has anyone have experience renting out their home/s? (Houston: real estate, rentals)

[zebrashoes]

Hi I was just wondering if anyone in the houston area has delt with renting their home out? We might be moving out of state, but we dont want to sell our house right now because we dont have much equity in it yet. I was thinking about renting it out. We would have to go through a managment company, but I am scared it will end up being a pain. I have never done it before so dont know what to expect. How long does it normally take for managment co. to get your house rented out?

[ItsAlwaysSunnyIn....]

I am interested in this as well. My job may require me to move overseas for 6 month to 1 year at a time. Right now I am renting, but I'm sick of throwing money away each month and I'm considering buying a 2-3 BR condo/townhouse within the next year. My plan is to rent it out during the months I am away to help offset the mortgage payments. One of my concerns deals with taxes. Do I have to pay income tax on the rents that my tenants pay to me? How much is that? If anyone has any experience please share it with us. Thanks

[VickiMBA]

Rental properties are a great idea for many reasons right now. First of all, many families around the Houston area are still displaced in the aftermath of Ike. There is a need for temporary housing until major repairs are made or while they search for another permanent home. Secondly, the current economic climate and recent financial meltdowns have created many potential renters. Due to tightening lending practices, many would-be first-time home buyers cannot qualify for mortgages. Others that are faced with job uncertainty (layoffs, transfers, etc.) are afraid to make such a big commitment as a home purchase.

For those who can afford to buy/own investment properties, the situations described above create a great opportunity. As with any type of investment, you need to carefully weigh the risks and returns. In the case of zebrashoes, renting your home out could possibly help you build equity or help you “buy” enough time to wait until your property appreciates in value. As with anything in real estate, your marketing time and rental rate will be determined by factors such as location and supply/demand in your area. It will also depend on who you choose to market and manage your property. Choose a good Realtor/property manager who is experienced in rental properties and knows your area. S/he should be able to know the rental comps. and should be able to help you determine the best rental rate to get your home rented out in a short period of time. If your rental is priced and marketed correctly, and if it’s in a good location for rentals, then it should rent out in 45-60 days or less. They can also help you with details such as screening potential tenants, collecting and forwarding rent payments, arranging for repairs, etc.

[VickiMBA]

Originally Posted by ItsAlwaysSunnyIn....

I am interested in this as well. My job may require me to move overseas for 6 month to 1 year at a time. Right now I am renting, but I'm sick of throwing money away each month and I'm considering buying a 2-3 BR condo/townhouse within the next year. My plan is to rent it out during the months I am away to help offset the mortgage payments. One of my concerns deals with taxes. Do I have to pay income tax on the rents that my tenants pay to me? How much is that? If anyone has any experience please share it with us. Thanks

You’ll have to report rental income to the IRS in the year that you’ll collect it. However, from this income, you can deduct rental expenses, such as:

• Professional expenses. Expenses related to renting out the property, i.e. Realtor commissions, management fees, accountant fees, etc. up until the time the home is sold or until it is re-occupied by the owner
• Maintenance, cleaning & repairs. Examples include interior/exterior painting of your property, fixing/replacing fences, cleaning/replacing floors, hiring housekeepers to clean between tenants, etc.
• Insurance
• Taxes
• Interest
• Mortgage Points
• Tax return prep fees
• Casualties and thefts. For example, losses for damage incurred during Ike if your home was a rental property
• Vacancy periods. You can also deduct the costs of maintenance, management and conservatorship during periods of vacancy.
• Depreciation. You can begin to depreciate rental property when it is ready and available for rent. This is a big deduction.

So, as you can see, depending on your situation, you may actually gain tax benefits from renting out your home. If your home and mortgage are newer, then you will be able to deduct most of your mortgage payments (since in an amortized loan, most of the payment in early years is made up of taxes and interest) plus a large chunk for depreciation. Of course, you should consult a qualified tax professional to give you a more accurate analysis of the tax gains/liabilities of your particular situation.

Home ownership definitely beats throwing away money on rent, which is 100% lost!

[desertsun41]

Vicki the Real Estate Agent is right. There are some good benefits to owning rental property. But regardless, renting your house sucks and sucks bad. I could list the reasons why but then my post would be so long that no one would read it.

Management companies could be good but they rape you about 10% a month of the total payment. They do all the collecting, qualifying, handle maintenence but bill you for it, and do find qualifed tenants pretty quick.

My guess by what you said about not having much equity is that you would have to charge enough rent to cover your mortgage payment and that would make the rent payment too high. Add to that another 10% by a management company and the rent would be so high that no one would even look at it.

And I dont care who the tenants are, dont expect to get the same house back as the house you left. No way no how and I got money to bet on it.