Going for 12mo Cruise. What About The House?

[zstine]

We're getting ready to leave for a year, but not decided on what to do with the house. We've been knocking out boat projects and saving our cruising kitty for a 12mo Carib cruise leaving in spring. We have 2 kids in grade school (6 and 8yrs) and plan to return to home in NJ, in the same school. Our mortgage alone is twice our expected monthly cruising cost. So we don't have the cash to just pay the mortgage on an empty house for a year. I can only see 2 options, sell or rent. others?

Since we're coming back home, renting would be great. But in NJ it is assumed that a lease will renew unless the tenant is behind on rent or has done something else to warrant eviction. I could get a lawyer to write in the lease that it will expire in a year and the tenant is hereby notified that they must vacate, but who's going to rent the house then? should I rent and take the risk...?

Selling posses the issue of what to do with all our stuff. Renting allows us to keep and store our land possessions for when we return. Selling the house would require moving to storage and/or selling our stuff. Then buying a house, buying the stuff we sold, and moving the stuff we stored... uhg

Any advice?
thanks
Zach

[stello]

I guess it depends on how much equity you have? It's a great time to be selling, things might not be as rosy in a year.
I can't see prices going up by much over the next 12 months or so, so possibly sell it and plan on renting for a while when you get back until you find something else to buy?

Perhaps by then the market will have dropped so you'll be able to afford more house, or perhaps the cruising will be so awesome you'll change plans and not want to return at all.

Another option is to look into short term rental. Is there much of a market for Airbnb in your location? Possibly leave it in the hands of a reputable property manager and let them handle all the day to day of running it? Could it rent out weekly to vacationers?

[pesarsten]

You may want to speak with a property manager about the rental aspect. Someone needs to be available if there are problems at the house. I would think renting it out is your best bet, don't think there is any problem with a non renewal lease agreement.

[roverhi]

How much in love are you with the house, neighborhood and school district. If it's just a house, might think of selling it. As soon as interest rates start up, housing values will, at best, maintain their current value or, more likely, drop. It's a sellers market most places now but getting soft. Couldn't be a better time to sell in my estimation.

If you really like the house, etc. consider renting it furnished. A reasonable number of people have temporary transfers or don't plan on buying a house so don't want a long term lease. Store any heirlooms or irreplaceable furnishings but leave enough furniture for the tenants to be reasonably comfortable. A property manager can tell you if such an arrangement is feasible for your area. Since you are going to be living on the boat while cruising, may have to move on to it a month or two early to accommodate a tenant but consider it experience.

You should be able to rent the house unfurnished for a fixed period with no option to extend occupancy. Can't believe there is anywhere where that is not the case even in the Peoples Republic of NJ. Once again, talk to a rental agent to get the straight skinny.

Search around for a good rental agent. Some earn their commissions but many do not. Get references and check them out. In no case try and manage the property on your own. Managing a rental from the Caribbean is fraught with disaster. Don't expect the tenants to do the yard work. Budget in a landscaping service unless you don't care about the condition of the yard. Have never had a tenant take care of a yard as I would like it done.

Have a great trip. Your kids will have a fantastic experience that they can get in any other way. A great adventure, hands on learning and family experience.

[flymike]

We just got back from a five month cruise - started the Great Loop in our trawler. We used "housesittersamerica.com" to find a sitter.
The time period was too short for a renter and we had pets to feed so leaving it empty wasn't an option. No, the sitter didn't pay anything, but we got our house back in good shape. Good luck.

[TrentePieds]

Rent it, is the obvious answer, except that unless you are constitutionally and psychologically fitted to be slumlord, you'll be in for some very nasty surprises. Sez I having bin in that game for many years.

Tenant selection is the key to tenant discipline, but tenant discipline has to be enforced on a weekly/daily basis. Unless the tenant - not just in low-rent districts - is aware daily of the Sword of Damocles hanging over him, your landlording experience is not likely to be one of contentment and could, indeed, prove VERY costly in terms of bux.

You'd prolly need a COMPETENT rental agent - if you can find one :-)

TrentePieds

[zstine]

Originally Posted by stello

I guess it depends on how much equity you have? It's a great time to be selling, things might not be as rosy in a year.
I can't see prices going up by much over the next 12 months or so, so possibly sell it and plan on renting for a while when you get back until you find something else to buy?...
Another option is to look into short term rental. Is there much of a market for Airbnb in your location? Possibly leave it in the hands of a reputable property manager and let them handle all the day to day of running it? Could it rent out weekly to vacationers?

thanks stello.. we don't have much more than the 20% down when we bought 3.5 yrs ago. so most of the mortgage still goes to interest. I'm wherry about the short term rental b/c the uncertainty, though being outside Morriston NJ (under an hour to NYC) that is a possibility. But I'd hate to be cruising for 6mo and find our cruising kitty running out b/c the house isn't renting as much as predicted.

Originally Posted by pesarsten

You may want to speak with a property manager about the rental aspect. Someone needs to be available if there are problems at the house. I would think renting it out is your best bet, don't think there is any problem with a non renewal lease agreement.

I agree that I need to speak more to a professional. I have talked to a friend in real estate and he was the one that voiced the concern of squatters.. big issue here in NJ. He was the one that said I'd be able to get around that if a lawyer basically states notice to vacate in 12mo. Perhaps that clause is not as big of a deal breaker as I think, so need to learn more.

Originally Posted by roverhi

How much in love are you with the house, neighborhood and school district. ...
Have a great trip. Your kids will have a fantastic experience that they can get in any other way. A great adventure, hands on learning and family experience.

Thanks roverhi, I'm not in love with the house, so not worried about moving b/c of that. We do want to put the kids back in school where their friends are. Selling, storing, buying, moving is just A LOT more work than renting and that's more what is keeping me from wanting to sell. I definitely need to talk to a property manager/rental agent and get the low down on fixed term rental.

Originally Posted by flymike

We just got back from a five month cruise - started the Great Loop in our trawler. We used "housesittersamerica.com" to find a sitter.
The time period was too short for a renter and we had pets to feed so leaving it empty wasn't an option. No, the sitter didn't pay anything, but we got our house back in good shape. Good luck.

Congrats on a successful voyage flymike! a house sitter would be ideal if money was no object, but its over $30k for a year of our mortgage payments and that would wipe out the cruising kitty... can't have both.

Originally Posted by TrentePieds

Rent it, is the obvious answer,...

You'd prolly need a COMPETENT rental agent - if you can find one :-)

TrentePieds

thanks trentePieds. you make a good point about the risk of bad tenants. I'll have to leverage off my real estate friend to get hooked up with a competent rental agent/property manager... and pay him well.

Looks like I have to talk to a rental agent and do some investigation on the non-extended lease issue. renting seems easier, even with the many issues.

[redhead]

If you live near a university there are visiting professors and grad students who need housing for 1 year only. Call the college. If you live anywhere near a national laboratory or a scientific institute, same thing. Basically a short term rental to highly educated people who can afford it. No long term expectations on either side. You will make very good money, but must have.a property manager since the tenants have high expectations and most times English is a second (or third, or fourth) language. I was in real estate for a short time and realized very quickly what a neat little niche market this is. Done well, everyone comes out happy, and the house is left in better shape than a regular rental. Good luck!

Sent from my SM-G900V using Cruisers Sailing Forum mobile app

[Cheechako]

Rent the house. Aren't rentals at a premium in NJ? I doubt you will find a problem renting. Rent just a touch lower than going rate and state up front it's a 1 yr rental ONLY. There must be people out there who are moving to NJ and would like to rent a year before buying. etc.

[Mikado]

I am in a very similar situation except I wanted to be able to go back to my house every few months.

I chose to rent thru AIRBNB and VRBO. It has been a fantastic success. I rent on the average of 10 nights a month and it more than pays my house payment. If I want to come back home I just make those days unavailable to rent.

I put most of my small personal items in couple of locked closets leaving the guests an empty closet in each bedroom. They are not allowed access to the garage so plenty of room there to store stuff as well.

The amount that the agency makes covers cleaning after each guest leaves, clean sheets and towels, etc. So far this has been a perfect solution for me.

Good luck,

Jeff

[zstine]

Originally Posted by Mikado

. .

I chose to rent thru AIRBNB and VRBO. It has been a fantastic success. I rent on the average of 10 nights a month and it more than pays my house payment. If I want to come back home I just make those days unavailable to rent.

. . .

The amount that the agency makes covers cleaning after each guest leaves, clean sheets and towels, etc. So far this has been a perfect solution for me.

Good luck,

Jeff

Thanks Jeff, does 'the agency' manage the VRBO and AirBNB schedules/web pages so you don't get double booked, etc.? or do you do that?

I just spoke to my real estate friend who's been renting and selling for 26yrs in Hoboken NJ area and he said he has NEVER had a non-renewal clause in any lease, not even his short term 6mo or month by month rentals... Not that it can't be done. He's just concerned that it will be hard to rent a 4 bedroom house in the burbs for 1 yr only. So we can try, but need a back-up plan. AirBNB / VRBO is a good backup for sure.. if not a primary solution.

Thanks to all

[Mikado]

Originally Posted by zstine

Thanks Jeff, does 'the agency' manage the VRBO and AirBNB schedules/web pages so you don't get double booked, etc.? or do you do that?

I just spoke to my real estate friend who's been renting and selling for 26yrs in Hoboken NJ area and he said he has NEVER had a non-renewal clause in any lease, not even his short term 6mo or month by month rentals... Not that it can't be done. He's just concerned that it will be hard to rent a 4 bedroom house in the burbs for 1 yr only. So we can try, but need a back-up plan. AirBNB / VRBO is a good backup for sure.. if not a primary solution.

Thanks to all

I don't do anything. They sent out a photographer to take pics and videos and manage all advertising, schedule, bookings, cleaning, etc. They only time that they have contacted me was for a couple maintenance issues.

Jeff

[Ded reckoner]

I recommend you re-read TrentePieds post. Then, see the movie "Pacific Heights" before you decide to rent. If you still decide to rent, you should understand the tax consequences of taking any deductions related to rental property (for when you eventually sell your house). In any case, if you're contemplating leaving your property unoccupied any significant amount of time, you need to contact your homeowner's insurance company about their coverage of this situation.

[Shrew]

You bought a house 3.5 years ago with little equity and then decided to prepare for a 1 yr cruise with small children?

Do you actually have a plan? Or a plan du jour?

[Dave22q]

It may be customary for house leases to be renewable on NJ but it is no big deal to draft a lease without a renewal clause. Check with a local lawyer but I feel pretty sure that omitting any option for renewal and providing a notice to vacate some reasonable period before expiration is about all you would need.
You will need some kind of service company, being a landlord is hard but being an absentee landlord is just impossible. Then you can figure what your net will be after factoring in the management company, and clean up expenses after the renter leaves. You bank and insurance company might have some say as well, check with them.
Selling as an option is not great. Probable higher home prices mortgage rates on your return, taxes on capital gain are some negative factors to consider.
It seems like your plan for a long cruise may be inconsistent with your situation. Think twice before jumping into anything.