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I can't win...

Vent your rants and raves here about whatever makes you mad, angry or frustrated.

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Re: I can't win...

Postby gsjackson » January 8th, 2017, 6:32 pm

Guyver wrote:
gsjackson wrote:No, no, no. You don't want to furnish the house unless you're looking for short-term tenants, which presumably you aren't. Any realtor/property manager will tell you that you cut your potential renter pool down significantly by furnishing the house. People want their own furniture. Try to find an honest and competent rental agent/property manager -- you'd be surprised how many are neither. They usually charge ten percent of the rent. When you're figuring up your ROI, don't forget adding in taxes, repairs, etc.


Okay, that's the first time I heard that one. Can you provide more info on why a furnished home wouldn't do as well? A link to some forum that talks about it maybe?

As far as the ROI, the only real cost on me would be the taxes and lawn work. My home is 2016 brand new built, so no maintenance costs here.


Just ask anybody who rents houses or apartments for a living. That's my source of information, having dealt with lots of realtors and property managers.

But let me see if I understand your reasoning. You think that if you spend thousands of dollars on furniture (and you wouldn't want to buy ratty used stuff if your goal is to rent it out fast) that tenants inevitably will beat the crap out of, that you will get your money back because the place will rent faster? I can't remotely imagine that's the case. People looking for furnished places are usually on short-term work assignments, and tend to look more at apartments closer to the city center. Now, if you had already bought furniture there might be a decision to be made, but I think anybody you asked to rent it out would tell you to get rid of the furniture.

A for the option of selling, that would be a formula for losing thousands of dollars -- your closing costs as a buyer and thousands more as a seller (if you use a realtor). If you are in a typical American suburb, your house hasn't appreciated in value at all over a few months, and arguably might have decreased in value since the community is still being built out with brand, spanking new units available at a standard price, while yours is lived in.

But I certainly agree being an absentee landlord is fraught with potential problems, which I don't think are addressed by turning the business over to relatives living two hours away. That would be a surefire way to alienate the relatives, when they start having to deal with the inevitable hassles.
gsjackson
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Re: I can't win...

Postby Guyver » January 8th, 2017, 7:39 pm

gsjackson wrote:
Guyver wrote:
gsjackson wrote:No, no, no. You don't want to furnish the house unless you're looking for short-term tenants, which presumably you aren't. Any realtor/property manager will tell you that you cut your potential renter pool down significantly by furnishing the house. People want their own furniture. Try to find an honest and competent rental agent/property manager -- you'd be surprised how many are neither. They usually charge ten percent of the rent. When you're figuring up your ROI, don't forget adding in taxes, repairs, etc.


Okay, that's the first time I heard that one. Can you provide more info on why a furnished home wouldn't do as well? A link to some forum that talks about it maybe?

As far as the ROI, the only real cost on me would be the taxes and lawn work. My home is 2016 brand new built, so no maintenance costs here.


Just ask anybody who rents houses or apartments for a living. That's my source of information, having dealt with lots of realtors and property managers.

But let me see if I understand your reasoning. You think that if you spend thousands of dollars on furniture (and you wouldn't want to buy ratty used stuff if your goal is to rent it out fast) that tenants inevitably will beat the crap out of, that you will get your money back because the place will rent faster? I can't remotely imagine that's the case. People looking for furnished places are usually on short-term work assignments, and tend to look more at apartments closer to the city center. Now, if you had already bought furniture there might be a decision to be made, but I think anybody you asked to rent it out would tell you to get rid of the furniture.

A for the option of selling, that would be a formula for losing thousands of dollars -- your closing costs as a buyer and thousands more as a seller (if you use a realtor). If you are in a typical American suburb, your house hasn't appreciated in value at all over a few months, and arguably might have decreased in value since the community is still being built out with brand, spanking new units available at a standard price, while yours is lived in.

But I certainly agree being an absentee landlord is fraught with potential problems, which I don't think are addressed by turning the business over to relatives living two hours away. That would be a surefire way to alienate the relatives, when they start having to deal with the inevitable hassles.


Some good info in this post, thank you for your reply. Some of it I agree with, and some I don't agree with.

No, that is not my reasoning at all. The logic is that tenants who damage anything would be held liable under the lease contract, and that includes legal fees as well. Everything would be defined right there in the contract. But if what you say is true about people wanting furnished places only for the short-term, then I will weigh that in heavily on what I do with it. I'm trying to consider all options here, and it's really no big deal if I need to remove the furniture since I could store it easily. One way or the other, I will cross that bridge if and when I get there.

Selling my place would be an absolute last resort, and I already know about the cost.

Being an absentee landlord would come with it's challenges, but I think it is worth a try. Again, this all hinges on whether or not I can land a new job in my area. I'm going to disagree with you when you say "surefire way to alienate the relatives."
Smart men learn from their mistakes. Wise men learn from other men's mistakes.

Knowledge is gained in bad experiences, but confidence is only gained through positive experiences.
Guyver
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Re: I can't win...

Postby MrMan » January 9th, 2017, 9:02 am

If you were renting some kind of short-term vacation home, a furnished apartment might do better, and you might be able to charge more than normal rent. There are some short-term rentals in non-tourist areas. But this is a real niche business, and it doesn't make sense to get into it if you don't have some expertise.

I think you should look at things in terms of sunk costs, like they teach in business school. Sunk costs means you don't look at how much you already spent. You look at how much money you will make going forward.

If you make decision A, you will come out with $20,000 from the decision. If you make decision B, you will come out with $10,000, which choice will you make? Most people will make decision A.

Now, let's say you are buying gold futures and you invested $20,000, did not know what you were doing, made a few hundred bucks, but then lost a lot in one day, and you were down to $15,000. Some people would want to stay in the gold market until they got their $5,000 back.

But let's say you started with $15,000 and someone told you how to invest in gold futures, but warned you you might lose $5000 in one day. You might decide against it because it is too risky.

Financially, it is the same decision. In the first case, you might want to stay in the market because you lost $5,000, and emotionally, you want to 'win' and so you want to keep taking positions until you get your money back. In the second case, you are not emotionally invested in having your money in gold futures. You are just making the best decision for the $15,000. Sunk costs would apply the same reasoning to scenario 1. You just make the best decision with the $15,000, whether you lost money before or not.

Don't worry about how much you put into the house already in terms of time or money. Just look at what is best for you going forward. There could be lots of reasons to rent. If you plan on moving back some day, and the house is what you want, there you go. That's a good reason. If the return from monthly rents minus insurance, repairs, and management fees is good enough, that's fine, too. If you think the market will appreciate there more than other people (and you know better than the market which calculates future expected values and risks into the current value), that's a reason to keep the property. If you don't need the cash and you don't need to free up some credit to get a new place, those may be good reasons.

About moving to New Jersey, if you don't want to move, it's usually best for yourself to find a new job first before you announce that you aren't going to move to take the new job. You could take that leave to get the job instead of working overeas.

If you have a degree, it is probably still easy to make between $1 and $2 grand a month teaching English overseas with a place to rent provided. It's not big money for someone who has a decent job.

If someone repo's your car, that's on your credit, or your parents? Either way, it's a bad way to go. I don't get getting into car payments.... maybe if you need the car to show off for some kind of sales position. I have tried to save up money and buy a used car that I could pay for in cash. I'm in my 40's and I've never had a conventional car payment. It just doesn't make sense economically. Used cars are so cheap, at least in the US, compared to new cars.
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Re: I can't win...

Postby Guyver » January 10th, 2017, 3:13 am

MrMan wrote:If you were renting some kind of short-term vacation home, a furnished apartment might do better, and you might be able to charge more than normal rent. There are some short-term rentals in non-tourist areas. But this is a real niche business, and it doesn't make sense to get into it if you don't have some expertise.

I think you should look at things in terms of sunk costs, like they teach in business school. Sunk costs means you don't look at how much you already spent. You look at how much money you will make going forward.

If you make decision A, you will come out with $20,000 from the decision. If you make decision B, you will come out with $10,000, which choice will you make? Most people will make decision A.

Now, let's say you are buying gold futures and you invested $20,000, did not know what you were doing, made a few hundred bucks, but then lost a lot in one day, and you were down to $15,000. Some people would want to stay in the gold market until they got their $5,000 back.

But let's say you started with $15,000 and someone told you how to invest in gold futures, but warned you you might lose $5000 in one day. You might decide against it because it is too risky.

Financially, it is the same decision. In the first case, you might want to stay in the market because you lost $5,000, and emotionally, you want to 'win' and so you want to keep taking positions until you get your money back. In the second case, you are not emotionally invested in having your money in gold futures. You are just making the best decision for the $15,000. Sunk costs would apply the same reasoning to scenario 1. You just make the best decision with the $15,000, whether you lost money before or not.

Don't worry about how much you put into the house already in terms of time or money. Just look at what is best for you going forward. There could be lots of reasons to rent. If you plan on moving back some day, and the house is what you want, there you go. That's a good reason. If the return from monthly rents minus insurance, repairs, and management fees is good enough, that's fine, too. If you think the market will appreciate there more than other people (and you know better than the market which calculates future expected values and risks into the current value), that's a reason to keep the property. If you don't need the cash and you don't need to free up some credit to get a new place, those may be good reasons.

About moving to New Jersey, if you don't want to move, it's usually best for yourself to find a new job first before you announce that you aren't going to move to take the new job. You could take that leave to get the job instead of working overeas.

If you have a degree, it is probably still easy to make between $1 and $2 grand a month teaching English overseas with a place to rent provided. It's not big money for someone who has a decent job.

If someone repo's your car, that's on your credit, or your parents? Either way, it's a bad way to go. I don't get getting into car payments.... maybe if you need the car to show off for some kind of sales position. I have tried to save up money and buy a used car that I could pay for in cash. I'm in my 40's and I've never had a conventional car payment. It just doesn't make sense economically. Used cars are so cheap, at least in the US, compared to new cars.


MrMan, I'm not interested in getting into the real estate business, but rather just want to keep the house if it's within my ability should I end up in New Jersey in the worst case scenario. It makes more sense for the long term. Renting it out would be the logical way to go. I probably won't have to move because I am constantly seeing new positions open in my area for my line of work each month. Yes, common sense would tell me to land the new job first before telling them I'm not going :wink: .

I owe nothing on my car. In fact, I never plan to buy anything newer than 3 or 4 years old at best since brand new vehicles lose thousands in their value the second you drive them off the lot. Even then, I will probably never do that because I prefer to pay off any car in cash just like you. I prefer much older vehicles that have a long history on the particular model which shows no mechanical failures. Easy info to look up on kelly blue book which I have used to estimate the value of the car which I used to own before the one I have right now.

Concerning how I am going to support myself after I get overseas, a CELTA certificate has crossed my mind, but I have something else going on which I am pursuing instead. I'm not going to get into that since that is going off topic.
Smart men learn from their mistakes. Wise men learn from other men's mistakes.

Knowledge is gained in bad experiences, but confidence is only gained through positive experiences.
Guyver
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Joined: November 6th, 2011, 3:13 am

Re: I can't win...

Postby Nailer » January 12th, 2017, 12:43 am

Why would you buy an expensive item you don't need with money you don't have and no guarantee you will be able to pay for it?
Coming back to life.
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