How Are You Renting Your House While Cruising ?

[SV Demeter]

Part of our plan for moving aboard and taking off cruising involves renting out our house in Annapolis. Im seeing management companies in the area looking for 10% of monthly rent as a fee. I would still be on the hook for any repairs required as my 10% basically gets me help finding and vetting a tennant and someone to pick up the phone and call a plumber when the hot water fails. Im exaggerating here but I think you get the picture.

How are you renting your house while cruising? Did you find and vet the tennant yourself? My wife has a background in commercial property management and certainly has the skill set to check out a prospect. Im also pretty sure we could find a handyman kind of person to keep on a retainer. Is it worth it to pay the management companies? Is 10% the industry norm?

Thanks!

[Ram]

I have done it with my families help- it’s not easy as no one can handle things like you can, and it winds up costing you more money than you figure -lots of things pile up-or you get a tenant you have to evict ,sometimes takes longer to get out if you’re not there- Good luck

[SV Demeter]

Yeah Im not interested in putting any of this on my family. I am curious to know if 10% is the going rate, seems like a lot to pay given what it actually provides. Might be just as easy to give tennant my sat phone number and call the plumber myself... Of course evicting someone is another story but I hope to make the tennant vetting process thorough enough to minimize that likelihood.

[Ram]

Originally Posted by SV Demeter

Yeah Im not interested in putting any of this on my family. I am curious to know if 10% is the going rate, seems like a lot to pay given what it actually provides. Might be just as easy to give tennant my sat phone number and call the plumber myself... Of course evicting someone is another story but I hope to make the tennant vetting process thorough enough to minimize that likelihood.

10-% has been the going rate for years, but currently I’m out of touch so it could be different now- what I do Is lower the rent of the home so it’s a good deal and have an agreement that they handle all the work unless its something big- this is working somewhat but not perfect-

[SV Demeter]

Originally Posted by Ram

10-% has been the going rate for years, but currently I’m out of touch so it could be different now- what I do Is lower the rent of the home so it’s a good deal and have an agreement that they handle all the work unless its something big- this is working somewhat but not perfect-

Thanks. This is helpful. So you dont use an agency at all then? Found tennants on your own and vetted them yourself? Like I said the admiral has a background in property management and Im sure could handle checking someone out, she also has friends who could probably handle the maintenence issues for a reasobable fee. We are also friends with our neighbors so an email here or there to find out the place hasent burned down should be doable. House is fairly new built about 8 years ago, which means appliances are all probably going to blow up at once the minute we shove off.. Curious to hear from other cruisers on how they handle this.

[terminalcitygrl]

I rented out my 900 sq foot condo to 3 different tenants over a 6 year period. If you have good tenants and appliances and such are in good shape, you should be able to handle it without much problem. Once I found good tenants and checked their references, all of our correspondence was generally by email. They'd email me if say the garbuerator broke and then they would call someone to fix it when it was convenient for them, they would pay and send me the bill and I would reimburse them. We currently rent and have the same arrangement with our landlord. I did have one tenant who didn't give sufficient notice to vacate and I had to file small claims court papers and deliver them to him, then he paid the month and no court. There is no way the work I did was worth the $8640 it would have cost me over 6 years to pay a 10% management fee ($120 p/mo on $1200 p/ mo rent). You can always try to do it yourself and if you find it too much of a problem, then hire a management co.

[SV Demeter]

Thanks Terminal. Very helpful and good to hear.

[Mark1977]

My wife does property management for a living and 10% is the norm. Worth it too....

[SV Demeter]

Originally Posted by Mark1977

My wife does property management for a living and 10% is the norm. Worth it too....

Can you give me some examples of why its worth it? Our house will likely rent for $2,500 per month. That sort of rent in an of itself should provide somewhat of a deterrent to problem renters. At 10% thats $250 per month or $3,000 for the year. For the $3k they find me a tennant and call someone to fix stuff that breaks, sending me those bills too. $3k buys a few plane tickets back from the Caribbean to deal with problems in person too.

[Mark1977]

Even good tenants can call allot, you wont want to be getting sat. calls from tenants every time they have a concern. I know the company here also does checks on the property, you wouldn`t want to come back to a dump after a year of cruising. It`s up to you, but to have that piece of mind that someone is looking after your property is worth it. If you do go with a property mang. comp. just ask them for refs. from owners that they work for.

[SV Demeter]

Originally Posted by Mark1977

Even good tenants can call allot, you wont want to be getting sat. calls from tenants every time they have a concern. I know the company here also does checks on the property, you wouldn`t want to come back to a dump after a year of cruising. It`s up to you, but to have that piece of mind that someone is looking after your property is worth it. If you do go with a property mang. comp. just ask them for refs. from owners that they work for.

Agreed Mark thanks. Like I said though Im close with my neighbors so im pretty sure I could get an update on things from them. I dont think the mgt companies actually walk through the house on a regular basis anyway. I guess Im just thinking with some effort on our part we can probably do most of this ourselves. Piece of mind certainly worth something though Mark. Thanks again for your comments.

[skipmac]

My mother-in-law managed residential rental properties for years. Her fee was 10%. Whether or not it would be worth the 10% to you (or me as a matter of fact since I am considering the same idea) depends on the total package offered by the management company.

If they vet the tenants do they also accept liability if the tenant trashes the house? Not to scare you and 98% of the time my m-i-l had good experiences with her tenants but every once in a while a ringer slips through. She had one tenant that looked great on paper, interviewed well, etc. Husband worked at the bank, wife was a teacher but when they moved out they left the house completely trashed.

House across the street from me is a rental. Last tenant lived there for years, quiet couple, landlord said they always paid rent on time. Turned out they had set up a hydroponic pot farm in the upstairs bedroom. The constant humidity and leads for years caused thousands in damage.

So, if the managers cover that sort of thing then well worth it. Would the mangers personally inspect and approve any repairs on the house or appliances? If it falls on your own insurance, you have to pay the deductibles and such maybe not. It might depend on where you are cruising and how much time and money it would cost to fly home and deal with any potential problems.

I guess bottom line, make sure you have good insurance.

[foggysail]

You do not know pain and aggravation until you become a landlord! Yes, it can be done and yes, there are many very good tenants out there and yes, for every good tenant, there are probably two or three surprises!!! OH!!! And lawsuits!!!! Tenants sometimes sue for the wildest reasons! Been there, doing that.

My business partner and I own a bunch of apartments...we started our business 17 years ago. I can attest that surprises never end. It is one thing to manage your own properties but I am reserved about hiring others for this function. If your going to use a property manager I suggest you also work with an attorney who can handle evictions.

Renting properties is not for everyone but it can be done.

Foggy

[keepondancin]

Rental income is the toughest easy money you ever made. Using a professional will cut down on the worry while you are a distance away. I have been involved with my own rental properties since 1972. Nothing surprises me. The great couple with excellent references that trash the place, and the tatooed, pierced, foul language scary guy, that turns out to be more concerned about your property than you are. We were cruising before wireless internet, and only HAMS could get messages over the airways. We had huge ATT Highseas Operator bills, trying to sort out issues that would occur. These issues were compounded by the jealousy factor, because we were off sipping Pina Coladas under the palm trees while the mortals were working. Now our daughter handles things for a monthly fee. I have used my Real Estate agent in the past, who would do a flat fee, less than 10%, but she still got her 10% finder's fee for finding a tenant.

I firmly believe that making a financial arraingment with someone, rather than favors, leads to a more responsible person, and less bother for you.

[Dakota450]

I considered this but figured the amount of money I would make vs the potential loss just isn't worth it. Once you turn a home into a rental instead of a primary in the US, now there are tax considerations. Some of the tax laws changed in 2009 regarding capitol gains exclusion based on what percentage of the time the house was personal and when used as a rental so be careful. It triggers depreciation then you have to recapture that if you sell it etc. To my knowledge, recapture of depreciation never goes away. You can 1031 exchange it and put it off but that isn't always and easy process. Besides, what if someone breaks their neck and sues you or trashes the place and it costs more to bring it back up to standard than you ever received in rent. I think selling it is a better option and be done with it or if you can afford it, let it sit empty. Why would you want to be out there trying to enjoy yourself always knowing there is this potential bomb waiting to go off on you?