An extended family member from out of town asked a rental question. I'll share it here.
Susie and her husband are moving to a new city for work relocation. The house they have in San Diego County is down in todays market and they have very little equity left. But they put plenty of equity and sweat equity into this house. So selling at a loss is not a great thrill.
Therefore they want to hang on for the rebound in the market and rent it short term.
The dialog went like this:
Have a question for you. Is it better to rent to someone you know who would take excellent care of your home and take a little bit of a loss on a monthly basis OR make a couple hundred extra a month with someone you don't know?
I'm leaning toward the little bit of a loss situation but want your professional opionion!
And my Reply is:
You have to go by the seat of your pants on these situations.
In calling on the references (more than one!) the most important question I can ask of the previous landlords is "Would you rent to them again?"
The amount of damage and down time for repairs is really heavy if you select poorly. So past landlords are key.
You have one unit. One heavily invested home. If you are renting in the new town... Is the rent received (old place) higher than the rent paid (new place)? If so, it is a good thing.
My 2 cents.*
* Price charged is Zero. My liability is the same.
No legal advice given here. Emotional justifications and encouragement offered freely and with my best of intentions to make you feel better about a hard and difficult decision.
Thank you brother!! Appreciate your advice. ...
One point I like to make here is the number of Units matters. If you buy or happen to have just one (like Susie above) and a bad tenant messes up or leaves early you are down and left naked to pay the mortgage by yourself for as long as it takes to repair and re-rent. That can be very costly. If you have more units... 5 plus! Then you have less financial hardship as you fix and re-rent one.
so my advice... Get as many units in the investment property as you can afford! Or team up with a couple of others so you can buy and properly fund a bigger asset.
So call me if you are interested in buying or investing in performing real estate in the Los Angeles region where historically the rents have been strong and stable.