Property management company increasing rent

[heatherleigh]

Oh gosh, I never filled you guys in on one part! I never re-read the original posts. The PM co. set our sights much higher by saying the owner's would require at least $300 more per month, IF they decided to re-lease it rather than sell. They basically used the old "takeaway close" and it worked. The PM did it unintentionally, but it's amazing how well that tactic works.

We then started looking at other rental properties in the area, and were not pleased with the homes OR prices. We didn't realize what a great deal we were getting on our house. $300 actually would have been very reasonable in comparison. The houses we looked at were not worth the money.

One house we saw had worn carpet, a broken gate in the back, and was just run-down. They wanted more than what we are currently paying. The only difference, was that the house was bigger. I do not care about size, I'm more concerned with the quality of the home.

 

[cats mom]

OK, makes more sense now.

I'm glad it all worked out for you.

 

[arminnie]

The old school of thought was that property was always a sound investment - who could have foreseen the drastic drop in property values that are happening now.

Some advice - for every boom there is a bust. Whether it is tulip bulbs in Holland in the 1600s, the dot com market, or housing prices a few years ago - when something gets bid up artificially high there is going to be a bust.

Sure long-term things do go up in price, but that is really a long-term view - like maybe decades. If you don't have decades to recover it can be really hard.

When there is an artificial high things will almost always even out eventually. I'm not sure that some owners who are shelling out thousands of dollars a year in expenses over rent while holding onto properties that are still declining in value are making the best decision. Sometimes it's best to take a $50,000 loss now rather than having a negative cash flow of thousand and selling for a bigger loss in a couple of years.

Of course as usual in real estate it is location, location, location. Those areas that did not get bid up really high are not experiencing drastic drops in value. For other areas it may take years and years for the property values to recover.

The good news is that for every bust there is eventually another boom - but it can be a long wait.

 

[Virgderon]

Op, I'm glad it worked out for you.

DH and I are in that situation with our house in MD. There will be a negative cash flow of almost $500 a month after we pay the mortgage, taxes, insurance, HOA and property management firm. We have no choice. The house wasn't selling and even if we did sell then it would have been at a huge loss (over $20k) as well. This way at least we can float the property for a few years and hope the market rebounds so that we can sell it at a wash or at minimal loss.

Same for us. We couldn't sell our house in Chicago with 3 other properties vacant on our street, one of which was nicer than ours and less money because it was a short sale.

We are only losing about $300 a month by renting it out, so I guess we shoudln't complain. I'm very skittish about buying again. I may never buy again. We can afford to, but our credit took a ding with my husband losing his job and the move halfway across the country, so we might not qualify for good interest rates. Plus I am not sure Florida has hit bottom on real estate prices yet.

 

[jedijill]

Op, I'm glad it worked out for you.



Same for us. We couldn't sell our house in Chicago with 3 other properties vacant on our street, one of which was nicer than ours and less money because it was a short sale.

We are only losing about $300 a month by renting it out, so I guess we shoudln't complain. I'm very skittish about buying again. I may never buy again. We can afford to, but our credit took a ding with my husband losing his job and the move halfway across the country, so we might not qualify for good interest rates. Plus I am not sure Florida has hit bottom on real estate prices yet.

I'm right there with you. My house in KC hasn't sold and when I went back a couple of weeks ago half the street is for sale. I hired a PM company and with their fees I'm only losing $100/month. I consider myself lucky!

As for the person who said take the loss now instead of holding on....some of us can't afford to eat the loss. My savings went down to zero the year I had the house on the market. I don't have cash to take to the closing even if I could find a buyer. By renting, I continue to build equity and all my renting costs are a tax write-off. I hope the market turns around in a couple of years but renting is my only option. I too will be very hesitant to buy again any time soon.

Jill in CO

 

[quentina]

Sorry, but I have to disagree. I think it would be poor business sense for them to not increase rent on an annual basis to keep up with expenses and keep the price competitive for the area. Utility costs rise, taxes rise, maintenance costs rise, staff salaries rise, pretty much all costs of ownership rise. Why shouldn't the rent rise?

I own my home and I can tell you that it costs me more to live here today than it did a year ago and it will cost me more still a year from now. I wish that weren't the case but it is.

There are laws that govern how much rent can grow per year (at least in PA). Personally, I feel 50$ is fair.