Relocation May Require Landlord Skills…

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It’s a tough discussion across the board. I’m talking about owning real estate in this market when seeking a job in a new city. Whether we are conducting a search for an individual contributor or a CEO – the challenges and options are identical. Critical financial choices have to be made that were non-existent a few years ago. We all know that the higher the salary/position the longer it takes to replace your job and income. Some executives I have spoken to have been out of work for two years. OUCH! That has to hurt across the board.

What I am hearing (and suggesting) more and more for candidates where relocation is required is… becoming a landlord. It may be their only option if they are unable to sell their home (and most fall into this category) and to take the risk of turning down an offer (and waiting for another opportunity) because of the boat anchor of owning real estate may not be the best option on the table. Let’s face it – it may be years before the the US housing market experiences a real meaningful recovery. In the meantime, candidates need to get back to work now and get the cash flow engine moving again. If candidates wait too long before pulling the trigger, it may become a moot point. Not good. Becoming a landlord for a couple of years until the market turns may be a reality. It’s not the end of the world either.

Even in better markets, many of us experienced long delays in selling hard to move properties. I myself have been faced with this dilemma twice. In both cases I decided to do a lease-purchase as a way to sell both properties. I required the buyer to pay a large deposit which they would forfeit if they were unable to close on the property at the end of the 24 month lease purchase. It worked both times and was a win-win for the buyer and seller (that would be me). So this is a time to think outside-the-box to solve the challenges of having a great job offer in a new city and creating a work-around for the real estate you own. Candidates must balance the risks of becoming a landlord or remaining unemployed. For some of our candidates – they just can’t get there. They would prefer to go down with the ship. Others (more recently) are rolling the dice and learning what it takes to become a landlord (at least temporarily) until market conditions improve.

I have also found that my clients are willing to step up on relocation packages like never before to land the right talent – and they should. Giving candidates six months of living expenses seems to be acceptable on both sides of the table. This gives the candidate (a little) time to exercise all available options and to be available to start their new job immediately. And now is the time for clients and candidates to get creative and find ways around the real estate issues and close search assignments that require relocation. It’s very doable.

Commute? Some candidates prefer to commute Monday-Friday and become a part-timer with their family. I have seen that movie too – not good. I think commuting can be an option for a few months but not long term. Neither is becoming a landlord – but that should not last forever.

So tell your candidates to put up that For Rent sign and take that offer. Oh yeah – and make sure they get the security deposit + first and last months rent – up front!

FOT Background Check

Tim Tolan is a partner at Sanford Rose Associates and specializes in Executive Search in Healthcare IT. He's a closer, and you really don't want to call him unless you're ready to bring out the bazooka to bag some big game. When I started Fistful, I checked four references on Tim - his wife, his kids, his pastor and a client. The references were great, even if it sounded like they were reading from a sheet of paper. I just chalked that up to them being "detail oriented" in their feedback....

7 Comments

  1. Great post. I think many people often forget that becoming a landlord and renting out your place solves an immediate problem very quickly. It’s definitely a short term solution, but a very practical one. Thanks!

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  2. Tim Tolan says:

    Roger that. Call me “landlord” and pay my mortgage until the market gets better – works for me! That would be my first choice.

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  3. Paige Holden says:

    Excellent post and very timely given today’s news on home sale. It’s a tough issue – I can certainly understand the apprehension for renting. It’s not as easy as some people may think. There are liability issues, not to mention the phone calls at 1:00am because a toilet is overflowing. It can be a job in and of itself, depending on the tenant. It’s advisable to have some set criteria (no pets, for example) and a in-person interview before letting someone have free reign to your home. Is renting ideal? No. Necessary? Probably.
    Fortunately, savvy companies are aware of the issue and are reviewing and revising their relocation policies accordingly. I think we’ll see some creative programs come out of this trend.

    Reply
  4. Tim Tolan says:

    Agreed – being a landlord does have its challenges. However, hiring a rental company to handle the day to day phone calls from renters is probably worth paying the monthly fees they charge. In the end – I do think it’s a short term deal if the seller is willing to establish a price point that is competitive to eventually sell the property and remove the landlord headaches once the RE market improves. And it will – one day:-)

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  5. Paige Holden says:

    We can only hope things can improve can’t we? :-)
    I will add one point, because I hear a lot about this issue. With people’s mortgages where they are right now many would be lucky to recoup total monthly expense at all. Especially in a condo/townhouse situation, because you also have to add in maintenance fees. And that doesn’t include insurance, taxes or the rental management fee. So, in many cases, all renting does is help stem the loss, not eliminate it all together. It’s a really, really hard issue – that’s why I think/hope some smart companies will include some sort of rental management component to their relocation plans.

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  6. Tim Tolan says:

    Paige:
    Good point on the added expenses of being a landlord. I’m already seeing companies making major changes to their relocation packages. To remain competitive they really have no choice if they want to cast out a wide talent net where relocation is the only way to get the right people on the bus. This housing crisis too shall pass – eventually!

    Reply
  7. Paige Holden says:

    Agreed on all counts. Love your optimism! Looking forward to reading more!

    Reply

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