Sometimes It’s Cheaper to Keep Her: Why You First Need Reserve Funds Before Renting Out Your Home

 

 



You tied up, you better stay tied up
Cause it's cheaper to keep her, this is from T, who says
It's cheaper to keep her, it's cheaper to keep her

When your little girl makes you mad
And you get an attitude and pack your bags
Five little children that you're leavin' behind
Son, you're gonna pay some alimony or do some time

That's why it's cheaper to keep her (Help me say it, y'all)
It's cheaper to keep her (It's cheaper to keep her)

 

(“Cheaper to Keep Her” by Johnnie Taylor)

 

Marriage can be the best thing in the world.

 

Marriage can be the worst thing in the world.

 

But breaking up is really hard on several fronts and is certainly never cheap.

 

Much like a bad marriage, we get calls from potential clients who want to break up with the houses they live in and rent them out to someone else:

 

“I’ve lived here for 20 years!  It’s just time to move.  And the hour commute each way to my new job is killing me!”

 

“This neighborhood has been going downhill for a long time.  It’s time to get around a better class of folk.  I’ll rent it until I can afford to sell it.”

 

“Things are breaking everyday in my house.  Mentally, I feel like I may be next if I don’t relocate.”

 

And as a Charlotte property manager, we like it when people want to move.  It keeps our doors open!

 

However, there is a difference between good and bad property management business.  Good property management business makes potential clients aware that renting out their home costs money and that they should have access to a reserve fund (2-3 months of rent at least).  Renting out a home can be costly upfront and things can get worse if things go wrong during the tenancy. 

 

Wait- I thought investing in real estate makes people millionaires!  I’m supposed to make money, not lose it.  What costs money?  And what can go wrong?  Here’s a very partial list:

 

1.  Preparing the home for market (steam clean carpet & a professional cleaning at minimum)

2.  Vacancy costs (utilities, HOA fees, monthly mortgage, lawn service)

3.  Property management fees (Sorry!  But well worth it! J)

4.  Things break (HVAC goes down, garage door breaks, etc.)

5.  Tenant stops paying and eviction is necessary

 

A good property manager will keep these costs to a minimum, but is never able to eliminate them entirely.

 

We sometimes get inquiries where there is an impression that as soon as there is a move-out there will be incoming rent covering the entire next month’s mortgage.  That is never the case.  And we don’t want to take business that puts our clients in untenable, stressful situations.

 

Don’t get me wrong; we’d love to rent out your house for you.  But change comes at a cost!  If there are not reserve funds available, as Mr. Taylor eloquently says, it is just cheaper to keep her. 

 

Holding rental homes can be a great path to long term wealth, but can drain liquid resources (especially in the short term).  If you want to break up, first make sure you are financially able to pull it off!   

 

Brett Furniss is the President & Owner of BDF Realty (Charlotte Residential Property Management), the trusted real estate advisor for Charlotte landlords & Home of $100 Flat Fee Property Management.   BDF Realty utilizes their innovative Pod System for exceptional customer service in residential property management, home repairs, and home sales for single-family homes, condos, and town homes in the Charlotte-Metro Area.  Contact Us Today!