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So, potential profit is $250 assuming repairs, etc are not needed. Condo itself is not new, but appliances, floors, tiles, etc are.
I've been reading on IRS depreciation and believe (possibly incorrectly) that the potential profit will be less than depreciation and therefore, not taxed (am I way off on this?).
Water/sewage/trash included in HOA, utilities on renter.
Some might think the profit is not worth the trouble/risks of renting the property; however, we are not ready to sell (might move back in a few years). Also, recently refinanced so would prefer being able to recoup closing costs, etc then selling in the near future.
Being a landlord is a business... with all that running a business entails.
Residential Landlords can easily get into trouble by not being well versed in the applicable codes and regulations... some places, this can be a daunting task for those just starting out.
On the other hand... if you are committed and want to give it a try... why not?
There is a book you should be able to get at your local library called Landlording by Leigh Robinson. It is an easy read and points out some of the nuances of the business.
Thanks for the advice. As previously mentioned, we may end up living in the property in a few years, hence why we are interested in renting the place. The purpose will not be to make sufficient income to quit my job but I imagine that is not usually the case for first time landlords, and the way I see it, I will never know how it could be without trying.
The biggest downside is living far away from the unit but I imagine there are other landlords in the same boat. I also figure if the negatives outweigh the positives then we can look at selling, possibly when the market is on the upswing.
I borrowed the NOLO Landlord's Legal Guide from my library which has some useful information.
Thanks for the advice. As previously mentioned, we may end up living in the property in a few years, hence why we are interested in renting the place. The purpose will not be to make sufficient income to quit my job but I imagine that is not usually the case for first time landlords, and the way I see it, I will never know how it could be without trying.
The biggest downside is living far away from the unit but I imagine there are other landlords in the same boat. I also figure if the negatives outweigh the positives then we can look at selling, possibly when the market is on the upswing.
I borrowed the NOLO Landlord's Legal Guide from my library which has some useful information.
I was a regular at NOLO when they were Berkeley based and that is where I bought my first copy of Landlording.
Around here, typical management runs about 10% with lease and lease renewal fees and service calls additional.
Many tried to discourage me when I moved out of my home and made it my first rental... that was 30 years ago and I still own it and have only had two tenants...
Not going to get rich... it does provide an income stream... I'm still charging the same rent as I was 10 years ago... having a good tenant pays dividends beyond monetarily...
So, potential profit is $250 assuming repairs, etc are not needed. Condo itself is not new, but appliances, floors, tiles, etc are.
I've been reading on IRS depreciation and believe (possibly incorrectly) that the potential profit will be less than depreciation and therefore, not taxed (am I way off on this?).
Water/sewage/trash included in HOA, utilities on renter.
Some might think the profit is not worth the trouble/risks of renting the property; however, we are not ready to sell (might move back in a few years). Also, recently refinanced so would prefer being able to recoup closing costs, etc then selling in the near future.
Any constructive advice is greatly welcomed!
With a 1-year lease (hope they stay for more then 1 year but you cannot count on that) so by your numbers not mine
Mortgage a year 15600
Rent – 1 month 17050
Total profit 1450 a year 120 a month
Now repairs you no what they say about ass-u-me.
The rule-of-thumb for annual maintenance costs range from 1.5 to 4 percent of the house's original cost for an average house. If the condo is worth 100k at 2.5 we are at 2500 dollars a year for a net loss of 1050 a year or 87.5 a month.
If you want to lose money or pay someone so you can work keep it.
Now your HOA might pay for some repairs but it will only take 1 bad tenant to trash your place and with the numbers you gave you will be under water for years.
Yes, the thought of paying a management group 8-10% would barely allow me to break-even, not to cover repairs, etc, let alone any profit.
As the next poster mentions repair/maintenance rule-of-thumb at 1.5-4%. Even assuming the $100K example, annual cost of $1,500 seems high for a condo (maybe that suggestion was for a house?). I have lived here for several years and have spent probably $300 on the occasional plumbing issue (e.g., clogged sink), A/C annual mainteance, and filter replacement.
Now, I know all it takes is one bad tenant or one major problem, such as the heat pump fails, to get expensive, but I have not yet (thankfully) experienced anything near those "rules-of-thumb."
Yes, the thought of paying a management group 8-10% would barely allow me to break-even, not to cover repairs, etc, let alone any profit.
As the next poster mentions repair/maintenance rule-of-thumb at 1.5-4%. Even assuming the $100K example, annual cost of $1,500 seems high for a condo (maybe that suggestion was for a house?). I have lived here for several years and have spent probably $300 on the occasional plumbing issue (e.g., clogged sink), A/C annual mainteance, and filter replacement.
Now, I know all it takes is one bad tenant or one major problem, such as the heat pump fails, to get expensive, but I have not yet (thankfully) experienced anything near those "rules-of-thumb."
Put a renter in there and you will it will be on the lower side because of being a condo. You might have a few good ones then you will have the one that cost you 3k in damage. Remember the AC, stove, fridge, garbage disposal,carpet,paint,blinds,ETC do not last forever. The house I live in the paint on the walls look new after 6 years not in any rental. Stop trying to talk yourself into something you no is a bad deal
You need to up the amount you are paying for insurance if you are going to rent...and realize that your mortgage company may have criteria for renting something that is no longer your "primary residence". Make sure you do your homework.
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