We’ve 100% officially decided to put our house on the market this month to be rented out. Making us a) automatic investment property owners – woo! and B) Scarrrrrrred out of our mind with all the work we now have to do to get it in tip top shape, haha… But we’ve gotta start somewhere! So all last week we’ve been lining up our ducks to figure out what needs to be done, and when.
It makes me want to poke my eyes out :)
But if we don’t do it now we’ll just end up rotting away and continue dreaming of “what may be” and we’ve done that for two years already – it’s time to take action! My business and baby and everything else will just have to fit in somehow. That’s life, right?
Here’s everything we need to do that we’ve come up with so far:
- All carpet needs to go (it’s really dirty)
- All new carpet/laminate/hardwood? needs to be installed
- We need a new dishwasher that’s not rusted out
- All walls need to be patched up from my bad picture hangings
- All walls need to be repainted “normal” colors (no more bright blues and reds!)
- All our stuff must get organized into either “trash,” “donate,” “sell,” or “take with us” piles
- Then it all must get OUT OF HERE!
- 20+ other little handyman things also need to be fixed around the house
- Then we lock in a property manager to put the place on the market and find us a suitable renter
- And take a deep breath…
And that’s just half the equation – albeit the hardest part. Not only do we need to get our house ready to be rented out (we can’t sell it due to the market and how much we’re underwater, so by default we’ll be turning it into an investment property), but THEN we need to find a new place to GO TO! A new state, a new home, a new everything! Yikes! We don’t even know where we’re going yet, but this will force us to choose faster! :)
Which then means:
- Changing out all addresses on bills/etc to the new one
- Figuring out new health insurance (it wouldn’t extend no matter where we move)
- Getting a new pediatrician, doctor, dentist, blah blah blah…
- Throwing a welcoming party for ourselves!
- And finally living a happier, newer, more carefree/minimalist life :)
Nice and easy, right? Our plan is to be out of here and in a new home – with everything rented and secured – by the end of June. So we have less than two months to make it happen. I think it’s do-able. It has to be, especially if we get our place rented faster than expected – we’ll be homeless! Haha… but I do love me some excitement.
As for money with all this? I shudder to even think about it… Replacing the carpet alone – regardless of what we put in exchange – will run a few thousand off the bat. And since we’re leaning towards a nice wooden laminate feel (so we don’t have to keep replacing carpet in between renters and it’ll have better re-sell eventually) I imagine it’ll at least double. Then we’ve got the painting and fixing up and hiring the property manager/etc, and now we’re down another few thousand to boot – all depending on how much we actually *do ourselves*. (TBD)
On the plus side, we just spent a couple thousand prettying up the exterior of our place this year so that’s one less thing to worry about! And if you recall from the early baby days we also have our nice little garden out front courtesy of my mom pitching in :) So we’re not totally helpless.
My rough guesstimate says we’ll probably spend $10,000 when all is said and done. After all cleaning, upgrading, moving, property management costs, etc. Or at least that’s what my cap is :) I have no idea if that’s even in the ballpark, but once we start getting in estimates for stuff we’ll know more. And I’m sure it’ll sway us one way or the other on *WHO* exactly will be doing all the work, haha… I value my time as much as the next person, but if getting down and dirty for a handful of hours saves us thousands of dollars, you better believe I’ll man up! I can only do so much though, especially if I want to keep my businesses alive and functioning throughout – not to mention this blog.
Sooo….. lots to think about and do still, but the process has officially started. We’ll see how fast our wallet drains in the meantime! Lots and lots of exciting stuff. I’ll keep y’all posted…
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Photo by blmurch
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congrats! what a big step. Can you rent as is? getting back $10K will take quite some time. In France it is common to offer the renter the first month or two for free in exchange for them doing the house improvement they want.
Well that’s pretty cool! We don’t do that stuff here in the States really… plus I’d imagine redoing three levels of floors may not be worth it too much on the renter’s side in this case ;) We can’t rent as-is unless we want to take a HUGE drop in monthly rent.
I love the fly-by-the-seat-of-our-pants style, but I’m missing something. I don’t know why you are making this move. You mentioned that you are not sure where you will be living, so are you planning to travel the world? Are you merely moving to another state? What’s the motivation? What are you escaping from?
To make such a bold move, so quickly, without a more structured plan (except a date) seems to be putting yourselves at risk, unnecessarily so. Of course, this may your intention. To live intentionally can often mean to live without a plan. If so, that’s cool, but it would be great to learn more about this.
I’m eager to learn more about your adventure.
We’re doing a little bit of both here. We’ve wanted to move *somewhere* (anywhere) for the past two years now, but never took any steps to make it happen. I’m going stir crazy working from home all the time, and my wife will now be working at home finishing up her dissertation, so we figured now was as good as a time as ever to get our place rented and move somewhere closer to a city where we can have more of a life again ;)
So it does seem kinda all of a sudden if you haven’t been a reader of the blog for a while, but really it feels (to us, anyways) that it’s “about time.” So we’ll get this place ready to be rented out and in the meantime find a new state to move to! Probably North Carolina or Virginia, but we’ll see…
Who will be watching your home when you have moved far away? How much does one of those property management companies cost? A percentage of the rent or a flat fee?
Our property manager will be watching our home while far away, and we’ll check in on it too whenever we happen to be back in town. My initial research shows that a typical property manager takes 1 month’s rent up front for *finding and placing* the renter, and then anywhere from 8-12% monthly rent to be on call 24/7 and manage everything. A nice chunk of change for sure, but well worth the peace of mind at least to us.
We have to get our townhouse ready for rent too. Our tenant fell through so we should be getting it fixed up faster than we are. Every month it isn’t rented costs us a mortgage, insurance and property tax payment! We have to replace carpet too, so if you hear of any tips to get a great deal pass them my way!
oh no – that sucks! and one of the reasons we are more than likely going with laminate or hardwood (or laminate that LOOKS like hardwood :)) – it’ll rent out much faster and don’t have to replace it ever few years and/or with every new renter! I’d rather eat the costs now than to deal with that headache – and pay more too – over time. Especially if we decide to hold onto the property for 30 years or something…
Good luck getting it rented again! Def better to spruce it up faster so you don’t lose those months as you said!
If you haven’t figured out where to go yet remember the article from Friday. In the 10 Commandments of Wealth and Happiness the author states “You already spend a third of your life sleeping. Why spend another third of it freezing your tail off?” I thought that was hilarious but so true. Being from the northeast I would suggest thinking of a warmer climate, mild winters and so on.
Haha indeed! Def. not going more north, so that’s already ruled out ;)
I’ll second Jane’s question in regards to who’ll be watching your house when you move – I am assuming it’ll be a property management company? We just finished getting our master bath redone and I am still cringing at the cost. It was a simple redo, but still cost an arm and a leg. Good luck!
Yeah, it’s not cheap that’s for sure :( And here was my response to Jane:
Our property manager will be watching our home while far away, and we’ll check in on it too whenever we happen to be back in town. My initial research shows that a typical property manager takes 1 month’s rent up front for *finding and placing* the renter, and then anywhere from 8-12% monthly rent to be on call 24/7 and manage everything. A nice chunk of change for sure, but well worth the peace of mind at least to us.
I WISH we could rent our house right now. We put our old house on the market a couple years ago and bought when we saw how low prices were going in the neighborhood we wanted. We decided, if our house sells in the terrible market, we would move… and it sold in 30 days!
The rentals in our most coveted neighborhood are going QUICKLY. Looking at the rental prices in our neighborhood, we could get much more than our current mortgage. But question is, where would we live?? We LOVE our home, but it is to big for us at the moment. But we would love to live in it later. But given the rental market in our neighborhood, it would be worth it to just keep it and have it pay for itself. I have seen a lot of above questions on who would watch it when rented, luckily we have family living in our neighborhood, so that is an easy one for us.
Contemplating a move out of the country, since both of our jobs would provide us with a hefty housing and food stipend, and school stipend for our little one to go to an international school. Now only if the jobs would align perfectly and we could make a transition overseas for a couple years, then come back with one more child, maybe two and need the bigger house.
That would be fun!! We kinda want to move out of the country too, but probably not until the baby’s a bit older and we have more savings banked just in case… But I hear ya on downsizing, that’ partially what our goal is to do too. I want to live a more simpler/cozier life :) Could you possibly buy a smaller one to live in and rent out your big house and then later swap and move there and rent the new one? It ties up a lot of cash flow initially but it seems to be well worth it in the end from talking to people… I can tell you how it works too if you come back in a few years :)
We are landlords, not by choice, but due to the economy. Our management company only gets paid if the place is rented which keeps them motivated to keep us with a tenant. I didn’t even know that was possible, however it was standard in the contract we signed. They also get 10% of our rent as their payment. I’m quite pleased with how it all worked out. Read the contracts with an eagle eye (and interview more than one company!). Keeping my fingers crossed for you.
I’m glad it’s working out for you so far!! That’s exactly the info we’ve been finding too – we’ve got some good recommendations and been talking to other friends in the same boat :)
As someone who knows all too well the difference between good and bad tenants, I wish the absolute best of luck to you.
Also, don’t forget that repairs, maintenance, interest and depreciation, are deductible from rental property income now — even if you don’t itemize
YUP!!! Getting fully aware of that the more and more we look into this stuff here – that’s awesome!
I must have missed some backstory, because it’s not clear to me why you’re moving in the first place. It sounds like you’re going to invest a ton of money fixing the place up and will need to hire a property manager (or at least an on-call handyman). Do you think that you’ll be able to at least break even on the house?
I’ve been thinking (and blogging) on and off about moving for over 2 years now for a handful of reasons (change of pace, living walkable to a city, maybe closer to family), so we’re just gonna pull the trigger now and make it happen while we’re motivated. We won’t break even on our house for a few years I’d imagine, but who knows what will happen by then. Perhaps we’ll keep this place as an investment for 50 years and make bank over time. Or maybe we’ll sell in a year. Either way, the updates we do to it will all help the price/rent rise.
HUGE step. I can’t wait to hear how it goes. NC ain’t that bad.
Thx man! NC is def on the list :)
Oh, man, SUPER exciting and scary and awesome!! Congrats to you and the fam! I can’t wait to hear about all this panning out.
Thank you!! We’re crazy excited/nervous! :)
I made a post similar to this today also! :) We plan on spending around $2,000 or $3,000 to get our house ready to sell.
How cool!!! We’ll be going on an adventure together – woohoo! Will go check it out after I respond to these comments :) Congrats!! Doesn’t it feel like your LIVING??
All carpet needs to go (it’s really dirty)
We take our shoes off when we enter the house like the Japanese and other cultures do.
You don’t quite know what you might have stepped in outside – perhaps urine. You come inside with the same shoes on and walk on carpets. Previously we lived in the same house for over 22 years. We always took shoes off when we got inside. The new owner was surprised how the carpet was kept clean.
The same is true when men pee in the bathroom. Most folks, probably 98% or even more, don’t dry themselves out. They shake it a little and zip up the pants and they think they have done a super job. Little do they realize that they sit in their own urine.
Remember that Wisk commercial where the mother would have the son’s underwear in hand with yellow stains on it and screaming at him. If you dry out and clean yourself, you don’t get yellow stains.
Hahahhahaha… WOW that’s descriptive. You are something else today, my friend :)
Sounds exciting! We were lucky enough to sell our house within a day of listing. We made upgrades but we did them so we could enjoy them too, added new carpet 6-8 month ago, repainted a few years ago with a semi-gloss that stays pretty clean and even after touching up all the picture holes with the semi-gloss you can’t even tell they were there. Good luck!
COOL! That’s reassuring a little! We were thinking how much the new renters are going to be loving our place more than us with all the upgrades, but really were weren’t motivated at ALL to spend the money while living there anyways… Not it feels like we have more of a business case for it so we’re running with it :)
How exciting! The next couple of months WILL be crazy stressful as moving always is, but you’re on to greener pastures! So it will all be worth it. And I do love the organization aspect of moving… no more clutter, the bane of my existence!
I hope you share what it’s like to go through the moving process with a baby! Our lease is up at the end of August, so we’ll be moving with an almost 8-month-old at that point. I’m a tad scared for my sanity…
Good luck with everything!
Haha yeah it’s going to be pretty crazy, I can already tell :) We’ve started packing a bit but have to keep taking turns and then waiting for him to go down for naps/bed times. But we also don’t live near many friends or family, so if you have those around that would be killer!
Awesome sauce! Congrats on your new beginning. In regards to the flooring I would do tile or vinyl. Laminate and carpet do not hold up very well and is quite expensive. I would do as the other poster suggested and let the new tenants paint to their desires. Get a dishwasher with an extended warranty. Hopefully you consider my tips along with others :-). I hear Austin TX is getting Google fiber… Portland, I hear is pretty sweet too…
Tile or vinyl on all the floors of the house? We are thinking of tile in the foyer, but would stick out too much across the more livable floors – at least in our place. I know that a lot of people that live near beaches do tile everywhere which makes sense. We will, though, let our renters paint as they desire :) I always appreciated that myself when I wanted to paint the walls.
Way to get started! That’s almost always the most important part. I’m a relatively new dad as well and I can relate to the feeling of needing to wait until “things settle down”, but the reality is that’s never going to happen! It’s always daunting putting something new on your plate, but it sounds like you’ve got a good handle on things. Best of luck!
Yup! We were supposed to move *before* the baby was to come out but that was pretty laughable :) So now we figured just gotta do it or else we’ll be stuck here forever… And really, we have no ties to the area so no big loss.
Moving out of your home without knowing where to go is such a risky decision! At any rate,I wish you good luck on your new home and may you find a nice tenant for your current home.
Thanks! We won’t be moving until we’ve gotten the place in order and ready to be listed on the market :)
I missed why you are moving too, but let me put a plug in for moving to Houston. We moved here five years ago from the northeast and have never looked back. We bought a house 1200 sqft larger for $20K less than our house up north…and now we are finding it’s too big for us. We have no state or local income tax so it was like BOTH of us getting a 6% raise instantly. We have found food is much cheaper here, gas is much cheaper, and services like daycare or house cleaning are much cheaper too. And we love it! HUGE amount of culture, awesome things to do all the time, fabulous food and people. The main caveat is the heat, but I prefer that over shoveling snow any day.
Agreed!! I’m actually a big fan of a lot of places in Texas, but man – that heat is no joke. And we kinda want to stay somewhat close to the East coast (at least for now) while family visiting is somewhat of a car trip away. But I’ll be missing those deals out there!!! I remember seeing this mansion out near Dallas the other year which cost less than our small townhouse, jeez…
Reasons we’re moving: change of pace, living walkable to a city, downsizing, maybe closer to family
Sounds exciting, but it doesn’t sound like you’ve put pen to paper on the actual plan. Two bits of math I’d have in excel before even contemplating this.
1. Improvements Budget. Before even thinking about going ahead you should have a guestimated budget. List everything you’d like to do and start googling to pull together estimates. Add some contingency (10%) since this would an estimation.
2. Income/Cash Flow estimate. Have you done the math on what actual rent you expect less all the management fees? You mention asking a broker about value in a forsale scenario – they can opine on rent too and provide comps. What about an emergency fund for the property once you’ve moved on to cover repair & maintenance plus a month or two of mortgage/insurance/taxes if you lose a month or two going from one lease to another? Unless you’re in a rare market where the rent vs buy is flipped, you’re going to be negative cash flowing: ~$350K of debt + insurance + taxes on a per month basis will likely be more than someone is willing to pay to rent a $285K house less mgmt fees.
I’d have these two things as narrowed down and sensitized as possible before I even thought of pulling the trigger. Would make for an interesting post too!
Thanks
Agreed :) We’ve talked and researched all of this already, just haven’t put it down on paper yet. But honestly, it wouldn’t change our decision anyways because we refuse to live in our home anymore. It would only change whether we got hardwood over new carpet and other upgrades we’re considering. We’re comfortable with our overall emergency fund right now ($50k, which will be lower once we make improvements) so the only two options are rent it out or sell it. And the latter would be a complete loss off the bat, so renting it is for now. I can eat a couple hundred $$ a month to live somewhere else which it may end up coming to.
We rented a house with crazy ass colors! Our landlord actually stipulated that certain of the rooms couldn’t be painted but others could if we wanted. We didn’t mind at all.
So, maybe painting could go at the very bottom of the list and if you run out of time and money then don’t bother? Because I’d like to throw out there that you’d like to have tenants that care about their surroundings, you know? If you let someone choose their own colors then they feel a little more respect and care for the property.
Hah! Funny timing actually – we were just thinking the exact same thing today :) We’re going to do exactly that: update and fix everything in the house, and then work on painting everything last – at least the walls with funky coloring. We need to paint our main level regardless just cuz there’s tons of holes and touching up we need to do anyways, but some of the other rooms can def. wait until later and/or if the renters want to physically change ’em themselves. Fine by me if they don’t mess up my new floors!
Wow, congrats on the major life change! I like how you have a plan and timeline because that will make it actually happen. Good luck on everything and make sure to keep us updated!
Yeah, it’s still all pretty up in the air, but I’m tired of dicking around with it. It’s now or never :)
We have a ton of things to do at our rental home too. We need to repaint the exterior this year and probably replace the carpet when the current tenant move out.
Can you sell the house or are you still underwater?
That might be easier on the wallet.
We’d much rather sell but way too underwater. Like, we’d probably lose $75k or something ridiculous like that in the end… And we’d still need to replace everything anyways to even do that :( Perhaps this is a blessing in disguise though, and the beginning of an investment property empire! That would be cool!
Sounds exciting! Take advantage of your flexible working schedule. If I could I would work from a tropical destination like Costa Rica. Somewhere where I have access to the beach, and adventurous activities.
Oh, it’s def. on the mind believe me :) I don’t know if we’d have the balls to do it THIS round, but we def. want to go overseas in the future! I did it throughout growing up myself (dad was in military) and I sorely miss it… excellent on kids, too.
Congrats! Definitely a big decision!
Like others have suggested, I think it would definitely be helpful to sit down and come up with an detailed list of the materials/labor required to make the required improvements. The reason I say this is that, depending on your house’s square footage, you could easily blow out your $10K budget on the flooring alone.
That’s what we’re finding out now that we’re poking around actually… lots to consider and research still though, I’m staying positive!
Patching is actually pretty cheap. Go to Home Depot and get the three dollar canister of repair spackle. It even comes with its own spackle knife. Dab some in and smooth it out with the knife. Three next day you can paint over it.
I like the sound of that! It’s been FOREVER since we last painted anything, I’m totally out of the loop… and these days I actually *care* how the paint job comes out, haha…
Awesome! Even though it costs a nice chunk of change to have someone else manage the property, if you find a good property manager it’s totally worth it! Much less hassle. Renting out properties (and hiring a property manager) is something my girlfriend and I hope to do one day.
Sounds like quite the adventure, good luck! We recently became accidental landlords due to circumstances similar to what you described. Being a landlord isn’t as bad as some people make it out to be.
That’s what I’m banking on, but even if it turns horrible at least we’re living in a new home and place and having fun! I can deal w/ a drop in money as long as the rest of my life is awesome :)
Congratulations J! You should come on down to Georgia now :)
We considered Atlanta but a bit far for this first year of moving :) I will be visiting soon though if all goes well, haven’t been there in forever!
Hi.
Your friendly landlord reader here. Just wanted to drop a website for you to check out (I may have mentioned it before). I am a frequent contributor to (but mostly reader of) mrlandlord.com. Specifically, the bulletin board. That website is: http://bbs2.mrlandlord.com/
PLEASE go check it out before you drop $10K fixing up your house to meet your standards. Rentals should be clean and functional – unless you are re-roofing and doing major expenses, $10K seems really high. They don’t have to be perfect.
There are many posts that will help you. We have many discussions about the importance of having colorful walls. We talk about steam cleaning old carpet. We talk about alternative flooring (Allure, from Home Depot). We talk about management companies (and what they should cost). We talk about the perils of long distance real estate.
I owned several rentals for several years before I got myself educated. Now, I am making more money and having less stress (and I don’t have a management company).
PLEASE read up on being a landlord. Ask questions (there is a convention in a couple of weeks in Nashville, if you want to go, but it is pretty intense).
Okay, cool! Thanks so much – that’s awesome. I’ll def check it out :)
Good for you, taking the leap. Flooring costs a bleedin fortune most times and I would also go with a nice laminate floor especially if you are renting it out. or Carpets can get pretty mucky at the best of times but steam cleaning is good as well if you can bring back some life into them. We just did that with our carpets as we aren’t putting our floors in quite yet and they look almost new again. Best of luck getting it all completed in time and finding a new place.
Mr.CBB
That’s great news! We were going to rent our house also because we were under water, but instead we took money out of our 401k’s to make up the difference.(Some say very bad idea) We lived with our parents for 3 months (plus the 2 kids) and saved every penny to put down on our dream home! Good luck!
Oh wow, that’s hardcore! Haha… You gotta do what you gotta do though – I hope it all works out in the dream home! :)
Congratulations!!!! Come to NC!!! :-)
You know it’s on the list! :)
Congratulations on the move and everything! Keep your eye on the new adventure and everything else will fall into place. :)
Congratulations! Exciting news. Hardwood floors, I’ve found, are more than worth it; increased price but great investment for eventual home value. Much easier to clean, too.
I would definitely watch the budget on improvements to the rental….the rental market has changed….folks don’t have the money they once did AND the “tenant pool is very shallow”. I’ve been doing this almost 35 years and this the worst rental market I have seen for qualified tenants, It is certainly possible to “over improve ” a property and never recover the money spent on improvements. I… like others …am certainly intrigued by your sudden move….to move…
It’s not really all that sudden, we’re just finally making a move on it :)
Here’s what I commented to others above:
We’ve wanted to move *somewhere* (anywhere) for the past two years now, but never took any steps to make it happen. I’m going stir crazy working from home all the time, and my wife will now be working at home finishing up her dissertation, so we figured now was as good as a time as ever to get our place rented and move somewhere closer to a city where we can have more of a life again ;)
So it does seem kinda all of a sudden if you haven’t been a reader of the blog for a while, but really it feels (to us, anyways) that it’s “about time.” So we’ll get this place ready to be rented out and in the meantime find a new state to move to!
Getting your house ready to rent is as big a project as getting it ready to sell. We are on a 2-4 year plan to rent our house out. My big goal is to live in a few foreign countries for a few years but rather than sell our house, I’d like to rent it out furnished so that we could always come back if we don’t like nomadic life. I imagine my to do list will resemble yours!
I like that plan!! That’s so fun!!!
I thought you lived in Washington, D.C. I guess not:)
Have you looked at college towns? They may be smaller than you’re looking for but they have good activities, a good overall vibe and tend to have stable property values with good options for rentals if you decide to go into that area of investing.
Best of luck!
Yup! I love college towns!
Wishing you well in your ventures into landlording. A good property manager will help you keep the thing rented to good people. Ours has done that.
That’s what we’re hoping for! No luck so far, but a ton of interest so we’ll see… You and I are now in the same state fyi :)