For about six years Tall & Handsome and I leased our home out when we moved due to T & H’s job assignments. We knew we didn’t want to sell the house and wanted to come back to where friends and family were and where I had grown up and lived most of my life.
Then of course the real estate market tanked and we certainly knew we didn’t want to sell during that kind of market. Unfortunately, there are/were a lot of people in the same boat after the market tanked and had no choice but to lease their home as a last ditch effort. Personally I can tell you there are pros and cons to that type of venture.
- You can possibly save a home you want to keep and return to at a later date or want to sell when the market rebounds.
- Unless the home is paid for, someone else is essentially making the mortgage payment for you.
The cons? Well, be prepared for a longer list:
- First your property taxes will go up, because your home is now considered a business property instead of a residential property. In my case the original increase was almost four times what I had been paying as a homeowner vs. a “landlord”.
- Next, your homeowner’s insurance will have to be converted to a landlord policy. Again, this type of policy is more expensive. In my case it was about twice what I had been paying for homeowner’s.
- You need to decide if you are going to manage the property yourself, or have a property management company manage it for you. If choosing the latter, property management companies charge a management fee and usually the minimum is 10% of the rent you are going to charge.
- You need to take all of these extra costs into consideration when setting the rent, add it to the monthly mortgage and build in a contingency sum, if feasible to cover any needed repairs that will arise (and believe me they will).
- No matter how well you think you have screened your tenant you may still end you with the “tenant from Hades” and feel like you’re living the Amityville Horror story. Unfortunately, it is probably easier to use an exorcist for poltergeist in your home than it is to rid yourself of a bad tenant. We learned that lesson the hard way…
First the repairs. Just let me name some that I had to do while the tenant was in the house. Keep in mind the house was about five years old when he moved in. I had to have the septic tank pumped. Why? Because the Bozo was flushing baby wipes (no there were no infants or toddlers in the family) down the toilet. Evidently when the tank was pumped the wipes came gushing out and covered the ground like snow.
I called “Big Jim” up and asked, “Are you flushing wipes down the toilet? You do know you can’t do that don’t you? You cannot flush baby wipes down the toilet!” Of course, he denied it, but I knew I hadn’t flushed the wipes and I’m sorry, but I just don’t believe that baby wipes evolved out of septic tank goo.. Also, when we took possession of the house back, we found boxes of baby wipes in the bathroom and we replaced one of the toilets. When the old toilet was pulled up from the floor, there were baby wipes sticking out of the hole in the floor!
I also had to replace the hot water heater and repair the air conditioner because “Big Jim” didn’t change the filter and burnt up the unit.
When we moved back home “Big Jim” and his crew stayed in the house for a few months and then some home brewed disaster of his making caused him to make the decision to vacate the premise…owing about two months of rent. Lose #1…
When we took possession of the house and had a chance to go in and really look it over, the results were nothing less than devastating…sickening would be more like it.
The stove in the kitchen had been move and placed in the garage. Yes, you read that correctly. Almost every room in the house had at least one hole drilled into the floor. Where there was carpet it was ruined beyond words…just imagine a herd of elephants trampling over your carpet, some with blue nail polish. That would be the end results…and not even Berber carpet can withstand that kind of abuse.
All the kitchen appliances where shot. There had been a fire in the microwave and evidently some other kind of fire in the kitchen because there was a small burnt place on one of the cabinets. My beautiful cultured marble jetted tub had barely been used and still looked new when I left now looks like someone took a box cutter and went wild in the bottom of the tub…either that or someone has a really boney rear end…
And, the outside of the house? Well, at one point “Big Jim” had 10 vehicles parked on my lot even though the lease stated vehicles could only be parked on paved surfaces designated for parking. (I have two driveways…how many more do you need?!) The beautiful landscaping I had started as a foundation was totally trashed. A Japanese maple…totally gone. It was unbelievable…
And, now people, it’s time for a little lesson in homeowner’s insurance.
I don’t care who they are and how well you know your agent…when it get’s to the bottom line, you are dispensable. I had known my agent since I was a child. He had insured my parents’ home and vehicles, my first two home and this home and all of my vehicles. I had babysat his children. I had been with him and State Farm for over 35 years and never been cancelled for non-payment. Not only did they refuse to convert my policy back from a Landlord policy to a Homeowners, but they cancelled.
Why? Because they paid out $8,700 to pay what was realistically about $40,000+ of damages. It’s amazing what they don’t cover. For instance…the appliances…no way no how…even with visible evidence of fire damage in the microwave. The jetted tub? Nope. And if there were other damages they would cover I’d have to file a claim for each thing and pay a $1,000 deductible for each one. Keep in mind each claim you file is a mark again you.
We had a tree fall on a house we were living in and State Farm had to make repairs to that house. That was held against us and the fact they set up a bat claim that we didn’t know they set up that paid out $0. Those circumstances converged with the “Big Jim” claim to give State Farm the excuse to cancel and deem us uninsurable. The gal that worked for years at the agents office actually told T & H that State Farm expected us to pay our $1289 annual premiums and never file a claim!!!
So there you go, what insurance companies, particularly State Farm, think of their good neighbors…and how they will take care of you…”like a good neighbor”…
T & H had to make most of the repairs to make the dollars stretch. He contracted out some of the work and got day labor to help for some jobs. And, progress has been made.
Let me show a few “before” pictures…damage “Big Jim and crew” left us with and some after pictures…keep in mind this is NOT all of the damage…
I think they moved the stove to the garage just because they were lazy and didn’t want to clean it
Inside the oven
Inside Oven Door
Floor under the fridge…
Floor in front of fridge…
Example of holes drilled in floor in every room
Floor under stove and dirt and grease above stove
Wall and woodwork damage
Woodwork damage and phone line scabbed into hallway for some strange reason…
Burnt Microwave…this was a new microwave when I left!
Now for some progress shots:
Still a lot of work to be done…unpacking, pictures to hang, quilts to hang. It’s a work in progress…any volunteers?
I know one thing…for all you would be landlords out there…I would only recommend taking that step as a last ditch effort. In this case, it’s landlord beware!
© 2011 Beverly Hicks Burch All Rights Reserved