The Marin Rental Home and Landlord Profit

by Christopher Barrow 11. March 2010 07:28

When meeting the owner of a Marin rental home for the first time, usually the very first question my team and I get is "How much do you think I can get?"

Isn't that the million dollar question?

Our answer is usually quite a bit lower than the landlord wants to hear, and quite a bit higher than a tenant wants to know.

That's the funny part about Marin rental homes: Tenants new to the area grow frustarted with the expensive asking prices (we usually get about one "hate" email each month from a tenant angry that we dare ask $12k per month for a $4 or $5 million home!) but rarely do these folks consider what is going on behind the scenes.

Marin County is one of the most expensive countys in the US.  And it's going to cost you on both ends if you want to live here and enjoy our top notch schools, great weather and premium access to a world class city.  And if you happen to be looking at homes in the multi-million dollar range, like, well, most of the homes here, then that's going to cost you proportionately!

We know it's frustrating to have to pay $5,000 per month for rent to get the house you want.  But if you're paying that much, that's because you're choosing to lease an approx $1.4 million - $1.6 million home.  Think about the carry costs were you to own that same home. A jumbo loan even at 6% would put you out of pocket at least $8,000 per month.  And that's before property tax (add another $1k), insurance and repairs (likely another $1k?).  So at approx 50% - 60% percent of the cost you get to live in the same house without the headache of ownership.  Not such a bad deal now, right?

And if you're the owner of the same property, unfortunately, as much as you want to hear that the rent can cover your mortgage, unless you put 50% down when you bought the property, or have owned it for many years, the simple reasoning behind why people rent vs buy is because it's cheaper.  If they could own your home for the same cost as they could rent it, there would not be any tenants!  While your carry cost may be in that $8k  range, if you own an approx $1.4 million home, the rent is likely to be right around $5k, regardless of what you are paying to own it.

That's why for Marin rental home owners it's important to remember that you are choosing to rent the home as a long term investment with an end goal.  That end goal is profit, but  you are much more likely to make an actual profit from the long-term appreciation than from the short term rental.  (And we mean LONG TERM folks...not 1 -2 years!)  It's important to keep in mind that your tenants and the rent you are able to bring in from them are going to help you achieve that goal, but they are not likely to be the goal itself.

Happy Hunting everyone!

Have a Marin Rental Home and a question?  Call or email anytime.  My team and a I specialize in Marin rentals and are happy to help.  Office (415) 507-9600.   www.marinrentalgroup.com/

 

 

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About Marin Rental Broker Christopher Barrow

Born in San Francisco and raised in Marin, broker Christopher Barrow comes from an educational background in communications, with previous work experience in sales and client management.  Together with partner/wife, Darcy Alkus Barrow, the two run Foundation Rentals and Relocation servicing all of Marin County's rental property needs.

Even as the owner of the company, Christopher works every end of the Marin rental spectrum from one bedroom apartments for $1,000 to high-end, executive-style rentals renting anywhere from $8,000 to $15,000+ a month.  A working relationship with Christopher brings round the clock dedication and true client focus.  

When not working--which is rare if you ask his friends and family--Christopher spends his time at the Bay Club in Corte Madera, or at home in San Rafael with his wife and their two dogs, enjoying all the great outdoor life Marin has to offer.

Contact Christopher anytime at cb@foundationrentrelo.com CA DRE Lic# 01722834

http://www.foundationrentalgroup.com/

Areas served include: Sausalito rentals, CA, USA - Mill Valley rentals, CA, USA - Tiburon rentals, CA, USA - Belvedere rentals, CA, USA - Corte Madera rentals, CA, USA - Larkspur rentals, CA, USA - Greenbrae rentals, CA 94904, USA - Kentfield rentals, CA, USA - Ross rentals, CA, USA - San Anselmo rentals, CA, USA - San Rafael rentals, CA, USA - Novato rentals, CA, USA - San Francisco rentals, CA, USA‎ Rentals
 

 

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