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Getting the Condo Rented

(Part Three of Renting Out a Condo)

By - December, 2012

In the second part of our story about our condo investment we learned a few good lessons. Fortunately, after finishing all of the repairs and renovations we did not go as far over budget as we thought. In fact, we exceeded our total budget by less than a thousand dollars. Of course we opted out of new vanities for the bathrooms (we painted one), and never found a door that would fit the shower in the master bathroom (so it now has a nice shower curtain).

In other good news, the leak from the roof into the air conditioning closet electrical box seems to be fixed after three attempts. Two days of heavy rain tested the repair. After that I was able to close up the wall with some new drywall. I didn't call the handyman back for this, because my imperfect drywalling and painting job was good enough for a utility closet. Now if the repair holds until the roof is replaced (scheduled for this year or next by the management of the complex), we are fine.

As we were finishing the project our real estate agent found a possible tenant. He looked at the place while we were still a bit disorganized, but liked it right away. The catch was that he might have a problem that would show up on the background check the association would be doing (we cannot divulge the details, but nothing too bad), and he was unemployed. The good news was that he was actively seeking a job, had money in the bank, and could pay six months in advance. That last part got our attention.

He said he wanted the place, and then a couple days later, when the agent sent over the lease agreement, suddenly recalled the rent being $925. Actually he had been told clearly that it was being listed at $1,100 per month, but we would rent it to him for $1,000. From the clues we and our agent put together, it seems that he had heard of another place that he was considering renting.

Lesson: Make it very clear what the rent and other conditions are, and get the lease signed as soon as possible. As it turns out, we may have been right about the misunderstanding being a delay tactic. In the end he did sign the lease after waiting another day.

Lesson: Ask prospective tenants a lot of questions. Apparently the one problem that might show up on the background report turned into several. The association refused to approve our renter after the report and an interview. They would not divulge what showed up on the report, which leads us to our next lesson...

Lesson: You have less freedom with a condo as a rental rather than a house. The prospective tenant had to pay $75 to apply to the association, and $70 for the background check. neither of these fees is refundable. This is sad for the applicant, but the denial of approval, and the week that the process took (it can be two weeks or more) also means we will probably not get the place rented out for another month. We lost a $1,000 in rent.

On the other hand, we may not have wanted to rent to this person if we had seen that report, so this could be good news. But the bottom line is that you will always have less control when you are renting a condo out. There might be a few things in an applicant's history for which the association would deny approval but which would not bother us enough to say no (especially with several months paid in advance).

In any case, we might find a better tenant now, which leads us to our next lesson...

Lesson: Timing can matter. The season is revving up here in Naples (tens of thousands move here for the winter), putting pressure on the rental rates around town. We just noted that the other places offered in our complex are rented out. This leaves our unit as the only one for rent here, making it possible that we can get a tenant who will pay $1,100 per month. Alternately, we are offering the condo as a seasonal rental (three months minimum) for $1,500 per month. They are regularly rented for more than that when furnished, but we do not want to invest in furniture that we might have to store when we eventually get a long-term tenant.

Watch here for another update (the final one I hope).

Last installment: We Sell Our Condo

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