OK guys, have a new emergency! Try to keep this short…my tenants dropped the bomb on me last night that they can no longer afford the house and are vacating sooner rather than later.

My big question/area of concern is this…

If the house sits empty, I literally cannot afford the payment. With that in mind, what is the impact on me and what are my liabilities and responsibilities, as well as options, while the house sits?? I have not called the mortgage company yet, but that's my very next step. Hoping to see what we can work out.

The insurance and property taxes all get paid out of the escrow account; how are those items affected also?

This house is in Sacramento, CA, so not much of a selling option available and I've done all I can do to not be a dead beat and contribute further to a crappy real estate situation by letting the house foreclose or shortsale and I don't want to do it now.

No, I don't have a property management company to assist with finding renters, but I may have to look into that.

Thanks for any info guys!!!!

 

You are liable for the payment regardless of whether it is rented or not. You are at the mercy of the mortgage company as to what they will workout with you.

 

Your best hope is to get your house back on the rental market asap. Which means, today. Even if you have to show the house while the old tenants are still in there. Worst case, like my sister had to do on short notice was to rent their house out at a discounted price and cover the difference in the mortgage. I think it was around a $200 difference that they had to cover. Not something they could afford but had to make it happen. Use craigslist if you have to. I'm sure if you work it hard you can get someone in there within 30 days or so. If that puts you past your due date on payment, work something out with your mortgage company and defer a payment or something.

In most cases a property owner is only given 30 days notice to find new tenants so it is doable.

 

Since you don't have any time to waste, IMO you should start shopping for a reputable property management company in the area ASAP.

 

What DBD says above. It will cost you a percentage, but
they might get it rented sooner.

Also be careful what you divulge to the insurance company. Many companies have a clause that states they will not insure it if empty. I've had that issue with condos we rent.

 

It doesnt cost him a percentage, that percentage is seen in the rental cost. If the property is set at 1200 a month, with a property management group that rent will now be 1300-1400 a month, making it harder to rent imo. Plus there are leasing fees that are paid up front. Normally they range in the amount of the monthly rental. Or vise verse, you need to rent the property for 1200 a month to cover mortgage costs but with a property management group you will only see 1000 of that after their fees are removed. Leaving you to cover the rest of your mortgage. Unless your mortgage is far less than what the property can rent for a month, then it would be a tough call at this point.

Also, I have seen it take just as long for property management groups to rent the property as it would any ordinary person. The paperwork they require takes 2-3 weeks per applicant..... if that applicant does not go through, the process starts over again. Being they can only process one applicant at a time by law. At least in my state they are not allowed to review numerous applicants credit.


If you have numerous properties, a property management group is the way to go. Or if you have a great mortgage rate, low payments, own your home you are renting etc...

 

I'm guessing he lives out of the area, and can't easily screen new tenants or show the property. That may be an incorrect assumption, but a local expert might be in position to provide a valuable service.

Hopefully he can find an honest property manager who knows a qualified tenant who is looking for a rental home in the area.

Yes, the proeprty manager charges money and may not be the best long term solution, but it sounds like the OP is over a barrel and needs to start collecting rent ASAP.

 

Correct...I am not living in the area of the home! The house will also not rent for enough to cover the note; thus the reason I don't currently have a property manager. Couldn't afford the hit the first time.

 

most realestate agents will put it in MLS for 1 months rent.

you dont need a managing company , you just need someone to rent it.

if they are breaking the lease you keep the deposit, this should buy you a month or cover the fee

 

oOO.. not living near the home makes things tough. Any family for friends in the area that would help screen some potential renters? Ouch.

 

In my experience management companies are a waste of time and money! I tried to use them a couple of times and the only things they were interested in was seeing how much of MY money that they could could get me to put into THEIR escrow account "in case of necessary repairs". The kids that they sent out didn't even have a clue of what the place could be rented for. But if you're out of the area you're going to have to go where the house if or find someone local that can show it, maintain it, keep an eye on it and the tenants, etc. I think that if you use a management company you'll have to give them a fat fee up front plus a monthly fee and they'll make all the money while you go broke! But I would not notify the mortgage company that the house was being rented or that's it's now empty! If worse comes to worse, you may have to sell it cheap and quick to protect your credit.

Welcome to Obama's Amerika!

 

You can use a realtor w/o paying a monthly fee for property management. Go talk with a realtor, tell her/him that if they find a renter by such and such a date, you will give them $$XX dollars. They have a lot more options for finding renters than most owners.

 

Why not?

Shoot…how's that gonna protect my credit? I can't sell it for near enough to pay the note and I certainly can't float the rest.

 

Do not let the mortgage co. know it is empty. Most insurers in Ca. will cancel your insurance.
Call a management company and pay them a one time fee for a renter.
Also, in Ca. the property management charges a percent for a fee, usually 10%, but this can be negotiated.
I have done most phases of property in Ca. If you need to talk to me, PM me with your phone # and best time to call.

Also, did the renters have a lease or was it month to month. If it is month to month, by law, they must give you 30 days notice in writing. If they have a lease, they are responsible for the entire amount, BY LAW. You can sue for the remainder of the lease.

 

From the sounds of you, if you decide to try and pay out a "one time fee" 1200-1500 on the spot plus monthly fees, that's money that if you had, that could go toward making a payment on the property and give yourself time to find a renter. Plus, your going to have to be in the area at some point to meet with property management... Also, I'm sure you need to go through your house as well when the old tenants move out. If you are not far, or within reasonable driving distance I would use that time to schedule potential renters and forget the management. I'll bet if you post an add for the rental, craigslist or wherever, youll have more emails then you know what to do with. Rentals are at an all time high/occupancy.

Chasing someone down through small claims over unpaid rent or breach of contract is a long and most of the time expensive process...