House for Rent
Posted on May 15, 2006 Posted by John Scalzi 40 Comments
The renters at our house in Sterling, Virginia are heading off to retirement, which means that the house will be available for rental as of July 1. Naturally we plan to put an ad in the Washington Post, etc, but I thought I’d mention it here as well, for those of you in the Washington DC area (or those of you who know people in the Washington, DC area) who may be looking for a rental.
Here are the details on the house:
Location: Sterling, VA (20164)
* 3 bedrooms (master bedroom is 22×12)
* 2.5 baths
* Living room is 14 X 14
* Dining room is 10 X 11
* Family room is 19 X 12
* Kitchen is 16 X 12
* Basement level includes three additional finished rooms plus full bath plus very large workshop
* Washer/Dryer, Microwave, Dishwasher and of course standard oven and fridge
* Air conditioning/heater plus vent fan
* Carpeted floors with hardwood hallway (kitchen is tiled)
* Working fireplace
* Located on family-friendly cul-de-sac (with good neighbors)
* Close to Rt. 7 and Toll Road
* Pets okay with additional deposit
The lot is small (.11 acre) but the back opens up on a .33 acre “common area” that effectively belongs to the house (you can’t get to it except by going onto the property), so the back yard is pretty nicely sized.
Rent: $2,000 (plus $2k deposit); year-to-year lease. No subletting. Renter pays utilities; we pay homeowner association fee.
Interested? Let us know.
I hope this doesn’t come out snarky, because it isn’t meant to and applies just as much to expensive apartments as to your rental property. Do you find it strange that people will rent living space for the same price they could buy a house? Are these people who don’t plan to be in the area long or just don’t want the hassels associated with owning do you think?
Well, in this particular case, you can’t buy this house for what the rent costs. Another house in the neighborhood that has the same floor plan as ours is going for $500k, which means that the mortgage payment is about $2,300 (not including the various property taxes and other payments tacked on in escrow). So this house is renting at a discount to the mortgage cost in the area.
As for why people rent, I couldn’t say. For some people it’s a convenience issue, for others it’s a money issue.
Your property sounds really nice and I hope I didn’t imply that it wasn’t worth the price or that it’s morally wrong to be a landlord. It’s just that my one bedroom is a little over a quarter of that rent and frankly after living in Denver for a few years, I want a garage… Probably sour anyway.
My mother keeps trying to get me to buy a house. “It’s an investment!” is the most common battle cry, followed by “You’re just throwing money away with rent!” as a close second.
So why am I renting? For a number of reasons. The most important of those is that it means someone else does all the maintenance. If something breaks, I fill out a work request order, and the maintenance guy comes by and fixes it, or replaces it, or whatever. They will even replace light bulbs for me if I really wanted.
If I owned my own house and something broke, I’d have to fix it myself. This would take time and energy and probably expertise that I don’t have and/or don’t want to commit. I would also most likely need to do yardwork and all sorts of other outside maintenance that the apartment complex people do to all of their buildings and grounds routinely.
The short answer is, I have other things I want to think about more than I want to worry about learning the ins and outs of house maintenance. I rent because it’s more convenient to have someone else around to worry about all that.
It’s funny… supply & demand economics says that for a given piece of property:
rent = mortgage price + carrying cost.
I have no idea what “carrying costs” are, so this is all sorts of second hand…
But it implies to me that in the absence of real-estate speculation, rent should be more expensive than owning. Of course, it’ll be an awfully icy day in Washington D.C. (Wait… hell? Aww, what’s the difference anyway) when there is an absence of real-estate speculation.
It’s funny… supply & demand economics says that for a given piece of property:
rent = mortgage price + carrying cost.
– (tax deduction on interest) + (cost of associated rental services) – (expected rise in property values based on volatility and trend) + +- (expected volatility in interest rates, depending on mortage type) + (various property taxes) – (preferential social standing of owners vs. renters) – (risk premium for eviction) – (options to modify your dwelling to fit your needs) – + – + –
A home purchase is a great whanging bundle of risks and flows, many of them mutually contingent, and frankly isn’t for the timid. It’ll be interesting to see who starts taking advantage of some of the newly opening futures and options markets for private and commercial real estate to hedge these risks. Until then you’re probably best off with the rule of thumb of “if you’re not going to be moving for a few years, you should probably buy”.
So, will I get free books if I find you a renter?
I forwarded your blog to an Army major who’s moving to DC area this summer. Maybe this will work for both of you.
The last house we rented (before we bought) was an absolute STEAL for our area, in 2002, at $2K. It had:
1 Less bath
No dining room
No family room
No basement (so, of course, no bonus rooms or workshop)
And the smallest of the 3 bedrooms was about 10×10.
Oh, and we realized shortly after we moved out that it had very probably begun its life as a doublewide.
Damn kids with your music and your cheap rent.
MWT, there is also the middle route of condo. The actual structure varies from an apt, duplex, or whole house. The standard deal is that you’re responsible for everything on the inside, the condo association is responsible for the outside, roof, and yardwork.
You are building equity, you are responsible for some things but not as much as with home ownership. May or not be for you but something to consider.
I am intrigued: it’s actually legal to have a no sublet clause?
First, lose the blue paint.
Second… is there any way you can make the house not be in Virginia?
Your screen name is Smurf and you don’t like blue?
Or…you could buy a charming bungalow in central Illinois for $84K. Friends have told me that it would easily go for a quarter million in Chicago or San Fran. If you’ve always wanted to work for Beer Nuts or State Farm, have I got the house for you!
(The drywall guy is here right now…so there will even be a ceiling in the dining room. I guess people value things like new ceilings over new roofs).
Nice digs, John!
As one who has lived in DC for a decade, I can assure you that $2K a month for a 3-bedroom house is a steal. I know that Denver isn’t cheap, but DC is absurd.
It’s difficult to find a 3-bedroom house in good condition and in a safe neighborhood for less than $500K. Depending on the kind of mortgage you opt for, your interest rate and your downpayment, you’re very likely to have a mortgage that is far more than $2K/month.
I just this weekend moved to Sterling 20164. (bought a condo there). We pay about that much monthly for our two bedroom condo. Someday we might be able to afford a house. :P
With “someday” being “as soon as we move away from frickin DC”.
Hilariously enough, I am looking for a place in the DC area around that time. Sterling is really too far out for what I’m looking at; I currently live in Rockville and am going nuts not to be near a city.
Driving everywhere? Bah!
It probably depends on the location (i.e., state and/or city and the various laws therein), but no-sublet clauses have been very common in the (admittedly few) leases I’ve seen thus far renting in Boston. Now, most of these leases were standard form leases, and the language is such that if the landlord really doesn’t mind a tenant subletting, they can choose to allow it. With these form-leases, it gives the landlord a strong legal claim to prohibit subletting if they choose (as it’s included specifically in the lease language), but also allow it if they choose to by informal amendment of the lease conditions. So, really, in the end it depends on the disposition of the landlord whether or not sublets are permitted.
Disclaimer: IANAL—this could be completely wrong.
I don’t like THAT blue on THAT house. Smurfs are very caught up in stuff like that, especially when they are French.
Aren’t we all just renting anyway?
I like the rust wash on the firestack…perhaps since it has its original patina it should demand a higher price…
Rental cost lower than mortgage payment is a pretty good indicator of a housing bubble – speculation. This in not nationwide, of course, mostly on the coasts.
I don’t expect the bubble to pop per se, but when it deflates it will hurt a lot of people.
John, are concerned about advertising a house vacancy on the internet?
As opposed to advertising a house vacancy in the newspaper?
I remember reading a scare piece about people sending e-postcards while on a cruise. The post cards were public on the cruise website. Somebody cross-referenced the cruiser with an online real-estate ad which even had a walkthrough of the house.
The thieves were very appreciative.
I don’t see what is strange about being disinclined to risk losing up to $250,000 when the alternative only involves risking losing up to $24,000.
– Captain Button
That’s a pretty good false dichotomy you’ve got there. It would be hard to lose 250K on a house and you are definately going to lose the rent.
Well, for one thing the house isn’t vacant yet, so I imagine the thieves would be a little surprised. For another thing, we have many neighbors who stay at home, so it’ll be unlikely that someone walking off with major appliances wouldn’t be noticed.
I think John’s tenants have less to worry about with thieves and more with crazed fanboys. My first thought (not serious) was “ooh, I can drive around on my way home tonight so I can get a picture of myself in front of the Scalzi house!”
Aside from property valuations, renting in this area is probably above-average because of how mobile our population is. In the student arena we have an above-average number of schools (George Mason, Georgetown, U of Maryland, Howard University, American University, George Washington and more) and in the employment area there’s a huge number of enlisted and civilian personnel working for the military branches.
I think there’s a more nuanced argument to be made about renting vs buying in general, but even the most rabid pro-ownership folk should be able to understand that the economics are very different if you are going to keep it (or can’t be sure you’ll be able to keep it) for less than 2 years. We’re a little far from the city but a huge number of people commute into DC from this area.
“That’s a pretty good false dichotomy you’ve got there. It would be hard to lose 250K on a house and you are definately going to lose the rent.”
No, you only lose the rent if you cannot live in the house for some reason, and cannot get out of the lease.
And if you buy a house, you “lose” the $15,000 in interest you pay.
(I am assuming a 6%, 15 year loan for $250,000, which gives a payment of $2100. I’m rounding figures the nearest $100, and only looking at the first year.)
I agree that it is unlikely that you will lose the full $250,000, but you are still playing the real estate market with what is likely several years pay. But a 5% drop in the housing market and you are in the red.
You lose the rent 100% of the time because you are not getting any equity for it. It is a sunk cost and you are getting none of it back.
I’m sure there are ways to finance a house so that if the interest rates move one way or the other you are paying more or less money for the house. I’m not sure of any way to finance a house where if the market goes down you lose money before you try and get out of the house.
I agree that it probably isn’t a short term solution to any problem, but over the long term I think in most cases you are better off buying than renting. Unfortunately, the only houses I can afford in Denver still have the crack heads in them.
rochelle says, “Or…you could buy a charming bungalow in central Illinois for $84K. Friends have told me that it would easily go for a quarter million in Chicago or San Fran.”
I don’t know about Chicago, but in San Francisco, $250,000 wouldn’t get you a charming bungalow. It wouldn’t get you a rotting crack house with shootings out front every night. It wouldn’t even get you a one-bedroom condo above a bowling alley, and below another bowling alley.
The median house price in San Francisco last year was $746,000. Past few years people here have on average been making more money owning a house than working a job. Thus, they subsidize me to rent their house so it stays somewhat in shape. Meanwhile, I save up downpayment money and wait for the crash.
I’m living in a house in Oakland like Scalzi’s (sans basement, but better location), paying $2100/mo in rent. But I’m splitting that with 3 roommates. It’s pretty sweet.
Oakland’s a better location than Sterling, Virginia? This California boy is doubtful about that, but entirely agrees that the SF housing market is plug insane.
You lose 5% of the price of a house when you buy, and 5% when you sell (5% is sort of half-remembered, but I’m talking about real-estate agent fees). There are also fees for the escrow agent, and if I remember correctly, a couple more fees for inspectors and such. If you have payed off less than 1/10th (based on my semi-imaginary 5% real-estate agent commission) of your mortgage at moving time, buying a house is losing you more money than you would have lost by paying rent.
That is of course excluding the costs of maintaining the house, property taxes, garbage collection, and any number of other things I’ve assuredly forgotten.
If you’re capable of maintaining a house without forcing its vaule down by damage, you’re capable of maintaining an apartment such that you won’t sink your security deposit.
There’s nothing obvious about a decision to purchase, least of all organizing your life so you can get past the “balloon payments” (I don’t even know what these are really, but apparently it is something written into most home mortgages that involves a 1 or 2 time wad of cash to the bank.)
There apparently are a bunch of Kevins who post here, perhaps I need a more clever name. (I try to avoid using my last name online anymore, seeing as Google can still find things I posted to Usenet and/or the web with my full name from when I was in high school… suffice to say it’s a bit embarassing in places).
In any case, a balloon payment generally means your payback plan is not constructed to have the full loan paid off at the end of X years… so at the end of the X years, there’s a “balloon” payment that covers the rest of the loan. (If it’s sufficiently large, you end up taking a new loan to cover it.) Generally this is a bad idea, so if you can avoid it you’re better off.
If you’re having any problems finding prospective renters, you might want to check out washingtondc.craigslist.org. If you’re not already aware of it, it’s an online classifieds site (free posting), and it gets tons of traffic. Good luck.
Oh, I will. I just thought I’d give Whatever readers a head start.
“Oakland’s a better location than Sterling, Virginia?”
I’ve never heard of Sterling, VA, so I can’t say for sure. But I’m really loving Oakland. I live right off downtown… In less than 10 minute’s walk from my house I can eat at a great taqueria, a great dim sum place, a good sushi place, a mediocre Thai place, a mediocre fish and chips place, or a Korean place that must be very authentic because it was packed with asians and I couldn’t even identify the flavors of the thing I ordered. :) Non-food-wise, there’s a gorgeous Art Deco theater that’ll be showing the Oakland Symphony, Elvis Costello, and Al Green. Also, there’s a BART station so I can take the subway into SF or Berkeley.
On Saturday with a longer walk along the lake, there’s a farmer’s market. In a 10 minute drive I can get to a place that teaches blacksmithing, neon art, and pinball machine repair; or a second-run movie theater where you sit on couches and drink beer and they bring you pasta; or a used furniture store that supports the African People’s Education and Defense Fund.
The airport is Southwest’s hub and you can get there eaily on public transit; the Raiders fans dress up creatively and tailgate artfully; there are paddleboats to rent on the lake. I dunno, if you like city living, there’s a lot to like. Hope you don’t mind me rhapsodizing.
I don’t know which sucks more…the city of Oakland or the people that live there…but together they definitely suck greater then the suck of their parts…
Scott said: “If you’re capable of maintaining a house without forcing its vaule down by damage, you’re capable of maintaining an apartment such that you won’t sink your security deposit.”
I like having a place that I can “damage” without fear of eviction. Ridiculous paint choices, digging up the yard for herbs and flower beds, accumulating cats, tearing down a wall, if warranted. I’ve always hated renting–you have to live by other peoples’ rules more than usual. I probably wouldn’t do very well in an HOA, either.
Does anyone else absolutely love zillow.com?
I can safely scan the housing bubbles from a distance and look in awe at what people are paying for a place to live.
I wouldn’t put too much stock in Zillow.com. I don’t know the algorithm it uses to calculated value, but I can tell you that it is useless in the DC market. It tremendously undervalues properties if one compares the Zillow-calculated value with the price that homes are actually going for.
For example, the highest value Zillow gives a home in my neighborhood is $361K. Yet, a home hasn’t sold for under $400K in over two years, and most current listings are well above $500K.
oh you have such a nice and huge house. it’s too big for me but i would like to have something like this somday:) i hope you’ve already found tenants, but you should register your house at the apartment finder. people like to do lot of things online ecause it’s comfortable and finding a place for rent online is quite comfortable too.