Agent: I see you have two homeowners policies with us...
Agent: Are these both primary dwellings?
James: No, we live in [current address] and we are in the process of selling [old house address].
Agent: Well, we don't cover unoccupied properties.
James: Oh, according to our policy documents as long as the property continues to be maintained (heated, utilities connected) and cared for coverage is still valid.
Agent: Well, yes, but not when they're so close in proximity to each other. (As an aside, it turns out people don't usually buy a vacation property less than two miles from their primary residence in the middle of a city in Wisconsin, imagine that...) Unless you can prove that you maintain residency at the property at least 1/3 of the time we'll have to discontinue your coverage. You have until the end of the month to either prove that you live their, sell, or find renters (so the switch to a rental policy could happen).
Well, that threw us into a bit of a panic. We tossed around crazy ideas (maybe we could piece together enough furniture to partially furnish the other house and have all or part of us live there a couple of days a week), improbable ideas (maybe we had a brother or friend who could come out and live there temporarily until we could establish rental coverage), and variations on both before deciding the most practical option would be to seek out short-term renters from the public at large. So, we put an ad on a popular classified's website and decided to see what would happen. It seemed like the best, if not the only, decision at the time and we were hopeful that it would be a solution not only to our insurance conundrum, but also to the large sucking sound coming from our bank account due to paying two mortgages every month.
Within a day of posting the ad we had a response. We set up a time to meet and didn't really know what to expect. The next day we met a couple, we'll call them "Bill" and "Sandy" and their two teenagers "Jr." and "Diva" and showed them around the property. Their story, as presented to us, was that they had just sold a property, much more quickly than expected, and were unable to close on their new home until April 1. The new home, we were told, was in a very prominent neighborhood (we'll just call it "Eagle's Airport") on Madison's West Side and would be their dream home, he even rattled off an address. Perhaps warning bells should have gone off at this point, as they didn't look like the type of people who would currently, or probably ever, be able to afford this neighborhood. But, looks can be deceiving and who am I to judge how people spend their money, so I didn't give it too much thought. Furthermore, they were quite eager to move-in as, their story goes, they were living in an extended stay hotel and had finally decided it just wouldn't work for them for 3 months.
Being the newbie landlords that we were, we wrote up a contract (which to our credit was actually decent) from online resources and arranged to meet the next day to receive the security deposit and the first months rent and hand over the keys. We didn't do the background checks and references that we should have and there made our first big mistake. The following day we met Bill at the property and he produced, in cash, all of the security deposit, and not one, but two months of rent money. Perfect,we thought, now we don't even have to mess with collection, late payments, etc. we have it in advance! His only two requests seemed workable. Since it was such a short-term lease, he said, could we just leave the utilities in our names and he could pay us for them as they came in. He'd give us an advance to cover the first month or so, and then he'd get us the rest as we needed it. That would save him and us the hassle of having to change everything again in April when they moved out and into their new place. Also, could he paint Diva's room a neutral shade instead of the nursery scheme that was currently there. Diva, at the ripe old age of 14, just couldn't bear two months in a baby-room, he was never going to hear the end of it. Big mistakes #2 and #3, we said yes to both. Newbie mistake again on the utilities, just didn't comprehend how wrong it could all go with the paint.
We met on a Friday, and by Sunday they were fully in occupancy. We contacted our insurance agent, got the policy changed to a rental policy, and thought the sailing would be smooth. And for the first month or so it was.
To Be Continued...