- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Turning a home into a rental
Posted on 5/13/15 at 9:43 pm
Posted on 5/13/15 at 9:43 pm
We are in the process of moving out of our starter home and many people have told me that we should rent it instead of selling it. I also have a potential buyer who plans on renting it.
My current note is $900/month and I can't see getting more than $1200/month rent at best in my area(1100 sqft 3bed/2 bath, rural town). Most rentals and apartments in my area are for lower income people.
How do you justify if a property is worth renting? $3600/year doesnt seem worth my time if I still have to cover major repairs and the possibility of having two notes if they moved out unexpectedly.
My current note is $900/month and I can't see getting more than $1200/month rent at best in my area(1100 sqft 3bed/2 bath, rural town). Most rentals and apartments in my area are for lower income people.
How do you justify if a property is worth renting? $3600/year doesnt seem worth my time if I still have to cover major repairs and the possibility of having two notes if they moved out unexpectedly.
8
Posted on 5/13/15 at 10:05 pm to jmh5724
How much are you gaining in equity each month?
Posted on 5/13/15 at 10:11 pm to MrSweets
I don't know the numbers off the top of my head. I did refinance 3 years ago and went from 6.75% to 4.25% so it was quite significant. I've been in the house for 6 years so I dont have a ton of equity in it.
Posted on 5/13/15 at 10:45 pm to jmh5724
I get what you are saying now. The money is to be made down the road by letting someone else pay the interest and cashing in the equity. Thanks, didn't look at it from that angle.
Posted on 5/13/15 at 10:56 pm to jmh5724
Especially if you financed it over 15 years.
Posted on 5/13/15 at 10:59 pm to MrSweets
I refinanced at 30 years because I was just interested in lowering my note at the time.
Posted on 5/13/15 at 11:32 pm to jmh5724
I've been in your situation before(30 yrs, bad interest rate). I think I paid off 3K of principal in 2 years. I refinanced it to 15 yrs at a lower interest rate. I've gained 55K in equity in 5 years. So you can see the difference right there.
Posted on 5/13/15 at 11:46 pm to MrSweets
Yeah I considered it but we had twins on the way at the time and I was only concerned with disposable income. Bought the house right before the market crashed and now I'll be lucky to break even. You live and learn.
Posted on 5/14/15 at 1:41 am to jmh5724
I would sell it. I don't think it's worth the time, effort to pick up 200-300 each month.
Posted on 5/14/15 at 8:42 am to MrSweets
quote:
I would sell it. I don't think it's worth the time, effort to pick up 200-300 each month.
I have one rent house and I make $800/mo on it and it is almost not worth the time and effort and wear and tear tenants put on my investment.
I almost put mine on the market about 6 times over the past month.
Posted on 5/14/15 at 8:53 am to jmh5724
The numbers don't work at all.
Have you accounted for vacancy, CAPEX, routine maintenance, insurance, taxes, management fees (your time is worth money), etc.?
You need to sell.
Have you accounted for vacancy, CAPEX, routine maintenance, insurance, taxes, management fees (your time is worth money), etc.?
You need to sell.
Posted on 5/14/15 at 9:37 am to Motorboat
What you want for it? I'm just starting to look for another rental.
I was in your position with the last tennants but the current ones are great.
I was in your position with the last tennants but the current ones are great.
Posted on 5/15/15 at 7:49 am to eng08
I'm going to stick it out another lease with these new tenants. When it concludes, I'm either selling it, or fixing it up it and demanding higher rent.
If I was selling, I'd be asking about $140K.
If I was selling, I'd be asking about $140K.
Posted on 5/15/15 at 8:46 am to jmh5724
quote:
The money is to be made down the road by letting someone else pay the interest and cashing in the equity. Thanks, didn't look at it from that angle.
i dont mean this as an insult at all, but if that aspect didnt immediately strike you - it might be a sign that its not the best bet to complicate your finances over what is not an ideal spot to take the risk in the first place.
Posted on 5/15/15 at 10:11 am to Motorboat
Email me eng08td at gmail
Where's it at? I will probably be interested then as well.
Where's it at? I will probably be interested then as well.
Posted on 5/15/15 at 1:47 pm to eng08
Jefferson Court. Off Brentwood/Jefferson. I have a ways to go.
Posted on 5/15/15 at 5:02 pm to jmh5724
So your PITI is 900 a month?
Posted on 5/15/15 at 6:28 pm to MrSweets
quote:
I would sell it. I don't think it's worth the time, effort to pick up 200-300 each month.
He would also gain a tax write-off and the equity of letting someone else pay off the other $900 per month.
Looking at the net every month is short sighted but I agree with ILoveBama that the numbers don't look really appealing.
I would sell it and use any equity gained now to roll over into a proper rental if he is looking into gaining some properties.
Posted on 5/15/15 at 10:21 pm to I Love Bama
quote:
The numbers don't work at all.
Have you accounted for vacancy, CAPEX, routine maintenance, insurance, taxes, management fees (your time is worth money), etc.?
You need to sell.
This.
And in my experience, escrow can frick you over in the future because the way it's calculated can mean it may take over a year to get your actual new monthly payments.
Not to mention, if you've never rented out a house before, you have no idea what it's like to be having a normal day and receive that phone call that says, "The a/c isn't working." Suddenly you're on the phone with repairmen, taking off to deal with it/trusting a property manager, and potentially looking at a few thousand dollars out of your pocket. That feeling sucks. It sucks bad and if you can avoid it, avoid it.
Posted on 5/16/15 at 9:03 am to StringedInstruments
That's why they have property managers. I alwAys run my calcs as if a manager were running things just in case. Sounds like his numbers won't work anyway.
Page 1 of 2
Popular
Back to top
Follow TigerDroppings for LSU Football News