lynn Posted May 6, 2008 Share Posted May 6, 2008 I know a single mom that really needs a reasonable rental home for under $500. Rents here are about $1200 and we are in a position to rent it to this lady for $500 without any hardship on us. Would this be a bad thing. What things should I consider? Quote Link to comment Share on other sites More sharing options...
Claire Posted May 6, 2008 Share Posted May 6, 2008 Be *sure* you understand the tax implications of how you rent the house because that can affect how you are taxed if you decide to sell. It depends on how the rental income is accounted for you on your income tax filings. Also, find out how your house insurance premiums would change if you rent the house. I think they would go up quite a bit. You may find that between taxes and insurance, $500 a month might not cover your costs. Also, I just think it is always risky giving people too much. It can destroy the friendship down the line if the house gets trashed, if you decide you need to sell the house and she has to move, if you decide you need to move back into the house, etc. Basically you are proposing giving this woman $700 a month without having her go through the application and screening process offered by charitable organizations. Will you have a rental agreement you both sign? Quote Link to comment Share on other sites More sharing options...
Part-Time Homeschooler Posted May 6, 2008 Share Posted May 6, 2008 Ditto everything Claire said. Up until a few years ago, we had a rental property. At the time we bought it, we thought it was a great investment but it gave us headache after headache after headache. The more we did for our tenants, the more they wanted and we got no appreciation in return. They trashed the property plus they paid their rent late, if at all. We ended up evicting several tentants for non payment; all of them were at least 4-6 months behind on the rent. One tenant paid her security deposit and then never paid another dime for the next several months. We finally had enough and sold the property. Also, keep in mind that as the property owner you can be held liable for any accidents, dog bites, fires, etc. that happen on the property. We had to get an umbrella insurance policy that would cover several different scenarios. It was very expensive but worth it just for peace of mind. I would think very hard before renting out your home. I wish you the best no matter what you decide to do! Edited to say that there are a lot of great renters out there. Unfortunately, we just had bad luck. Quote Link to comment Share on other sites More sharing options...
Christine Posted May 7, 2008 Share Posted May 7, 2008 What things should I consider? Our insurance did go up a bit. . . Do you have a septic system? That's a doosey. . .especially if it backs up do to some stupid result of the renter. . .(Yep there's a story in that, but the bottom line was that WE had to not only pay for clean up, but put the renters in a hotel until it was fixed!) If you are going to rent out, paint your house with a good "washable" paint. They will have to wash spots when they move out, and you really don't want to have to deal with drywall patches. We had a great realtor we went through (though it doesn't sound like you will be going that route), and she went over every conceivable problem and how we could try to alleviate them (except for the septic issue, which wound up being something new to her as well). Maybe you could ask a realtor what they see as issues, and they could give you some good advice. ETA: One other thing, check your state laws. We knew someone that was renting out, and according to their state law (I can't recall what state) they really couldn't kick out non-payers for almost 6-9 months of non-payment. . .even though it was in their contract that they could kick them out after the 1st month! Quote Link to comment Share on other sites More sharing options...
1bassoon Posted May 7, 2008 Share Posted May 7, 2008 Following this thread with interest - We had thought about renting our home if dh gets the job 2.5 hours away. Now - hmm - not so much. Quote Link to comment Share on other sites More sharing options...
Laura R (FL) Posted May 7, 2008 Share Posted May 7, 2008 It really depends... We have 4 rental properties and have had 2 or 3 others in the past that we have sold. For us, the benefits have outweighed the costs or we wouldn't continue to do it! :001_smile: Of course, all of the scenarios listed above are possible, but we have not had significant problems. We do have insurance on the homes, we have tenants sign a lease that spells out their responsibilities and ours. Yes, we've had to evict tenants for non-payment, we have them place a deposit for damages plus 1st/last rent and take pics before and after. Yes, my husband has fixed septic lines, floors after leaks, etc. He's called the plumber or A/C guy. We have a 90 yo tenant who forgets to have the gas guy light her pilot light for her gas furnace, so we drive around the corner to take care of her. What do we get in return? Someone pays the mortgage on houses that build equity for us and we get tax benefits as well. You do have to pay capital gain taxes when you sell a rental, but hopefully money made covers that money owed. Quote Link to comment Share on other sites More sharing options...
Kari C in SC Posted May 7, 2008 Share Posted May 7, 2008 It really depends...What do we get in return? Someone pays the mortgage on houses that build equity for us and we get tax benefits as well. You do have to pay capital gain taxes when you sell a rental, but hopefully money made covers that money owed. I have a question about the capital gains taxes. If you lived in the house for 2 out of 5 years, you are free from this tax? Correct? We are renting our house in Florida (would not sell). We plan to rent it for one year and put it back on the market. I am hoping I had it right that we will not have to pay capital gains. Thanks! Quote Link to comment Share on other sites More sharing options...
Sweetpeach Posted May 7, 2008 Share Posted May 7, 2008 It really depends... We have 4 rental properties and have had 2 or 3 others in the past that we have sold. For us, the benefits have outweighed the costs or we wouldn't continue to do it! :001_smile: Of course, all of the scenarios listed above are possible, but we have not had significant problems. We do have insurance on the homes, we have tenants sign a lease that spells out their responsibilities and ours. Yes, we've had to evict tenants for non-payment, we have them place a deposit for damages plus 1st/last rent and take pics before and after. Yes, my husband has fixed septic lines, floors after leaks, etc. He's called the plumber or A/C guy. We have a 90 yo tenant who forgets to have the gas guy light her pilot light for her gas furnace, so we drive around the corner to take care of her. What do we get in return? Someone pays the mortgage on houses that build equity for us and we get tax benefits as well. You do have to pay capital gain taxes when you sell a rental, but hopefully money made covers that money owed. The classic case of risk-reward. We've had no problems with any of our units. Management is key. Quote Link to comment Share on other sites More sharing options...
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