my roommate and I refuse to have more than a handful of people over at a time. But they have definitely expelled people before for pretty flimsy reasons.

I will say I'm almost positive his old caretaker used to come into tenants' places when they weren't home. She basically admitted that to me before, and that IS in violation of the lease. But I don't think it's something he knew about or approved of.

ETA: Oh, and basically a shoe scuff on the floor forfeits your deposit. Their definition of normal wear and tear is ridiculous. I'll only get mine when I get out of here because I've rented from him for so long and never caused him trouble. The second you piss him off, you lose that deposit because it's just about impossible to keep a place pristine.

[PiKA2001]

I'm a renter and have rented both private homes and apartments in TX and the lease conditions/terms/stipulations are always the same and from the Texas Realtors Association. I'm sure Ohio has something similar.

Here, check it out: http://www.ilrg.com/forms/lease-res/us/oh
They have other forms regarding rent-to-own as well.

ETA: Another option is to look into getting a broker to rent out your house. All you do is provide the property, they take care of everything else.

[Drolefille]

Be sure the terms of your lease are enforceable via local law. A landlord could say that they can evict you for X but tenant laws may require multiple warnings, extensive notice, or prohibit eviction for X entirely.

It gets complicated quickly.