For rent and for sale, part one
An email from one of my clients said this:
Hello, I had a question... today I noticed the same house is both for sale and for rent... does this often happen?[Attached here was a link to a rental notice on Trulia for about $2000 a month. This house is on my client’s MLS list for sale around $400,000.]
It seems like the way the system works, sellers agents would be very reluctant to see a house offered for rent. I was pleased to see the ratio of price-to-rent was relatively low. I'm curious what, if anything, this means about the state of the Market, as they say.
I answered:
Did you notice that the same agent is doing the rental and the sale? That means he will sell it now, or sell it later. So his disincentive is minimal.Renting homes that don’t sell is happening more and more in the unstable market. It means that sellers are insecure enough to be willing to rent a place until next spring so they don't need to sell it during the winter slump. Also, he won’t have to heat an empty house all winter.
When someone is marketing a home and it isn’t selling, does it make sense to rent it?
The rental price is about $2000 a month. The mortgage for the current owner is just under $2,500 a month. These owners will be short about $500 a month on their carrying costs, based on what they paid for this home when they bought it.
Winter is coming. Therefore so are heating costs and the risk of frozen pipes in an empty house.
As a seller, would you rent it or wait for an offer that would let you break even? Is it better to get someone in the house for the winter or should you keep it empty, sell it, and be done with it? When would you be willing to rent at a loss? For how long?
(Accidental Landlord, are you still reading?)
