Real Estate Rentals

Why Room Rentals?

Room rentals? Why would you want to make your home into a boarding house? Maybe you shouldn't. I enjoyed having people living in my house, and most of them became friends. On the other hand, you might not like that arrangement. I hated being a landlord when I owned rentals that were not my home. Each of us is different.

Consider Your Room Rental Options

You don't necessarily have to live with the room-renters, so consider all the options available. You could do any of the following:

1. Rent rooms in your own home and share common space with the renters. This is what I did for several years when I was single, and it worked fine for me.

2. Partition your home so you can rent rooms without sharing common space.You'll need at least two bathrooms, and separate entrances to make this work.

3. Add an efficiency apartment for yourself, so you can have privacy, perhaps still sharing a laundry room with the renters. This is what we did when I married. It also opened up one my previous bedroom, increasing the rental income enough to pay for the new apartment in less than a year.

4. Buy a house just to rent it out by the room. This can be an excellent way to get cash flow out of homes that might not otherwise be such good investments.

5. Sublet a room in the apartment you rent. If this is okay with the landlord, it can be a way to afford a nicer apartment, or to get past financial hard times.

6. Use room rentals as a way to afford a house payment. If you are having trouble buying a home because you can't afford the payments, you can buy a home with extra rooms and rent them out.

Consider The Money In Renting Rooms

The amount you can charge for rent will vary greatly in different parts of the country. Here is what I charged renting rooms in a mobile home in a small town in northern Michigan (a few years ago):

Small Bedroom: $65 per week times 52 weeks equals $3380 per year.

Medium Bedroom : $75 per week times 52 weeks equals $3900 per year.

Large Bedroom : $85 per week times 52 weeks equals $4420 per year.

Potential Annual Income (I had a couple weeks vacancy now and then): $11,700 per year.

This was a home that I lived in, remember. I included all utilities in the rent, and I tracked my expenses closely. Including repairs to the heating system, the refrigerator and roof, as well as utilities, garbage collection, cable television, local phone service, property taxes and insurance, my costs the last year I had the house were $3,900 (I had already paid off the $253/month mortgage).

How do you figure profit when you live in the home? Renting rooms in my home probably added $300 or so to the annual costs. Heating was almost the same cost, as was garbage collection, taxes, insurance, cable television, and phone service. A little more wear and tear and a bit more electricity were the only real additional costs. In other words, almost all the extra income was profit. Or if you want to look at it another way, I lived for free and had $7800 income from the home I lived in.

Do you want to have thousands of dollars of extra income every year? What would you do with that money? Think about that, and you have the answer to why you should rent rooms.

Why Sell Your House to an Investor?

When talking to people who are trying to sell their house I'm often asked the question, “Why should I sell my house to you?”

That's a great question. Today's house seller has lots of options: they can list their house with a real estate agent, they can try to sell the house themselves or they can sell their house to a real estate investor. None of these choices is necessarily better than the others: they each have their own advantages and disadvantages.

Here is what I say when asked why someone should sell their house to me:

1. I'm fast. In many cases, sellers are in a rush to get their house sold. Maybe they're facing foreclosure or they're settling a divorce. Sometimes the seller has moved because of a job and needs to sell the house quickly to avoid two mortgage payments. Or someone might inherit a house and they don't want the hassle of dealing with the repairs and marketing necessary to sell the house.

Most people who try selling their house themselves or through a real estate agent find that it is anything but a “fast” process in most cases. Unless you are willing to sell your house at a significantly reduced price, in many markets you could find yourself waiting one to three months before you accept an offer.

On the other hand, because I'm an independent investor with private funds I can often close a house purchase in 7 days or less.

2. My offers are flexible. I make my offer fit the seller's needs. If the seller wants to close quickly, that can be arranged. If the seller wants cash all at once or a monthly cash flow, I can do those, too. I can also make up past payments and take over current payments to immediately relieve money burdens on the seller.

I can be a lot more flexible with my offers than the “traditional” offers sellers typically receive. That's because I'm independent and not part of a bank bureaucracy which has to follow lots of rules. I'm also aware of possible creative solutions to meet sellers' needs that your average home buyer wouldn't think of.

3. I'm open-minded. I might buy someone's house when no one else will. In many cases I buy houses that have fire damage, termites, mold, foundation problems, roof problems or need major repairs. Houses with these conditions scare most buyers and real estate agents hate listing them because they know such houses are hard to sell.

I actually enjoy talking to sellers with houses like these because I can see the house's potential value after all the repairs are made. I'm also not worried about extensive repairs as long as the after-repaired-value of the house justifies the expenses.

In conclusion, I encourage sellers to investigate all avenues of getting their house sold in the way that best meets their needs. If they decide that working with me to buy their house makes the most sense, then I'm more than happy to help.

Why Should You Use A Realtor?

A lot of people ask why they should use a realtor instead of selling a home or purchasing a home themselves. The answer is simple. A realtor is a trained real estate professional with experience and knowledge of the local real estate market. This experience and knowledge is of critical value when one is attempting to get the most for their home sale, or finding the best possible deal when purchasing a home. However, the realtors importance goes much deeper than that, there are several more areas that the realtors abilities come into play that are often unconsidered or overlooked.

One of the most important things that a realtor can do for you, especially when the sale of your home is concerned, is provide marketing and market coverage. This is a difficult undertaking on your own for many reasons. First of all a realtor usually has a previously established web presence. The realtors website is a great place to find out info about homes that are available, information about the community and mortgage options. Your home will be prominently featured on this website, showcasing your home to a huge market. Other aspects of marketing that a realtor provides include such things as newspaper ads, open houses, flyers and info packages. Realtors have a higher budget to spend on marketing a home, and the experience of doing so. They also have an established network of contacts, usually buyer's agents. This means that their network will bring more prospective buyers to your home.

When buying a home a realtor will essentially do the legwork for you. By informing them of what you are looking for in a home you can save yourself valuable time. A realtor will be able to sort through the homes that are available and select only the homes that suit your needs, lifestyle, and budget. They will also have important information regarding the area, neighborhood, and the homes in question. Realtors will also be able to arrange inspections and conduct them with the inspector so that you remain as informed on the process as possible.

Another important aspect of both sales and purchase where a realtor's knowledge is invaluable is during the closing of a home. This is easily the most complicated part of a transaction as many FSBO sellers and buyers have found out. Real estate contracts are intricately involved documents that require an understanding of not only the contracts process, but real estate law as well. A typical closing will involve more than the realtor, lawyers and notaries play an important role in the transfer of a home from one owner to another. Realtors are trained in the art of contracting home sales and usually have an established group of lawyers and notaries that they utilize in order to make the entire process easier on the buyer or seller.

Would you let a car mechanic fix your piano? It does not make a lot of sense does it? For the same reason you should seek the services of a professional realtor when buying or selling a home. Their experience, knowledge and professionalism will save you time, money, and most importantly the nervousness of wondering if everything has been done properly and in accordance with law and practice.