How to let a house without acting as a landlord?
May 6, 2008 5:56 PM Subscribe
Is it possible for a 'normal person' to let a house without doing all of the usual landlord work? We want to keep a house in the family but don't want the responsibility of finding tenants, contacting a plumber, collecting rent and so on.
So just to give a bit of context, my family have recently inherited a large house in a well-to-do area of California, worth close to $2mil on an initial estimate. Specifically, it's between five siblings: A, B, C, D and E. E, who happens to be the executor of the estate, has said that he has "zero interest" in keeping the house in the family, and is currently trying hard to sell it ASAP. A, on the other hand, would prefer to keep the house in the family on the basis that (i) it's in a useful location in the state i.e. several family members live there and more may move in at some point, (ii) it's a very good location for a holiday home for all five siblings, and (iii) it may be useful as somewhere to retire to. Unfortunately, none of these reasons are immediate (and unlikely to be so within the next 5 years at least).
Clearly, the house can't be left empty for five years -- it would degenerate significantly without someone to look after it, as well as property tax and so on. One solution seems to be to let the house on a long-term basis, with the idea that the family keeps the rights to the house, and the ability to use it at some point in the future. Unfortunately, none of the five siblings live in the area (in particular, A lives overseas) and/or want to act as a landlord to sort out e.g. plumbing and so on for tenants.
So, the question: is there some way it can be set up so that someone else takes on the work/responsibility of being a landlord (obviously, for a significant share of the rent -- as long as no money is actually _lost_ on it) while the family keeps hold of the house? It doesn't seem practical for A to do it, though it might be if it's very low hassle.
So just to give a bit of context, my family have recently inherited a large house in a well-to-do area of California, worth close to $2mil on an initial estimate. Specifically, it's between five siblings: A, B, C, D and E. E, who happens to be the executor of the estate, has said that he has "zero interest" in keeping the house in the family, and is currently trying hard to sell it ASAP. A, on the other hand, would prefer to keep the house in the family on the basis that (i) it's in a useful location in the state i.e. several family members live there and more may move in at some point, (ii) it's a very good location for a holiday home for all five siblings, and (iii) it may be useful as somewhere to retire to. Unfortunately, none of these reasons are immediate (and unlikely to be so within the next 5 years at least).
Clearly, the house can't be left empty for five years -- it would degenerate significantly without someone to look after it, as well as property tax and so on. One solution seems to be to let the house on a long-term basis, with the idea that the family keeps the rights to the house, and the ability to use it at some point in the future. Unfortunately, none of the five siblings live in the area (in particular, A lives overseas) and/or want to act as a landlord to sort out e.g. plumbing and so on for tenants.
So, the question: is there some way it can be set up so that someone else takes on the work/responsibility of being a landlord (obviously, for a significant share of the rent -- as long as no money is actually _lost_ on it) while the family keeps hold of the house? It doesn't seem practical for A to do it, though it might be if it's very low hassle.
I think what you're looking for is a property manager or property management company. They are everywhere... some are good some not as good. You'll need to figure out exactly how "hands-off" you want to be and go from there. See what the property managers/companies will offer and for how much -- some will even find you a tenant.
posted by rooftop secrets at 6:04 PM on May 6, 2008
posted by rooftop secrets at 6:04 PM on May 6, 2008
Most property management companies will do it all, they take their cut right out of the rent. Call around. Most real estate agencies offer this.
another idea is call these companies that offer corporate living, especially if the home is in a good area. They do short term ( and sometime long term) rentals to executives and their families that are transferring. Usually their company pays top dollar for temp housing while the executives are on a longer assignment, or to give them time to find a house to buy when they've been transferred to a new area. Nice thing about corp living is you usually get top dollar and high end tenants
posted by Mr_Chips at 6:15 PM on May 6, 2008
another idea is call these companies that offer corporate living, especially if the home is in a good area. They do short term ( and sometime long term) rentals to executives and their families that are transferring. Usually their company pays top dollar for temp housing while the executives are on a longer assignment, or to give them time to find a house to buy when they've been transferred to a new area. Nice thing about corp living is you usually get top dollar and high end tenants
posted by Mr_Chips at 6:15 PM on May 6, 2008
A property management company will take care of everything--advertising for tenants, evicting them if they don't pay rent, arranging for repairs, landscape maintenance, collecting rent, etc. They generally take 5% plus costs in my area.
posted by Enroute at 6:47 PM on May 6, 2008
posted by Enroute at 6:47 PM on May 6, 2008
I'm not sure quite how you set up a situation like this but my grandparents rented the house that they lived in for almost 50 years. I think in the beginning they might have paid rent but when I knew them (30 years into the arrangement) they were paying all of the upkeep, taxes and other expenses directly in lieu of rent. When the owners wanted to sell, my grandparents got an assessment and paid the then-current market price.
posted by metahawk at 7:44 PM on May 6, 2008
posted by metahawk at 7:44 PM on May 6, 2008
Most real estate companies have rental departments. Choose carefully;they are not all created equally. Get recommendations!
posted by konolia at 7:57 PM on May 6, 2008
posted by konolia at 7:57 PM on May 6, 2008
As others have suggested, a property management company could handle the practical arrangements. Of course, E might be hoping to realize his share of the value of the house, and depending on the will, he might be able to sell it without A-D's approval. Or instead of selling, he might be able to demand that A-D buy out his share for the fair market value, which in California, might require more ready cash than A-D can raise. The terms of the will or trust might even require E to dispose of the property and divide the proceeds as quickly as possible. Just because you want to keep the property in the family doesn't mean that the executor will want to do so or be able to do so. If you anticipate a conflict, you should contact a lawyer for advice.
posted by brianogilvie at 8:30 PM on May 6, 2008
posted by brianogilvie at 8:30 PM on May 6, 2008
Brian makes a good point. You need to carefully read the will and see what actual powers the executor has.
That said; property managers, especially those focused on corporate and executive housing are your best bet. I know that companies like Exxon regularly pay up to 20k per month on rentals for executives who need to be somewhere but aren't going to relocate permanently.
A good real estate attorney should be your next resource call. Not only can she give a cursory glance at the estate paperwork, but she should be able to turn you on to the right sort of property management firm for about a couple of hours of billable time, assuming non-complicated papers.
posted by dejah420 at 10:05 PM on May 6, 2008
That said; property managers, especially those focused on corporate and executive housing are your best bet. I know that companies like Exxon regularly pay up to 20k per month on rentals for executives who need to be somewhere but aren't going to relocate permanently.
A good real estate attorney should be your next resource call. Not only can she give a cursory glance at the estate paperwork, but she should be able to turn you on to the right sort of property management firm for about a couple of hours of billable time, assuming non-complicated papers.
posted by dejah420 at 10:05 PM on May 6, 2008
It may be also beneficial to set up a trust for the financial aspects of this. If E is really keen to sell, the trust may eventually be able to buy him out. In any case a trust may simplify things given that so many people have an interest in the asset.
posted by padraigin at 10:55 PM on May 6, 2008
posted by padraigin at 10:55 PM on May 6, 2008
Nthing a property management firm. Get recommendations. There are good property managers and not-so-good ones.
Being your own landlord can be an absolute nightmare. That's what property managers get paid to deal with, plus they act as a go-between among the tenant and the owner. They can be impartial where an owner can be swayed by tenant sob stories or not realistic about what revenue can be generated from a rental property.
posted by Savannah at 10:58 PM on May 6, 2008
Being your own landlord can be an absolute nightmare. That's what property managers get paid to deal with, plus they act as a go-between among the tenant and the owner. They can be impartial where an owner can be swayed by tenant sob stories or not realistic about what revenue can be generated from a rental property.
posted by Savannah at 10:58 PM on May 6, 2008
This thread is closed to new comments.
posted by robinpME at 6:01 PM on May 6, 2008