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Being a Landlord
Posted on 8/2/22 at 6:21 am
Posted on 8/2/22 at 6:21 am
I am about to get in this market with my current home and was wondering if any of you can give me some pointers on how this all happens. Pit fails I should watch out for, etc. I am getting all my documentation lined up currently
Question- do yo have to get a certain insurance other than traditional homeowners/flood?
Question- do yo have to get a certain insurance other than traditional homeowners/flood?
12
Posted on 8/2/22 at 6:27 am to trident
Why would you not sell and get your tax free gains?
Not sure how nice your house is, but assuming it is a B or C entry level house I would not rent to anyone with a lot of culture.
The best tenants you will get are illegal immigrants. They always pay in cash and are going out of their way to stay under the radar.
Insurance - let your insurance company know you want insurance for landlord vs homeowner.
Don't fall for a single sob story. If they break any part of your agreement, you take swift action.
Not sure how nice your house is, but assuming it is a B or C entry level house I would not rent to anyone with a lot of culture.
The best tenants you will get are illegal immigrants. They always pay in cash and are going out of their way to stay under the radar.
Insurance - let your insurance company know you want insurance for landlord vs homeowner.
Don't fall for a single sob story. If they break any part of your agreement, you take swift action.
Posted on 8/2/22 at 6:39 am to I Love Bama
If by swift action you mean months of legal red tape trying to evict bad tenants. Usually everything starts out great for the first few months then once it starts to go bad most of the laws favor the deadbeat living in your place. Was a landlord once and the things i had to do to try and evict the tenant were crazy. Good Luck but if you currently work , pay your own mortgage, have a family etc.. and don't need extra stress then i advise against renting versus selling.
Posted on 8/2/22 at 6:49 am to I Love Bama
quote:
Why would you not sell and get your tax free gains?
Long term financial goals. Yes i can sell now, and it is a fairly nice house in a great area.
Posted on 8/2/22 at 6:56 am to trident
quote:
and it is a fairly nice house in a great area.
These very rarely make good investments.
What is the house worth right now and what can you rent it for?
Posted on 8/2/22 at 7:02 am to I Love Bama
180,000 and 1800 a month. Ive lived in this for 10 years, saved enough and bought another house. I could sell this and take money or rent it and be paid for in 10 years
Posted on 8/2/22 at 7:06 am to trident
quote:
180,000 and 1800 a month. Ive lived in this for 10 years, saved enough and bought another house. I could sell this and take money or rent it and be paid for in 10 years
Yeah those numbers are not bad. Personally, I would sell and then have the cash for another investment but your plan is not a bad one.
Posted on 8/2/22 at 7:10 am to I Love Bama
quote:
I would sell and then have the cash for another investment but your plan is not a bad one.
thought of that but this house is fixed up and ready to rent. If I sell and buy another one, and I have been looking, all those will need some $$$ to get ready since I am still on the lower end, cheap.
Posted on 8/2/22 at 7:24 am to trident
It takes a certain mindset to be a good landlord (not just taking care of the property, but willing to hold tenants responsible).
Look into the state laws about getting rid of bad tenants in your state before you make a decision. In some place like California it can be damned near impossible to evict someone (depending on scenario), in other states it may be easier.
Sell before you consider doing Section 8. Uncle Sam pays on time every month, but the quality of your clientele is usually going to be severely lacking.
Look into the state laws about getting rid of bad tenants in your state before you make a decision. In some place like California it can be damned near impossible to evict someone (depending on scenario), in other states it may be easier.
Sell before you consider doing Section 8. Uncle Sam pays on time every month, but the quality of your clientele is usually going to be severely lacking.
Posted on 8/2/22 at 7:43 am to trident
If your plan is to sell it down the road be careful with depreciation. I've known a lot of people that get in a bind because they leverage rentals to buy more rentals, and then want to sell and they're actually upside down because of taxes on depreciation recapture. It's a nasty little trap.
Bottom line - depreciation seems like a great deal on your taxes - but it doesn't last.
Bottom line - depreciation seems like a great deal on your taxes - but it doesn't last.
Posted on 8/2/22 at 8:19 am to trident
Feels like usually this board, and people I have met that are landlords, all say it's worth it/do it now/find a way to get started, etc.
This whole thread is don't do it.
Im confused
This whole thread is don't do it.
Im confused
Posted on 8/2/22 at 8:36 am to trident
The advice I received, which ultimately swayed my opinion was:
"You either have 10 rent houses or you have none."
Obviously you have to start somewhere to get to 10 homes, but the message I took was if you want to fully bear the fruit of being a landlord, you need to be fully committed to being a landlord. Which means owning multiple properties.
"You either have 10 rent houses or you have none."
Obviously you have to start somewhere to get to 10 homes, but the message I took was if you want to fully bear the fruit of being a landlord, you need to be fully committed to being a landlord. Which means owning multiple properties.
Posted on 8/2/22 at 8:42 am to Bard
quote:
Sell before you consider doing Section 8
I will def do that. I still live in the neighborhood so I have interest in good tenants
Posted on 8/2/22 at 8:43 am to ItSawGood
quote:
You either have 10 rent houses or you have none."
I dont know about 10 but I hope to get some more after seeing what this is all about.
Posted on 8/2/22 at 8:46 am to cable
quote:
If your plan is to sell it down the road be careful with depreciation.
Can you explain?
Posted on 8/2/22 at 8:47 am to ItSawGood
quote:
The advice I received, which ultimately swayed my opinion was:
"You either have 10 rent houses or you have none."
I sort of agree with this sentiment. You're going to have good and bad renters. Time to time you'll have issues with collecting but it won't be all of your units. The reason you need to cash flow a certain amount per property/unit is because sometimes you'll need that buffer of some units not being rented out for brief periods, some tenants not paying on time or at all, maintenance, etc. The best business model is one that the business is able to support itself through all the difficulties and that may take time depending on your situation. Each situation is different.
I've been in the business for a handful of years and am in a perpetual learning process. I will say once you get past 3-5 properties, things do start to get easier financially if things go as planned. It's the managing part you need squared away at that point if you're able to do it yourself at first.
Posted on 8/2/22 at 9:29 am to FLObserver
quote:
If by swift action you mean months of legal red tape trying to evict bad tenants. Usually everything starts out great for the first few months then once it starts to go bad most of the laws favor the deadbeat living in your place. Was a landlord once and the things i had to do to try and evict the tenant were crazy. Good Luck but if you currently work , pay your own mortgage, have a family etc.. and don't need extra stress then i advise against renting versus selling.
This is well said and coming from a place of real world experience I can tell. The majority of people will not heed your advice because they have to get burned before your words make sense to them. Like Robin Williams character in Good Will Hunting where you can tell me every book written about Michelangelo because you're a genius, but what you can't do is tell me about the smells of the Sistine Chapel the second you enter because you don't have real life experiences.
Posted on 8/2/22 at 9:40 am to I Love Bama
quote:
Personally, I would sell and then have the cash for another investment but your plan is not a bad one.
I am in the exact same situation as OP. Moving soon. My current home purchased for $185k and now worth $240k. I can rent for $1800/mo. I refinanced into a 2.75% 30 year a couple years ago.. so note is about $850 including escrow.
Looking for advice as well. I would HATE to give up my 2.75, but does it make more sense to sell for tax free gains and then purchase a different property? What I like is I know the house well and I know the expenses.. And couldn’t I still sell within 5 years and meet the criteria of living there “2 of the previous 5 years” and realize some sort of tax savings?
Posted on 8/2/22 at 10:48 am to trident
quote:
180,000 and 1800 a month. Ive lived in this for 10 years, saved enough and bought another house. I could sell this and take money or rent it and be paid for in 10 years
What did you buy it for? You need to look into the 5/2 rule and I would suggest spending the $300 to meet with a CPA to see if this is going to severly hurt you.
My guess, you don't want to rent for more than 36 months. If you sell it with it being your primary residence for 2 of the last 5 years you can avoid capital gains. If the home is worth $180k now you likely bought for what $120k? That means you'd owe income tax on $60k after 3 years plus 3 years of depreciation at I believe a 15 year schedule, so it would actually be around $96,000 in income? My math may be off.
Given that, get a rental application and force 5-10 years of job history. Don't rent to anyone that hasn't routinely had a job for 2+ Years in a row, the same job that is.
Chances are someone with a college degree that has a good job history will be a good tenant as far as taking care of the place and paying rent on time.
Make sure you are VERY firm on late rent payment and charge it immediately on the 6th day or whenever its due. not a day late EVER or they will pay you a day late every time.
Posted on 8/2/22 at 11:39 am to baldona
5/2 rule. So I would have 3 more years before this kicked in for taxing on the gains. Thanks for that information.
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