A Tenant In Hand

So, Jeff and Alyson are short selling their home. For those who don't know what that means: a short sale is when you are selling it for less than you owe. The bank has to agree. Also, there has to be a legitimate reason: like a hardship related to loss of income, illness or something equally icky. Jeff and Alyson aren't late-late on their payments and have been keeping the auction at bay. However, they are struggling with their personal issues and a short sale was the answer they were looking for.

In walk my clients: Mitch and Tonya. Mitch and Tonya are buying Jeff and Alyson's town home as an investment property for cash. They were thrilled when Jeff and Alyson asked if they could stay and re-rent the home back. It meant Mitch and Tonya don't have to scramble to find a tenant in mid-September. In fact, not only do my clients have a built-in tenant, but Jeff and Alyson are super-duper clean, responsible and have demonstrated they take care of their home. Even if they are in the process of loosing it.

And of course, if things were just this simple, I wouldn't be writing.

Here is where it got a bit sketchy. Jeff and Alyson say they don't really have the money for the deposits and first month's rent. If they move somewhere else, they will have to come up with it. But, with Mitch and Tonya out of state, who is to say Jeff and Alyson will actually vacate the home mid-September when the home closes? And, who is to say they won't take everything nailed down with them?

Jeff and Alyson don't seem to be the type. But, there is always that risk.

Mitch would like above market rent, a deposit and a litany of other things from these guys. Tonya just wants renters. Mitch called me, appealing to my inner landlord, saying "It's just a simple business decision, right?"

I sided with Tonya.

Though I am the first to reject anyone who doesn't have rent and deposits--before they move in--what we have in this case is a tailor-made tenant, ready to stay. Jeff and Alyson already live here. They take great care of the place. To me, that is worth maybe a half-month free. Nope, that is worth a heck of a lot more than a half-month.

The difference between people coming in upfront and saying they are broke, and those who already live there and have demonstrated a standard of care to the property is night and day. If they were ready to move in and did this, I wouldn't play.

Mitch's position is if they don't want to come up with the deposit and rent, let them move out.

Mitch will then get the locks changed, advertise the house for rent, let it sit vacant for a few weeks and then spin the roulette wheel for a tenant who is willing and able to move in the last three months of the year. Also, he will be getting at least $150 less per month.

And, because Mitch does not live here, if these people move, he has to pay for cleaning and maintenance. I don't change locks. I get people in touch with locksmiths. I don't clean client's homes so it can be shown (even if they live out of state), but I can put them in touch with people who do.

I have a job. Staging a rental home for free isn't in my union. And, if you are a real estate agent, I know you are bobbing your head up and down right now, because you know what we have been asked to whore ourselves out to do.

I do advertise and show rental homes. And for that I will get a small stipend when it rents. That's ok. But, this town home is in the far-east part of Mesa, not terribly close to a large portion of the population or major employers. Also, there are 18 other town homes in this complex for rent as well. It isn't going to rent in a week.

All this I explained to Mitch. Yes, he can play hard-ball. He might get Jeff and Alyson to balk, getting them to pay. But Jeff and Alyson can go across the street and rent for less money for the same home for a more desperate landlord.

After a bit of consideration--and probably some marital clarity from Tonya--Mitch has decided to go with a renter in the hand. And, just to add to his comfort level, Jeff and Alyson are getting the air conditioner serviced, and they asked for an 18 month lease.

A wise decision under the circumstances.