Hi all! I hope this finds you doing well!

With the housing market the way it is right now, I'm sure we either know someone, or are dealing with it ourselves the choice of having to sell a home or rent it out and trying to figure out what is the best option. Utlimately the decision IS yours as to what you do decide to do, but knowing some information, and the right questions to get answered can help a great deal.

I know there are many people that, due to a job transfer, have to leave their house behind. They've put the house on the market for six months prior to leaving, with little to no activity. And, like it or not, a house WILL sell at the right price. Sometimes the challenge is figuring out what that price is. And if you've only owned the home a few years, or took out a second mortgage on it, you probably don't have a lot of wiggle room to keep lowering the price.

SO, what are the options? Well, you can sell via a short sale, and deal with those consequences, continue to lower the price until it does sell, you can leave it vacant until it does sell, or just leave it vacant without having it on the market to sell, or you can choose to rent out the house. The choices are yours. If you have a mortgage, though, and your income won't cover a mortgage on this house, plus a mortgage on your next house (or rent if that's your choice), then you have to figure out where the money is going to come from to pay that first mortgage payment.

Renting can be an excellent option, but there are things to remember when you do rent out your house. First off, chances are, even if you have excellent renters, the house is not going to be in as good a shape as when you left it. There is going to be normal wear and tear, things wear out, settling happens. Granted other things can and do happen, whether it's the fault of the renter or not. You do have to realize that nobody will take as good care of your house as you do. This doesn't mean that by renting the house will be "ruined" forever. Sometimes some repairs are required, or painting, new flooring, things like that, but keep in mind, after living in the house for a few years yourself, you would likely be changing out the flooring and painting anyway.

When you rent, there are a couple of ways you can handle the renting. You can manage it yourself regardless of where you are. Some people see this as a hassle and don't want to bother. If you have a good rapport with your renters, though, it can work out wonderfully. The disadvantage, though, is that you can't see for yourself damage or issues--some issues that can be fixed are relatively minor and you can save money by doing them yourself. If you have a good tenant, they often take care of many minor issues themselves (I LOVE renters like this!). There are plenty of places that you can advertise your property for rent for little to no cost. Check out the area where you live, and where people go to look to find a place to rent.

The other option is to get a property management company to manage the rental. They usually charge 8-10% of your monthly rent (some will be higher or lower--vacation rentals are considerably higher). Some companies also charge a fee for getting a renter in to the property. This could be a flat fee, or a partial month's rent once the renter does get in there. They show the house to respective renters, let you know what the current market rents are, and a good price for your house if you want to get it rented quickly. With the market flooded with so many properties that are not selling, the rental market is now getting flooded as people think it is a great option--except right now you have to either have a house that is highly desirable, or a great price. Both will ensure it rents quickly.

What's the best way to determine a price to rent? Look around to see what people are asking for properties similar to yours, in the same neighborhood, and see how long those houses have been on the market for rent. To get yours rented quickly, lower it from what everyone else is asking. Think about it, if you were going to go rent a house, and you saw two that were identical, same neighborhood, both in great condition, and what you are looking for, which house would you pick? My guess, the one that's priced lower. Granted, you won't make as much of a profit, however, getting most of your mortgage paid due to a lower rent amount is better than getting none of it paid because you have no tenant.

Things to ask your property management company; if you haven't personally witnessed how they've handled rental issues previously, you'll want to know. How do they handle when the rent is late, what do they do if someone violates the lease in other ways? This could be something as minor as, you thought it was a husband, wife, and small child renting from you, and you find out later it's actually 8 adults in a 2 bedroom house. While some families have no problem with doing this, it may be in violation of the lease--so find out what your management company would do in that case. I would personally be concerned about this, because even if the rent is on time, chances are that my property is not being taken care of as well as it should be if they are violating the lease agreement.

Screening tenants. You obviously want to know you have tenants that are going to pay rent, so how does the company determine that will happen? Some companies will let anyone rent as long as they have the needed cash to move in. Others will do a credit/background check, and of course, there are scenarious everywhere in between. If it's important to you to have a check done, ask the questions.

Eviction. What would constitute an eviction, and how does that work? I know it varies with the state. In the state of Florida, I can have a tenant out of my rental in 23 days if I do things immediately and by the book. As an owner, I can also file a judgement against a renter for damages, and past due rent. A property manager is limited--they can file eviction paperwork and take back possession of the property, but they cannot represent you, or file for monetary issues. If you want to sue the tenant for money, you will either have to show up yourself to do the paperwork, or hire an attorney.

I have seen some leases that do have a provision for illegal activity at the house--in those cases, eviction can happen within 24 hours. This could be a tenant getting arrested for illegal drug activity in the house for example.

In other states, it takes longer to get a tenant out, so you will need to know the landlord tenant laws of the state your house is in. A local property manager can help with educating you on how things work in your state. You can also do a search on the internet for the state statutes, and read through them yourself if you are so inclined.

Rent it or sell it...that is the question...if you're still not sure, if you're sitting on the fence, and not making a decision because you don't know what is the best way to go, sit down and write down on a piece of paper all the facts, and the pros and cons of doing both. Write down a list of questions that may help you with your answer. Can you lower the sales price any more? Is a short sale an option? As you get more and more "no's" on your list, you'll find what your options are, and be able to make a better decision as to what to do.

Good Luck!

Valerie A. Sullivan

Broker Associate, GRI, e-Pro