Haha I believe the double negative in his sentence threw you off too. The "No way" and "not" cancel each other out.
HAVE to rent my house out... Advice? What am I getting in to?
- Thread starter jbes3
- Start date
Haha I believe the double negative in his sentence threw you off too. The "No way" and "not" cancel each other out.
For what it's worth, World's Worst Tenants is completely fictional. It's all scripted and they are ALL actors.
Carry on.....
Carry on.....
Ehhh. My taxes already suck. How is it income if you are just paying it back to the lender?
Thanks for the advice. Sounds like my new "rental" will be a party whorehouse meth making residence. YAYA. :shrug:
In the case of rental properties, the mortgage proceeds are used to purchase an asset, the house. You didn't recognize income when you received the loan proceeds. The house will be considered converted from personal use to residential rental property. The way you will be handling it it will be considered passive income, so you cannot create a loss to offset other income. The loss will be suspended and offset against future passive income.
You report all of the rental income on Schedule E. You will have your gross income. From that, you will be able to deduct several expenses: management fees, mortgage interest, repairs and maintenance, etc. Look at Schedule E and you will see what is there. This is how you recover the cost of your income.
On top of that, you will have depreciation expense (Line 18). You will depreciate the property via MACRS, generally over a period of 27.5 years. And just know, you will have to recognize a gain (or loss) on the house when you sell it since it will now be considered business property.
Last edited:
I was burned on a previous rental but have no qualms against doing it again. Use a local agent and hang onto the property until you deem it time to move on.
In my case I had to go through the eviction process and spent $10k on repairs after eviction. We're somewhere around 4th in line on wage garnishments with our judgement. Luckily the local market was on an upswing and we sold at a profit after repairs.
In the future I will definitely use background and credit checks.
In my case I had to go through the eviction process and spent $10k on repairs after eviction. We're somewhere around 4th in line on wage garnishments with our judgement. Luckily the local market was on an upswing and we sold at a profit after repairs.
In the future I will definitely use background and credit checks.
What are you in for? A scat storm of misery. My dad owns a rental home next to a base so he's almost exactly in your position . He'll never do it again and can't wait to sell it. Bottom line is people don't respect what's not theirs. He used an agency and still got burned all while living across town. You're going to be far away. I've heard too many bad things to make it worth it.
Yeah, what this guy said. Plus, whomever said your insurance will go down on the property must be lucky, because I own a rental, I also have USAA and my insurance on the rental property tripled when I moved out. It went up because I wasn't there, and some unknown folks would be. It also doesn't cover anything other than pretty much fire. Nothing even close to the coverage the house had before when I was in it.
I'd love to sell mine, but we are to far underwater to sell...we are still down about 30k or so on the house, plus closing costs, realtor fee's, etc. So I'm stuck with it for a while longer. I'm also local to mine, so while I do pay an agent to find/vet my tenants (cost's me 1/2 a months rent, but it's because we bought our new house through our agent) I do my own property management.
It can be a hassle for sure, but I've been extremely fortunate with very good tenants the last couple of years. Most of the stuff I've had to go fix were legitimate land lord type things..so, I'm thankful for that. Given your situation, I'd definitely opt for the property management company. Make sure you ask around to find a good one though, I've heard horror stories about lousy management companies from friends.
Also, do what you can to make sure you have at least 6 months of backup rent in savings. 18 months if you really want to be safe. If someone declares bankruptcy under you, it can take upwards of 18 months to get them out, during which time they probably won't be paying rent. Expect it to be vacant for a couple of months between tenants on occasion too.
Finally, Good luck.
I manage a portfolio of rental investments so i may seem bias... You can either sell now or produce income on your property and sell in a year or two when the value has increased and you have equity. I have had steady tenants for over 5 years on some properties. 80% of tenants are good payers and will take care of your house. The other 20% you will know in the first three months if they will be problematic. You should carry liability insurance aside from the property insurance you already have. If you will not be local it would be a good idea to hire a manager.
Tricky Bastard!
This might as well be written in mandarin. Definitely getting an accountant this year, **** you turbotax!
Also, you have to pay taxes in that state for the income
My buddy got transferred to NC (Marine) and he is renting out his house to another soldier in his local unit. I go by time to time to keep an eye on things. He got the first and last months deposit, the renter seems to pay on time, and he may have some recourse if things go wrong. I am not sure how he handled the insurance part. I know he is just charging his mortgage plus 50 bux (taxes & insurance are part of his reg mortgage payment). He offered a "contract" sell as well in case the renter wishes to purchase in the future. I don't know if this is an option for you, but it is working out well for him. He is happy and if he comes home, he will have a house to return to.
One piece of advice I can give you is to not take a security deposit. Most States have security deposit Laws that are heavily in favor of the Tenant, and their also convoluted. One little mis-step in the security deposit Laws could cost you a ton of money. If the Tenants damage something then take them to Court over the matter and get your money that way. Make sure you also take lots of pictures of the property to prove the existing conditions.
Just a story for you to think about while you're writing your lease and what to be prepared for......
My parents have been renting out a house because like everyone else they are underwater on it. This renter *has 2 kids, 2 cats and grandma is living there too* has been OK for the most part in the last 5 years or so with the usual smaller issues where we had to teach her how not to overload the washer and that if her kids destroy the paint we're not rushing over to fix it. She pays a little late *3 to 6 days* just about every month but never has bounced a check. Mom and dad's curent issue is that dad got a call from the local police that they raided our rental for *An individual dealing drugs from the house.* Come to find out it was the renter's boyfriend. Even better, the boyfriend got the 15yo daughter pregnant. We are talking with lawyers about how to protect ourselves in case this happens again. Our issue is that if the cops raid the house for the same issue a 2nd time they can sieze it. It pays to keep in touch with neighbors and have a good relationship with the local police. The only reason the cop called is a friend of ours is on city council and told him to call.
Not saying this is going to happen to you but you have to word your leases so you have options when and if things like this happen. Dad's losing sleep over this issue worried he can lose an investment while he's waiting for the market to come back up.
My parents have been renting out a house because like everyone else they are underwater on it. This renter *has 2 kids, 2 cats and grandma is living there too* has been OK for the most part in the last 5 years or so with the usual smaller issues where we had to teach her how not to overload the washer and that if her kids destroy the paint we're not rushing over to fix it. She pays a little late *3 to 6 days* just about every month but never has bounced a check. Mom and dad's curent issue is that dad got a call from the local police that they raided our rental for *An individual dealing drugs from the house.* Come to find out it was the renter's boyfriend. Even better, the boyfriend got the 15yo daughter pregnant. We are talking with lawyers about how to protect ourselves in case this happens again. Our issue is that if the cops raid the house for the same issue a 2nd time they can sieze it. It pays to keep in touch with neighbors and have a good relationship with the local police. The only reason the cop called is a friend of ours is on city council and told him to call.
Not saying this is going to happen to you but you have to word your leases so you have options when and if things like this happen. Dad's losing sleep over this issue worried he can lose an investment while he's waiting for the market to come back up.
You are the only person i've ever heard say not to take a security deposit :dw:. How are these laws in favor of the tenant?
I'll agree that there are laws protecting tennants that limit the amount of a security deposit, that is by no means a reason not to get one. You need a way to recoup the damage the tennants do to the home between move in and move out dates. That security deposit has historically been the way its done.
Thanks for that inspirational story. You could have kept it to yourself. LOL. :fm:
I think I will be better off leaving it vacant and paying the mortgage. Hoping for good renters. There is the exact house across the street that has been rented the 7 years we have been here. Everyone that has lived there has treated it like they owned the house. Maybe we'll get lucky.
Users who are viewing this thread
