Dear Property Manager…
Dear Property Manager,
We have moved out of the area and our house has not sold. We left it with a property management company that said they could get enough rent to cover our mortgage as well as their fee. They don’t charge a fee while it’s vacant but here is the problem, it has been sitting vacant for months. The cost of covering two full mortgages is unsustainable for us. Do you have any suggestions? Please help.
Dear Going Under,
I would suggest you find a property management company that has been around long enough to have gone through the ups and downs in the rental market in your area. One that can give you the reality of the current market, not just tell you what you want to hear to get your account.
Rental markets take a hit when houses are not selling. Rental inventory jumps up dramatically which puts a lot of pressure on what you can rent your home for. If yours is not renting, it is priced too high. Look for a management company that does not have a large inventory of vacant homes, this tells you that they price their homes to fit the market.
Here is the news you may not be getting. You most likely will not get in rent the full amount of your mortgage, let alone the management fee. In fact you may have to feed it some. But look at it this way, if you have rent that covers part of your mortgage and you end of paying two or three hundred dollars out of your pocket, you are gaining on your investment future at an easy, more sustainable rate.
If your mortgage payment if $1500.00 per month, your annual mortgage is $18,000.00. For every month it sits vacant waiting to get the $1500.00, you are paying out of pocket. If it takes you 4 months to rent your home, you had to make $6,000.00 in mortgage payments. However, if you bring your rent down to market value at $1250.00 and the home rents within the first month, you are only out a maximum of $1500.00 for one month of mortgage payment. Your rent for the next 11 months would total $13,750.00 which is only $4,250.00 less than your mortgage.
For about the price of a car payment, you are still buying a great investment! The sales market will pick up and you will get a better opportunity to sell your home and protect your equity. Just doing this simple math shows you how much over pricing your rental, even just a small amount can cost you more money than you want to give up. Maximum cash flow is our goal for your home.
In the end, you will be very happy to have paid a property manager to work for you, represent you and your best interests for the long term.
Ready to work for you,