Alternatives for Dealing with a House

August 15, 2020 4:43 PM

I've inherited a house that I can't live in it because I live many states away. My experience with property management companies has been terrible and so I'm not sure how reliable they are. I would like to keep it in my family even though I'm feeling my only real choice is to sell it.

But I'm looking for other options. Maybe I've been watching too much TV, but can I have a short term contract with a non profit that needs a place for its clients to live while they get their lives together? I assume churches and social service agencies have houses like this. Can I make the house available to a government agency that may need a place for someone temporarily? What about donating the house for the tax write off? Is that worth it? I'm feeling like people who aren't privy to certain information are left with the usual choices and I'm wondering is there are options that will let me do some good with the house while I figure out what to do with it.

posted by CollectiveMind to Law & Government (15 answers total)

I am assuming you are in the USA, which is a statistically likely assumption.

There are several charities around my area that own homes or rent homes for housing people for a variety of reasons. I would start with women/men's shelters and homeless shelters if you want to go that route. However, before you do, consider what you'll do when you want to end the arrangement. At the very best, you'll have to evict a vulnerable person, and at the worst, your house may be vandalized. Consider if you'll be able to handle either of those in good conscience.

I doubt a government agency would want a short term lease on a random house, but I can't say its impossible. That wouldn't be the first place I look.

Donating an asset for a tax deduction is never "worth it" from a strictly financial standpoint. You do not get a credit for your donation (ie, you do not get $1 off your taxes for each $1 of value), you get a deduction (ie, if your marginal tax rate is 24%, you'll get $0.24 off your taxes for each $1 of value). In general, you only get value from donations if you itemize your taxes (only ~30% of taxpayers do), and even then, you can only donate 60% of your adjusted gross income (AGI). You can, however, roll over the donation for five years. Although I don't know your particular financial situation, most people in the US would not be able to fully deduct a typical house value, even over five years.

As a minor benefit, you will not have to pay capital gains tax on your house when you donate it - however, most people don't end up needing to pay capital gains tax on property sales anyway.

This is not to say donations aren't worth it - merely that the value is more emotional than financial to you. There are significant benefits to the receiving charity for being donated a house though. It gives them maximum flexibility - they can keep the house for their own use, rent it to other people or other charities, or sell it when they need some extra cash flow. They can even have different uses over time - they may have an imminent need for housing that is being solved in the long term with new construction, but having a short term boost would be a big benefit to them. In general, charities highly value unrestricted gifts of assets rather than short term services (like a house rental). This is especially true when you aren't able to give them any notion of how long the house would be available to them if you chose to donate "rent" to a charity.

A far off idea is a conservation easement if the property has significant acreage. In some states, this could have perpetual tax advantages to you as well as help your local ecology.
posted by saeculorum at 5:28 PM on August 15, 2020

Depending on the location, I might be interested in housesitting for you (feel free to Memail me). Trusted Housesitters connects homeowners with free housesitters, often for vacations, but sometimes for year-long stints or more.
posted by pinochiette at 5:51 PM on August 15, 2020

I have a situation like this. The house isn't too far away, but far enough that I only visit a few times a year. The big questions will come down to money, especially how quickly you will need to make a decision.

So first off, do you know how much it would cost to just keep the house empty? I am not suggesting this (houses "want" to be lived in and they do not do well when empty). But like paying the taxes and utilities and being able to keep the place heated enough (if it's someplace cold) or not humid enough (if the opposite) so it won't fall apart rapidly? It's also worth understanding the tax situation where you are. Many states will charge more for taxes if it's not someone's primary residence and some places will not insure a house that is empty (or will charge more). That is kind of where you start "This house costs $X to just have."

If you had a housesitter like pinochiette, usually you'd be the one picking up those costs (I have done this before, had a housesitter and if you can find someone you trust it can give you some time before you are forced to make a decision)

Then, as saeculorum says, there are options. Conservation easements are great if there is extra property and, depending just which state the house is in, can greatly help with taxes. If you were "donating" your house (like you keep owning it but let an organization use it) you might want to look into refugee resettlement places, churches, and other non-profits. You can kind of decide how much you want to sort of give with the house (i.e. keep the furnishings there or not? lock up parts of the house or not?).

Also since these are COVID times, possibly checking with a nearby college or University who are sometimes de-densifying their dorms and you might be able to make a deal. Long-term AirBnB is also a possibility and there are a lot more socially aware AirBnB options out there. This is kind of a listicle but gives you an idea about other ways you could do this.

I'll be honest, I've kept my "extra" house as a vacation place that I share with my sister, who also doesn't live there, and it's fun and also an incredible hassle and money sink.
posted by jessamyn at 5:58 PM on August 15, 2020

You mention that you don’t like property managers, so maybe this is worse, but have you considered being a landlord directly?

If you can find a tenant you trust, you might be able to strike a deal where they do the busy work of maintaining the property, in exchange for reduced rent. You would be paying for maintenance still, but they could be the ones running around looking for a plumber. I’ve been the tenant half of this type of deal before, and it worked out.
posted by tinymegalo at 6:18 PM on August 15, 2020

You might check with a domestic violence agency in the area. They might be able to use it for victims who have use up their (legally mandated) time limit in a shelter, but who may not be stable enough to get their own place yet.

Also, because of COVID 19, DV shelters are not able to take in their normal number of residents, so they need places for the “overflow” to stay.

If you are interested in these options, you can go to DomesticShelters.org and enter the zip code of the house, and it will tell you what domestic violence agencies are in the area.
posted by MexicanYenta at 6:44 PM on August 15, 2020

Has your experience with property management companies been as a tenant? If that’s been your only experience and that’s your biggest concern, I’d look into that first. Perhaps you could find a reputable (smaller?) property management company that will find decent longer term tenants so you don’t have to make any decisions in the short term.
posted by bluedaisy at 7:11 PM on August 15, 2020

If you want the house to stay in the family, then you may not want to rent it to a nonprofit where there would be a high turnover of tenants who are stressful periods of their live thus likely to end up with more wear and tear than a single long term tenant.

One option that might work would be become a landlord who accepts Section 8 vouchers. You still get a reasonable rent, the tenant gets a clean nice and affordable place to live and the government picks up the difference. The people that I've know who had Sectin 8 vouchers have been very motivated to be good tenants. You could see if a property management firm might then be willing and able to handle the day to day demands of landlording. Look around the area for a property management firm that has good reputation from both landlords and tenants about being responsive and professional in dealing with tenant issues.
posted by metahawk at 7:32 PM on August 15, 2020

You say you want to keep it in the family - what does that mean? Have you talked to any other family members about it to see how they feel about the house? Is there a next generation who will likely want a house where this house is? Narrow down that idea a bit as you make your decision.

Any rental option is a crapshoot in terms of tenants and odds are good your house will get damaged. Minimally there will be normal wear and tear, which may still be more wear than you expect. Depending on the laws where the house is, you are likely to be constrained in how you can screen tenants and right now evictions may be banned. If you have a sentimental attachment to the house, get comfortable with that reality before you rent.

Talking over your charitable ideas with a lawyer may also be helpful to make sure your interests are protected.
posted by momus_window at 9:11 PM on August 15, 2020

If you do want to make it available to a nonprofit for a period of years, check with the local community health agency to find out who is operating adult foster care homes. They tend to own and/or operate several homes at a time and they are professionally managed.
posted by yclipse at 5:28 AM on August 16, 2020

The "keep it in the family" needs some explanation. Is a family member going to live in it?

Best thing you can do is put it on the market so that a family who needs a home to live in can buy it and live in it. You can take the cash and do what you like with it, including donations.
posted by JackFlash at 9:01 AM on August 16, 2020

I’ve been letting my apartment for 10 years and I’ve never had a problem with the agency - I live in another country and have zero interest in managing the property myself. They send me emails every now and then and a monthly statement when they deposit my income and that’s it. It takes more effort to plug these statements and the mortgage statement into a spreadsheet to do my tax return than the effort that goes into any other aspect of being a landlord. Between tenants the place has been unoccupied for less than two months in total over these 10 years.

You’re not going into a lot of details about whether the property is mortgage free, if your emotional attachment/keeping it in the family means you would like to live there in a few years/retire there or keep it for the next generation or whatever. All of that has bearing on what to do now.

But this is the kind of financial decision you want to get right. So I would start by getting an appraisal of the property including estimates for any short and medium term repair needs. I wouldn’t just ask a few estate agents for their views because they are interested in getting it on the books and earning their commission. Pay somebody with relevant technical expertise. That tells you what you might sell it for but also what you might need to budget to get the roof done in five years.

At the same time I would seek recommendations for good local letting agents and find out the rental value including what you’d have to pay the agency. They normally offer different tiers of service and you may not need everything they offer.

Figure out what landlord insurance and other ownership related costs you may have outside upkeep of the property. Get some tax advice on selling vs letting it.

And once you’ve got that information you have a much better basis for deciding. And you may even realise you have a strong preference one way or another.
posted by koahiatamadl at 9:52 AM on August 16, 2020

A podcast I was listening to the other day talked about how Roofstock (a turnkey property purchase site, I believe?) also certifies property managers in a given location who meet certain criteria. That might be a resource to find a good property manager.

Also, honestly, if you can find great tenants who want to stay a long time, you don't exactly need a property manager. The tenants can meet the person who is coming to replace the hot water heater or whatever. The Nolo guide for a given state summarizes the relevant laws and includes a sample lease.
posted by slidell at 10:10 AM on August 16, 2020

If you do decide to try the property management company route, it might be worth looking through the membership directories of an organization like the National Apartment Association, National Association of Residential Property Managers, or Institute of Real Estate Management (or the local chapter of same) to find a property manager/company. Depending upon what state the property is in, property managers may need a general real estate license but that's likely it (I think there's one state that requires specific licensure/certification for property managers?) So if you find one who is a member of or certified by a professional organization, in theory you'll find someone more professional and ethical - it's not required legally so someone who goes through the expense/trouble hopefully is a bit more invested in the profession.
posted by misskaz at 11:11 AM on August 16, 2020

My folks are in this situation. Through local relatives they found some people who were willing to do their own maintenance (or if it's something they can't handle, they get three estimates for the work, forward then to my folks, my folks pick a contractor and the tenant schedules the work, then sends the bill along) in exchange for very low rent. When those people moved out they found some friends to move in. This has been going on for 12 years now. The house is old and not in great repair, but it's in a nice old neighborhood with good schools and has a huge yard with mature and productive fruit trees, and the rent is truly a pittance. The tenants know they're getting a great deal and stay out of my folks' hair.

This partly works because everyone involved is fairly realistic about the condition of the house. Nobody expects it to be in pristine condition. It was hacked together by my grandfather over the years and when they or their descendants sell the property, the house will absolutely be a tear down as literally nothing about the place is up to modern code (or, for that matter, applicable code at the time of construction). If you're fussed about the house staying nice I think it's much scarier to go ahead without a property manager.
posted by potrzebie at 12:23 AM on August 17, 2020

If you can make the margins work and there is some demand for housing in the area, nthing that there is a cohort of very responsible people that do really appreciate low rent. It can be a totally different landlord/property manager experience. It has to be impressively low, not just a few bucks here and there. I have friends that maintained a crappy but charming house for years paying about 60% of market rate. Family friends own an apartment in a booming neighbourhood but never raised rent because they genuinely couldn't believe how expensive the going rent was (so its now probably 60% market rate too). They have had the same tennant for a decade. When the bathroom flooded (no fault of his) he paid an emergency plumber in the morning then only called the property manager that afternoon to say "I got a professional in and have cleaned and fixed everything don't reimburse me just thought you might want to pop round to inspect for piece of mind".
posted by hotcoroner at 5:15 AM on August 17, 2020