No sale? Why not rent it instead?

This Great Neck home is a rental for This Great Neck home is a rental for $7,000 on month. Photo Credit: Photo by Charles Eckert

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Thinking of asking a fortuneteller about the real estate market? Fuhgeddaboudit.

It doesn't take a crystal ball to observe that things in the housing market aren't exactly hunky-dory and are not likely to get better for a while. It also doesn't take a visionary to see this creates a tricky situation for those who want --- and sometimes need-- to sell their home.

That's why some would-be sellers these days are considering an alternative they might never have imagined in the past -- renting out their houses.

"I'm considering renting for a year or two," says Wayne McCann, a broker who has chosen this option for his Mattituck residence, a home he almost sold for $2.5 million last year before the deal fell through.

He can downsize to a smaller house he owns while the potential rental income helps him meet expenses on the larger home, he says. At the same time, McCann, the founder of Sea Cliff-based Harmonious Homes, is scanning the horizon for good times to come.

"I'll wait for a better market," he says, "and maybe get my $2.5 million again."

A National Association of Realtors spokesman says the number of people moving to another home while retaining their old one has remained at 5 percent over the past several years.

Most Long Island real estate experts contacted, however, say they have seen an uptick in homes being rented out -- mostly those in the more-than-$600,000 category, probably since at the moment they're harder to sell.

Paradoxically, they also say the rental market for single-family residences is tightening because there are more people interested in renting these days. 

WHY IT MAY BE A GOOD IDEA

Houses aren't moving.  "Back in the old days, banks would lend out money in a heartbeat at 5 percent down," says Trudy Elliott with Laffey Associates, June Shapiro Division. "Those days are gone."

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The rental market is strong.  Mary McGrane, who specializes in rental properties with Century 21 Northern Shores, had neighbors who struggled to sell their Victorian home in East Northport. When they finally put it on the rental market, it was scooped up by the first looker. "I didn't even have a chance to show it," she says.

It's an income source. The market for rentals is strong, and many experts say it's likely to remain so in the future. Rents on Long Island range widely, from about $1,000 to over $10,000 a month.

You can keep it on the market. Zindelle Drew of Daniel Gale Sotheby's says she's seen several homes purchased while they were rented in recent years. And Deborah Sande, a rental specialist in the Huntington office of Daniel Gale Sotheby's, downplays the risk of damage to your home. Just consider all the money renters have to come up with to get into the house in the first place, she says. With a month's rent, a two-month security deposit and an agency fee, that could be $10,000 or more, she said.

With that much at stake, Sande believes most renters will take care of a house. "I've been doing this for a long time and I can count on the fingers of one hand the number of times things have gone wrong," she said.

A lease-to-own option could net a buyer. Some homeowners are offering lease-to-own options. This appeals to potential buyers who aren't quite ready to make the commitment, says Donna Scala, an agent with Daniel Gale Sotheby's International Realty. Arrangements vary, but normally this means the renter gets first crack at the home if it's put on the market again and may get to apply some rent money toward the purchase price. "This maybe puts them in a house they might want to buy," Scala says. "They get to take it on a test drive and maybe come up with the money later."

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You can go home again. Jamie Blundell, an Internet search engine optimization specialist, lived contentedly in his Bayville Cape while working on Long Island. But after he got a job in Manhattan, he decided to sell his house and move closer to work. After looking at the slow housing market, he chose to rent instead. "I'd like to keep it as an asset. And it's always nice to have docking rights in Bayville." And Blundell still likes his Bayville home. "Who knows," he says. "I might retire here some day." 

WHY IT MAY BE A BAD IDEA

It's no way to get rich. Rental income may not be enough to offset the home's upkeep, says Lawrence P. Finn III, director of Corporate Services for Coach Realtors, especially with added expenses.

Renters may not take good care of the house. "Renting a property is usually not the best for keeping it in selling condition," Finn says. In addition, regular upkeep -- plumbing, landscaping, etc. -- can be a trial. That's especially true, Finn says, if the owner has moved out of state and doesn't have a trusted local repairman to make sure work is done well.

It's harder to sell if it's rented. If your ultimate goal is to sell the house, Finn says, renters can get in the way. It's harder for potential buyers to get access to the house to look at it, and it may not "show" as well because the renters are less interested in selling than you are.

It's time to move on Finn calls it "rent and regret." He says, "A seller wants to move and get on with their life. This puts their goals and aspirations on hold."  

IF YOU DECIDE TO RENT OUT YOUR HOUSE

Screen that tenant. A rental agent will do this for you. Otherwise, ask the renter for three references and a credit check, says Bettie Meinel, a broker and vice president of career development with Laffey Fine Homes. Also, get some history about the person. Why are they renting? Are they moving into the area, or have they sold a house and are waiting to get back into the market?

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Get it in writing. Get a lease agreement. They usually can be obtained at a stationery store, Meinel says. Normally, the lease time is for at least one year.

Ask for the money. Get the first and last month's rent and either one or two month's rent security deposit up front.

Decide who pays for what. Most tenants pay rent, any landscaping costs and utilities. The homeowner typically takes care of the water bills. All those things can be adjusted.

Get the house ready. The condition of a house helps determine how much you can charge for rent. Make sure the home is freshly painted, that it's clean and everything is in working order.


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Great Neck

$7,000 a month

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99 Ash Dr.

This 10-room, newly renovated Colonial in Great Neck Estates has southern exposure. It has been on the market since spring and was last listed for $1.65 million. Listing agent: Trudy Elliott, Laffey Fine Homes, 516-376-6944


Mattituck

$6,900 a month

1035 Sebastian's Cove Rd.

This 11-room, waterfront Colonial on 1 ½ acres has views of the Long Island Sound and the Mattituck inlet. It has been steadily reduced in price over the past three years, starting at $3.295 million; it was last listed for $1,999,999. Listing agent: Wayne McCann, Harmonious Homes, Inc., 516-721-5182


Bayville

$2,650 a month

87 Godfrey Ave.

This eight-room Cape has a new kitchen, a finished basement and beach rights. The owner was going to put it on the market, but decided to rent instead. Listing agents: Michael and Ludmilla Stanco, Prudential Douglas Elliman Real Estate, 917-293-0915

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