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To rent or to sell? That is the question...


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My widowed (3 years ago) friend has a HUGE house in Pittsburg (paid around $500k for it.) (They moved to Pitts, bought the huge upper middle-class house, and he died 4 months later.)

 

In the past 3 years, she's moved back to the Washington DC area where she's from, but still owns the huge house in Pittsburg. She's been renting it to a wonderul, best-renters-in-the-world Australian couple for the past year, while they are working in the USA. (They are going back to Australia when their time in the US is done.)

 

When their lease is up (in February 2010), she was going to put it on the market and try to get rid of it. She doesn't need to make a profit and can sell it at a loss. She wants it GONE. It's been a weight for her to own this house that is so far away (what if something breaks and she - as the landlord- has to figure out how to fix it, from 5 hours away.)

 

PROBLEM: The Australian couple has asked if they can extend the lease to the end of 2010. They need an answer.

 

What to do? Tell them no, put the house on the market and HOPE it sells--but in the meantime pay for the mortgage as well as her own lease on the apartment she has in DC?

 

Tell them Yes, they can stay, and continue to fret for another year that something will happen to the house that she'll be financially responsible for?

 

Does anyone have any insight? Her realtor doesn't have any advice. The realtor says, "Some days the market seems to be looking up and some days I think it's worse than ever."

 

Does anyone know anything about this sort of thing? (As landlords, or people trying to sell upper-middle-class houses in Pittsburg, etc.)

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We once had landlords that lived about an hour from us. They did not want to come out for problems and paid a jack of all trades type of company to be on call to fix problems. Whenever there was a problem, we called landlord and they either called this company(whose name escapes me just now) or had us call them. They would sched. an appt. I think there was an emergency contingency as well, but I don't recall having to use that ever so I don't remember how it worked. Why not have your friend look around for such a company. I'm sure they must exist in Pittsburgh as well. That way, she can keep wonderful couple, ease her mind and wait a little longer for the market to hopefully come back up.

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It sounds like maybe she's not charging them enough rent. I would expect (as a renter) to be paying an amount equivalent to the landlord's mortgage + homeowner's insurance + a good bit more to cover the landlord's risk. If they're paying a reasonable rent (for the area) and her mortgage is a reasonable mortgage, then she shouldn't be in a position of being particularly financially vulnerable.

 

She might also look into something like American Home Shield. It's an insurance policy that covers most things that go wrong with houses (plumbing, electrical, HVAC, most appliances, etc) and can be very valuable (particularly for landlords) when things like the air conditioning go out! You simply call their 24 hour number, tell them what's wrong and they send the appropriate contractor out. There's a service charge of something like $60 per call. But again, if it's the a/c that needs to be replaced, I'll take $60 over $3,000 any day.

 

There's my two cents. I hope she finds the peace of mind she needs!

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There right now---except our large home is in MO. We would sell, we want to sell, I should say. The market just isn't there right now. We can't rent it for what a mort. would be. Thankfully, we don't owe a lot on the house, so we can afford to rent it for less then mort. payments would be. But we do not want to take a huge loss on the property either. Some of the money we put into the home to personalize it will not be realized when we sell, but at the same time we want to get out of it what we paid for it and realitor's cost. So, for the time being we are renting. We are using a property mangament company to take care of things since we are not local.

 

When you say that she could afford to take a loss on the house--what does that mean? How much of a loss? How much does her realtor feel it can sell for? Right now the market seems to be flooded with homes just like hers. Many of these homes have been foreclosed on. They are selling for much less than is owed on the homes. Her home would need to compete with those homes. Even if she receives offers, her home must be appraised--and it will be compared with the foreclosed homes that have sold. If it doesn't appraise at or above the offer--no deal unless the buyer has lots of cash on hand.

 

Will things get better before the end of the next year? I personally don't think they will get worse, but one never knows.

 

The home market is also really individual. What's happening in one place is not what's happening elsewhere. Perhaps she needs to talk to another realtor who can talk her through the decsion and help her see the pro's and con's of each choice.

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She should find a property management company to handle the rental. Then it doesn't matter that she is so far away. The managment company takes all the calls, handles the repair men, etc. SUre you lose a bit of the rent (10% is customary), but the headaches it saves is worth every penny. I think she would do well to extend the lease in the hopes that the market is better in a year. I would also suggest talking to other realtors. Definitely get a second opinion.

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she has quality renters in there....let them stay another year! get the home warranty for $400 and then they call that when there are house problems. then list it when the renters leave....another year will only help her selling situation.

 

:iagree::iagree:Pitt is not a hard hit real estate area, so she is not going to lose anything by waiting.

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I would recommend selling, if nothing else just to get rid of the headache. I don't know about Pittsburg specifically, but houses have generally been selling for more than most people can afford due to easy financing. Prices have continued to be propped up with first time home buyers credit and such. There is a huge "shadow inventory" of people who are renting out their homes waiting for the market to recover. Once those homes go on the market, supply goes up and prices go down further.

 

Yes, maybe prices will go up later, but they could go down too. And an out-of-state property is a huge energy drain. Price it to sell now and get rid of the headache.

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I rented from a family who lived in Israel.

 

They had a friend who collected the rent and when the refrigerator broke (quite often) I would call him to get the okay to get it fixed and how much I could spend.

 

It worked out fine for years.

 

I rented an apartment to a couple who stayed for five years. It was easy money and when something broke (rarely) they got it fixed (with approval) and deducted from their monthly rent.

 

I'm surprised the real estate agent isn't offering to act as a property manager. This way when your friend does decide to sell the realtor knows she will get the listing. Their are plenty of companies around that provide that service. The realtor should be able to point her in the right direction.

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