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Advice about Renting Out Your Home
We are planning on taking a year long trip in a few years (summer 2018-summer 2019) and would like to rent our home - furnished - for the year that we are gone. Has anyone here had experience with this before and found a great way to do it or is it just Craigslist? I feel like we have a great home for a visiting professor with a family (Alameda, four bedrooms, two baths, good public schools etc.)...is there a good place to list our home for this purpose? thanks! CHS
We just bought a home in Berkeley with an in-law unit. I am wondering if anyone has experience going through the City of Berkeley to get an in-law made into a legal permitted rental unit and if you'd be willing to share your experience and any advice? Thanks! Wondering about making our in-law unit a legal rental unit
We are contemplating renting our house while we are away for my husband's work this summer and fall. If we decide to rent it, we are considering two options: renting the house on airbnb (and pay a friend to check in/out the guests, check for damage, schedule the cleaner, etc) or rent to one family for the entire time.
I would love advice from people with experience owning rentals (where to get rental agreements, how much deposit to require, special clauses for a short term lease), from anyone who has experience renting on airbnb, vbro, etc. and from anyone who has rented out their entire home for a few months (if we rent to one family for the entire time, do we pack up our dishes and pots and pans, etc.?)
Our plan is to remove valuables from the house to a safety deposit box and store clothes and personal items in one of the bedrooms. Thank you!
We have a lovely 3-bedroom home in Berkeley and might be taking a sabbatical for a year or possibly, even 2. Rather than moving our furniture & things, we are thinking of renting out our place furnished. Does this lower the possible rent that we could get? What kinds of things should we consider while we rent out our place furnished? Also, I've heard that tenants rights are very strong in Berkeley -- when we want our home back in a year (or two) is it possible for the tenant to refuse to move? Wondering what the best thing to do is... anon
''10. A landlord or lessor seeks in good faith to recover possession of the rental unit for his/her occupancy as a principal residence, where the landlord or lessor has previously occupied the rental unit as his/her principal residence and has the right to recover possession of the unit for his/her occupancy as a principal residence under an existing rental agreement with the current tenants.'' anon
It's intended primarily for those associated in some way with academic institutions, so tends to be people on sabbatical, most of them looking for furnished places to spend the year. You can also look for a home exchange there, which might also suit your needs. R.K.
We own a unique property near the University of California that we might / maybe / if-we-feel-secure-about-it rent, but we can't figure-out how to avoid get entangled in Berkeley's punitive 'rent control.' And we will not be willing to rent to a student-type group to avoid possibility of an 'animal-house' developing. Our property is a large 100%-new building (structure meets-or-exceeds current seismic requirements). There are large, well-appointed public spaces (living room, dining room, kitchen, ... ), nice gardens, and several bedrooms; each bedroom has a bath. We're trying to think of a way to rent our very nice property, rather than just leaving it empty (locked-up tight, with alarms), that will not turn into a dreadfully stressful situation! So, because we're stumped, we're hoping someone has suggestions ...
- Rent rooms via AirBnB or Vacation Rentals by Owner. I know three people in Berkeley who do this quite profitably. This is running a business and might be more maintenance than you want but if you put some systems into place, it should run smoothly. You could have someone live there and run the business for you. I can recommend a couple reliable, trustworthy and enthusiastic people.
- Contact a few organizations and schools in our area that have regular coferences and meetings to be one of the 'go to' accommodations. I can suggest a couple.
- Rent it the traditional way. I don't think your single family home rental falls under the rent control laws. (I will have to confirm.) Landlording also is a business and requires some work but if you choose your tenants carefully, it should go well.
I am a Realtor, my partner is a Realtor, and we have property management experience.
Single-family homes rented after 1/1/96 are exempt from rent control; therefore, the landlord may increase your rent once your lease expires. However, if the rent increase is more than 10%, CA Civil Code section 827 requires that he give you a 60-day notice before the increase can go into effect (30 days' notice is required for increases of 10% or less).
Eviction controls do apply; you cannot evict without good cause. However, with 60 days notice you can raise the rent to exorbitant levels, thus forcing the tenants out.
As far as getting good tenants, I would recommend a couple of things. Make sure the home is in tip top shape. Clean up. Put all your personal stuff in storage. Make repairs. Paint and spruce up anything that needs it. Have someone with a critical eye and disposition come in and make suggestions. You may have to hire someone, friends and family to not like to be so negative.
Then, if you set the rent a bit low, you will have many people applying and you can choose who you like. In order to figure out the rent, looks at ads on craigslist for your area (within just a few blocks if possible). It is even better if you can actually go look at the places to rent and compare them to yours. Premium Properties may be able to help. I used them years ago. http://www.premiumpd.com/
Good luck! Make sure that you do a credit check and get a good lease. Anon
Whether or not you're exempt from rent control, you will want to protect yourself (your property) with careful tenant screening, a good lease and on-the- ball management. Anon
What it looks like to me is that you are asking for advise about how to circumvent a municipal Law, which constitutes a crime. I am sorry that you find Berkeley's rent control laws so onerous. If you don't like the law either work to refine it or consider owning property elsewhere. annonymous
'Circumventing' a law is not necessarily a crime. Most laws are extremely complicated and there are often ways around them. For instance, what if I wanted to teach my ten year-old to drive? I cannot do that legally on city streets, but I can do that legally on private property. So while circumventing the law, I am doing nothing illegal.
And in regards to the law being onerous. It is indeed onerous. For instance, it is very difficult to get rid of criminals due to rent control. Somehow, current tenants are more important than anybody else. They are protected no matter what they do. Both neighbors and landlords have their hands tied.
The law also favors sitting tenants. Many people could benefit from low-cost housing, but those who have it are somehow more important than those who don't. This makes no sense to me.
And last, why is the landlord's responsibility to subsidize tenants no matter how rich or poor they may be? Grocery stores are not required to provide food for the hungry. Why should property owners be required to provide housing for the rich?
If the people of Berkeley feel the need to help poor people with housing, then it seems to me that everyone should be taxed and tenants should have to document a lack of funds. The system we have now is nuts, and there is little anyone can do to fix it. People have tried over and over.
Some of the hardest hit people are students. While long-term tenants commute to San Jose or use their apartment for a pied-a-terre after they have moved away, students have a difficult time finding reasonably priced housing near campus. And since a vacant apartment rents at market rate, students pay full price.
In short, I think rent control causes more problems than it solves. Perhaps you love the protection it provides for you. But I wonder why you deserve it more than someone else. Anon
Hello, My wife and I will soon have a vacant lower unit in a 2-unit house that we would like to rent out. We will be living in the upper unit. We are interested in doing some sort of short term rental arrangement for a variety of reasons. Most importantly being that our plan is to some day convert the home into a single-family and we don't want to have to deal with getting long term tenants out when we want to do this. I've seen many listing online for short term rentals in Berkeley. I'm wondering if anyone has any experience doing this, and the easiest way to manage such a unit. I'm curious to know if such units are governed by the Berkeley Rent Board in any way. Any advice or insight is greatly appreciated. anon
Since you have been renting out the downstairs for some time already, I assume you are aware that the rent you collect is income and therefore taxable to you, but you get certain deductions because a rental is treated differently from your own home. (It's surprising how many people who rent to tenants are unaware of this.) And, whether or not the unit is exempt from basic Rent Control, I am fairly certain that you are still subject to the 'just cause for eviction' regulation and you still must pay your tenant annual interest on the deposit monies you are holding. Becky
What are the legal ramifications, both theoretically and practically, of renting to a tenant who is undocumented? We are renting our downstairs granny flat in El Cerrito to our ex-nanny who is undocumented, and who has a 10 yr daughter who lives with her every other week and who is a US citizen. She pays her rent partly by babysitting, and partly monetarily. Should we reconsider? Realistically, how likely are we to get into trouble, if at all? renter
In reality, however, the chances of anyone going after you for knowingly hiring an undocumented migrant are miniscule. The federal government has very few workplace inspectors (relative to border control agents) and the inspectors go after large employers, not individuals who hire nannies, landscapers or day laborers.
If you are very concerned about this, your tenant could set up a legal entity (incorporate or establish a limited liability company) and you could contract for services through the company. This is a legal slight-of-hand to get around hiring an ''employee.'' But that seems like legal and bureaucratic overkill for your situation. immigration researcher
any advice or referrals for an experienced, landlord attorney? I have always been a responsible berkeley landlord caring for my home and the people living in it. Now dealing with tenant not paying rent due to mold? I have happily rented to this tenant for almost 3 years, have always agreeably adddressed the 2-3 issues that have come up during this time and now very stressed by unreasonable behavior. sincere
We are planning to rent out our 2 bedroom house in Oakland at the end of the year and could really use some advise. We would like to rent it out ourselves to save some money. But if you think there is a compelling reason to get the help of a rental agency/property management co., please do let me know! These are just some of the questions that I can think of. I am sure there are more in the days to come: Are there certain must-dos we should be aware of? Where do you find the most comprehensive lease forms? Any pitfalls we should be aware of? Do you do credit checks? How? Any book/website recommendations? Where do you post your ad that yields high traffic? Craigslist? How did you determine your rent? thank you!
As the owner of a owner-occupied duplex, if you are going to do it all yourself, I highly recommend joining RHANAC, which is the landlord association for Oakland & surrounding areas. They have the best leases & also can help with screening & alert you to the bevy of legal issues about being a landlord. http://www.rhanac.org/.
Or, if you don't want to be as directly involved with the headaches, go w/a leasing company! This is what I would recommend in your case, since you have only one property & the amount of time you will likely spend on reviewing laws, listing the rental, taking calls, prepping leases, fixing problems, etc. outweighs the payback of doing it yourself. once bitten twice shy
The City of Oakland does have rent control and also eviction controls, but I forget whether they apply to single family dwellings. You can check with the City's website.
It wouldn't hurt to talk to two or three property management companies and see what they would do for you and how much they charge.
If you're convinced you can do it yourself, Nolo Press has books that can help: http://www.nolo.com/legal-encyclopedia/landlords/. Becky
aoausa does credit checks: http://www.aoausa.com/
Craigslist is good for listings. Be sure to include photos. You can also use UC Berkeley.
Determine rent level by visiting rentals in the area to see what they are asking and what they are renting for. Compare square footage, number of bedrooms and bathrooms, amenities such as fireplaces and outdoor space, etc.
You can probably do a better job than a rental agency, because you care more about your property. anon
I would say definitely craiglist is what worked best for us. We tried the UCB services but the response rate was a lot more slow than craiglist and the UCB students also responded to craiglist, so we ended up not doing UCB anymore.
To us there was no need to rent an agency but we did consult once in a while with friends who were real state agents, tax attorneys, etc.
RESPONSES TO YOUR QUESTIONS IN CAPS BELOW Are there certain must-dos we should be aware of? DO GET A SECURITY DEPOSIT EQUIVALENT TO ONE MONTH SUGGESTED TO GET A LAST MONTH DEPOSIT TOO (NEED TO PAY INTEREST BACK ON BOTH DEPOSITS, SO KEEP TRACK)
Where do you find the most comprehensive lease forms? WE JUST FOUND SOME FORM ONLINE AND THEN ADDED INFO AS NEEDED.
Any pitfalls we should be aware of? IT'S A LITTLE NERVE-BREAKING EVERY TIME YOU HAVE TO RENT THE PROPERTY. WE DID IMPROVEMENTS PRETTY MUCH EVERY TIME SOMEONE LEFT AND SPENT LOTS OF TIME AND ENERGY CLEANING THE PLACE. BECAUSE IT WAS IMMACULATE AND EVERYTHING WORKED, WE USUALLY RENTED OUR PLACE IN 2-3 DAYS.
Do you do credit checks? How? WE DID NOT DO CREDIT CHECKS, BUT WE DID CALL PRETTY MUCH EVERYBODY IN THE REFERENCE LIST. IF EVEN ONE PERSON DIDN'T FEEL 100% GENUINE OR SUPPORTIVE OF THE APPLICANT, WE USUALLY LET THAT APPLICANT GO. WE FOUND THAT GOING WITH YOUR INSTINCTS DOES WORK. (INCIDENTALLY, THE SECOND RENTAL i GOT AT BERKELEY AS A STUDENT WAS ALSO AN INFORMAL AGREEMENT)
Any book/website recommendations? DO BECOME FAMILIAR WITH THE OAKLAND RENTING LAWS, THEY ARE VERY SPECIFIC AND USUALLY TEND TO BE PROTECTIVE OF RENTERS.
Where do you post your ad that yields high traffic? Craigslist? YES
How did you determine your rent? LOOKED AT CRAIGLIST AND COMPARED BASED ON SPECIFIC CRITERIA: LOCATION, SQ FOOTAGE, PRIVACY, PARKING, AND OVERALL STATE OF THE PROPERTY. OFFERED ALL UTILITIES AND WIRELESS (EASIER THAN SPLITTING THE BILL WITH JUST ONE METER-RENTAL WAS LEGAL BUT A GRANDFATHERED CONSTRUCTION WITH ONLY 1 METER IN THE WHOLE PROPERTY).
HOPE YOU HAVE A GOOD EXPERIENCE AS A LANDORD, WE WERE LUCKY AND HAD GREAT TENANTS THAT PAID ON TIME, WERE QUIET, RESPECTFUL AND VERY FRIENDLY, SO IT WAS A GREAT EXPERIENCE (HAVE SOLD THE PROPERTY SINCE!). Anon
A question about rental protocol. After applications have been submitted and a renter has been chosen, how do you inform those who have not been chosen? Do you contact them by phone, letter or email, or do you tell them up front ''If you don't hear from me by Thursday keep looking.'' Looking to streamline the process.
hello, we are looking for advice/information about the following situation... we own a nice but cozy 1 bedroom in the hills near campus. when we bought a few years ago, we thought we would sell this place when we had a baby (which happened 7 months ago) to ''trade up,'' but alas, we have flat or possibly negative equity in the house due to the current market.
so we are considering renting it out, as we can likely get close to our mortgage payment. meanwhile, we are interested in then renting a bigger place for us, a little further out (and therefore cheaper) for pretty much the same monthly rent as what our tenants would pay us. we'll still likely lose $ overall, at least on property taxes (which i consider a loss anyway), but perhaps it will be more gradual than trying to sell our house now at such a bad time. and perhaps in the meanwhile, the market might recover, who knows.
does anyone have experience in renting a house to live while being a landlord? the tax implications? the positives/negatives? it seems like a temporary solution to our problem of no longer having enough space while seeing if the market somewhat recovers, but i'm not sure. advice or financial referrals would be appreciated. thank you.
My very independent aunt, who is approaching 80 years old, is the owner of some rental units in Oakland. Although there are no present problems with her properties (that we are aware of), we want to be sure that the maintenance of the properties is up to the standard in terms of what landlords are supposed to do, i.e., strapping the water heater, assessing earthquake safety, doing routine inspections, etc. I'm hoping to get some advice for her about what the legal responsibilities are of a landlord along these lines, as well information and resources to guide her, in the form of inspectors and consultants who could look at the property, as well as books, etc. The impetus is both to be sure the tenants are safe and to protect the assets she has/needs as she grows older from any liability. Thanks in advance for any help!
Good for you for wanting to be conscientious landlords!
I am in debt (manageable debt) with great limits on my ability to earn - mainly because of the profession I have chosen. I am beginning to work on switching gears to something that pays more, but in the meantime, I have equity in my home, experience in managing rental property and fixing it up for resale, and want to invest. My credit rating is good and I have been told that I will be able to qualify for loans. I would be looking for property that I would hold onto for a fairly short time period - 1 to 3 years. Is there anyone out there who has done this on a small scale and can offer advice? I don't want to post my email but if you prefer to have me contact you, I would appreciate that
It is very hard to make money or break even on investment properties in this area unless you have a very large down payment (without having to take it out of the equity of your primary residence). What I would suggest if you want to expand your portfolio and invest in real estate is this:
1. invest in a REIT (contact a financial planner for info)
2. invest in rental property out of state where it has a better cash flow and is more affordable. consider investing in an area that you like to visit- so you may gain the tax benefits when you travel.
3. invest with companies that specialize in real estate and do the leg work for you- try SIFF investments (they specialize in Oregon investment properties and are based here in SF) or Open Door Properties- (they gather pools of investors for short term investing on real estate)
Last, you could invest in property in the Bay Area and be cash flow positive if you took a negative amortization loan. Your loan balance would go up instead of down so you'd be relying completely on the real estate market appreciating to make money in the long run. If you are looking for 1-3 years as your investment period- you are taking a big risk. Many experts believe the real estate market may flatten or decline during this period and are advising clients to invest for longer terms.
We have a property in Oakland and we're relatively new to the
rental game. We've gone to workshops, read up about being a
landlord, we're part of the rental association, have books and
cd's, etc. but it's still so hard especially because it is not
profitable at all and we've been burned a couple times now and
again we have a tenant who is not paying rent and is acting
like a complete jerk. At this point we are borrowing money
from family and friends so that we can pay for this jerk to
live in our home and we're getting behind on our bills. How
can we get him out quick? We've started the eviction process
but we really can't afford an expensive process and he has made
it clear that he's going to make stuff difficult even though he
doesn't even have a contract with us. At this point, I am not
above doing something illegal/unethical so that my own family
doesn't end up in a shelter with no credit over him.
I've been a landlord for a long time and have many wonderful experiences and one truly horrible one. My initial advice: Calm down, resist the urge to do something ''illegal/unethical,'' and strongly consider getting yourself a lawyer. A few observations:
(1) Landlords should never be in a situation where their own financial well-being is affected by a few months of vacancy. Being a landlord brings with it financial risk, including not only the loss of rental income but the very real possibility that you will be sued or have to provide a cash settlement of some kind to a tenant to get rid of him. (This is sometimes cheaper in the long run.) From your e-mail it sounds as if you may have counted a bit too much on the income from your rental. Maybe there's a way you can address that (refinance?). But it sounds to me like you need to consider seriously whether owning rental property makes sense for you financially.
(2) Nonpayment of rent is grounds for eviction. Period. But the law provides many protections for tenants at risk of eviction. You need to read your landlord books carefully and follow their advice to the letter regarding eviction. Be absolutely sure that your observe all deadlines and do all of the paperwork correctly (including getting a witness to your posting of various notices to him, etc.). Any mistakes you make will certainly lengthen the time the eviction takes and may also provide grounds for your tenant to sue you. I also recommend keeping a detailed written chronology of all of your communications with the tenant--phone calls, letters, encounters, etc. What, when, who.
(3) You don't specify what you mean by the tenant ''making things difficult,'' but his options are limited. He can refuse to move, in which case you can have his belongings removed at his expense (you will never collect on that, however--works better as a threat). In my case, what the tenant did was create an elaborate set of false accusations of harrassment and non-habitable premises, get an attorney and threaten to sue me unless I provided a $20,000 settlement (for an apt. that rented for $800!!!). So as bad as your situation is, remember it could get worse. In our case, the tentant eventually backed down and agreed to move out, then immediately sued us in small claims court (and lost, appealed, lost again). Despite our complete innocence (which was stated clearly by the judge, who was aghast at the insanity of the ''case'' against us), this cost us a fair amount of money (attorney's fees, court fees, process servers, inspectors to prove habitability, lost income, etc.) and a lot more anxiety and stress. What saved us was the help of a calm, reasonable, and expert lawyer who told us the facts (most landlord tenant law is designed to protect tenants) and helped us use the law to obtain a just outcome. Without his help, we would not have made good decisions or obtained the result we did. Our lawyer was R.C. Wong, who has an office in Berkeley. I recommend him highly. He is normally a tenants' lawyer, which was helpful to us because he understood the tenant perspective.
(4) Next time (if you do continue renting), be sure to check every reference (don't rely on letters alone and consider doing additional research like googling the tenant to verify employment, etc.--we later found out our tenant-from-hell had had disputes with previous landlords and that a ''clean'' recommendation was part of the settlement terms when he left his previous residence), get a good-sized deposit, and make absolutely clear that you will scrupulously observe legal deadlines with respect to payment of rent.
Good luck!! Been there
tia, fellow Measure EE landlord
Second, sometimes, rather than resorting to the eviction process, you can just pay someone to move out. Offer to pay them ''moving expenses'' if they get out by a certain date. Everyone has their price. I've had friends use this method to get rid of tenants.
Third, it's unclear whether your are renting a room or unit in your house, or if you have an apartment building or what. With Oakland and its Measure EE Just Cause Eviction law, getting tenants evicted can be difficult. I have a friend who highly recommends a company called ''The Evictors'' for evicting tenants. With all the rules and regs, he felt is was just easier to use a service like this. If you are renting a room or unit in your house, it may actually be easier to get rid of the person (single family homes are often exempt from various laws).
We are considering renting out our house and I am interested in any advice for or against becoming a landlord. We own a house in Oakland (Crocker Highlands area), but have an opportunity to rent a house in Moraga -- we had been considering selling our house and buying in Moraga/Orinda for school reasons, but with this opporutnity to rent there, we thought it would be a good chance to test things out out there before we take the plunge and buy. This would mean renting out our Oakland house temporarily (maybe a year or two). My questions: How hard is it to be a landlord (e.g., finding and maintaining good tenants, taking care of their complaints, worrying about your house being kept in good shape by them, getting them to move out when it's time to sell, and anything else I haven't thought of)? Does anyone have any advice on how this will work out financially for us? What are the tax consequences of renting out what was previously your residence (in terms of deducting interest on the mortgage, depreciation, etc.)? Should we be looking to get rental payments that equal our mortgage payment? Would less still let us cut even financially? Any words of wisdom on this subject would be greatly appreciated. Thanks. sharon
The biggest thing you should consider though is capital gains taxes, which you will be subject to after 2 years of not living in the property. The good news is that you only have to pay the tax on any gains the property makes when you sell it. The bad news is that it can really eat into property appreciation. I'm sure there is much more to consider but this is a start. I look forward to reading the responses. Good luck with you decision! Anon, please
We're considering moving to China with our 9-month-old daughter for at least a year but don't want to give up our Bay Area home. What are the pros & cons of renting our home in this market? Some say we should sell and invest the money rather than put up with the landlord headaches from thousands of miles away. We do have some relatives here, but we can't expect them to keep a constant eye on things. How much work would an agent do on our behalf? Thanks! Sean
Plus, should your tenant leave while you are still out of the country, there is now a law that they are entitled to a walk-though prior to vacating in order to give them a chance to mitigate any deductions from their deposit. It therefore is a great idea to have a specialist who can handle doing this so you don't have to come back to do it.
Also, you should be aware that you will pay a significant tax to the State of California should you decide not to return and you sell your rental house. Talk with a tax specialist about this. Been there, done that
2. The two most important things to check with renters are their credit rating and their references (i.e. current landlord). If their application is incomplete or information is inconsistant, that is a bad sign.
3. The NOLO books are pretty good. Also consider joining the Rental Housing Association of Northern Alameda County. Then you have access to lease forms, information and advice from the California Apartment Association, and credit reports.
Greetings, We are considering renting our 4 bedroom, 2 bath North Oakland home for a long-term period. As we are close to Cal, this would be perfect for a family here on sabbatical. We'd really love advice as to how to advertise this to the academic community and other responsible, long-term renters and/or leasers. Are there special websites for academics who are heading here on sabbatical? Any advice would be greatly appreciated. Thanks in advance, Deborah
There is no charge to list a home (or apartment or room) at Cal Rentals. If you would like more information about offering your home as a rental, please call 642-3644. Or, you can send an email to: homeinfo[at]uclink.berkeley.edu. Nancy
My mother's modest estate has been probated and us sibs (6) are considering whether to simply sell the house and go our separate ways, or retain joint ownership of the property and turn it into a rental. The house is 45 years old, a modest but large ranch style, 4 bed, 1 1/2 bath, with original kitchen and baths, and has received so-so upkeep throughout the years. However, it is in a community that has become very upscale, with high home prices, few if any single family rentals even exist, has great schools, is on a picturesque .9 acres of woodsy Conecticut, complete with babbling brook, and is communter distance to NYC. One of my sibs lives nearby and could help hire / oversee a rental maintaince company.
Has anyone done anything similar to this before who could provide insight into how to get this kind of thing set up, do's and don'ts, how you get a group of sibs to agree on a course of action, legal steps, etc.?
My feeling is that we could probably be a little in the black right away, and then in twenty years the house might provide a nice supplementery retirement income for all of us. Thanks in advance.
My advice about turning a family home into a rental is an emphatic: don't! Both in my extended family and in my husband's, we've seen siblings turned from tight and loyal families into implacable enemies by co-ownership of indivisible assets (ironically, one was Great Granny's beautiful farm in Connecticut, like your land, replete with babbling brook.) Managing a rental involves plenty of headaches all by itself, but the constant decisionmaking over big expenditures, chores, etc. becomes a real hazard to family harmony once a large number of co-owners are involved. What are the odds that all six of you will agree about how much risk to take, how much money to spend maintaining or upgrading your investment, or when to sell? What are the odds that your tax situations are all identical? Rentals are not too profitable if you have to pay people to do all the work for you, but I can tell you from personal experience that sharing these tasks among you will be difficult. The tendency is for those who are doing the tasks to have a different assessment of their value and difficulty than the siblings who don't do them: everyone feels burdened. Also, you want to be able to make demands on the person who does each task, and to ask tough questions and make sure things are done wisely and well. However, it isn't easy to call a sibling to account, or to ask him or her to justify decisions and actions, even if you are paying him or her for the work. Things only get more difficult once your spouses, (or, god forbid, ex-spouses) get dragged in. These folks rightly have a say over a couple's assets, but aren't always bound by the same generous sentiments as the siblings themselves. And then, of course, your children serially inherit the mess. Protecting their stakes in the house pits the first-orphaned nieces and nephews against their aunts and uncles, instead of keeping their relationship one of mutual aid and support. After that, the vast diaspora of cousins has to make joint decisions. Hopeless.
Political Science tells us that requiring unanimity results in paralysis. (And paralysis in managing an asset means financial losses.) Our experience of family life tells us that forgoing unanimity, and overruling some siblings, brings ill will and grudges. Your responsibility to your siblings begs you to accept financial losses to keep harmony among you; your responsibility to your spouse and children obligates you to do what is best for them economically. Co-owning a rental creates an inevitable conflict between these two responsibilities. Out of love for both groups, better to avoid it.
Capital gains taxes, and the tendency of property values to fluctuate, mean that it is a complex transaction for individual siblings to divest themselves of their stakes at different times, and zero-sum games are inevitable. Divestiture involves facing decisions that pit one sibling's interest against the others' and where there are no clear cut rules to guide one.
Worst of all is seeing what happens to one's family nest egg when the siblings can't agree, as happened in my spouse's family. Lawyers ate roughly a third of the total assets, and considerably more than the portion that was in dispute.
Now two families are scarred, and we are left with sad reminders like sparsely attended weddings, and birth and graduation announcements that fall on deaf ears. Gone for good are those happy sharings of rented beach houses and woodsy cabins, where, in a wild army cousins, each of us always found a soulmate. The more you love your family, the worse the heartbreak.
If you decide, as many do, to attempt co-ownership, please at least read up first on the management of family owned businesses.
It has always amazed me that, as a family-owned concern, the Mafia manages to make money. That they are driven to slaughter each other is no surprise at all.
Anonymous out of tattered respect for my disgraced lineage
1) You have to detach yourself from an emotional connection to the house, and see it as an investment. If this is the house you grew up in, and you would be sad to see it repainted or the old cherry tree cut down or whatever--or if any of your siblings would--you should sell it. Because eventually you will have these decisions to make, and monetary concerns will butt up against emotional attachments, and may cause problems for you.
2) Property managers can take an enormous cut of your profit--typically a monthly fee from you, plus the first month's rent (or 1/2 that sum) every time a new renter moves in, and then virtually anything else you have them do (e.g., fix pipes), paid at their rates. You pay them for their office time, if you ask them to fax stuff, etc. etc. Maybe this is not typical out in Connecticut, but it seems to be here. Also--and this is important--because they profit most when there's a new tenant, they have no incentive to choose people who will stay long-term. I rented a house myself recently and twice saw property managers give rentals to the first people to walk in the door with the deposit in hand. They didn't even check references.
3) Property managers and tenants don't do maintenance like you would do maintenance. They don't worry about that drip in the eaves that's going to rot the foundation mudsill in 5 years--the one that could be fixed in 10 minutes, if only you were notified about it. They worry about crisis situations, and whether the carpet and paint are new. Also, with few exceptions, tenants don't garden or do landscaping. So if you expect to make a tidy sum 20 years from now when the house is paid off, you need to make sure it doesn't look like it's been rented for 20 years, or need 20 years' worth of work. Your sib who is close by should maybe get an extra cut of the profits for keeping an eye on the maintenance.
4) Get Nolo Press's guide to being a landlord--it's invaluable.
The curmudgeonly landlady
A couple of years or so ago we ended up renting out a house which we'd been trying to sell in Vallejo to a family who had a credit situation that needed to be cleared. The agreement was that they would rent for a 6 to 12 month period while they cleared their credit record, then purchase the house. We, being trusting and wanting to be kind landlords, have let this arrangement drag on, and have been extremely patient and lenient about rent payments which have been late for reasons which may or may not be beyond the family's control. Thousands of dollars later, we are finally coming to our senses and would like to cut our losses by getting rid of these tenants and trying again to sell the house. We've considered and rejected the idea of trying to handle this ourselves. We've had some interest from a real estate broker who offered to evict the tenants then sell the house for us. Someone else has suggested going to Small Claims Court to try to recoup our losses. We're pretty! naive about what to do at this point, so any advice from others who have dealt with a similar situation would be really appreciated. What sort of professional(s) should we consider helping us out, how much should we expect to pay for someone to take care of this for us, etc. - Anonymous please
We just bought a house and are wondering about others experience with the sellers renting back from the buyers. The sellers were renting back from us for 3 weeks after we had closed escrow. They were reluctant to give us a key and we had to wait over 2 weeks to get one. According to our agent, it is normal for the sellers to give the buyers a key after closing, even during the rent back period, afterall the buyer has just purchased the house. However, according to their agent, in all the 15 (?) years of their experience, they have never heard of the sellers giving the buyers a key during the rentback period after closing. What is the proper procedure? We never signed forms that state anything regarding when we would get a key. As the buyer/landlord now, we know we are bound by certain rules to give notice if we need to enter the property with a legitimate reason, and we have no problems with that. We would like to know what to expect with the key if we are ever in this situation again.
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