Renting AND/OR Selling in the Ann Arbor Real Estate Market in Washtenaw County
What are the Realities and Pitfalls of Renting in Michigan?
With slower home sales in the Ann Arbor Real Estate market, significant numbers of sellers are choosing to rent out the homes they truly want to sell. Before becoming a landlord, people need to be aware of the realities and pitfalls.
To determine market rent, you can research what other similar properties are commanding in the area. Sellers/Landlords need to know what the monthly costs are. Know the principal, interest, insurance and property taxes. Consider any rise in property taxes that may ensue by not being a primary homestead. (For more detailed information on the “Homestead Tax” follow this link.) There are other costs they may incur as a result of vacancy, repairs, utilities, legal, accounting, etc. Try to cover your outflow.
With each tenant comes a story, make sure you have a credit report, application and lease for review before wasting your time in the interview.
A standard 5 percent is used as a cost figure for vacancy rates. You will also need the advice of a CPA and an attorney. I suggest the latter before entering into a contract with a tenant. It is wise to have the attorney review the lease before it is signed and perhaps prepare the lease so it is complete with all occupants’ names. Do you have a water softener that requires salt? Who mows the grass? What happens if the grass is not mowed? Plan on having a cushion for late pays and rent collection delays.
Landlords should take time stamped photos of the property before turning it over to the tenants to establish condition. They should also consult the insurance agent to change coverage from complete contents to facility coverage.
Landlords might buy a home warranty and split the deductible with the tenant for repair items. They should have access to local vendors (take a local phone book) for plumbing leaks, etc.
I always suggest that the Landlord pretend Mr. and Mrs. Satan will occupy the home and anything better than that should be a bonus. Consider smokers and pets. What will you allow? What is the lease term? Will you be putting the house back up on the market in Spring selling season? Will the tenants cooperate with showings? Will the lease change to a month to month so you can actually sell to a new owner and terminate the lease with ease?
As an Ann Arbor Real Estate market investor, I have unique business perspective that provides insight to many clients. Renting is certainly advisable in some situations, but before executing this strategy, understanding the total package and ultimate home selling goals is important.
Related Links
What is the POP UP TAX?
And who does it benefit?
How Can Michigan Home Sellers Avoid State Transfer Tax?
A seller may seek an exemption from paying the state transfer tax if specific criteria
are met.
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Kathy Toth & Team: Ann Arbor Area Real Estate Experts
Keller Williams Realty
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