Getting the Condo Rented
(Part Three of Renting Out a Condo)
By Steve Gillman - December, 2012
In the second part of our
story about our condo investment we learned a few good lessons.
Fortunately, after finishing all of the repairs and renovations
we did not go as far over budget as we thought. In fact, we exceeded
our total budget by less than a thousand dollars. Of course we
opted out of new vanities for the bathrooms (we painted one),
and never found a door that would fit the shower in the master
bathroom (so it now has a nice shower curtain).
In other good news, the leak from the roof into the air conditioning
closet electrical box seems to be fixed after three attempts.
Two days of heavy rain tested the repair. After that I was able
to close up the wall with some new drywall. I didn't call the
handyman back for this, because my imperfect drywalling and painting
job was good enough for a utility closet. Now if the repair holds
until the roof is replaced (scheduled for this year or next by
the management of the complex), we are fine.
As we were finishing the project our real estate agent found
a possible tenant. He looked at the place while we were still
a bit disorganized, but liked it right away. The catch was that
he might have a problem that would show up on the background
check the association would be doing (we cannot divulge the details,
but nothing too bad), and he was unemployed. The good news was
that he was actively seeking a job, had money in the bank, and
could pay six months in advance. That last part got our attention.
He said he wanted the place, and then a couple days later,
when the agent sent over the lease agreement, suddenly recalled
the rent being $925. Actually he had been told clearly that it
was being listed at $1,100 per month, but we would rent it to
him for $1,000. From the clues we and our agent put together,
it seems that he had heard of another place that he was considering
Lesson: Make it very clear what the rent and other
conditions are, and get the lease signed as soon as possible.
As it turns out, we may have been right about the misunderstanding
being a delay tactic. In the end he did sign the lease after
waiting another day.
Lesson: Ask prospective tenants a lot of questions.
Apparently the one problem that might show up on the background
report turned into several. The association refused to approve
our renter after the report and an interview. They would not
divulge what showed up on the report, which leads us to our next
Lesson: You have less freedom with a condo as a rental
rather than a house. The prospective tenant had to pay $75 to
apply to the association, and $70 for the background check. neither
of these fees is refundable. This is sad for the applicant, but
the denial of approval, and the week that the process took (it
can be two weeks or more) also means we will probably not get
the place rented out for another month. We lost a $1,000 in rent.
On the other hand, we may not have wanted to rent to this
person if we had seen that report, so this could be good news.
But the bottom line is that you will always have less control
when you are renting a condo out. There might be a few things
in an applicant's history for which the association would deny
approval but which would not bother us enough to say no (especially
with several months paid in advance).
In any case, we might find a better tenant now, which leads
us to our next lesson...
Lesson: Timing can matter. The season is revving up
here in Naples (tens of thousands move here for the winter),
putting pressure on the rental rates around town. We just noted
that the other places offered in our complex are rented out.
This leaves our unit as the only one for rent here, making it
possible that we can get a tenant who will pay $1,100 per month.
Alternately, we are offering the condo as a seasonal rental (three
months minimum) for $1,500 per month. They are regularly rented
for more than that when furnished, but we do not want to invest
in furniture that we might have to store when we eventually get
a long-term tenant.
Watch here for another update (the final one I hope).
Last installment: We
Sell Our Condo