Homeowners Turn to Renting: Long Term Rentals v. Transitional Rentals in Marin

 Bay Area NBC just ran an article titled Homeowners Turn to renting Waiting for Market to Recover.

(See original article at: http://www.nbcbayarea.com/news/business/Homeowners_Turn_to_Renting__Waiting_for_Market_to_Recover.html by Mark Koba.)

By now everyone knows the story: Home goes on market, home doesn't sell on market, home sits vacant, homeowners decide to rent.  This is where we come in as Marin Rental agents.   We often get the call from the Realtor, referring the owner and the property to us to handle.  If a homeowner has owned the home for many years, they may be in a great position to rent.  If we can cover their smaller mortgage with the rent, they can coast for a couple years until the sales market has re-balanced and try again.

However, the homeowners with equity are usually the ones who can adjust their asking price low enough to sell the home if they really need to sell.  These homeowners usually own the long term rentals and are landlords by choice.  The other type of landlord is the one who owes more than his/her home will currently sell for, therefore turns to rentals simply because the home cannot sell.

It's important for both landlord and tenant to recognize the difference.

As a tenant, you will generally see two types of rental homes available in Marin: the long term rental and the I'm-renting-because-I'm-in-transition type rental.   

The long term rental is generally in ok condition, usually somewhat updated, but not fuly, and usually with a level of finish you would expect from a rental.  Maybe you see tile from the 70's or 80's, of if you're lucky granite tile from the 90's, vs today's sleek slab stones, or an electric stove vs a gas stove.  You're more likely to find wall-to-wall carpet in long term Marin rentals, which is easier for landlords to replace between tenants.  You might find a slightly unkempt yard where tenants are in charge of landscaping.  The long term rental is great if you already know you are a long term tenant: you know you're staying so it's probably worth it for you to put a little elbow grease into fixing up the yard a bit, or maybe buying a new gas range.  This type of rental property in Marin is the more affordable option for most renters.

The Transitional Rental, as we like to call it, is likely the homeowner's personal residence, likely done with a greater level of finish than the long term rental, and has likely come to the rental market because the homeowner is in some type of transition.  This is a rental best suited for a tenant also in transition.  You're more likely to find that gorgeous Wolfe Range, the custom cherry closet systems, the well-manicured lawn with the fragrant roses in this type of rental.  You're also likely to pay more for it, and likely are going to have to leave at the end of your lease, or deal with the home going back on the market for sale. 

If you're the owner of a long term rental in Marin, you know the drill: clean the carpets, re-paint the walls, get it leased to a nice quality tenant for a price that hopefully covers what you owe (maybe even a little more?) and hope nothing major breaks.   If you're a transitional landlord turning to lease a home in Marin for the first time, you will have to accept that the rent your home will bring will not cover your mortgage.  You will have added costs: up keep, gardening, insurance, leasing agents fees, and most unpredictable: downtime between tenants.  You need to understand all the costs associated with renting before making the decision.  If you can't afford to come up a bit in the red each month, it may be a better choice to take the loss now on selling your home.  However, if you've calculated the costs, leasing to a great tenant for a year or two may be a great way to help offset your monthly costs while waiting for the market to recover and saving you money in the long run.

Understanding the Marin rental market is the first step to determine, as landlord or tenant, if leasing is right for you in this economy.  As leasing agents here in Marin, my partners and I are happy to help.  Contact me anytime with your Marin rental questions!  da@jwavro.com

 

 

May 24, 2009 06:18 by Darcy
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