Do investors buy ready to rent houses?

Question

I have a SFR in a low to moderate income older neighborhood. We've owned it 3 years and rented it out.

The house has been vacant now for a few months, partially due to cleaning and doing improvements. We originally thought we would rent it out, but have found that we simply haven't had the time or patience to deal with type of applicants (and tenants) we will get. My husband has started a new job that takes all his time and I am just not cut out to be a low income landlord by myself.

So we have decided to sell. I am thinking the house should be marketed to investors, but was looking for opinions on this. The house is ready to rent and has had a new roof, driveway, kitchen and bath in the last 3 years, and we just put new windows in. Basically, it's ready to rent out for someone who has the time to find a tenant. The neighborhood is a small one with tract homes of 2/1 and 3/1 @ 925sf and probably about 40% are rentals. Things seem to rent well here if priced right. This is a 2/1 but one of the nicer houses in the neighborhood.

Do some investors look for finished ready to go homes?  If so what would they be looking for (i.e. lower price, etc.)?

Will Barnard · Answer

I could not agree more. Why sell at what would likely be a discount to market value with an investor buyer when you can retail it to a mr and mrs home buyer!

Ali Boone · Answer

I only buy ready to rent, turnkey, homes personally. I don't want to worry about working on them at all.

But my question is, why market to investors over primary home buyers? Investors always want a deal. You can usually get a higher sale price out of primaries. Something to think about!

Lucas Pfaff · Answer

If you're main issue is showing the property and marketing to potential tenants, I would suggest using a Realtor (or general real estate agent).  Commission can be negotiated but I would expect to pay roughly a full month rent as commission.

If you don't see it renting very quickly you can try offering a bonus if it fills in the first 30days.

Start by calling local real estate companies and asking for an agent specializing in rentals.

Dawn Anastasi · Answer

Your other option is to hire a property manager who will do those tasks for you while you collect a check (and manage the property manager).

Angie W. · Answer

@Christopher Dittemore thanks for the suggestions.

I don't have a mortgage and my holding costs are about $60 per month. Other than losing the monthly rent that is. I can live with that. My biggest concern is vandalism at this point.

Believe me if I had a friend that would take calls for me I would gladly pay them for the service.

For some reason I am having trouble getting referrals for PM companies. The few that I have contacted either will not return my calls or contracts are written in a way that doesn't provide me with much protection.

Would love to find a leasing agent - but it seems they are not plentiful here as I have not been able to find one.

Christopher Dittemore · Answer

I didn't see if you had a mortgage or not, but waiting means you're going to be losing profit through holding costs. I'd contact a local REIA and get referrals to PM companies/realtors. Also I'd put up some signs in the area and have a friend take calls with a list of questions to ask. I'd even request an application fee for pulling credit etc.

Angie W. · Answer

I appreciate all the advice. At this time I think I have decided to sit tight and re-market it for rent after the 1st of the year. Right now seems to be "crazy applicant/caller season" here and I don't have the patience to deal with it.

I would love nothing more than to hire either a PM or leasing agent. However, my experience in trying to find one or the other over the last few weeks has not been a good one. The PM's I have contacted have either not returned my calls, or have a lot of hidden fees that could potentially leave me with little to no income. Have not had any luck in locating just a leasing agent.

The problem with this property is that the tenant pool does not use online resources to find rentals. So online advertisement is a waste of time and produces no applicants. The best chance at finding a tenant for this property is the old "sign in the yard" - which is also the most time consuming method. After talking with other long time landlords in this neighborhood it is the only way they have found to be successful. I have not spoke to one PM yet that will do anything but advertise online, none want to be bothered with a sign in the yard. I can and am advertising online myself already so why would I hire someone else to do what I can do for free myself?

Angie W. · Answer

Just an update for anyone who may run across a similar situation to this.

I spoke at length with my realtor today who confirmed what I believed. The biggest issue with this property is the comps - all of which are HUD/foreclosures. I finally got the understanding today when she explained that trying to sell the property at retail (even if someone is willing to pay retail) that owner occupants or non cash investors more than likely will have a hard time with financing because of the comps. Regardless of what someone is willing to pay it all boils down to what their appraisers will say when they do the appraisal. Her experience lately has been that many appraisals are coming in well below the contract agreed price, which no one has any control over.

So her advice to me is to try to rent it if I can, as I would have to sell it at a significant discount at the present time. She agreed that it is a great rental and perhaps I should take a little more time to see if a decent applicant comes along. Hopefully in the future the trend will turn to more traditional sales in the area and I can try to sell then. In the mean time she is going to network for me to see if she can find a leasing agent willing to help me, or if anyone has any leads. She's been in the business for 25 years so I will trust her judgement.

Now off to revise my application and some of my paperwork and start a postlet ad and see what happens.

Angie W. · Answer

Thanks for all of the replies. The reason I asked if investors look for or buy ready to go properties is that this area is trending more towards renters/investors than owner occupants. Most of the sales in recent years have been "handyman specials" and the comps make it hard to price at retail for O/O. This neighborhood is approx. 40 - 45% rentals.

The other issue is this is a  2BR home in a 1940's tract neighborhood that is approx. 85% 3BR. Top dollar in this neighborhood is around $48,000 for a 3BR completely finished - 2 BR comps are hard to find. Rents for 3BR currently run between $700 -$800 depending on amenities. Mine was rented for $635 for the last 2 1/2years.

I plan on using an agent for the sale, but I like to be knowledgeable before hiring someone to do something for me.  I have never sold a home before that would be suitable for investment purposes, so I appreciate all the feedback.  I'm going to have to go shopping for a RE today as the one I have used for years is having a problem getting back to me.

I'm open to anymore advice or suggestions/opinions anyone may have.

Tim Jensen · Answer

i would buy a rent ready rental.

Do investors buy ready to rent houses?

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