Rental negotiation – How much is the OWNER paying?

[Rockemsock]

I’m just starting to deal with a management company regarding a potential rental. But i’d love to know how much the owner is paying…so i can possibly guage how much leverage I have. Can you get this data online? I tried Zillow, but the home was bought new, so it says it doesn’t have any sale data.

1468 Golden Sunset Dr. San Marcos CA 92078

this is the location…

Also, does anyone know how much a management company charges? Is it a percentage or a flat rate…

Thanks,

PS. By the way, i realize it’s a safer bet to rent an older home from long time owners…but save your argument for my wife, I’m already convinced…

[ocrenter]

I think you’ll be pretty safe. Golden Sunset was build in 2002. with most of the homes going for high $300,000 to low $400,000. These homes at 2800 sqft is slightly larger than Luminara in size, and those are going for low $600,000 right now. So your future landlord in theory has about $200,000 in appreciated equity.

the problem is you don’t know if he has been refinancing and HELOC’ing away. that you can only find out from a Realtor.

as for management companies, generally 8-10% of the rent is the market value.

[RottedOak]

You can use SDLookup.com to get sale data on properties in San Diego county. This particular property sold for $446,900 back in 2002. However, that alone doesn’t tell you what the owner is paying per month, because you don’t know how much he put down, what his interest rate was, whether he has refinanced, etc.

[SD Realtor]

They have alot of activity on the tax roll.

7/26/05 – 150,100 from citibank (most likely a heloc)
12/17/04 – 518,000 from wamu (most likely a refi)
6/22/04 – 337,000 from wamu
5/13/03 – 25,000 from citibank

I would say they are pretty extended.

SD Realtor

[ocrenter]

assuming the 150,000 and the 518,000 are outstanding, that brings the total loan volume to 668,000. dependning on who you talk to, they may be close to being underwater on this house.

how much are they charging for rent?

[Diego Mamani]

Rockem, what the owner is paying is irrelevant. Rents are set by the market, not by cost.

What is legitimate is to investigate to what extent the owner could be facing foreclosure. Other than that, knowing how much the owner pays every month is irrelevant for setting rent. Owners charge the highest rent that the market can bear, regradless of cost.

Of course, if the property has negative cash flow, the owner won’t be in business for long.

[Rockemsock]

Thanks for all the info…this is looking a little scary.

Rent is $2595…i was going to try and get it down, but it looks like they may be taking a loss already. There first was financed in ’04…i wonder if it was an ARM?

Kinda’ funny that i can find all this info on the internet and i’m still beggin’ for more. “What do you mean I can’t find out when their ARM adjusts!” Isn’t technology grand…

I do know that the reason for the move is that the wife has a job that is relocating up north. That makes me think they have a double income…but there was a crib in the Master retreat…and another young child’s room as well…so perhaps Mr. Mom lives there.

[PerryChase]

People often price rents by that the “need” to get. Once a home sits on the market for a while, then it’ll be priced at market rate. There is plenty of “need to” pricing right now — both in the rental and resale market.

I expect that next year, we’ll begin to see 1 or 2 months free rent with a lease (like there used to be in the 1990s).

[no_such_reality]

People often price rents by that the “need” to get. Once a home sits on the market for a while, then it’ll be priced at market rate.

If they have substantial equity. For many of the rentals with current exorbinant “need to” rents, they won’t come to market, the owners can’t handle that much negative cashflow a month.

The OP is thinking ahead well. If the owner is currently extended, their room to negotiate with a good tenant is very limited.

[Enorah]

Have you all seen this?

http://www.rentometer.com/

You input info on a rental to find how it compares with other rentals currently listed in the area.

Originally posted on Housing Panic

http://housingpanic.blogspot.com/

[kev374]

great site Enorah.

I do not believe in renting from Property Management companies. Besides being overpriced they tend to be total jerks because to them you’re just another statistic in the 400 unit complex, they have no incentive to keep you happy. In addition they will rip you off when you leave the place accessing you all sorts of spurious cleaning charges even if the place was left spotless. They have full time lawyers on their payrolls anyway so you’ll be facing an uphill battle if you fight them and they know this.

I’ve had much better experiences dealing with individual owners because the playing field is equal and they have personal interest and attention in their property and their tenants, not to mention they usually price attractively because the cost of staying vacant for them is higher.

[Enorah]

Thanks kev.

I agree about renting from a homeowner if possible. The last 4 homes I have rented were through the owners themselves. Overall this has been a much happier experience for me than renting through a management company. I did a lot of that when I was younger, rented apts that were managed by some kind of property management company.

We are moving to the north county coastal area this June. We will be renting and we are open to a managed property but prefer to rent directly from an owner.

[Author]

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