May 05, 2016 - 12:05
Here in Houston 1 out of 10 homes are considered to be vacant according to Realtytrac.com and it is a big money loss for the owners. There are many personal and financial reasons why a home becomes vacant. Sometimes because the owners have moved on and never got around to selling the old home, others because they are unable to find a tenant to rent out the property and some don’t have any money to renovate the home to a livable condition. Most of the time it is because the home was passed down to a relative(s). Once they receive it they can either sell it, fix it (which would require a good sum of cash), rent it out, or they will just keep it as it is because they assume the value will appreciate over time. Most of the options consist of putting in money but when they try to sell it they quickly realize that they will not receive as much as they would want, so it stays as it is.
There are many different expenses in keeping a vacant home and they all burn your pocket. Here are a few on the list:
Most of these payments are included even if you have already paid of the mortgage. In addition, there are also vacant home liabilities that can include vandalism, theft, trespassing, weather damage or water and fire damage. Most insurance companies stop insuring your home after it has been vacant for 30 days. When that happens, you have to get vacant property insurance, which is a lot more expensive than homeowner or landlord’s insurance. Overall, the monthly fees could be around $800-$1,000 a month, that’s around $10,000 loss a year. And the total income from the property? ZERO.
So what are the options that you could take in order from loosing $10,000 a year?
One option would be to list, price and market the home for sale at a competitive price. If it gets rid of the mortgage and even put a bit of money in your pocket, it is better to sale than to loose every month. You could even offer incentives like seller financing or rent-to-own in order to stop your loss of money. You could also invest a few thousand dollars into the property (depending on renovation costs) to get it back on its feet, once rented out you will get a good return to cover the money you spent and even get more over time. But to just let it keep sitting there vacant would not be a smart financial move. So look over it and if you decide to sell it, here at Tran Realty we can always help you do that.