5KidzRUs Posted June 23, 2009 Share Posted June 23, 2009 What should we know about renting our house out?? We are leaving in a week and about to give our house up for rent. I heard that home owners sometimes get sued by renters (misc. reasons) and the home owner should require in the contract that the renter maintain renters insurance at all time while renting the house. Is that common? Oh the angst! TIA! :001_huh: Quote Link to comment Share on other sites More sharing options...
KatieJ Posted June 23, 2009 Share Posted June 23, 2009 Yes, you absolutely should require renters to have their own insurance. We have been landlords for over 25 years now. ONe of our houses had a very serious fire. The house was gutted. The renter's insurance paid to have their trash hauled out and away, otherwise our insurance would have had to kick in and we would have had less to rebuild with. No, we have never been sued. I would address pets, as in, non refundalbe pet deposits. Figure out who is going to pay utilities. Try to get it in their name, but be sure the utility has your name on their information as a contact, or else you could end up with non paying renters and then the power gets shut off.... BTDT. Do you have someone who will be checking up on the house to be sure the lawn gets mowed, etc? WE live in a different state and have a management company that handles our properties, but we do try to get back there and do a walk thru at least once a year. We have set it up as a business on our taxes and therefore travel expenses are deductible... Quote Link to comment Share on other sites More sharing options...
Laura Corin Posted June 23, 2009 Share Posted June 23, 2009 We also have landlord's insurance which includes legal cover, in case there's any dispute with the tenants. We've never had to use it, but it feels good to have it. Laura Quote Link to comment Share on other sites More sharing options...
JenneinCA Posted June 23, 2009 Share Posted June 23, 2009 Make sure your renters know who to contact when something breaks or stops working. And be sure you have a plan to deal with repairs. Less than a month after we moved in to our current rental house we had a pipe in the bathroom burst and spray water all over. We turned off the water to the sink and called the home owner in the morning. It was fixed later that day. A month later the roof leaked in one of our rooms, again we called and again it was fixed quickly. We have also had a wasp nest that needed to be dealt with. It really makes us, as renters, feel better to know that when the house needs fixing that it happens quickly and with minimal disruption to us. We do have renter insurance both because the lease required it and because it is a good idea. Quote Link to comment Share on other sites More sharing options...
Kari C in SC Posted June 23, 2009 Share Posted June 23, 2009 We have been renting our house for a little over a year. Our first tenants seemed all well and good up until the end of their lease. Then they paid later and then not at all. We live out of state and we did visit once about 5 months into the lease. At that time, I did not ask to enter any of the bedrooms. Just the main living area. BIG MISTAKE! Their teenager had written with sharpie all over the walls in several of the bedrooms and the bathroom. She had torn wallpaper, left animal droppings, etc. The main living area and master were taken care of. It was just where the kids were that was awful. With our new tenants, I made it very clear to them that I would be sending a friend to do a FULL walk through every 3 months and wrote it into the lease. That would be my main piece of advice - regular walk throughs. As far as rental companies... we tried that. The rental company was actual the one that screened our first tenants. They said they didn't have perfect credit, but they would advise us to rent to them. We were not allowed to see any of their credit info, background, etc because it was solely released to the agency. In dealing with eviction, etc, we came to find that the renter's actually had very bad credit and lots of problems that should have been flags. The other problem we had with the rental company was getting them to actually deal with repairs. They would email me and ask me if I wanted to send somebody or have them find somebody. We canceled with them after 3 months. This was a reputable company in our county. After that experience, I decided I wanted to screen my own tenants and make my own decision. I also found that I preferred to call a handy man I know I can trust rather than have them send somebody that will charge me an arm and a leg. My last piece of advice is to be ready to accept that there may be some damage to your house. Make a plan of how you will deal with it when the lease is up. Our last tenants moved out in January. We had to spend 9 grueling days repainting EVERYTHING. My dh had to finish projects that they decided to start and not finish. We had to replace screens, fix broken closet doors, etc. It was tough, but we survived. We put the house back on the market for 4 months - then my dh was laid off. So, the house has been rented again. We are already planning to have to spend a week there when the lease is up fixing and cleaning. If we don't - great, but if we do - we won't be surprised. I know I sound really negative. I don't mean to. There are some great things. Our rent covers both mortgages for the rental house and the house we live in plus brings in an additional $$$ amount. It is a great tax write-off. All of our travel to the house is deductable. There are positives. Good luck. Quote Link to comment Share on other sites More sharing options...
5KidzRUs Posted June 23, 2009 Author Share Posted June 23, 2009 Wow! Thank you for the great anecdotes and tips - I have never heard of Landlords insurance and it is good to know that the expenses can be written off. Unfortunately, renting it out will not make us any profit. The rent will cover our mortgage and that is it. Quote Link to comment Share on other sites More sharing options...
Anne Posted June 23, 2009 Share Posted June 23, 2009 But if you add in the tax deductions and so forth, you may actually come out ahead. Be sure and get some good tax advice on this - it is worth it! Anne Quote Link to comment Share on other sites More sharing options...
OhM Posted June 23, 2009 Share Posted June 23, 2009 I highly recommend this book, which covers absolutely EVERYTHING! Landlording ETA: What Anne said! Having a rental was always a huge tax break for me, even though I didn't make tons of money off of it. Quote Link to comment Share on other sites More sharing options...
Dobela Posted June 23, 2009 Share Posted June 23, 2009 If you are not going to be local, you need to charge a bit more a month and hire a property management co. I don't know about everywhere, but the ones here charge about 10% a month to take care of repairs, find renters, run background checks, and so on. My parents have always kept a second bank account for rental property, even when they only had one. It is much easier to track expenses and deposits for tax purposes when it isn't mixed with another account. If you are renting just to pay the mortgage, do you have any money set aside for repairs? Even small ones can add up. Next month the stove could suddenly quit or the water heater could burst. After they move out (or the 3rd one moves out) you will likely need to make repairs and paint again. My brother asked for $35 more a month rent on his condo just so he could have repair money. He still didn't come out ahead but atleast he wasn't having to borrow money for other repairs. Make your lease very clear, even ask an atorney for help. There are scammers out there that will try everything with an unsuspecting landlord. Make it very clear what is required for them to get the entire deposit back. When we rented we always had to show proof that the carpets were cleaned after we moved out. If we didn't, we would lose 1/2 of the deposit for the cleaning. My parents have a weight limit on animals, say none inside, and completely ban birds after someone letone destroy a house. When an animal is coming, the deposit is an extra 1/2 again, and sometimes my dad will add another $50-$100 month to the rent. It is all laid out in the lease agreement. They also have to show proof (receipt) of professional exterminators treating the house indoors and out after they leave to kill any fleas. Yes, this is a big deterrant to some pet owners, but honestly, if they aren't willing to do that, you may not want to rent to them. My dad had no "grace period for rent". The rent is due on the first of the month. If not received by the 3rd, he will add 10% a day late fees every day until it is caught up. Be prepared. The house will not look as nice as you leave it. Everyone has different standards. It will be abused. It will not wear the same. Renters will do sometimes stupid and crazy things to your home. Quote Link to comment Share on other sites More sharing options...
Renee in NC Posted June 23, 2009 Share Posted June 23, 2009 Wow! Thank you for the great anecdotes and tips - I have never heard of Landlords insurance and it is good to know that the expenses can be written off.Unfortunately, renting it out will not make us any profit. The rent will cover our mortgage and that is it. You need to get good tax advice - your mortgage payment is not a deduction, only the interest is. You can deduct advertising expenses, repairs and maintenance, taxes, insurance, etc. Without proper records you may end up making a profit and having to pay taxes. You may be breaking even or losing money as far as cash in and cash out, but that isn't how the IRS figures profit. Quote Link to comment Share on other sites More sharing options...
KatieJ Posted June 23, 2009 Share Posted June 23, 2009 Taxes have not been addressed. You will no longer be living in the home, so you wil no longer get the homeowners tax break..your taxes will be higher. Be sure your insurance company knows you are renting out the house. It will be a different kind of policy than if you lived there. Ours only covers the structure of the house and any appliances we have in there and of course liability. Tenant damage is NOT covered! Do you have a neighbor you trust to call you if there are issues? We have recieved very valuable tips on cruddy renters when our old neighbors would call us. The city where our homes are requires that we have a rental license for which they charge us 112.00 per year. They require a local phone number to be on their paperwork..meaning, we have to have a local management company handle our properites. Look in the phone book or internet for property management. Many of them only handle their own properties or buildings, but there are still some who manage single family homes. We started using an accountant for taxes when we became landlords. Things like updating carpets or new appliances can not be just deducted. They have to be deducted a portion of at a time over the expected life of that item. Good news is your tax prep fee can be deducted as an expense. We also keep a separate bank account for the rental properites. Damage deposit money can not be spent. You have to hold it in escrow and should there be any given back to the renter, you will owe him interest. Quote Link to comment Share on other sites More sharing options...
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