Need Advice. HUGE opportunity but HUGE risk

amother

Fri, Apr 08 2011, 3:08 pm

OK so here's the deal. Right now my family is living in a run down way too tiny apartment that is making me and the kids miserable but the rent is cheap and thats all we can afford.

Here's the dillema: a stunning huge house became available for rent around my block: for $4000 a month which we can barely afford a quarter of. HOWEVER the house has a finished basement apartment, a studio apartment and a big driveway, all of which the landlord will permit us to sublet. if we can get for them the prices he said he got when he lived there, the remaining rent would be about what we're paying now. DREAM COME TRUE....EXCEPT: how da heck do we cover the rent while looking for tenants? and what if , as is bound to happen with small, or basement apartments there is a frequesnt tenant turnover. for those months while we look for a new tenant, we would have no way to afford the rent.
we don't wanna let this opportunity go. the house is perfect, the neighborhood is perfect the timing is perfect and with tenanats, the price is perfect. the big "but" though is pretty big. WWYD?

amother

Fri, Apr 08 2011, 3:15 pm

You should try to find something in between. $4000 sounds like a major rip-off even for the most expensive neighborhood. And as you have never been a landlord before, you will have to acclimate quickly to all the new responsibilities. I would suggest finding a smaller house that is more within your budget, and also has a rentable basement ... Sometimes in life we want something really badly, but your family would be much worse off with two stressed out parents who can't afford anything ... Also the summer is coming now so you can probably manage in your apt while you take the kids to the park all the time and they can play outside ... This is just my two cents and you can feel free to ignore it.

amother

Fri, Apr 08 2011, 3:18 pm

amother wrote:

we can't afford something in between. the reason this is a possibility more than a 2200 a month apt is the possibility of subletting which will keep the rent within an affordable range.

Tweedledee

Fri, Apr 08 2011, 3:20 pm

Mkay wrote:

What's your neighborhhod like? Is there a large demand on basements and driveways? Do you know anyone that recently found tenants for these things that can clue you in?

plan on talking to a real estate agent about that.he'd know

Last edited by Tweedledee on Fri, Apr 08 2011, 3:22 pm; edited 1 time in total

amother

Fri, Apr 08 2011, 3:21 pm

We had the same opportunity, and we turned it down. We waited til something else came up, and now we're happily living in a home we can afford and we don't have that constant stress. I definitely would advise against it.

amother

Fri, Apr 08 2011, 3:25 pm

amother wrote:

We've been waiting for many years and the rental prices have gone up in that time by an average of $400. I have this pressing "now or never" kind of feeling. Im afraid if we let this go, we'll be in this little flat in 10 years wishing we'd gone for it. I am so indecisive about this

amother

Fri, Apr 08 2011, 3:26 pm

self-actualization wrote:

What if it takes 6 months to find renters for everything? Do you have 6 months' worth of cash to float you while you are looking for renters?

Hence my dillema

amother

Fri, Apr 08 2011, 3:26 pm

amother who had same opportunity

I want to add that we didn't either think we could afford something in between. BUT we ended up finding something that was worth a lot more than they asked- a real deal- so in essence, we got an in between place for a low, low price. Keep that in mind.

amother

Fri, Apr 08 2011, 3:27 pm

$4000 is a heck of a lot of money. That's way bigger than my mortgage. How do you know that your landlord is not going to back out of the subletting idea? I think its a bad move, financially, to rely on theoretical income (rent from subletting). You can't afford it. period. I don't even see how a landlord would rent to you if you really could not afford it. A landlord wants rent money. not theoretical money.

shoshina

Fri, Apr 08 2011, 3:31 pm

OP the numbers here don't add up. You said you can afford "a quarter" of $4000/month for a beautiful house. Do you think a basement apartment in that beautiful house is worth more than a quarter of the rent? Do you think a driveway in that beautiful house is worth more than a quarter of the rent? I would wait until you have something that cannot potentially put you WAY in debt in such a short time-- even if you found a rentor tomorrow, you would have to eat this months rent fully-- do you have $4000 in disposable income right now?

It is really a shame though, can you negotiate with the landlord for a lower rent that IS affordable?

Tova

Fri, Apr 08 2011, 3:35 pm

Please don't do it. It is not smart even in the best case scenario (in other words if you can sublet for each month you live there). You have a LOT to lose and nearly nothing to gain (even if your net rent is the same as now, your other costs of living will be higher). I'm sorry I don't have time to elaborate, but let me know if you want me to.

amother

Fri, Apr 08 2011, 3:39 pm

shoshina wrote:

the landlord said he's be willing to lower the price to $3000 if we don't have tenants in those spaces but thats still too high.

sky

Fri, Apr 08 2011, 3:46 pm

saw50st8 wrote:

I wouldn't do it.

In addition to the problems with rent, an increase in living space will likely increase other bills (utilities mainly).

this is true. Your electric and gas will be much higher on a larger house. You also have to consider who is paying the tenants utilities. Do you pay that. Are you responsible for fixing things that go wrong in their parts of the house?

amother

Fri, Apr 08 2011, 3:48 pm

sky wrote:

saw50st8 wrote:

I wouldn't do it.

In addition to the problems with rent, an increase in living space will likely increase other bills (utilities mainly).

I don't think so. we are not the landlords.

shoshina

Fri, Apr 08 2011, 3:49 pm

OP what about $3000 WITH tenants? It seems too risky to gamble that much of your income on finding subtenants. Also realize that they will be living in your basement. That may mean music on Shabbos, non-tsnius behavior, and can you really be picky about tenants if you can't evict them without a financial blow to yourself?

OP I understand lack of space...but it might be better to wait for something better, or better yet, save to put a down payment on a beautiful house of your own!