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MY HOUSE/MY LIFE

To Cash Out or Rent Out?

April 01, 2001|MARC OLSON | SPECIAL TO THE TIMES

The red-hot Orange County real estate market is just the sort of action I like to observe from a safe distance.

But when my tenant of nearly three years announced in mid-December that he would move at the end of the month, I became a player. And my first move, I figured, would be to harpoon that tenant for not giving me 30 days' notice as stated in our rental agreement. I'd withhold his entire $400 deposit. I think I even rubbed my hands together with glee.

That didn't last long. After all, my tenant had given me every landlord's dream: 33 months of on-time rent and no plumbing problems.

And heck, it was almost Christmas.

So I kept $100 for a carpet cleaning and wrote him a $300 check. Maybe he'll put it toward a sofa in his new home or a dog, now that he's out from under my no-pets rule.

Next came my big decision: Should I rent the place again or sell it?

Letting go of that little condo would be hard for me and my wife; it was our home for three years soon after we were married. And those were our pre-parenthood days, when we slept late, dined out and saw movies in theaters.

Truth is, that place still feels like home.

But renting it out again would mean more fretting about Santa Ana property values, and a new tenant would mean worries about prompt payments, repairs and a possible PCP lab in the living room.

So I decided to do the wholesome thing and let money be my guide.

I called a Realtor familiar with that part of the city, described my two-bedroom, one-bath unit and learned I could get $129,000 if I sold. Not a great return, considering I paid $107,000 in 1993, but a chance to leave the rental business before my "Pacific Heights" moment.

I owed it to myself, however, to check out the alternative. I'd been charging $824 a month and losing a bit-money I could have been losing on tech stocks. I asked the Realtor how much I could get for it as a rental.

"Put $990 in the ad," he said, "and don't negotiate."

After I hung up and turned a cartwheel, I explained to my wife that we would seek a new tenant, refinance the loan (you go, Alan Greenspan) and, get this, turn a profit each month.

She agreed, but only after giving me that same wary look that Wilma Flintstone gave Fred whenever he had a scheme. In my case, her brown eyes clearly said: "I doubt we'll get another tenant who'll give us 33 months of on-time rent and no plumbing problems."

After telling her to be brave, I put an ad in the paper and learned how hot this market is. For the next week, the phone rang like a car alarm, and I was fielding calls like a broker. I had dozens of prospects, not including the ones I lost because I'm not inclined to elaborate on washer-dryer hookups while my 8-month-old is choking on a Cheerio.

Some of those people actually stopped by the unit and filled out an application.

As any landlord knows, the weeding-out process begins with folks who won't give a Social Security number. They know it looks as if they're hiding something, so they all have reassurances.

Maybe they've been converted. Maybe they've reformed. Maybe they recycle.

As a landlord putting his property at risk I had just one reaction: Next!

Applicants who came clean also posed problems. An early prospect was a woman who clearly could not afford the place, but she maintained her ex-husband would help her pay the rent. Yeah, right.

She had him call me, and I kindly said I'd take his offer under consideration, all the while determined not to become the clipboard-carrying sap knocking on Andy Capp's door.

The next two applicants were a young, single woman with a roommate, and a young, single mom with a 7-year-old daughter. Both had good jobs and seemed pleasant during the interview. I liked these two because they both had jobs, and that meant two incomes to draw on when my precious rent was due.

My wife sided with the mom, reasoning that she would be less likely to have loud parties. Or rather, that if she had loud parties, they'd be at Chuck E. Cheese.

But credit checks revealed that both had blemishes.

That's when another landlord gave me some advice: Don't give too much weight to the credit check. If these people had good incomes and clean credit, they'd already be in a house. So I was willing to give ground.

But then the next two applicants sailed through the credit check unscathed.

I suppose every landlord wishes there were some way to look into a person's eyes and determine whether he'll pay on time, respect the carpet and not put the Waltons in the second bedroom. I ended up picking the person who arrived earlier.

Two days later, we had a deal. As I gripped the deposit check and shook his hand, I told him I hoped he would enjoy the place.

But what I really hope for is 33 months of on-time rent and no plumbing problems.

*

Marc Olson is a copy editor at The Times' Orange County edition.

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