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rated:
rascott said:   
solarUS said:   
rascott said:   
solarUS said:   
rascott said:   
Current project I bought for $54k, rehab about $15k. Will rent for $1k, maybe $1050. Retail value is $110 to $130k. I plan to rent for 5 years, then do a retail grade rehab and sell.

 

what sort of purchase was this? these are increasingly rare in my area. a 15k lipstick flip to get 40-60k in profit is...uncommon in 2016. I'm guessing this is quite rural, flyover territory and not much [investor] competition?


Let me be clear, the $15k is rental rehab...other than paint and flooring, not doing any cosmetics. Most of it is going into mechanical, new HVAC, new plumbing, hot water heater, electrical etc....

If I wanted to get $130k, for it I'd probably need to spend $30k and redo the kitchens and baths. But I'll do that in a few years.

I might get closer to $100k as it will be.

This is urban area, capital city in Midwest. Plenty of competition...I'm lucky to find 2-3 per year that hit these numbers, but that's all I ever want to buy anyway. I bought on day 1 it was open to investors.

ah ok. not lipstick flip. you must really have your costs down to do all that for 15k - I certainly couldn't.

i'm with you though...if i can't get it under contract on day 1, I usually don't even try. 


$4k new HVAC, $2500 new PEX plumbing supply lines, $1k electrical. $6k paint and flooring (flooring only needed in about half of house). Rest miscellaneous. 1500 sq ft house.

  
$4K for new HVAC for a 1500 ft² house? Is it made of gold?  $1885 for 3 ton/80,000 system. Get off duty HVAC guy to install for $500 - $750 on the weekend. 

$2,500 for PEX? Copper, maybe, PEX is CHEAP! Any DIY homeowner can do it. 

$1,000 for electrical? Does the house have knob and tube and needs to be re-wired?

$6,000 for paint and flooring? Are you putting eco friendly and renewable bamboo, or peel and stick? 

 

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JaxFL said:   
Flot said:   
blueiedgod said:   
If you want cash flow, go with 30 year mortgage. 

  
Right - I don't need the cash flow.  At a 30 year mortgage, the property is probably ~ positive $250 a month.  At a 15 year mortgage, the property is ~ negative 250 a month.  However, the interest paid over time is substantial, somewhere north of $50-60k.  Having the property paid off at the 15 year mark is important to me, at that point it goes positive ~$1250 a month and becomes a meaningful contribution to my retirement planning.

  At 15yrs you are probably negative more than the $250 as you will have vacancies, repairs etc... At 30yrs you may not be positive with those factored in. 
Unless your primary is paid off, Id suggest you do a 30yr on rental and use the monies you were going to use on rental to pay down your primary. With homestead protection you would be eliminating some long term liability risk. Ive always preferred a 20 yr amortization. Its the best bang for your buck. If you amortized the rental @ 20yrs youd probably technically be break even, based upon your summarization.
 

  
can u please explain what is "homestead protection"?

thanks in advance for your reply

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2500 for pex ?? get more bids.

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KDS95AB said:   
JaxFL said:   
Flot said:   
blueiedgod said:   
If you want cash flow, go with 30 year mortgage. 

  
Right - I don't need the cash flow.  At a 30 year mortgage, the property is probably ~ positive $250 a month.  At a 15 year mortgage, the property is ~ negative 250 a month.  However, the interest paid over time is substantial, somewhere north of $50-60k.  Having the property paid off at the 15 year mark is important to me, at that point it goes positive ~$1250 a month and becomes a meaningful contribution to my retirement planning.

  At 15yrs you are probably negative more than the $250 as you will have vacancies, repairs etc... At 30yrs you may not be positive with those factored in. 
Unless your primary is paid off, Id suggest you do a 30yr on rental and use the monies you were going to use on rental to pay down your primary. With homestead protection you would be eliminating some long term liability risk. Ive always preferred a 20 yr amortization. Its the best bang for your buck. If you amortized the rental @ 20yrs youd probably technically be break even, based upon your summarization.

  
can u please explain what is "homestead protection"?

thanks in advance for your reply

Its the reason OJ Simpson had his mansion in FL, after the murders. Your home is protected from lawsuits/creditors. Though the risk may be minimal for your average joe, you never know what may happen over the years.  Technically the homestead you apply for as part of your property taxes isn't the same, and you may file a "declaration of domicile" with the clerk if you want it put the world on notice.

If you really believe in real estate investment and the power of leverage you would minimize your cash outlay and use those funds to purchase an additional property, under the premise that it will appreciate in value... rule of 72.  You can then sell the 2nd property after 15yrs+- and use the proceeds to pay off the 1st rental.  Sounds simple, though there are many other variables.

 

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Why replace all the plumbing? Is it Quest PB? Or is it all just really old?

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Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

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JaxFL said:   
KDS95AB said:   
JaxFL said:   
Flot said:   
blueiedgod said:   
If you want cash flow, go with 30 year mortgage. 

  
Right - I don't need the cash flow.  At a 30 year mortgage, the property is probably ~ positive $250 a month.  At a 15 year mortgage, the property is ~ negative 250 a month.  However, the interest paid over time is substantial, somewhere north of $50-60k.  Having the property paid off at the 15 year mark is important to me, at that point it goes positive ~$1250 a month and becomes a meaningful contribution to my retirement planning.

  At 15yrs you are probably negative more than the $250 as you will have vacancies, repairs etc... At 30yrs you may not be positive with those factored in. 
Unless your primary is paid off, Id suggest you do a 30yr on rental and use the monies you were going to use on rental to pay down your primary. With homestead protection you would be eliminating some long term liability risk. Ive always preferred a 20 yr amortization. Its the best bang for your buck. If you amortized the rental @ 20yrs youd probably technically be break even, based upon your summarization.

  
can u please explain what is "homestead protection"?

thanks in advance for your reply

Its the reason OJ Simpson had his mansion in FL, after the murders. Your home is protected from lawsuits/creditors. Though the risk may be minimal for your average joe, you never know what may happen over the years.  Technically the homestead you apply for as part of your property taxes isn't the same, and you may file a "declaration of domicile" with the clerk if you want it put the world on notice.

...

  
   We're talking about a rental investment property here aren't we?    
The homestead exemption only applies to your primary residence (even in FL).   


Also, while you both live in FL, I think its worth pointing out on the topic that FL is especially generous with the homestead exemption and most states don't exempt the entire home without limits.   Here in OR the limit is $40k worth of equity in your home.  

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rascott said:   Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

  
I think plumbers are some of the most over paid..next to lawyers.  I've done jobs for $50 in materials that they wanted $500 to complete.   

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drew2money said:   rascott said:   Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

  
I think plumbers are some of the most over paid..next to lawyers.  I've done jobs for $50 in materials that they wanted $500 to complete.   

Idk , ceo and execs seem more overpaid then plumbers or lawyers

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rufflesinc said:   
drew2money said:   
rascott said:   Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

  
I think plumbers are some of the most over paid..next to lawyers.  I've done jobs for $50 in materials that they wanted $500 to complete.   

Idk , ceo and execs seem more overpaid then plumbers or lawyers

  
As CEO and Executive of BFE Properties...I think I'm way underpaid!!

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drew2money said:   rascott said:   Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

  
I think plumbers are some of the most over paid..next to lawyers.  I've done jobs for $50 in materials that they wanted $500 to complete.   


And how long did the job take you to complete? Material costs are not the only relevant topic. Plus you'll never get anyone to do the simplest job for less than a couple hundred $, plumbing or otherwise.

rated:
rascott said:   
drew2money said:   
rascott said:   Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

  
I think plumbers are some of the most over paid..next to lawyers.  I've done jobs for $50 in materials that they wanted $500 to complete.   


And how long did the job take you to complete? Material costs are not the only relevant topic. Plus you'll never get anyone to do the simplest job for less than a couple hundred $, plumbing or otherwise.

  

Unless you do this during business time, your labor is free in after hours and weekends. In fact, you are more likely to spend more money on the weekends "relaxing" instead of making money by doing additional work. 

It took me about half a day to replace all of the galvanized plumbing in a ranch house, and 2 full days (a weekend) in a Cape style house with a bathroom upstairs. Wife and kids came to help and we did it as a family project on an investment house. 

I look at it as spending time together with the family productively, rather than paying $100 for the 4 of us to sit on our asses watching some stupid movie, or eating out at an establishment that makes a meal that is probably not the healthiest. Kids learn that you have to make an effort to make money (i.e. Money does not grow on trees) by earning their allowance helping daddy. 

Perhaps I am minority, but I don't just give them what they ask for or want. They earn it, just like I do. 

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blueiedgod said:   rascott said:   
drew2money said:   
rascott said:   Old house, all galvanized plumbing. That is also replacing all the galvanized drain lines including the main stack.

I've been doing this for 15 years, I know my prices. As to DIY plumbing....that's laughable. Does your time have no value? Or the opportunity cost of rehab dragging out forever? Every week is $250 to $300 in missed rental income. I hire pros who can bang this all out in a couple weeks.

  
I think plumbers are some of the most over paid..next to lawyers.  I've done jobs for $50 in materials that they wanted $500 to complete.   


And how long did the job take you to complete? Material costs are not the only relevant topic. Plus you'll never get anyone to do the simplest job for less than a couple hundred $, plumbing or otherwise.

  

Unless you do this during business time, your labor is free in after hours and weekends. In fact, you are more likely to spend more money on the weekends "relaxing" instead of making money by doing additional work. 

It took me about half a day to replace all of the galvanized plumbing in a ranch house, and 2 full days (a weekend) in a Cape style house with a bathroom upstairs. Wife and kids came to help and we did it as a family project on an investment house. 

I look at it as spending time together with the family productively, rather than paying $100 for the 4 of us to sit on our asses watching some stupid movie, or eating out at an establishment that makes a meal that is probably not the healthiest. Kids learn that you have to make an effort to make money (i.e. Money does not grow on trees) by earning their allowance helping daddy. 

Perhaps I am minority, but I don't just give them what they ask for or want. They earn it, just like I do. 


Well my only child is 11 months old, so he's not quite ready to help replumb a house.

I hate doing that kind of work, so I'm happy to pay others to do it. I'd much rather spend my time doing things I actually enjoy, either business or pleasure. I would not be a landlord if I had to go do home repairs myself.

On some of my very first investment homes, I did most of the work myself. It didn't turn out that great, and took me much too long to complete. Never again. If the home doesn't meet my investment objectives without me being able to hire out the work, then I don't buy it.

rated:
while I appreciate and value blueiedgod's point "I look at it as spending time together with the family productively, rather than paying $100 for the 4 of us to sit on our asses watching some stupid movie, or eating out at an establishment that makes a meal that is probably not the healthiest. Kids learn that you have to make an effort to make money (i.e. Money does not grow on trees) by earning their allowance helping daddy. "

I myself am in rascott's camp.... "I hate doing that kind of work, so I'm happy to pay others to do it. I'd much rather spend my time doing things I actually enjoy, either business or pleasure. I would not be a landlord if I had to go do home repairs myself. "

If i'm skillful i'm glad to do it... but I feel i can add value somewhere else..... like I like and enjoy spending time to do my taxes, while my friends who are more DIY types pride themselves fix their own garage door openers, plumbing issues around the house etc....they dont do their own taxes etc.... just as an example...

Coming to the topic of the forum "landlording"... As a newbie landlord.... I hate paying money for management companies so that I can be handsoff....So at this point, I have purchased extended warranties for all the appliances I purchased for the investment homes....
I might look into purchasing "home warranties" in future.... At this point, as all my rental properties are new construction/less than 5 yrs old... i have the luxury to postpone that decision....

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whatSay said:   .... I hate paying money for management companies so that I can be handsoff....So at this point, I have purchased extended warranties for all the appliances I purchased for the investment homes.....
What is the Connection between those two statement?

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As blueiedgod pointed out, my time is not really billable. I have so much vacation with my job, I have to take it or lose it, and doing "fun" things cost so much money.

With the exception of toilets, I don't mind most plumbing jobs. Getting them seated correctly with no drips is so time consuming. I'm actually getting ready to demo and rebuild a shower, and its a going to be a challenge, which makes it "fun".

Rascott..you do have you handsful with a 11 month old.

rated:
i know i am jumping in on this late, but my time is valuable -- BUT some of the prices of some of these "craftsmen" is approaching insane --- depending on where you live.

With home depot and other stores, as well as youtube and depending on quality of the home, it is SOOOOO much cheaper to do certain jobs yourself if the job entails SIMPLE removing and replacing.

i can replace a door w jamb and put up trim without really thinking -- I can put up FAR BETTER material using my labor for about 20% of the price some of these tradesmen charge. If i have 10 hours over a weekend, why not save $2000 AND install far better materials.

Do i "enjoy" painting a bedroom -- NO.   But if i can buy Sherwin WIlliams best self-leveling paint (hides DIYers mistakes) --its called cashmere and paint a room in 2 hours versus pay someone $300 why not.     I cant and wont put on a roof , but I surely can install doors, etc.

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patch96 said:   
i can replace a door w jamb and put up trim without really thinking -- I can put up FAR BETTER material using my labor for about 20% of the price some of these tradesmen charge. If i have 10 hours over a weekend, why not save $2000 AND install far better materials.

I can get a stock exterior door Installed thru Lowes for $500 half of which is material. I think most people on FWF value their time we'll over $25 an hour

You do have a point with paigting, on rentals you can get away with a crap paint job, not so much on carpentry.

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Not sure why you guys don't start handyman gigs in all your spare time! You clearly value your free time at $25/hr or so, you can charge way more than that.

How about all the time running to the store, buying supplies, driving to your properties, realize you need to go back to the store as you need another part, yada, yada......blah. I'll be playing golf.

You are either an investor or your are a hobbyist. IMO investors don't spend weekends painting or hanging doors. BTW, my handyman charges about $100 to hang a prehung door. Not sure who is paying $2k! It's a 2 hr max job for someone who knows what they are doing. An exterior door maybe double.

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patch96 said:   
i can replace a door w jamb and put up trim without really thinking -- I can put up FAR BETTER material using my labor for about 20% of the price some of these tradesmen charge. If i have 10 hours over a weekend, why not save $2000 AND install far better materials.

Do i "enjoy" painting a bedroom -- NO.   But if i can buy Sherwin WIlliams best self-leveling paint (hides DIYers mistakes) --its called cashmere and paint a room in 2 hours versus pay someone $300 why not.     I cant and wont put on a roof , but I surely can install doors, etc.

  

Two grand and to hang a door? Who were you planning on using, Donald Trump?

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Ftw, as an ee, I do basic electrical repairs (outlet and fixture replacement) myself. Mainly because the houses in 19 50s may not be grounded and I don't trust a handyman to handle properly, and I don't want to pay electrician their prices . But I do have electricians fish new lines, put in panels, groud rods etc

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Hi all.

Quick question. I own a rental in NJ in which a tenant is bailing about 4 months early.

New Jersey is I believe a duty to mitigate state. I believe that means I have to try to find another tenant.

I want to cash out this place within 2 years anyway. Can I take this time to sell the place now rather than try to rent it out, within the duty to mitigate clause?

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I am trying to buy another property in FL and will be converting the current one as rental from primary and moving to new as primary residence, I still have mortgage on current house, do I need to do anything specific about current home e.g informing lender or buying a different type home owners insurance?
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you
 

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mkha said:   I am trying to buy another property in FL and will be converting the current one as rental from primary and moving to new as primary residence, I still have mortgage on current house, do I need to do anything specific about current home e.g informing lender or buying a different type home owners insurance?
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you

  You shouldn't have to tell the lender.  You should look into a insurance policy for  non-owner occupied.  No need insuring the contents.

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Krazen1211 said:   Hi all.

Quick question. I own a rental in NJ in which a tenant is bailing about 4 months early.

New Jersey is I believe a duty to mitigate state. I believe that means I have to try to find another tenant.

I want to cash out this place within 2 years anyway. Can I take this time to sell the place now rather than try to rent it out, within the duty to mitigate clause?

If you plan to try to collect any of the remaining four months of rent from the current tenant, you have to follow the law, lease or both. If you don't want to try to collect the unpaid rent, then you don't have to mitigate and can move forward to sell. The security deposit, if any, can be used to offset whatever damages the tenant may have caused, but cannot be used for unpaid rent if you don't mitigate. Just to be sure to document damages and segregate any costs for upgrades you may make to sell.

That being so, it's not hard to to prove you tried to rent the unit should you decide to keep some of the deposit for unpaid rent if the tenant questions your doing so. Just keep good records of whatever you do, and prepare to sell or market to rent with an option to buy for the four months. If it doesn't sell by then, drop the rent option and continue with a sales listing.

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You have a duty to mitigate.  Whether you mitigate or not (by leasing it out again) is up to you,  However, your damages will be limited to the amount you would have lost if you made reasonable efforts to mitigate.  Every rental market is different but it is very unlikely that you could ever recover anything close to four months for a residential rental.

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mkha said:   ...
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you

  
How much has the house appreciated since you bought it?    

If you have a substantial gain on it, then it might make sense to just sell it now and lock in that gain tax free.    
But if the gain isn't that considerable then the transaction costs of selling and buying another property might cost you more than the taxes you'd save by selling the one you've got.
 

rated:
mkha said:   I am trying to buy another property in FL and will be converting the current one as rental from primary and moving to new as primary residence, I still have mortgage on current house, do I need to do anything specific about current home e.g informing lender or buying a different type home owners insurance?
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you
 



You can still rent it for 3 years, without losing your tax free appreciation. Only need to live in 2 of prior 5 years. Just don't wait too long.

You will need a landlord policy from your insurance. Lender doesn't need anything other than updating escrow.

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jerosen said:   
mkha said:   ...
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you

  
How much has the house appreciated since you bought it?    

If you have a substantial gain on it, then it might make sense to just sell it now and lock in that gain tax free.    
But if the gain isn't that considerable then the transaction costs of selling and buying another property might cost you more than the taxes you'd save by selling the one you've got.

  Thank you for the reply, I would say around 25k-35k profit I can make if sell now, is it wise to sell now or wait for 2 more years and sell before completion of 5 years? btw I am already in process of buying another house so my option is either rent or sell it out.

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rascott said:   
mkha said:   I am trying to buy another property in FL and will be converting the current one as rental from primary and moving to new as primary residence, I still have mortgage on current house, do I need to do anything specific about current home e.g informing lender or buying a different type home owners insurance?
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you



You can still rent it for 3 years, without losing your tax free appreciation. Only need to live in 2 of prior 5 years. Just don't wait too long.

You will need a landlord policy from your insurance. Lender doesn't need anything other than updating escrow.

  thank you, will landlord policy premium increase from current? Do I have to start the landlord policy the day I close the new house( would be my primary residence)?

rated:
vadeltachi said:   
Krazen1211 said:   Hi all.

Quick question. I own a rental in NJ in which a tenant is bailing about 4 months early.

New Jersey is I believe a duty to mitigate state. I believe that means I have to try to find another tenant.

I want to cash out this place within 2 years anyway. Can I take this time to sell the place now rather than try to rent it out, within the duty to mitigate clause?

If you plan to try to collect any of the remaining four months of rent from the current tenant, you have to follow the law, lease or both. If you don't want to try to collect the unpaid rent, then you don't have to mitigate and can move forward to sell. The security deposit, if any, can be used to offset whatever damages the tenant may have caused, but cannot be used for unpaid rent if you don't mitigate. Just to be sure to document damages and segregate any costs for upgrades you may make to sell.

That being so, it's not hard to to prove you tried to rent the unit should you decide to keep some of the deposit for unpaid rent if the tenant questions your doing so. Just keep good records of whatever you do, and prepare to sell or market to rent with an option to buy for the four months. If it doesn't sell by then, drop the rent option and continue with a sales listing.

  

This is the language I have.

Tenant Ending Lease Early:

Tenant may end lease early with written permission of Landlord, and only if:

A. 60 days notice AND
B. Termination Fee of 2 months rent AND
C. All rent is paid until a new tenant is approved and a new lease takes effect.


He hasn't technically provided written notice yet. Rather, I got a mortgage rent history application for the guy. 

But as far as I can see I am not entirely sure how a duty to mitigate logically works with both B and C. B+C is obviously not a bad outcome.

Seems to me like the prudent course is to try to re-rent it.

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mkha said:   
jerosen said:   
mkha said:   ...
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you

  
How much has the house appreciated since you bought it?    

If you have a substantial gain on it, then it might make sense to just sell it now and lock in that gain tax free.    
But if the gain isn't that considerable then the transaction costs of selling and buying another property might cost you more than the taxes you'd save by selling the one you've got.

  Thank you for the reply, I would say around 25k-35k profit I can make if sell now, is it wise to sell now or wait for 2 more years and sell before completion of 5 years? btw I am already in process of buying another house so my option is either rent or sell it out.

  
$25-35k profit isn't going to amount to a huge tax bill.   Generally capital gains are at 15% so thats in the $4-5k range.    Selling that house will likely result in a higher comission for a realtor.   

I'd say then that selling now to avoid the tax bill isn't really worth it.    And I'd go ahead and keep it as a rental if thats your plan.
 

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jerosen said:   
mkha said:   
jerosen said:   
mkha said:   ...
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you

  
How much has the house appreciated since you bought it?    

If you have a substantial gain on it, then it might make sense to just sell it now and lock in that gain tax free.    
But if the gain isn't that considerable then the transaction costs of selling and buying another property might cost you more than the taxes you'd save by selling the one you've got.

  Thank you for the reply, I would say around 25k-35k profit I can make if sell now, is it wise to sell now or wait for 2 more years and sell before completion of 5 years? btw I am already in process of buying another house so my option is either rent or sell it out.

  
$25-35k profit isn't going to amount to a huge tax bill.   Generally capital gains are at 15% so thats in the $4-5k range.    Selling that house will likely result in a higher comission for a realtor.   

I'd say then that selling now to avoid the tax bill isn't really worth it.    And I'd go ahead and keep it as a rental if thats your plan.

  excellent, thanks for your valuable advice..first time going to be a landlord thats why so many questions in my mind..do I have to start my landlord policy from the day one? I have closing on new home next week.

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mkha said:   jerosen said:   
mkha said:   
jerosen said:   
mkha said:   ...
I am not sure if renting is better or selling in profit and take the profit tax free now , already live in the house for 3 years++ thank you

  
How much has the house appreciated since you bought it?    

If you have a substantial gain on it, then it might make sense to just sell it now and lock in that gain tax free.    
But if the gain isn't that considerable then the transaction costs of selling and buying another property might cost you more than the taxes you'd save by selling the one you've got.

  Thank you for the reply, I would say around 25k-35k profit I can make if sell now, is it wise to sell now or wait for 2 more years and sell before completion of 5 years? btw I am already in process of buying another house so my option is either rent or sell it out.

  
$25-35k profit isn't going to amount to a huge tax bill.   Generally capital gains are at 15% so thats in the $4-5k range.    Selling that house will likely result in a higher comission for a realtor.   

I'd say then that selling now to avoid the tax bill isn't really worth it.    And I'd go ahead and keep it as a rental if thats your plan.

  excellent, thanks for your valuable advice..first time going to be a landlord thats why so many questions in my mind..do I have to start my landlord policy from the day one? I have closing on new home next week.


Likely not day 1, but certainly before you have a tenant move in.

I would discuss with your insurance agent and get a quote now...some insurers won't write them, others price them very high, so you may end up shopping around. I ended up moving all my insurance because the landlord quotes from my original insurance were ridiculous.,

rated:
If someone has a rental property in an LLC,

How easy / difficult it is change a rental property back from LLC to personal names - without putting these into trust

How costly is the above process?

Thanks in advance for your replies.

rated:
We signed a contract last night for our first rental property in Florida. Our primary home is in Missouri. We have plenty of equity in our MO home to pay for this rental. Do we refinance our MO home to pay for the rental or get a 30 year fixed mtg to pay for the rental to keep things separate for taxes? We need to close in 30 days.

2nd question: is it better for tax purposes to take a loss on the rental? We are renting it to my niece for 2 years so not sure if I should give her the deal of the century or not.

Thanks!

rated:
frugalityisking said:   We signed a contract last night for our first rental property in Florida. Our primary home is in Missouri. We have plenty of equity in our MO home to pay for this rental. Do we refinance our MO home to pay for the rental or get a 30 year fixed mtg to pay for the rental to keep things separate for taxes? We need to close in 30 days.

2nd question: is it better for tax purposes to take a loss on the rental? We are renting it to my niece for 2 years so not sure if I should give her the deal of the century or not.

Thanks!

To pay for and close on the rental unit, you can use either method, but I would get a new loan on the rental and probably a 15 year loan.  It will be easier tax wise and keep your home equity secure.

If you rent your unit in a not-for-profit manner to your niece (or anyone else), you can rent it at whatever price you want, but your tax deductions are limited to no more than your rental income. The IRs will consider the FL property as your second home rather than an income property. It's much better, tax-wise, to rent it at market rate and take all the deductions you are entitled to.

In any case, be careful when renting to family. When something goes wrong, you may have to contend with evicting your tenant / family member or getting into any number of disputes about maintenance, late fees and have to deal with the distance between where you live in MO and the unit in FL.  That's long way to travel to check on the property and to deal with routine maintenance and repairs.

rated:
thank you!

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