Rent house and then buy? — The Bump
Atlanta Babies

Rent house and then buy?

We are considering renting our house out in Atlanta and then trying to buy in Greenville, SC where we are.

I know a few of you are doing the same thing....

Any tips?  How does this effect your taxes? Are you going through an agency?  Are there some banks to look at trying to get another loan from that are better than others?

TIA!  If you feel better emailing me it is daniellebryson at gmail dot com

The area we are in, Northlake, remained strong in this economy until about this past Summer and several foreclosures have killed our value (even though they are several miles away they come up in the comps).  They just passed a tough new short sale and foreclosure law which will hopefully start to curb the amount we are having (the banks come back to the owners for the difference of sale versus loan price so it is not such an appealing option). At our current list price we stand to lose about $80k now, $8k of which we would have to bring to closing.  That really stinks.  So we are thinking about renting it out for a few years until the market turns back around and hopefully we could either lose less or break even.  Our Elementary school is one of the highest ranking in Atlanta, 9 out of 10 on Good Schools and a Blue Ribbon winner and middle school was ranked the best in Atlanta.  Close to Emory/CDC/85 and 285.  It is this little nook that across one street is Chamblee, the other street is Decatur and down the road about two miles is Tucker.  Our address is Atlanta but Doraville post office handles our mail so it can come up Doraville but it is not, it is Atlanta (but not city of).


Re: Rent house and then buy?

  • We attempted to do this earlier this year when we couldn't sell our house b/c we are so upside down.  We had rotten luck though and I'm sure you wouldn't have all the issues we did- don't let it scare you!  I'm convinced that God just wants us to stay in this house so he made them all fall through.  We had a TON of rental interest- I was shocked actually at how many.  Serious people who paid an application fee and everything- and then for the most oddball reasons they fell through.  I think we had 4 or 5 of them get to the lease signing stage and then fall apart.  Kbrickell was a saint for putting up with us through all that.  In the end, we decided to stay put b/c the stress was getting to me and well, I just had a hard time feeling 100% comfortable as a landlord of such an expensive house.  I mean, it's one thing if its an inexpensive investment property but this is an expensive house to repair if someone trashes it!  It also scared the crap out of me thinking of covering maintenence/repairs on TWO houses/TWO sets of appliances/etc.  Now my mom on the other hand, has started a VERY successful side business of rental properties and hasn't had any problems at all.  I think she's up to like 9 or 10 properties.  Most of hers were foreclosure properties that she bought at auction, but she also rented out her new construction house in Hapeville when the values plummeted there and those renters have actually taken better care of it then she did- lol!  Planting flowers and staining the porch and all that.  So it definitely CAN work out.  The main thing is to be sure that you can get a rental amount that will cover your mortgage as well as maintenence and even a slush fund in case its sitting vacant between tenants.  Talk to your agent to get an idea of rents in your area to see if that's even feasible.  Try to get tenants to sign a longer term lease than a year.  It's a pain to have to deal with new renters every 12 mos.  I would take a little less rent for a longer lease term.  Also, insist on a background check and credit report on the tenants.  And read though the GA landlord handbook... it definitely gave me things to think about that I hadn't thought of before...

    https://www.dca.ga.gov/housing/HousingDevelopment/programs/downloads/Georgia_Landlord_Tenant_Handbook.pdf

    Good luck sweetie- this market sucks.  I totally understand your frustration.  It was too much for us to handle and really, I'm glad we stayed.  Don't know how long we can hold out this far from work but for now... we're making it work.  But you have all my respect for having no choice!  I hope you get it sold/rented soon!

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  • I rented mine and then rented one to live in.  I was just super nervous about buying something and having 2 mortgages.  I have actually had no problem at all renting.  I ended up knowing someone who knew my renter which made me feel better.  
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  • We also rented our house in Decatur when we moved to FL--we didn't buy another house because we also had another rental property on top of that (DH's condo from before we were married).

    Renting out a house that you own can provide big tax benefits, but only if you fall below a certain income. 

    If you have specific questions about the whole rental process, let me know.

    Also, based on your area, you should post on the Emory housing board.  That is who we went through to find all of our renters (nerdy grad students--they were great!!!)

  • We are in the process of doing this with our condo.  Dh wants to rent it himself.  I have friends that have gone both ways.  Some have handled everything themselves, some have gone through an agency.  One friend paid her realtor $500 to handle it  another went through an agency that charges one month worth of rent ($1600 in her case) but he does everything and she has now had the same renters for 3 consecutive years.


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  • We used a realtor to rent out our house in Woodstock.  Our renters are great, on a relo and can't buy something until their house in NC sells.  They want to buy our house, just can't yet.  We don't want to buy anything partly because until our house sells, we can't.  But even if we could, we won't because if our renters flake and leave, I don't want to carry two mortgages.  Worst case scenario, I'll just move back to my Woodstock house.    It took us a long time to find our renters so if they leave, who knows how long it will take again.  

    We had listed it for a while on CL, but I don't recommend that.  We got all kinds of crazy people calling us.  I liked that the realtor did all the showings, processed all the paperwork, did the background check.  I didn't have to do any of it, just keep the house clean.   We paid one months rent for this, but it was worth every penny.  

    We wrote the lease with no right of early termination, so if they leave, they have to pay the entire lease off.   We just rounded the corner of their renewal and I was nervous that they wouldn't renew, but I guess they have!  PHEW!  

    Good luck, Danielle. I know it must be stressful to have the house sitting empty.  

     

  • We rented out our old house and bought our new house over the summer.  Just know that even if you have a signed lease, your previous house will still count against you as current debt when you go to qualify for a new mortgage. i.e. you have to be able to qualify to carry two mortgages at the same time, which will likely affect how much of a loan you can get approved for. 

    Once you have 2 years rental income on your old house, it will no longer be counted against you and you will qualify for a much higher mortgage for your new place.

    I'm a Realtor and help people lease their homes all the time. It is a GREAT rental market right now (on the landlord side).  If you have any questions, feel free to email me! alix.nadi at gmail.com 

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