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Trish Bender, Real Estate Pro in Cypress, TX

Need some feedback from those Seasoned Realtors!

Asked by Trish Bender, Cypress, TX Mon Apr 14, 2008

I have alot of people moving in from out of state, who are waiting to sell their homes and can not buy. My husband and I have a few rental properties and I am thinking of buying one for a short term lease option to all those moving in.

Most sellers are not willing to lease a home that is for sell. Do you think this would be a good idea? Of course all utilities would be included. Basically it would be a month to month type lease. Feeback is appreciated.

Thanks in advancefor your kind comments.

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12
Hey Trish...and Chris. :) I think it is a great idea. Corporate housing is outrageous right now. I have a few clients wanting furnished-reasonably priced rentals. Go for it!! and if you want...let me know if you have any available.

I think this is a great idea in College Station too!!
2 votes Thank Flag Link Mon Apr 14, 2008
Trish,

Avoid short term rentals, you end up with transien tenants and that's not what you want. The joy of investment houseing ownership comes from having good houses and placing good people in the houses.

Several of my listings that have not been able to find a buyer are becoming rental properties. Two things are happening that makes this a good market for such adventures.

1. First time buyers that could have qualified a year or so ago are being locked out of the mortgage market right now with the higher qualifications required (I know some mortgage people can still do a mortgage for anybody anywhere but that's what got us into this mess so i don't recommend it) as a result the demand for decent rental properties is way up.

2. Many sellers, the ones that bought in the past few years or used their house as an ATM are now upside down but the still have to move.

The melding of these two factors makes this a great time to become an investor as long as the cash-flow is positive.

Do not pay utilities. My tenants all are required to pay for it all and maintain the yard and they do, as if it were their own.

Good Luck

JD “Dan” Weisenburger, GRI
Broker-Associate REALTOR®
Vanguard Realty, Inc. GMAC Real Estate
Web Reference: http://www.neflahomes.com
1 vote Thank Flag Link Mon Apr 14, 2008
Interesting idea and there probably is demand for it. A couple of thoughts are ----don't include utilities...those could eat you alive. Electricity is likely to go WAY up this year with the spike in fuel costs. Also can you price it high enough to sit through the vacancies and still make money? I think that is the real key. If you rent it for two months and then it sits vacant for 2 months and then you rent it again for 3 months and then it sits vacant for a month and then again for 3 months and then vacant for a month then your occupancy is only about 67% which in my mind would not be all that attractive. These places are as you describe very difficult to find when you need them so maybe you could fill a niche that is not being addressed. Builders may need them too when someone sells a house, but the build job is not finished. If you do it, I advertise the heck out of it to all real estate companies, builders, apt locators, and relo companies so they know the option is out there and available. Good luck.
Web Reference: http://www.teamlynn.com
1 vote Thank Flag Link Mon Apr 14, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Trish, I'll be looking forward to the answers! I've been thinking along the same lines. I also think about buying a condo for those that are in on football weekends and other short term times when hotel rooms around here are difficult to find.
We are getting a fair number of people coming in with the same difficulty. I even had one that did manage to sell their home but lost 20K on it in the matter of 2 years. Hopefully the housing market will pick up soon and we won't have as many of these type of situations.
Web Reference: http://www.christesch.com
1 vote Thank Flag Link Mon Apr 14, 2008
Trish:

I also think this is a really good idea and I would also consider having it be furnished almost like extended stay hotels. This way people can keep their stuff in storage and it makes the move in and out easier. I agree that corporate housing is super expensive and this would be a great alternative. Best
0 votes Thank Flag Link Fri Apr 1, 2011
Hey! That's MY thing! =)

After traveling overseas and living the ex-pat life with my family for several years, I returned to Houston with an intimate knowledge of what families and professionals "in transition" really need to settle happily into a new city (if even only temporarily).

All of my homes are in the inner loop area and within 5 miles of the medical center, so there's rarely a vacancy and almost always someone on my wait list.

My current and former tenants over the years include medical, business & engineering interns, traveling nurses and PT's, event participants (Rodeo / opera / theatre / ballet / circus performers & staff), cancer patients and their families, interstate & international visiting physicians & researchers, college students, professionals in transition, snowbirds, spouses in transition, business start-up teams, expat families between projects, homeowners undergoing remodelling projects or waiting for completion of their new homes, and the list goes on and on...

Although there's a GOODLY CHUNK of initial inve$tment and ALOT OF WORK involved (LOTS) and NOT a great deal of profit to speak of at the end of the year. Keep in mind the Houston summer utilities for the poor "Yankee folk" (internet & cable, too), contantly refreshing / replacing linens, kitchen items, and not to mention the crack-crazy property taxes, hazard, flood and liability insurance, maintenance & repairs (the occasional hurricane), lawn service, etc...

Trust me, THIS IS NOT FOR EVERYBODY. If you're not "handy" around the house, you don't like or don't have time for bargain hunting, if you can't be flexible (schedule-wise and bank account wise), if you can't stand heavy lifting, getting dirty, or whiners-- then, you will be miserable AND IN THE REND and this stuff isn't for you. IT'S ABSOLUTELY NOT FOR THE FAINT OF HEART.

I've learned that when toddlers get brain tumors, everyone's unhappy. And single men start fires in kitchens when they've forgotten that they've store stuff in the oven. BOY! Do I have stories!

Despite all of this, I STILL find tremedous satisfaction serving a wonderful assortment of tenants. Many come back to my homes year after year and refer their friends and colleagues.

I'm more than happy to answer any specific questions on short-term furnished housing. Just ask!
0 votes Thank Flag Link Thu Mar 31, 2011
Trish, What did you end up doing? Have been thinking of doing the same here in Katy, let me know how it worked for you, Thanks
0 votes Thank Flag Link Wed Nov 11, 2009
It'll probably be a lot more hassle than you're expecting. Some of the comments have already pointed out the vacancy issue. Maybe the spread in Texas between a mortgage and rental (especially corporate housing) is less than it is in the DC area (hopefully, it is), and it depends on what your payments are (that is, how long ago you bought), but, for just a real rough example, In a suburb of DC you could buy a single-family home for $450,000 and rent it out for maybe $2,000 a month. As corporate housing, maybe you could charge $100 a day, or $3,000 a month. At that rate, you'd break even on cash flow if it were occupied 90% or more of the time (again, just rough numbers here). But if it were occupied only half the time, you'd have to charge $6,000 a month. And that's not too likely to happen here. If it's a house you bought (again, in the DC area) 8 years ago for $275,000, then, yes, you'll cash flow at a 50% vacancy factor. But is that really the best use of your equity? A 0% return?

Then there's the wear and tear issue. One great thing about long-term tenants is that you paint and carpet before they move in. Then, when all goes well, you don't have to paint or carpet again for another 5 years or so. And I've had tenants who've offered to paint for free so long as I buy the paint. In a property with a move-in/move-out every month or couple of months, your maintenance costs are going to be very high.

Along the same lines, I've had some tenants who like to plant flowers, landscape, and take care of the lawn. When someone's in a property for a couple of years, it's theirs and there's a pride...if not of ownership, at least of occupancy. If someone's only going to be there for a month or two, I wonder if there'd be the same attitude or involvement.

There's also a question about zoning and about neighborhood restrictions. At some point, a "short term" lease may put you into another category, not just plain residential. And townhouse and condos are likely to be much stricter on frequent turnover of tenants.

Having said all that, it's certainly an interesting idea. And maybe it can work. (I hope it does, if you go ahead.) But just be aware of what you may be getting into.

Hope that helps.
0 votes Thank Flag Link Wed Apr 16, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
not sure what city you're in, but this would be a LOT of work & no guarantee of return; the rent you charge would just cover the expenses & moving in and out is hard on a house, especially if they have pets. Also, if they're too comfortable, what's their incentive to sell that other home out of state. The homes out of state will sell when they mark it down to the "real" value price.
0 votes Thank Flag Link Wed Apr 16, 2008
I think it sounds like a great idea! Please keep us posted
0 votes Thank Flag Link Tue Apr 15, 2008
I offer short term housing on all of my managed properties for a slightly elevated rent, but usually more cost effective than the gouging corporate market! It all depends on the turn around for all of this. If you set up an online application process, you could certainly crank out leases on the short term faster than trying to coordinate it all yourself. As long as the market is there then I would do it. Austin is an animal when it comes to that sort of thing! Also, most folks are wiling to pay the entire cost upfront, and that's not usually a bad thing.
0 votes Thank Flag Link Mon Apr 14, 2008
BEEN THERE DONE THAT don't.... I have lost clients over it when they did not pay me for rent... try working with an apartment complex for a short term lease therefore your professional obligations are selling properties.

If they need to be qualified I am not only a realtor but a loan officer.
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Apr 14, 2008
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