Would you rent your house for a year to someone who just had a Short Sale of their house?
We were hoping to move out of State for better schools and job opportunities. Due to the market conditions, we cannot sell our house without taking a large loss. So we decided to rent it out and then rent a house ourselves in a new city. We listed our home for rent with an agent for the past 2 months and only got one offer. However, the person who made the rental offer was in the process of selling their home on a Short Sale. This made us feel uncomfortable because how do we know they would pay US the rent? We have no margin for error in the budget. We need their rent to make it work.
Quick Property Sale
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June 24th, 2010 at 4:24 am
Depends on their employment record.
Depends on how much they make.
Depends on what else is on their credit report.
If the only thing that went wrong in their financial life in the last 3 years was this short sale, I would take a chance. There are quite a few people in the same boat. Where are all these people supposed to live? Who will give them a second chance?
Now, if the employment is short or spotty…if they have their credit cards maxxed out or have collections..then, I might think twice if I am really hard pressed to have that rent every month.
June 24th, 2010 at 6:14 am
You only got one offer in 2 months, and a bad one at that.
I would suggest three possible problems.
1. Your agent is terrible. If you suspect that’s the case, get a new agent now.
2. You are asking for too high of rent. I’m sure you calculated how much rent you require to make all your payments, but that amount may not be reasonable for your local market. Do some research to find a reasonable rate.
3. No one wants to live in your locality (hence your housing problem). If this is the case, there is not much you can do besides bite the bullet.
Good luck.
June 26th, 2010 at 10:06 pm
Normally a short sale is the much the same as a foreclosure. Neither one apparently could not or desired not to meet their mortgage payment obligations so therefore they may not be able or desire to meet their rental payment obligations.
June 29th, 2010 at 9:55 am
yes I would have. we all need help these days and most of all trust.
July 2nd, 2010 at 3:24 am
THe answer is maybe.
I would make sure the renter can afford the payment.
I would not rent to anyone were the monthly rent is more then 25% of their gross monthly income.
I would not rent to anyone were the their total montly debt, including the rent is more then 36% of their gross montly income.
I wold not rent to anyone that doesn’t have at least 4 months of the rent in checking or savings. If not, this means they are living pay check to pay check and they have no margin for error in their budget.
I would run a credit check. The credit score will be low because of the short sale. BUT look for other late payments and also review the credit report to see if they have reported all their monthly debt to you.
I would get the last month and security deposit up front. If they don’t have it all at one time, then I wouldn’t rent to them. Again, they are living pay check to pay check.
I would have them pay for the first $50 of all repairs.
July 4th, 2010 at 2:30 pm
The first issue is the fact that you only have one offer. This is a big problem because it indicates that the rent you are asking is probably too high. Whoever made you the offer probably got rejected from every other place. This is a weak position to be a landlord.
Secondly, the short sale is still ongoing. This means that the property is not sold and may not be sold for a long time if at all. Most short sales usually end in foreclosures. If a foreclosure happens, it is likely to be followed by a court judgment seizing assets and garnishing wages. Considering that your tenant will have a trashed credit, nothing to lose and wages garnished, paying rent will be his/her last priority.
The only way I would cautiously consider take on a tenant like this is if the following is satisfied:
– I’d take a large deposit (first and last month)
– There is a cosigner who is able to pay up.
– There is enough income to cover rent and all bills.
– Verify with an attorney that the amount of your rent would be exempt from seizure under bankruptcy proceedings.