Rental Help….

So I come to Ido for help, knowing the odds are good of someone having the answer.

So I currently live in a town house that I can’t stand. I just want a house and my own yard. Problem is selling , although an option, is HIGHLY unlikely. There are currently 4 other units in the development for sale, (generally between 3-6 at any given time) and they have been for over a year +. I don’t want to wait a year + to move. I’m not looking to make money on this I just want to rent it out to cover the current mortgage. So I can justify buying a house right now.

So the question is has anyone used a property management company to handle this? Or how did you go about finding your renters or rental property?

Wife says I can’t make this happen in under 3 months. I’m going to prove her wrong.

Think schools, hospitals, clinics. You are looking for professionals with careers.

Ask to post fliers or contact info with the human resources department.

I have had a couple of rental properties with mixed results. The market for rental properties is pretty good right now. If you use a property management firm, expect to pay more for most services (they arent as concerned about pinching pennies for mowing/plowing/repairs as you might be). They take 10-20% of the rent. If you have the time, and EXPECT TO SPEND SOME TIME, then I think it is best to manage it yourself.

We have found renters via word of mouth, craigslist, friends, etc. It usually hasnt been too hard.

One thing to note, a mortgage company or bank will usually use 70% of your incoming rent as income. 100% of the mortgage on your property is counted as an expense. With a new mortgage limited at 40% debt to income, even a cash flowing rental property impacts what you can qualify for on a new property.

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One thing to note, a mortgage company or bank will usually use 70% of your incoming rent as income. 100% of the mortgage on your property is counted as an expense. With a new mortgage limited at 40% debt to income, even a cash flowing rental property impacts what you can qualify for on a new property.

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Looked into this exact thing. – Only problem is they want to see a history of rental, usually damanding last years taxes to show you are actually getting the rental income you claim. Not much help if you haven’t rented it out yet.

As for rental companies, we rent out a property and found most of these management companies don’t really do much for you. Best thing is to get the “Propery Rental for Dummies” book (may not be the exact title) and do the management yourself. And do NOT skip on the background checks. A friend of mine was planning on renting part of his home, had a guy all lined up. Background check came back he had recently be released from prision for killing his wife (2nd degree murder I think he said). My friend decided not to rent it out.

I had a rental property a few years ago and will never do it again. It’s nothing but a pain and, unless you have several properties, you aren’t going to make much above what your mortgage is on it a month.

If you are fine with the value of it going down, being called for any little thing that goes wrong at anytime and dealing with issues on now two house to take care of, then rent it. Finding renters isn’t hard, finding renters who are good and won’t damage it is very hard.

Best advice, sell it, take the time and then buy what you want. Renting is not a good idea to do to just move sooner. You will regret it down the road.

Ditto. Would not want to do it again.

Also, you need to make sure renting is allowed by your association. And if it is, are there any additional rules that may cost you more money. Also check with your lender to see if thay allow and what rules they come up with.

If you do it, better price in about $2 to 2.5 million of personal liability on top of whatever insurance you have now.

-J.

Jon just reminded me of something, you can expect your property taxes and insurance to go up by 60-70% once the property is not owner occupied.

It still might be the best option for you. Just make sure you get all the numbers down…..surprises suck.

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Jon just reminded me of something, you can expect your property taxes and insurance to go up by 60-70% once the property is not owner occupied.

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Is this just in MN? From our experience, we have not seen this in WI.

FDR

Dave is referring to the Minnesota Homestead tax break for live in home owners. If you don’t live in the house, you don’t get the tax break. (Or if you own 2 or more homes, you can only “Homestead” one residence.) Most insurance companies will rate rental properties higher than owner occupied. Check ahead.

Not mentions – income taxes. You will be paying taxes on the rent you recieve. Plan for it as un taxed yearly income. If high enough, you must pay quartery.

-J.

On top of those expenses I also carried a $1 million umbrella policy. I actually still have that. That protects you a lot. If you go through with renting it, make sure you open an LLC or something and put the home under that. Renters can’t go after your own home and properties then, only that one.

ugh CRAP! Starting to think selling is the best option…. Oh well the rate the economy is going may as well take a kick in the shorts now as opposed to a couple years from now when it’s looking like it could be even worse.

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Dave is referring to the Minnesota Homestead tax break for live in home owners. If you don’t live in the house, you don’t get the tax break. (Or if you own 2 or more homes, you can only “Homestead” one residence.) Most insurance companies will rate rental properties higher than owner occupied. Check ahead.

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This is a lot less important than it used to be, as the Homestead tax break has shrunk to a fraction of what it once was. On our rental property, the extra property taxes we had to pay from going from Homestead to non-Homestead was under $100.

If you do decide to rent it out, even if the person is a friend or family member, do all of the paperwork. Having everything down on paper in the beginning is going to save a lot of headaches. We didn’t bother to include a an extra fee for steam-cleaning the carpets with our last renter, just had a handshake deal on it. He had a Black Lab, and we knew we were going to have to do more than just vacuum when he ended his lease. Funny thing, when he was moving out, he swears he never agreed to that, and since it wasn’t on paper, we were SOL.

Also, if you are in an association, be sure to get a copy of the Association Covenant that is recorded with the county. In one case I know of, the Covenant that people THINK is in effect isn’t the one IS in effect, because a revised one was never sent to the county. Also get a copy of the Insurance Policy the association has on the property. It’s possible their insurance will allow you to have a much smaller policy.