So you purchased a new home but want to keep the old family home too? Today you might consider renting the old family home and becoming a landlord. Tomorrow, you might regret this day if you don’t make careful decisions.
Congratulations on your new business venture! Wait? Did I say business? Yes I did and there will be more on that later. Beside business stuff, there are many pitfalls that the new landlord needs to watch out for.
First pitfall might be friends and family. You might have a family member, let us call him Randy Renter, and he can’t wait to rent your old family home. This is a perfect situation, right? You have known Randy all your life, so why not let him rent your home? Since he is family, do you really need a signed lease? Also, you might feel pressured by other family members to allow the Randy Renter to move in right away.
There are a couple of scenarios that can play out in this situation.
Randy Renter might not qualify for the home. He may say he makes enough money to pay rent, but when was the last time you saw a paystub from him? I have never seen a paystub from any of my cousins, siblings, aunts or uncles. Randy Renter can move in and stop paying rent because he can’t afford it. If he can’t afford rent, he can’t afford to move to a new home. So he will sit tight and force you to evict them. This will cause a rift in the family and cost you a lot of money in lost rent, damage and fees. On top of that, if you don’t post notices correctly, you might have to start your process all over after months of delays. That is only if Randy doesn’t dispute the eviction with the courts. If the tenant disputes the eviction then you have to go to court and that can be more expense and delays. Especially if you withheld requested repairs until rent is paid. If you did this, you could lose your court case and the tenant could be granted permission to stay.
If you do your eviction with an attorney, which is highly recommended, you will pay close to $1000 in attorney fees and court costs, just to get your home back.
Then you have to do repairs and rehab just to get another tenant to rent. This is usually when I get your call. You are frustrated and broke. This business venture isn’t making any money and if you are feeling defeated now, wait until you get your property tax bill after you lose your homestead.
While this is a worst case scenario, it happens all too often. You might be a great business person but there is always a learning curve when it comes to starting a new business. My suggestion would be, find a good, professional property manager and let them manage that home for you.
When looking for a property manager, there are some things you should consider. First thing to consider is experience. Ask how long the property manager has been in business. While they might be new to property management, they might be with a company that provides systems and education for their new managers. The company that stands behind the property manager is very important. Is the company primarily a property management company or is it a primarily a sales company? Real Estate is always fluctuating and new laws are always being adopted. Choose a company that specializes in Property Management as they will keep up with the new Landlord Tenant laws for your area. You should use someone who is also a Realtor. A Realtor has certain standards and education that they must keep up with. Choose a Realtor that specializes in Property Management. Your sales Realtor should be able to give you a few recommendations.
My name is Alisha and I am a professional Property Manager with All County® Suncoast. All County® has been in the property management business for over 2 decades. We are the premier property management company that uses the most advanced technology to manage single family homes, condo and small apartment buildings. All County® is also a franchised business with franchises all over the United States.