HAVE to rent my house out... Advice? What am I getting in to?

[jbes3]

I am military with orders to the other side of the country. I purchase my house in 2006 at the peak of the real estate market for this area. I was outbid on 5 other houses before I purchased this one. Anyhow, my wife and I have been one of a handful of homeowners in our development who have paid our mortgage and not walked away from our house. Out of the 5 houses that are directly connected to us, 3 have foreclosed (one twice).

Anyhow, our value is $133K and we owe $138K. I'm not ready to sell yet. I am currently looking to rent it.

Based on the market, I can rent it for about $50-100 more than my payment.

What kind of insurance must I carry?

What is my tax liability being that it's a rental?

Should I go through a Realtor or rental agency? If so, what do they normally charge?

Any input would be appreciated. Thanks!

 

[ford fanatic]

We rent my wifes townhouse since we got married and moved into mine. She bought in 06 also and is about 20K in the negative, so selling is not an option for us either.

We used a realtor to rent ours, they charged one months rent. Tax liability will change, and will also depend if you profit off of the house during the year.

For insurance we just had the carrier change it to whatever it needed to be to cover a renter, the renter has insurance also.

Overall, it sucks, I can't wait to get rid of it.

 

[SC_SnakeBite]

Do not rent! To anyone!

 

[Cbarr300]

Similar story here...its near a base I'm guessing, so renting shouldn't be a prob. Id suggest a management company. They screen applicants, take care of payments, etc. Around my area, its 10% of the rental price every month...plus a full rental payment up front to them. Takes stress out of your life though.

Inform your insurance company that its a rental property. For taxes, your rental income is considered investment income (could affect earned income credit), and your management company should give you the tax info needed for your schedule e (someone correcting I'm wrong...not a tax guy). You can deduct mortgage interest and several other things.

I think I'm keeping mine. Its right next to camp Lejeune so its easy to rent out, I pay 10 bucks out of pocket on my mortgage each month after management fees are deducted from rent, and sooner or later I can make money off it. Obviously there is upkeep and the possibility of bad renters...but hopefully house values will go up one decade.

Good luck with everything

 

[jason6488]

you definitely want to hire a rental agency. Trying to deal with the paperwork and legality of the issues alone is a pain in the ass, especially if you're out of the area and can't visit the property. I have a friend who moved to california and got a rental agency to rent her house. She doesn't make much off of it but she is building equity, which is a good thing. I rent a room to someone and I did a lot of reading on the laws. Most laws, in most states, are geared toward the renter. Use a professional agency, they will know how to keep you out of trouble.

 

[armycook1981]

similar here i left clarksville.

i rented agent took 10% each month so fro the rental value with my area i was out of pocket like $32 or something each month. which is better then the full amount owed.

I had a 1 year lease for the renters and then 2 months later i asked if they wanted to buy home. they declined and about 4 months after that they submitted an offer to me. i accepted and about 2 months after that they closed on the house.

I sold because i couldnt get the house i wanted here in houston with that still on my credit. even tho i was collecting income from it it was not yet showing on my taxes.

 

[Spudz]

If you decide to not use a rental agency, screen prospective renters very very carefully. Can't stress this enough.

I watched my father rent out a home to a family only to find out two months later they had punched holes in walls and used a hallway as an air soft shooting range... among many other stupid things. Long story short, he ended up eating the damages since they had no money.

I'd say renting is really not worth the potential trouble.

 

[Mjavant1985]

If you decide to not use a rental agency, screen prospective renters very very carefully. Can't stress this enough.

I watched my father rent out a home to a family only to find out two months later they had punched holes in walls and used a hallway as an air soft shooting range... among many other stupid things. Long story short, he ended up eating the damages since they had no money.

I'd say renting is really not worth the potential trouble.

This.

Renting out your house is not worth $1200 a year in headaches alone.

 

[afcobra01]

I have 2 houses now in different locations, Gulf Breeze florida and Kenosha wisconsin, that we rent out. We are military and are now in Virginia. The advice given here to use a Property Manager is good advice. They do all the leg work for you and it relieves a lot of the stress for you. Tax time is easy as they send you a report with all the years expenses ect... listed for reporting to Uncle Sam and the mortgage interest deduction saves you a lot of money. Make sure you get the insurance issues taken care of and the prices are cheaper since you do not reside there. We use USAA and they are a good company and have taken care of any insurance problems that we have encountered fairly. Hurricanes in Florida are not pretty. Hope it works for you.

 

[ULTIMATE ORANGE SS]

after watching worlds worst tenants id be afraid renting out to anyone i didnt know well.


being under water 5k is much better off than most. has value gone up lately in that area?

 

[Mr. Mach-ete]

There are good tenants out there, I use to be one of them. I mowed the lawn and kept the house looking good. My old landlady cried when I bought a house and moved out. She said I was the best tenant she ever had. My neighbors thought I owned the house.

 

[jbes3]

We rent my wifes townhouse since we got married and moved into mine. She bought in 06 also and is about 20K in the negative, so selling is not an option for us either.

We used a realtor to rent ours, they charged one months rent. Tax liability will change, and will also depend if you profit off of the house during the year.

For insurance we just had the carrier change it to whatever it needed to be to cover a renter, the renter has insurance also.

Overall, it sucks, I can't wait to get rid of it.

Appreciate hearing from someone in the same boat. I can't wait to get rid of it either.

 

[jbes3]

Do not rent! To anyone!

OK. My other option was for the house to "accidentally" burn down while my kids were at school and the dog was at the vet. We just put all of our valuables in a safe deposit box. LOL.

J/K. Really though, I'm not coming out of pocket $10-20K right now, especially with a cross country move happening. I get what you're saying, I hope i get some good renters.

 

[JetmechF16]

I'm in somewhat the same boat as you OP, trying to decide whether to sell or rent my current house. I just got married and we're trying to move to the southwest side of Houston, my home is worth more than I owe but I would also like to keep it since values are trending up in my area. Everyone I talk to around here says to just handle it yourself but having a company take care of tenant vetting and property management sure sounds nice.

 

[jbes3]

after watching worlds worst tenants id be afraid renting out to anyone i didnt know well.


being under water 5k is much better off than most. has value gone up lately in that area?

Crap, haven't seen it and I'm not going to start watching now.

The government and Realtors say the market has gone up. LOL. And it actually has. In 2008, my house was worth about $122K. So we ARE making progress. With sprucing up the house, realtor fees, closing costs and making up for being under water, I would probably be $20K out of pocket to sell it.

I have 2 houses now in different locations, Gulf Breeze florida and Kenosha wisconsin, that we rent out. We are military and are now in Virginia. The advice given here to use a Property Manager is good advice. They do all the leg work for you and it relieves a lot of the stress for you. Tax time is easy as they send you a report with all the years expenses ect... listed for reporting to Uncle Sam and the mortgage interest deduction saves you a lot of money. Make sure you get the insurance issues taken care of and the prices are cheaper since you do not reside there. We use USAA and they are a good company and have taken care of any insurance problems that we have encountered fairly. Hurricanes in Florida are not pretty. Hope it works for you.

Cool. I have USAA as well, so I will look into that.

This.

Renting out your house is not worth $1200 a year in headaches alone.

So what do you recommend?

Similar story here...its near a base I'm guessing, so renting shouldn't be a prob. Id suggest a management company. They screen applicants, take care of payments, etc. Around my area, its 10% of the rental price every month...plus a full rental payment up front to them. Takes stress out of your life though.

Inform your insurance company that its a rental property. For taxes, your rental income is considered investment income (could affect earned income credit), and your management company should give you the tax info needed for your schedule e (someone correcting I'm wrong...not a tax guy). You can deduct mortgage interest and several other things.

I think I'm keeping mine. Its right next to camp Lejeune so its easy to rent out, I pay 10 bucks out of pocket on my mortgage each month after management fees are deducted from rent, and sooner or later I can make money off it. Obviously there is upkeep and the possibility of bad renters...but hopefully house values will go up one decade.

Good luck with everything

I am near Robins AFB.

you definitely want to hire a rental agency. Trying to deal with the paperwork and legality of the issues alone is a pain in the ass, especially if you're out of the area and can't visit the property. I have a friend who moved to california and got a rental agency to rent her house. She doesn't make much off of it but she is building equity, which is a good thing. I rent a room to someone and I did a lot of reading on the laws. Most laws, in most states, are geared toward the renter. Use a professional agency, they will know how to keep you out of trouble.

Thanks!

 

[Mjavant1985]

So what do you recommend?

If it would cost you 20k out of pocket to sell, then it seems you may be stuck renting until you could get to a break-even point. I would just make sure to go through a renting company, as if they put bad tennants in there, you are covered.

 

[R.D.P.]

My parents owned and managed rental properties for years - many, many problems with tenants and they were very picky and were local to all properties so they were able to stay on top of things but they still got burned by some dirt bags over the years. They sold out since they are older now and were just tired of dealing with it. Overall they made some good money, but there were so many headaches along the way. No way I would not use a property manager in your situation.

 

[ssj4sadie]

I'm going through a property management company. So far it's been ok. I have to receive HOA violations by law (have gotten about 4 [weeds] in the last year). I send them to the PM just incase they didn't receive them. I had to pay about $800 for advertisement fees and "repair escrow". My PM charges 9 percent for military (owner of the company is a retired Command CMSgt) as opposed to 10 percent normally.

USAA actually charges me more (by $300 annually) for property insurance. I've called a few times to figure out why and their excuse is because now it's insured for fire. How the **** wasn't it insured for fires before?!

I'm scared to do taxes this year (first year renting the home) as it's 11 grand of not payed taxes on yet "income". FML

 

[ssj4sadie]

My parents owned and managed rental properties for years - many, many problems with tenants and they were very picky and were local to all properties so they were able to stay on top of things but they still got burned by some dirt bags over the years. They sold out since they are older now and were just tired of dealing with it. Overall they made some good money, but there were so many headaches along the way. No way I would not use a property manager in your situation.

What?! Why not use a property manager in his situation? He isn't going to be local and can't vet potential renters or check up on the property.

 

[Equalbracket]

My gf's family has a 10 houses they rent out, it sounds like a total nightmare, late fee due after like the 5th, so they're all calling for YOU to come pick the check up on that day and he's out till 2-4am picking up checks. Plus once someone moves in, good luck getting them. Screen them really well, do they belong in the neighborhood? If it's a nice place it'll keep trash out.

I have a bunch of friends that rent, they don't give a shit about the place. We always party over there. Not here, I own. I hear nothing but horror stories. Convicts can't rent apartments, but houses yes. Background check them, judge the shit out of them. Is their vehicle clean? Kids? Pets etc.