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Monday, August 17, 2009
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20 comments:
WaPo passes off anecdotal hogwash as journalism on the State of rentals for accidental landlords?
There are a few numbers in there, and it's hard to get better numbers than these, but it still rings of anecdotal hogwash to me. Entertaining, perhaps.
Cara,
WaPo - so many anecdotes, so little time.
Anecdotally, I've also noticed a number of rentals with 'open houses'. It looks like rentals are continuing to be soggy-priced in our area way west of Washington.
Harriet,
Indeed. These stories have some dose of truth in them, but I have a hard time figuring out what purpose they serve. Anyone looking for a place to rent will soon learn their target market better than this broad brush possibly could, and anyone looking to rent out their home will do likewise.
My take-away from this article was, look it's not so easy to be a landlord, or even to try to be one, so while that $8k is still on the table, get your house back out there and try to sell it!
But that's just me and my own observations influencing my reading of the story...
In quantitatively grounded news:
CR reports an article from the WSJ: FDIC losses higher than during S&L crisis
although this is supposedly not why the stock market is sharply lower today...
I wouldn't rent from an "accidental" LL. I've been asked this question directly by potential tenants who are having to move due to foreclosure or sale of the house. I tell them that they can stay for ten years if they like.
Also, people can be so stupid about rents - particularly property management companies who, generally, could not care less how long your place is vacant.
Take, for example, a condo that should rent for $1,200 per month. Three months vacancy equals $3,600 or $300 per month. Lower the price to $1,100 and the "loss" becomes $1,200. Or offer a bonus (500) to the renting agent. Your place will be top of the list for showing.
Also, yesterday when I mentioned "trashed-out" reo's I refer to the ones that were intentionally wrecked (stolen appliance, hammer to walls and doors, cement down drains, ect. These are not LL owned. Ordinary lack of maintenance goes both ways.
And, I don't expect anyone to get on a ladder to clean gutters. I refer you to the standard VA Board of Realtor Lease. Of course everything is negotiable. Lawn service is something I just increase rent for. On some properties, it is worth it to me to take care of the lawn (through a service). A tenant can wreck a lawn in a year or two. There is a whole list of tenant responsiblities for those who have not read the actual lease.
If a tenant told me to F@#$ off, I wouldn't want him regardless.
Va_investor,
If everyone took your advice and lowered their rents to $100 less than the "market rate" as judged by the listings in the MLS or Craigslist, we'd really get massive rent deflation.
People holding out for wishing prices in their rents help maintain the "market rent" for LL's like yourself, just as seller's holding out for wishing prices on homes, help maintain the illusion of value for home-owners.
If stuff is sitting vacant for 3 months at "market rates" then the market rates have shifted out from underneath them...
One problem is that I think there's even less knowledge about how large a typical rental inventory is, or how much time passes between tenants than there is about the selling market.
Cara,
I've usually been slightly under-market except in a very hot market.
It gives me more selectivity as well as makes economic sense. I'm glad others hold the prices up.
If going slightly lower gets me minimal downtime and multiple applicants (allowing me to select what I think will be a long-term tenant), it's a bargain.
Va_Investor said
I wouldn't rent from an "accidental" LL. I've been asked this question directly by potential tenants who are having to move due to foreclosure or sale of the house. I tell them that they can stay for ten years if they like.
This touches on why I've stuck with managed buildings. It's hard for me as a renter to tell the difference between a Va_Investor who is not going to foreclose while I'm there and someone six months away from foreclosing. I like knowing that I can rent the place as long as I can afford the rent.
In a different market I would probably have switched to an individual landlord by now.
tbw,
And it's not just foreclosure, it's the owner deciding after your 1 year lease that it's time to test the waters for a sale again. With a management company (usually) it's up to you when to move out. But this may be more of a percieved problem than a real one. Perhaps 99.9% owners will wait until they're between tenants before trying to sell. Who knows?
Cara, tbw,
You can always ask a LL for references. I'd welcome it.
Just like I dismiss people who tell me that they are renting for a year while they look for a house, tenants can dismiss LL's who are not in it for the long-term. Ask them flat out how long they intend to own the property, how many places they have, how long they have been a LL, do they reside locally, etc. No reason for tenants not to "screen".
From Friday's thread RE: Active vs. UC.
I was told that this was a Lender requirement. Whether this supercedes local mris "rules", I don't know. Obviously, if a contact is subject to 3rd party approval - it's not really a contract until that contingency is met. Should it be designated as a KO? I don't know because if you don't have a contract, there is nothing to "kick-out".
Va_investor,
I'm curious if your contract was worded differently than our contract. Did the bank provide a sample contract which you had to agree to? In ours it's just a contingency on the main contract like all other contingencies (inspection, appraisal, financing).
It's a valid contract, just one that has a contingency in it. So, I guess ours could be listed as contingent no kick-out, and yours should have been marked contigent kick-out if that was the requirement by the seller's bank. But if it really is contingent kick-out, then someone really can come in and offer more with the seller giving you the option to beat that offer.
From your statements I infer that the contract looked perfectly normal but that the seller's bank was post-facto imposing conditions on the contract through the lever of the short-sale addendum. I.e. we won't even consider letting this short go through unless you abide by our anti-MLS-rules policies. Is this about right?
Cara,
I'd have to actually find those contracts to tell you the answer. It seems to me that there was a short sale addendum that basically said the deal is dead if the lender isn't on board.
REO's are a different animal.
Va_investor,
That's the meat of what mine says. So no difference there. Have you considered threatening the LA with a complaint to the MLS about the lack of compliance with the rules regarding comments?
Cara,
No, read the contingency.
Va_investor,
Maybe I'm misunderstanding what yours says, but I only have one contract and have read it, oh, at least 4 times, closely.
What it says is that the seller's bank must agree to accept the sale as full satisfaction of the loan.
If they do not, then there is a procedure outlined for what to do with the bank's response.
The bank can state a new net amount which they would accept and approach the seller with that. The seller can then chose to make up the difference herself, or make a new offer to us. All offers and counter-offers based off the bank's price must be made with no more than 1 day delay in between or the contract is void. If no agreement can be reached between us and the seller that satisfies the bank's price, then the deal is void and all parties are released from the contract.
In reality, the seller can chose to release whatever aspects of this contingency she choses (such as she can agree to sign a promissory note and release the clause that states her right to get out of the contract if the sale itself is not sufficient to satisfy the lender).
There's also an end date of Sept 10, after which we can notify the seller that we want out of the contract if the bank cannot produce a short-sale agreement with in X days. (or the contract would be void for the short-sale addendum not being fulfilled).
Does yours differ substantially? I've only read the one, so I have a hard time imaging the full range of possibilities for how these could be worded or acted upon.
RE: accidental landlords
Our last two landlords were accidental, and one was long distance. I resent (a little) the sentiment that mostly tenants tend to trash things. What about good tenants with accidental + long distance landlords who:
--Are informed immediately that the garage door simply fell off, and take four months to get it taken care of? So the door was propped up/wedged at a kilted angle, looking ridiculous and unusable, for months? And the landlords knew the door was cracked and unstable when they left?
--Are informed immediately when a storm strips siding off of the house, so it dangles and bangs annoyingly on the windows and roof and occasionally detaches and sails into the neighbors' yards, and take over six months to fix it?
--Are informed immediately and repeatedly that a storm knocked two trees onto two different neighbors' fences, and take almost three months to have the trees removed?
We had to bear the brunt of our neighbors' ire for all these things, and none of them were remotely our responsibility. Not to mention the A/C that didn't work all summer, the heat that didn't work all winter, the 2/3 toilets that did not work the entire time we lived there, etc. etc. And the security deposit that was kept because they had no understanding of the concept of "normal wear and tear"?
Accidental landlords are scary, in my experience, because we, the tenants, are being used by them to create some positive cash flow with as little effort as possible. The house is not an investment--they are underwater--and the fact they still have to deal with the house at all is a source of misery for them. So they avoid their responsibilities to it and delay and do things as cheaply as possible. And our chance for remedy is very small. Yuck.
I guess this is good for me, though, as a reminder that I am glad we are not renters anymore, and it is OK that I need to hire an electrician to fix the blown circuit breaker that resulted when I installed a light incorrectly...
$2900 a month...in Bowie? So glad they slashed it to a mere $2700...
Meshell, I was thinking the same thing.
Tabitha,
I don't know where anyone said that tenants trash things. Many owners trash things too. There are good and bad of both.
I was before a judge once on a security deposit issue. I owned a 3-level townhouse that had been freshly painted at the tenant's occupancy (one year prior). I don't know what the heck they could have done to make the walls so bad. It was unbelievable!
The judge said that it was part of my cost of doing business. WHAT!!! I asked him if he had to paint his entire interior every year.
Some people are complete slobs, whether they own or rent. I saw a short a couple of weeks ago. The owner (wife) was laying on the couch watching TV (ok, that could be me too). But, the kitchen was a greased up filthy mess with roaches running all over the place. Garbage overflowed and dirty dishes and pots and pans covered the counter. The carpet was a disgusting, stinking mess. There were even roaches in the upstairs bathroom. This was an owner.
My point was that the stuff I have seen with intentional damage (think sledge-hammer to walls and doors, stolen appliances, paint poured on carpets, etc.) is owner-occ reo's. Tenants may be filthy slobs, but don't generally maliciously destroy stuff.
I've had tenants that have been exceptional and have only been to Court 3 times in almost 30yrs.
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