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*** Official Landlord Thread *** (1 Viewer)

Wooderson

Fight The Power
It looks like with in the next month I will become a first time landlord. We debated selling the home and could of made a profit but have decided instead to rent it. We plan to use it as an investment with hopes of selling it down the line for a better profit.

We will be able to rent for the same amount of the mortgage we pay. We would be out the cost of the property management group $65 the cost of utilities $75 and of course any repairs that might be needed.

I plan to have a separate account that I use only for the rental house. I hope to have about 10K in that account for just in case funds.

Any other tips you landlords could give me?

Tax deductions?

I hope this can be a running thread for all landlord questions.

 
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.

 
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Thanks this is the kind of stuff I need to hear about.So maybe I should sell if I can make 10K after only having the house for 3 years.

I always thought if you could swing it a rental property could be a good investment.

 
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Any idea what the income limit would be to be able to deduct losses? Using the rental as a tax write off is one of the main reasons I wanted to go that route.
 
There has to be more people here that own and rent property. After all we are FBG's... we collect houses like others collect marbles. :thumbup:

 
Thanks this is the kind of stuff I need to hear about.

So maybe I should sell if I can make 10K after only having the house for 3 years.

I always thought if you could swing it a rental property could be a good investment.
Here is a monster thread on RE investing. You can keep this one going if you'd like since it's only about being a landlord, but there's a lot of info. in there.Yes, a rental property can be a good investment, but it can also be a disaster (just like most investments).

 
Hopefully you will find these little tidbits useful:

1. Have your potential tenant get a credit report. Most will comply without argument.

2. When you place an ad for the rental, you can stipulate that the tenant is responsible for all utilities. It won't shy that many away.

3. You can deduct any expenses associated with the rental property (maintenance, furnace service/repairs, etc). That will offset some of the rental income that you have to claim.

4. PRAY for a good, long-term tenant. I have heard some horror stories about some bad tenants and it gets quite costly trying to recover damages, etc.

5. Don't just accept the 1st person that wants to rent it out. You can be a little picky if you are not in a rush to get it filled.

I've been quite lucky with tenants, but I also live 5 minutes from the renatl property, so I arrange to pick up the rent check in person so that I can peek in on things every month. :thumbup:

Good luck!

 
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Any idea what the income limit would be to be able to deduct losses? Using the rental as a tax write off is one of the main reasons I wanted to go that route.
The ability to deduct rental losses phases out between $100,000 and $150,000 of income for a married couple filing jointly but there are a few other tests involved as well. You really will want to research this or talk to an accountant. Any losses not allowed get suspended and may be used in a future year if your income drops or you sell the property.Also, renting the home will result in some tax issues when you sell it.
 
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Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Thanks this is the kind of stuff I need to hear about.So maybe I should sell if I can make 10K after only having the house for 3 years.

I always thought if you could swing it a rental property could be a good investment.
one 95k condo (1985) into 26 duplexes (2006) :thumbup: Get good tenants. Verify everything.

Get a good accountant.

Get a good lease.

 
Our accountant basically said with just 1 home for rent. There isn't any tricky/awesome tax stuff

 
Is this single family home?Property management group $65/month?These people will do what exactly?
Single family home 4 bed 2 bath.They find the tenet, collect the rent, handle calls, check property.I will be living 2 hours away so can some of the maintenance myself.
 
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Any idea what the income limit would be to be able to deduct losses? Using the rental as a tax write off is one of the main reasons I wanted to go that route.
The ability to deduct rental losses phases out between $100,000 and $150,000 of income for a married couple filing jointly but there are a few other tests involved as well. You really will want to research this or talk to an accountant. Any losses not allowed get suspended and may be used in a future year if your income drops or you sell the property.Also, renting the home will result in some tax issues when you sell it.
We have a combined income over $150,000. So your saying we not benefit tax wise as much as I thought. :unsure:
 
Is this single family home?Property management group $65/month?These people will do what exactly?
Single family home 4 bed 2 bath.They find the tenet, collect the rent, handle calls, check property.I will be living 2 hours away so can some of the maintenance myself.
Is that normal.Seems cheap?I live 30 min away from the house my mom owns that I basically am the Landlord to, and $65/month seems awesome.
 
Have 7 rental houses so :blackdot: until I get home and can answer what I can.
Please. I need help with this in a very short amount of time.I have a realtor setup to sell the home. Pictures have been taken price agreed upon. Just need to call her to say go and we will have an open house this Sunday.
 
Thanks this is the kind of stuff I need to hear about.

So maybe I should sell if I can make 10K after only having the house for 3 years.

I always thought if you could swing it a rental property could be a good investment.
Here is a monster thread on RE investing. You can keep this one going if you'd like since it's only about being a landlord, but there's a lot of info. in there.Yes, a rental property can be a good investment, but it can also be a disaster (just like most investments).
thanks for the tread link
 
Consider selling on Lease-option.

Assume you wanted to sell at $200K because you thought that this was appropriate market value, and could not find the buyer. You might be able to get $210K on a lease-option sale. In this scenario, you give buyer three-year lease and lock in the sales price at $210k. However, you also get money up front of, say, $7-10K for this 'option'. Therefore, in three years, the buyers would have to pay you $200-203k more and then own your home.

If they can not get a mortgage in three years you can renegotiate the sales price or start all over... however, I would not make someone in possession of my home mad at me for playing hardball. With $10k option, maybe offer $3K back to them if they are in this situation and return your home just like it was when they rented it. Plan for this contingency in the lease. Also, write in a $140 discount for every month ahead of 36 that they buy you out. Hopefully they will take great care of your place.

You might be suprised how many people cannot get a mortgage right now. I placed an ad on Craigslist and got four hits in 24 hours (we live in a very small market). However, we decided to keep the house for now.

Good luck with your purchase and rental.

 
Oh my now I'm starting to think I should go ahead and try to sell for a couple a weeks and see what happens. We have told our Realtor we are firm on the price. You never know we might just get it make a quick 10k after all fees and not have to pay capital gains tax.

My biggest reason to rent it is because we got at a decent price when we purchased have a low interest rate and will not be living that far from it. So it would be a nice investment.

Financially we can swing two houses and we don't need the money from the sell of this house to put down on another.

 
'Wooderson said:
Oh my now I'm starting to think I should go ahead and try to sell for a couple a weeks and see what happens. We have told our Realtor we are firm on the price. You never know we might just get it make a quick 10k after all fees and not have to pay capital gains tax.

My biggest reason to rent it is because we got at a decent price when we purchased have a low interest rate and will not be living that far from it. So it would be a nice investment.

Financially we can swing two houses and we don't need the money from the sell of this house to put down on another.
Go for it, there are horror stories out there, and you can also have a nice investment.At least you can say you tried one way or the other.

ETA: The biggest headaches i see are the minor things, like getting calls for dumb stuff...showing the apt, dealing with tenants directly. If you have someone doing most of the brunt work your basically just financial backing.

 
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'Wooderson said:
'Tom Hagen said:
'Wooderson said:
'sbonomo said:
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Any idea what the income limit would be to be able to deduct losses? Using the rental as a tax write off is one of the main reasons I wanted to go that route.
The ability to deduct rental losses phases out between $100,000 and $150,000 of income for a married couple filing jointly but there are a few other tests involved as well. You really will want to research this or talk to an accountant. Any losses not allowed get suspended and may be used in a future year if your income drops or you sell the property.Also, renting the home will result in some tax issues when you sell it.
We have a combined income over $150,000. So your saying we not benefit tax wise as much as I thought. :unsure:
Probably not. Usually, if the adjusted gross income on your tax return is over $150,000 the loss will get suspended. Unless your income drops below $150,000 you will probably not see the tax benefits until you sell the property, at which point you will have a taxable gain on any depreciation taken but will be able to take your suspended losses in full.However, if you have passive income from another source you may be able to offset that income with your rental loss.
 
I've picked up 10 single family homes over the past 4 years. Had very good luck as a landlord. Actually looking to pick up a few more this year and next.

Anyway, I think you should sell. Having one rental sucks. Your PM company wont do jack for $65/mo and you are 2 hrs away. Do you have a hvac/plumber/painter/electrician/roofer? You will pay through the nose for these services. It will take up more of your time than you think. On top of all that you're looking to break even best case month to month. I dont think this will end well.

 
'Wooderson said:
We will be able to rent for the same amount of the mortgage we pay. We would be out the cost of the property management group $65 the cost of utilities $75 and of course any repairs that might be needed.
Don't forget you still pay property taxes and insurance (which is probably going to cost more once its non owner occupied).This means you are guaranteed to lose money.
 
I have a few rentals and it can be profitable, but I've spent a good amount of money keeping it going. $65 for a property mngt company is a no brainer, but I doubt that's the only charge they have. Maybe one months rent up front or something like that.

Get a good lease. Get a go to guy in each of the different service industries. Scrutinize your tenants, this will make or break it for you.

You shouldn't be paying utilities and renters won't balk at that. I recently put a clause in my leases that the tenants are responsible for any repairs under $100 and a $100 deductible for anything else higher. You'd be surprised how much this cuts down on repairs and damage.

Get as much of a security deposit as possible. You WILL need it. My neighbor has a trick that he uses to get rent on time. He advertises the place for $100 more than he wants, but he tells them they will get a $100 discount each month that the rent is in by the 1st. He gets all of his tenants to pay on time with this system.

My opinion is that if you can't run positive cash flow on a 15yr mtg, it's reallly hard to turn a profit. Good luck.

 
'Wooderson said:
We will be able to rent for the same amount of the mortgage we pay. We would be out the cost of the property management group $65 the cost of utilities $75 and of course any repairs that might be needed.
Don't forget you still pay property taxes and insurance (which is probably going to cost more once its non owner occupied).This means you are guaranteed to lose money.
My brother has 4 properties and getting good tenants is a big factor in being successful. Also, if the rent you are taking in is less than the mortgage, don't do it as Random says. guaranteed to lose money. At the minimum, you have to charge enough to take care of the yearly taxes and mortgage.
 
I have a question for other landlords who may have experience with the court system. I won a judgement on Monday for back rent from one of my old tenants. They did not show up. Now what? How do you go about getting paid? I don't think they have any money and it was a pain to track them down to get served for court. I'm not sure if I could find them again as it was a temporary address.

 
When calculating your cash flow, don't forget about the money that is going to your principal loan amount. Probably a couple hundred bucks a month.

 
'Wooderson said:
'sbonomo said:
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Thanks this is the kind of stuff I need to hear about.So maybe I should sell if I can make 10K after only having the house for 3 years.

I always thought if you could swing it a rental property could be a good investment.
i dont see 10k worth it but thats just meif you do find a 'good' renter let them stay for as long s theyre willing to help buydown your loan for more profit

 
I'm kind of with Random as well. You are getting into this for unpleasant reasons (former primary residence that isn't selling quickly, hoping to break even) as opposed to pleasant ones (got a good deal on a multi-family, you're handy, you've always wanted to do this). Being two hours away is another big minus. You are going to have to have a lot of faith in your property manager (and $65/month sounds so low as to be suspect to me).

Also, make sure you contact your insurance company and make sure they know that it is non-owner occupied. Otherwise they will deny any claim you have, validly.

If you do stick with it, get this book. Seriously it is like a bible for landlords.

 
I'm kind of with Random as well. You are getting into this for unpleasant reasons (former primary residence that isn't selling quickly, hoping to break even) as opposed to pleasant ones (got a good deal on a multi-family, you're handy, you've always wanted to do this). Being two hours away is another big minus. You are going to have to have a lot of faith in your property manager (and $65/month sounds so low as to be suspect to me).

Also, make sure you contact your insurance company and make sure they know that it is non-owner occupied. Otherwise they will deny any claim you have, validly.

If you do stick with it, get this book. Seriously it is like a bible for landlords.
If the rent is $1000/mo, $65 isn't stupid low.... just sayin'
 
Sorry, didn't mean to make it sound like I had any kind of solid gold insight for you.

I can only speak of our experience, which has been both positive and negative. All of our rental houses are in Knoxville, which is where we currently live. My husband is very handy and takes care of all of the maintenance (outside of major plumbing and electrical). So, right now, everything is great. We cover taxes and insurance with the rent we take in if all of our houses are rented. I'm not sure what our tax situation is at the end of the year, whether we take a loss or have to pay anything. I can look when I get home tonight.

When we lived 8 hours away, it was a nightmare. We had my husband's father act as our property manager, and bless his heart, he did everything he could to help. But if the smallest thing broke, we had to find a handyman on Craigslist, etc. It got really, really pricey when we weren't there to manage things.

I don't know anything about property management companies, but I would agree that $65/month is a little suspect. If the level of service you get from them isn't up to par, you're going to have a lot of headaches and have to shell out more money than you should.

That said, I love the idea of renting houses to build equity. I'm also renting my old house in SC, I have a great renter and I love seeing that equity build every month. I say go for it, but just be aware that it's not going to be "easy money" - at least, until you get the hang of it.

 
'Wooderson said:
'sbonomo said:
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Any idea what the income limit would be to be able to deduct losses? Using the rental as a tax write off is one of the main reasons I wanted to go that route.
Ask you CPA or tax preparer...once you hit the AMT it is a sliding scale. I make good money (1xx,xxx) and have not had much in the way of deductions for a while. If you set up an LLC you will have to file a seperate tax return that will result in your recieving a K1. This is an added expense but well worth the peace of mind from a liability perspective.
 
In my limited research, I ended up just going with an umbrella policy that covers my rentals (once you get more than 4 it gets more expensive) to cover my liability risk.

 
'Wooderson said:
'sbonomo said:
Don't plan on making anything on it unless you can bank 20% per month on top of the mortgage payment. Plan on spending more than you ever thought was possible for maint.....good luck, depending on how much you make personally you may or may not be able to deduct any losses. Lastly, put it in an LLC for liability purposes....You can quit claim the title into the LLC's name for reasonable protection against a law suite. Good luck.
Any idea what the income limit would be to be able to deduct losses? Using the rental as a tax write off is one of the main reasons I wanted to go that route.
Ask you CPA or tax preparer...once you hit the AMT it is a sliding scale. I make good money (1xx,xxx) and have not had much in the way of deductions for a while. If you set up an LLC you will have to file a seperate tax return that will result in your recieving a K1. This is an added expense but well worth the peace of mind from a liability perspective.
If he goes with a single-member LLC then he doesn't have to file a seperate return so there wouldn't be much added expense if he goes that route.
 
We have to evict someone today. I'm pretty sure the language on the 30-Day Notice to Vacate is pretty standard, but wanted to double-check in here. Anything I need to be sure to include? My husband is going to take it by there today and have her sign while he stands there, so we aren't too concerned with Proof of Delivery or anything like that.

 
:sehorn:

anyone have more info on putting the house into an LLC for liability protection? This is just the title right? not the mortgage?

 
I have a tenant who is interested in renting, but they have a pet. I have never allowed a pet in the past, but this potential tenant seems pretty responsible.

Small dog........maltese.......5 years old.

What is a reasonable amount to charge for a pet security deposit? There is no carpeting near the doors where most dogs have their accidents.

I live in Illinois, so there is no statutory limit to the amount that can be charged for a security deposit.

 
I have a tenant who is interested in renting, but they have a pet. I have never allowed a pet in the past, but this potential tenant seems pretty responsible.

Small dog........maltese.......5 years old.

What is a reasonable amount to charge for a pet security deposit? There is no carpeting near the doors where most dogs have their accidents.

I live in Illinois, so there is no statutory limit to the amount that can be charged for a security deposit.
They will have accidents everywhere, or at least you should count on that.They will scratch wood floors, and when friends with other dogs come over, there can be some more damage.

i would probably charge 1/2 month rent deposit for any pet related damage

?

 
I have a tenant who is interested in renting, but they have a pet. I have never allowed a pet in the past, but this potential tenant seems pretty responsible.Small dog........maltese.......5 years old.What is a reasonable amount to charge for a pet security deposit? There is no carpeting near the doors where most dogs have their accidents.I live in Illinois, so there is no statutory limit to the amount that can be charged for a security deposit.
I charge $200. Non-refundable.ETA: Never ever allow a pet over 25-30 lbs.
 
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I have a tenant who is interested in renting, but they have a pet. I have never allowed a pet in the past, but this potential tenant seems pretty responsible.Small dog........maltese.......5 years old.What is a reasonable amount to charge for a pet security deposit? There is no carpeting near the doors where most dogs have their accidents.I live in Illinois, so there is no statutory limit to the amount that can be charged for a security deposit.
I charge $200. Non-refundable.ETA: Never ever allow a pet over 25-30 lbs.
$300 non-refundable here on most of the rentals I manage.
 

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