Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You are assuming I didn't assume those things lol. The A/C units are new and both under 5yr warranties including labor, water heater is 5 years old, roof is 5 years old, the house is new. Rent will be set low, in fact lowest in the area, for a house of that quality and size per the property management company to ensure occupancy.
Borrow from where? Ever tried to get a personal loan for 33k? No extra cars both have 150k+ miles, do have cell phones not losing those, 150k isn't alot if you fully fund your 401k which we do. We only net 6.9k/month on 162k of income after investments.
Then a $200 left over lol. As I said we fully fund our 401k each saving 17K/yr + company contribution and are determined to retire by 55! We are well on our way now thank gosh!!
401k loans are only a option for coming up with that 33k and it's only a option if buying a new house per our plan rules and we are not buying a new house obviously when we are stuck in this one. I just don't see a way to find that kind of $$.
Foreclosure and Bankruptcy are definitely not options!!
You're right I assumed but a lot of people who become forced LLs don't think about repairs. You made it sound like it was a "were moving must sell to get out from under the house situation". You're relocating for another job? I would borrow against your 401k and dump the house. You can ALWAYS put money back in 401 and not have the burden of another property in another state. You don't want a house in another state bleeding you for the tune of $700 a month. I'm assuming ( there is that word again) you'll be renting in the other state ( at least initially).
I'm sure if you look deep down there is a lot you can cut out. It's the willingness to do it that makes the difference.
If you do go the rent it route
My question is why would you set the rent low? That's your first mistake.
You think keeping rent low gets you a tenant who cares about the house as you do? Second mistake
If you're gonna do this you need to charge what the market will bear for a property in your size and condition. Give your requirements for tenant to the management company and let them go to work.
I had a tenant who we knew. We kept the rent low thinking we were helping her. Didn't raise the rent yearly. She was supposedly taking care of the place. The rent was over time about 5-600 behind going rate. Trashed the place and later found out she was subleasing part of the house. And this was a person we thought we knew Remodeled self pay no loan taken out and its re-rented for 1100 more than before.
I would at least speak to a agent and look into seeing what it will realistically sell for. Just remember that when the guy moves out and trashes the place the management company won't pay to fix it. You will. I've been a LL for over 20 years and I'm still amazed at what oeople are capable of doing. I had out of state investment rentals. I ended up dumping them and sticking to the ones close to me.
I wish you luck man.
Status:
"Full time traveler? Maybe?"
(set 9 days ago)
76 posts, read 91,243 times
Reputation: 53
QUOTED YOU
You're right I assumed but a lot of people who become forced LLs don't think about repairs. You made it sound like it was a "were moving must sell to get out from under the house situation". You're relocating for another job? I would borrow against your 401k and dump the house. You can ALWAYS put money back in 401 and not have the burden of another property in another state. You don't want a house in another state bleeding you for the tune of $700 a month. I'm assuming ( there is that word again) you'll be renting in the other state ( at least initially).
I'm sure if you look deep down there is a lot you can cut out. It's the willingness to do it that makes the difference.
Can't take a loan they (company) doesn't allow it. Only for the 6 reasons listed in the IRS code: for schooling, to BUY a primary residence, foreclosure, medical bills, funerals,or repair your current home. So, none of those apply to me unfortunately. We could cut the kids extra curricular and cut food to more basic items, but I'm not willing to do that. The kids must feel no change imo. Yes, we will rent for at 9 months and then buy to maximize the relocation package.
Technically, I could lie and take out a loan or lie and due a hardship withdrawel, but neither is appealing to me or my conscious.
If you do go the rent it route
My question is why would you set the rent low? That's your first mistake.
You think keeping rent low gets you a tenant who cares about the house as you do? Second mistake
If you're gonna do this you need to charge what the market will bear for a property in your size and condition. Give your requirements for tenant to the management company and let them go to work.
When I say low it's only a 10% discount from other similar sized properties with the same quality not a big 30-40% discount.
I had a tenant who we knew. We kept the rent low thinking we were helping her. Didn't raise the rent yearly. She was supposedly taking care of the place. The rent was over time about 5-600 behind going rate. Trashed the place and later found out she was subleasing part of the house. And this was a person we thought we knew Remodeled self pay no loan taken out and its re-rented for 1100 more than before.
I would at least speak to a agent and look into seeing what it will realistically sell for. Just remember that when the guy moves out and trashes the place the management company won't pay to fix it. You will. I've been a LL for over 20 years and I'm still amazed at what oeople are capable of doing. I had out of state investment rentals. I ended up dumping them and sticking to the ones close to me.
I wish you luck man.[/quote]
This is what scares me.......I've never seen that in my life, but I always hear about it. Would people who pay $1500/mo trash the residence? After putting down $1500/security deposit, after a employment verification, background check, and credit report pull? I even get to see the credit report. In our gated subdivision we have 3 houses that are rentals and the property management company that I'm talking to rents one of them. Never a hiccup, but situations like you describe scare the crap out of me.
You are assuming I didn't assume those things lol. The A/C units are new and both under 5yr warranties including labor, water heater is 5 years old, roof is 5 years old, the house is new. Rent will be set low, in fact lowest in the area, for a house of that quality and size per the property management company to ensure occupancy.
Borrow from where? Ever tried to get a personal loan for 33k? No extra cars both have 150k+ miles, do have cell phones not losing those, 150k isn't alot if you fully fund your 401k which we do. We only net 6.9k/month on 162k of income after investments.
Then a $200 left over lol. As I said we fully fund our 401k each saving 17K/yr + company contribution and are determined to retire by 55! We are well on our way now thank gosh!!
401k loans are only a option for coming up with that 33k and it's only a option if buying a new house per our plan rules and we are not buying a new house obviously when we are stuck in this one. I just don't see a way to find that kind of $$.
Foreclosure and Bankruptcy are definitely not options!!
Is the $1920 mortgage the rental or your current rent?
Just FYI, You can keep your 401K if you file bankruptcy.
I think you should revisit the idea of foreclosure and bankruptcy. When you go to get a home loan in 9 months, that loss on the first place is going to ding your income, from my understanding. But, maybe you'll have enough income to get approved. If you can get the home loan, you can always file bankruptcy afterwards and let the other go to foreclosure, once you're safely in your new home. In BK you can keep your home of residence.
I advise you not to take the money out of your 401K, because as I say, that money would be protected - if you decide to file bankruptcy.
You may really hate the idea of foreclosure and BK, but it won't hurt to just see what's exempt, so you can have that option in your back pocket, and be informed about what would happen if you chose that route.
Quote:
Originally Posted by wilsonthedog
This is what scares me.......I've never seen that in my life, but I always hear about it. Would people who pay $1500/mo trash the residence? After putting down $1500/security deposit, after a employment verification, background check, and credit report pull? I even get to see the credit report. In our gated subdivision we have 3 houses that are rentals and the property management company that I'm talking to rents one of them. Never a hiccup, but situations like you describe scare the crap out of me.
It can happen. But if the PM company is successfully taking care of other rentals, hopefully you don't need to worry. My daughter hired a PM and it was a nightmare.
The main reason for not pricing a rental too low is that people will wonder what's wrong with the place, and you can end up with the people at the bottom of the barrel who don't care what's wrong with the place - because they're desperate to get into any place. But, if your tenant passed all of the screening you mentioned, you should be fine.
Using a property management company and with all fees and upping liability I will have to shell out $700/mo to cover my expenses that includes 1 month a year of no rent, so $8400/yr!
Assuming 1% increase in property value the equity built starting at year 1 is 5k. I can't write the loss off because we make more than $150k/yr, but won't have to claim the income thank God. This is a $205k house based of appraisals recently.
Renting is the option because we are upside down 33k minimum if we try to sell.
What would you guys do? We have no way to come up with that 33k at closing? I don't know what else to do besides rent and stay diligent saving to the point where we have a option to sell and cover closing or property value goes up.
Short sale would be hard since it's 2 mortgages both fixed one at 4.875 another at 6.75.....why would the second subordinate to a short sale?
This is due to a job relocation in another state...............thanks for the help!
Can you get a loan? The monthly payments would be a lot lower. I was a landlord for a year and I will NEVER do that again. Renters are hard on your home.
Our experience is that when the house is kept in good condition you overall will get a better quality tenant who will be proud to keep the house nice. Never the less you will need to have a good background check performed and an experienced person to screen them.
Some background checks don't show any evictions since some LL never have filed or tenants have broken leases and moved out over night and LL didn't think it was worth to go after the person.
Be aware for stories that seems to be too good to be true and people who tell you what seems to be the perfect story why they have an eviction related to a foreclosure they lived at...(usually a lie!)
Houses that aren't well kept and houses from LL that are difficult with any repairs will be handled by tenants in a similar way.
Of course you can end up with Mr & Mrs. Clean or Mr. & Mrs. Trash!
You are assuming I didn't assume those things lol. The A/C units are new and both under 5yr warranties including labor, water heater is 5 years old, roof is 5 years old, the house is new. Rent will be set low, in fact lowest in the area, for a house of that quality and size per the property management company to ensure occupancy.
Borrow from where? Ever tried to get a personal loan for 33k? No extra cars both have 150k+ miles, do have cell phones not losing those, 150k isn't alot if you fully fund your 401k which we do. We only net 6.9k/month on 162k of income after investments.
Then a $200 left over lol. As I said we fully fund our 401k each saving 17K/yr + company contribution and are determined to retire by 55! We are well on our way now thank gosh!!
401k loans are only a option for coming up with that 33k and it's only a option if buying a new house per our plan rules and we are not buying a new house obviously when we are stuck in this one. I just don't see a way to find that kind of $$.
Foreclosure and Bankruptcy are definitely not options!!
Does this include the payment on the rental and the monthly income on the rental? I would put that in your budget, the rent as income, the mortgage on the place as an expense.
How much of a "hole" are you in renting this place? $100/month? $200? More?
Your blow seems high, even for 6 people IMO.
Also, maybe consider not fully funding your 401k, just temporarily, until you can get that amount of money.
What kind of tax returns are you getting, I'm wondering if your withholdings could be too high if you are getting large returns each year?
Also, seems kind of pointless to have investments (after 401k) if you have SL's and other debts, any CC debt?
I'd stop any extra investments, check if I can change withholdings to have more money during the year, stop fully funding my 401k past what the employer contributes (just temporarily), and try to come up with that money if your loss each month is very large.
Can't take a loan they (company) doesn't allow it. Only for the 6 reasons listed in the IRS code: for schooling, to BUY a primary residence, foreclosure, medical bills, funerals,or repair your current home. So, none of those apply to me unfortunately. We could cut the kids extra curricular and cut food to more basic items, but I'm not willing to do that. The kids must feel no change imo. Yes, we will rent for at 9 months and then buy to maximize the relocation package.
Technically, I could lie and take out a loan or lie and due a hardship withdrawel, but neither is appealing to me or my conscious.
When I say low it's only a 10% discount from other similar sized properties with the same quality not a big 30-40% discount.
This is what scares me.......I've never seen that in my life, but I always hear about it. Would people who pay $1500/mo trash the residence? After putting down $1500/security deposit, after a employment verification, background check, and credit report pull? I even get to see the credit report. In our gated subdivision we have 3 houses that are rentals and the property management company that I'm talking to rents one of them. Never a hiccup, but situations like you describe scare the crap out of me.
Gotcha on the reduction in living costs. I understand not wanting to change your children's lifestyles. I respect that. Those are choices we all make. I wouldn't lie either to get a loan. In your situation I would personally borrow against the 401 to get rid of the house as a last resort if selling and you gotta bring in cash. . I would also give thought to possibly completely getting rid of ALL debt before buying a house again. Hey I helped a friend get out of about 120k of debt. Had to make some hard choices but he is now debt free. Completely debt free. The 800 in blow $$ and 300 in incidentals I'm not sure what to make of it. You can also stop max funding your 401 for a while till you get out of the rut. I think you're just stretching thin between trying to keep your lifestyle with your family take on a move, rental, keeping this house afloat till it gets enough equity/prices go up high enough to sell etc.
If you are set on renting
How much is the difference between the rent you can get and your actual monthly payment?
The situation I had was somewhat unique in the sense she was a long term tenant and my wife's friend. My wife was too soft hearted to do anything about it and I didn't want to fight with my wife over it. Partly our fault for the problem. We learned our lesson well let me rephrase that my wife learned her lesson. Because one day I had it with the friend angle, the every month late payment and the craphole they turned the place into. The pets they weren't supposed to have, the parties the illegal parking everything. So I finally said its over. Theire out. By that time she was over it also. But I guarantee you if you become a LL long enough eventually you will may get some deadbeat. At that point act swiftly and stop the problem ASAP.
Seriously why give up 10%. If the rent charged is 1500 you're leaving 150 on the table. I know this might make me sound like a greedy bastard but you're not doing yourself any favors. Charge going rate. Take that extra 150. If you don't someone else will. Low rent usually gets you low end tenants. Your protection is setting standards on acceptable tenants. Since you won't be interviewing them you won't have a feel for them either.
My suggestion is get going rate for the rental. Keep a higher standard with background and credit check. Now granted you're letting a PMC take care of it but you're giving up another 10% on average over the year to that service. You will be charged for the procurement of the tenant and a monthly fee. The procurement usually is a month rent and the basic monthly fee is 10% of the rent. But that is negotiable. So you're losing about 20% between the PMC and the discounted price. That's a nice chunk of change you're giving up. I had a PMC once on rentals. I wasn't impressed with the service, but that doesn't mean there aren't good ones. Like you they were a out if state properties.
Do you actually KNOW what your house appraises for? What are the sold comps near you? With spring here the demand may be there and you might find a willing buyer. At least go speak to a few agents. Get some info. It can't hurt. I suggest weather you rent or sell you interview at least three agents and PMCs.
Last edited by Electrician4you; 04-22-2014 at 06:25 PM..
Using a property management company and with all fees and upping liability I will have to shell out $700/mo to cover my expenses that includes 1 month a year of no rent, so $8400/yr!
Assuming 1% increase in property value the equity built starting at year 1 is 5k. I can't write the loss off because we make more than $150k/yr, but won't have to claim the income thank God. This is a $205k house based of appraisals recently.
Renting is the option because we are upside down 33k minimum if we try to sell.
What would you guys do? We have no way to come up with that 33k at closing? I don't know what else to do besides rent and stay diligent saving to the point where we have a option to sell and cover closing or property value goes up.
Short sale would be hard since it's 2 mortgages both fixed one at 4.875 another at 6.75.....why would the second subordinate to a short sale?
This is due to a job relocation in another state...............thanks for the help!
A few of things to ponder
1. I didn't see where you included depreciation. That is another nice big deduction. You might as well take it because when you sell, the IRS will assume you did.
2. The $150,000 limit is MAGI not gross income. Maybe with 401k/IRA you can get your MAGI below $150,000 and start to deduct some of the passive losses.
3. The passive deduction is not lost if your MAGI income is over $150,000. It is just deferred. If you end up selling before you can take the deduction, it is deducted from the sales price of the house. This can help when recapturing the depreciation
4. Over time, you may start to get a gain. Rents typically rise. Or you can refi that 2nd, maybe as HELOC of your new primary home
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
