Thursday, February 07, 2008

Accidental Landlords

I believe that sometimes you have to look reality in the eye and deny it. -Garrison Keillor

Accidental landlords. These are those property owners who, for whatever reason, could not or would not drop their asking price to a level that generated a deal and decided to rent their property rather than adapt to the market's reality. As market dynamics have deteriorated, the ranks of accidental landlords have swelled. Ironically, the decision to rent a property that won't sell many times winds up costing more than dropping the price earlier would have. With hundreds of properties for sale, the hassle of showing a tenant-occupied property often means that another easier-to-show property will get the showing. Add to that the fact that tenant-occupied properties usually don't show well and you've got a difficult, if not impossible, property to sell all the while risking further price deterioration, tenant damage and ongoing carrying costs. To add insult to injury, a property with a mortgage often has higher monthly costs than the rent it will command. My advice to sellers who have considered renting, crossing their fingers and praying for a miracle rather than dropping your price; think seriously about the real costs of doing that and the risks involved.

The pessimist complains about the wind; The optimist expects it to change; And the realist adjusts the sails.
-William Arthur Ward