Is 2800 Sqft To Big For A Rental?
I have the opportunity to buy a home 2 years old that is 2800 sqft. Its priced about the same as a 1500 sqft house. Would this be to large as a rental? It will be an out of state rental for me. Any thoughts will be appreciated.
Size has no bearing at all on this equation.
You need to have a rent survey done in the area that this house is too see what your property will rent for.
Once that is done then you will be able to make a decision based on cash flow. In the rental game it is all about cash flow...
[addsig]
Is it a candidate to convert to a duplex?
mabe you could rotate the deduction between the 3 apartments ( 4 months for each apt ) starting with the empty apt, then next year everyone go on the same rate.
Just my two cents worth.
mabe you could rotate the deduction between the 3 apartments ( 4 months for each apt ) starting with the empty apt, then next year everyone go on the same rate.
Just my two cents worth.
Thanks Groverm--I appreciate your ideas
You might get in trouble with HUD if you charge different rents for idenical units. If current tenant finds out that the new tenant has cheaper rent they might jump to conclusions and think that you charging them cheaper rent because they are a different 1) race 2) sex 3) religion, etc, you get the idea. Something to consider.
Bargain is right on...pass the increased cost/exposure to the owner (or at least some of it)...
You will find many insurers to cover it, but the broker was probably in the ballpark on approximate rates. It is what it is, unfortunately....
[addsig]
You could also explore avenues that would put you and the property in a bullet proof position, you would then not need much liability coverage.
I have to disagree the liability insurance for a bar, is considerably higher, or the basis is higher. More activity more risk.
Your tenant needs to carry the liability insurance, unless he has no personal assets. In the case of a catastrophic accident related to his business, his LLC or corporation will be challenged, and as we all know small business corporations can be pierced quite easily.
In my opinion, when dealing with the baser part of the public i.e. low income rentals, or bars, your best bet is to hold property in a land trust, strip the equity from the asset, sell options to buy for your purchase price to your children, or family members, manage the property through a Nevada Corporation.
A seemingly over encumbered, hard to reach property has little, or no liability in the judgement market.
If you think not then fall on some loose pavement in front of an abandoned home in the middle of the ghetto, then ask a lawyer to take the case on contingency.
Your lender will not have any concern whether you carry liablity insurance on the property, they are in first position. They will however required fire insurance to protect their collateral.
If you are really scared by the possible liability then carry just enough coverage to cover acts not caused by the business, and have him pay for the policy concerning his business.
Just remember insurance companies are not in the risk business, they will not insure if they are going to have a guaranteed loss.
I have been sued by tenants a few times all they want is a quick $2000-$3000, and so does the attorney. If there is no quick pay check the suit will never happen.
I stopped these free and easiy paydays long ago, I sleep a lot better, the lawyers letters go in the shredder.
Just for fun, form an LLC (Nevada), have it lend you a lot of money (private loan), have the LLC record a mortgage on your property for 25% more than it is worth. You can keep a satisfaction letter in your safe, record it when you need to borrow from a lender.
Another option: when your loan is satisfied, ask the lender for a satisfaction letter, then put it in your fire proof safe, do not record it.
The above may seem radical, but when the big guys (doctors, pharmacuticals, large businesses) get their tort reform, you can bet the profession of law will turn to those lower on the food chain.
Nevada corp. and a land trust.
You are quite correct, but having no liability, and thus no need to carry liability insurance is best.[ Edited by dennis3456 on Date 03/17/2006 ]
Joel,
Do you have after rehab pictures?
Schedule appointments for all your potential rental applicants on the day (or weekend) you decide to open the doors. Meet each applicant at the property at 20 to 30 minute intervals. A potential applicant will know if they want the property within the first ten minutes. If interested, they will fill out a rental application on the spot. Applications that are filled out on the spot are serious inquiries, whereas, the potential tenant that takes a blank application with them to fill out later is just comparison shopping.
By scheduling at 30 minute intervals, you keep a steady stream of traffic throughout the day, minimize your down time due to no-shows, and also minimize the contact each potential applicant will have with each other.
At the end of your showings, qualify all applicants then offer property in order of best qualified.
What about this? If you think you undershot market rent based on the demand inform all interested parties that was a 6mos rehab rent special advertised and disclose that you plan to escalate the rent after 6mos to or whatever time period to rent $X. That should get you more money and weed out some of the 45 interested.
I would focus on trying to get a good tenant (responsible and good credit) that is looking to stay for a long time. We all know turnover is a high cost. Ask them for a 2 year lease up front. Have them pay for all utilities in addition to your stated rent. Make them responsible for yard maintenance etc...
Basically, take the FMR, but get everything else into your favor.
Jeff
Just make sure you are honest that you will want significantly more rent after 6 months. Make sure they can afford it and are on the same page as you. You want to keep your tenant not have them ruin your hard work and leave after 6 months.