Page 1 of 3 123 LastLast
Results 1 to 30 of 77

Thread: Rental Properties

  1. #1
    One man.....one pie Moliere's Avatar
    Join Date
    Oct 2009
    Location
    The Republic of Tejas
    Posts
    14,238

    Default Rental Properties

    There are a couple nice homes in my neighborhood that have been on the market for quite a while (over 90 days). I've recently been thinking about looking into buying one and using it as a rental property. I don't have a ton of money sitting around but I have some that I would like to invest in something other than the stock market. I also figure if I can get something close to my house I can at least keep a decent eye on it and hopefully screen out the tenants much better.

    Does anyone have experience with rental properties? Do they offer a decent return or is it more trouble than it's worth? This would be in a middle class neighborhood and the properties would probably go for around $200K to $225K.

    Just trying to do some initial due diligence and gather some thoughts before I decide to seriously look into it.

  2. #2

    Default

    Quote Originally Posted by Eddie Jones View Post
    There are a couple nice homes in my neighborhood that have been on the market for quite a while (over 90 days). I've recently been thinking about looking into buying one and using it as a rental property. I don't have a ton of money sitting around but I have some that I would like to invest in something other than the stock market. I also figure if I can get something close to my house I can at least keep a decent eye on it and hopefully screen out the tenants much better.

    Does anyone have experience with rental properties? Do they offer a decent return or is it more trouble than it's worth? This would be in a middle class neighborhood and the properties would probably go for around $200K to $225K.

    Just trying to do some initial due diligence and gather some thoughts before I decide to seriously look into it.
    Now's a great time to do it. This is when everyone panics but Mr Potter keeps his cool and buys pennies on the dollar.

  3. #3
    Peanut Gallery Asshat HBCoug's Avatar
    Join Date
    Dec 2008
    Posts
    1,348

    Default

    Quote Originally Posted by Eddie Jones View Post
    There are a couple nice homes in my neighborhood that have been on the market for quite a while (over 90 days). I've recently been thinking about looking into buying one and using it as a rental property. I don't have a ton of money sitting around but I have some that I would like to invest in something other than the stock market. I also figure if I can get something close to my house I can at least keep a decent eye on it and hopefully screen out the tenants much better.

    Does anyone have experience with rental properties? Do they offer a decent return or is it more trouble than it's worth? This would be in a middle class neighborhood and the properties would probably go for around $200K to $225K.

    Just trying to do some initial due diligence and gather some thoughts before I decide to seriously look into it.
    I have a former home that we've used as a rental since moving into our newer home (about 4 years ago). The home was built in 2002 so there hasn't been a lot of maintenance and upkeep as of yet but this last group of girls (BYU grad students) has really tried my patience. Prior to this year everything had gone perfectly. It's tough to say at this point whether or not I'm getting a decent return as we're in it more for the long haul. The rent pays the full mortgage, HOA, plus a little each month that we stash away in a rental slush fund. Having the rental is great come tax time. Send me a boardmail or post more specific questions here if you'd like.

  4. #4
    Boom Bitches!!! BlueHair's Avatar
    Join Date
    Nov 2008
    Location
    Utah
    Posts
    2,898

    Default

    My advice would be to be very careful. Price out insurance, property taxes, rental rates, and vacancies in your area, etc. I don't know where you live, but 225K seems kind of high if it is only one unit. Assuming you put 20% down ($45,000), you could probably get about a 5% interest rate. The P&I would be around $960 per month plus taxes and insurance. It's going to be several years in most places in the country before prices rebound significantly, so you might have $45,000 tied up with very little appreciation or cash flow. Home ownership is down so the number of renters is obviously higher, but many of them have bad credit. If you do buy, you could always sell a lease option to get higher than fair market rent and get serious renters. The only downside is you would be obligated to sell if the renters exercise the option.

  5. #5
    Senior Member myboynoah's Avatar
    Join Date
    Nov 2008
    Location
    Tokyo, Japan
    Posts
    11,067

    Default

    Quote Originally Posted by BlueHair View Post
    My advice would be to be very careful. Price out insurance, property taxes, rental rates, and vacancies in your area, etc. I don't know where you live, but 225K seems kind of high if it is only one unit. Assuming you put 20% down ($45,000), you could probably get about a 5% interest rate. The P&I would be around $960 per month plus taxes and insurance. It's going to be several years in most places in the country before prices rebound significantly, so you might have $45,000 tied up with very little appreciation or cash flow. Home ownership is down so the number of renters is obviously higher, but many of them have bad credit. If you do buy, you could always sell a lease option to get higher than fair market rent and get serious renters. The only downside is you would be obligated to sell if the renters exercise the option.
    I think BH is giving some pretty good advice in this market. I don't know what interest rates are, but 5% sounds pretty good for a rental property.

    We rented out our first home for several years. It worked out great through 2007 when we sold it. Had we waited two more years it wouldn't have worked out so well. But still, good tax write off and built equity. I'd be careful given today's market.
    Give 'em Hell, Cougars!!!

    For all this His anger is not turned away, but His hand is stretched out still.

    Not long ago an obituary appeared in the Salt Lake Tribune that said the recently departed had "died doing what he enjoyed most—watching BYU lose."

  6. #6
    Living in the Past ... FMCoug's Avatar
    Join Date
    Nov 2008
    Location
    The bubble
    Posts
    6,655

    Default

    Quote Originally Posted by BlueHair View Post
    My advice would be to be very careful. Price out insurance, property taxes, rental rates, and vacancies in your area, etc. I don't know where you live, but 225K seems kind of high if it is only one unit. Assuming you put 20% down ($45,000), you could probably get about a 5% interest rate. The P&I would be around $960 per month plus taxes and insurance. It's going to be several years in most places in the country before prices rebound significantly, so you might have $45,000 tied up with very little appreciation or cash flow. Home ownership is down so the number of renters is obviously higher, but many of them have bad credit. If you do buy, you could always sell a lease option to get higher than fair market rent and get serious renters. The only downside is you would be obligated to sell if the renters exercise the option.
    BH makes great points. Also remember that in TX, property taxes are huge. So that $960 could easily become $1300+ with Taxes and Insurance. What are market rents?

  7. #7
    One man.....one pie Moliere's Avatar
    Join Date
    Oct 2009
    Location
    The Republic of Tejas
    Posts
    14,238

    Default

    Quote Originally Posted by BlueHair View Post
    My advice would be to be very careful. Price out insurance, property taxes, rental rates, and vacancies in your area, etc. I don't know where you live, but 225K seems kind of high if it is only one unit. Assuming you put 20% down ($45,000), you could probably get about a 5% interest rate. The P&I would be around $960 per month plus taxes and insurance. It's going to be several years in most places in the country before prices rebound significantly, so you might have $45,000 tied up with very little appreciation or cash flow. Home ownership is down so the number of renters is obviously higher, but many of them have bad credit. If you do buy, you could always sell a lease option to get higher than fair market rent and get serious renters. The only downside is you would be obligated to sell if the renters exercise the option.
    Thanks, this helps a lot. The bolded part above is the biggest deterent to me pulling the trigger on something like this. I worry that maybe I will go many months without a tenant and having two mortgages for an extended period would be burdensome. The original plan was to pay off our current mortgage (which we could do in 10 years or possibly even shorter than that if my car holds up for a while longer) on our current home and then possibly move into a newer/bigger home and continue to own the old home free and clear. We would then rent the older home and use that money to pay for the newer home. However, with interest rates being so low and with home values low as well I've been thinking about buying a home for rent.

    There is one person in my ward that rents out a home and we've chatted before about it but I think she either owns the home free and clear or she doesn't have a rental/mortgage payment where she is currently staying.

    I'm going to run the numers again. I ran them 3 years ago and decided against it but my income has increased and interest rates have come down. Real estate values haven't really changed in my area over the past 4 years but then again we didn't have the big run up in home values either. I'm thinking my conservative nature will keep me from pulling the trigger based on teh bolded part in your post but we'll see.

  8. #8
    One man.....one pie Moliere's Avatar
    Join Date
    Oct 2009
    Location
    The Republic of Tejas
    Posts
    14,238

    Default

    Quote Originally Posted by FMCoug View Post
    BH makes great points. Also remember that in TX, property taxes are huge. So that $960 could easily become $1300+ with Taxes and Insurance. What are market rents?
    This is true. I refiananced last year and it dropped my P&I down to where it was less than the escrowed amount for property taxes/insurance. This year I finally decided to stop escrowing and I just put 1/12 of my estimated taxes into a savings account to be paid out at year end.

  9. #9

    Default

    Investment rates are actually below 5% right now. Now would be a good time however most lenders are now requiring 25% down instead of 20.
    *Banned*

  10. #10
    Senior Member Clark Addison's Avatar
    Join Date
    Nov 2008
    Location
    The Beautiful South
    Posts
    5,465

    Default

    This thread is as good as any for this somewhat random question, I guess.

    My son, as many know, is in college. Next year, he will be moving off campus. He just found an apartment, and he sent me over a document the property manager said I need to sign. It reads:

    I (We), the undersigned, being Resident(s) of the state of ____________________
    and parent(s)/guardian(s) of the resident(s) hereby Guarantee performance by the
    resident(s) of the Lease and any extensions thereof. I authorize a check of my
    credit history.

    **NOTE: Delinquent accounts will be turned over to a collection agency**
    What in the. . .? When I was a student, my parents never needed to sign anything for a place I rented. I was an adult, as is my son (legally, at least). Is this sort of thing standard now? Are college students so unreliable these days that they can't be trusted to rent an apartment without guarantees from their parents? I am not thrilled about a hit on my credit report, and I am sure not thrilled about the possibility of the Property Manager coming to me with a bill in a year for some sort of vague claim about damages.

  11. #11

    Default

    I wouldn't sign that crap.
    Will donate kidney for B12 membership.

  12. #12
    Where's Wallace? Surfah's Avatar
    Join Date
    Nov 2008
    Location
    V to the izz-A.
    Posts
    31,971

    Default

    Quote Originally Posted by Clark Addison View Post
    This thread is as good as any for this somewhat random question, I guess.

    My son, as many know, is in college. Next year, he will be moving off campus. He just found an apartment, and he sent me over a document the property manager said I need to sign. It reads:



    What in the. . .? When I was a student, my parents never needed to sign anything for a place I rented. I was an adult, as is my son (legally, at least). Is this sort of thing standard now? Are college students so unreliable these days that they can't be trusted to rent an apartment without guarantees from their parents? I am not thrilled about a hit on my credit report, and I am sure not thrilled about the possibility of the Property Manager coming to me with a bill in a year for some sort of vague claim about damages.
    Eff that. I'd never sign that.
    "Nobody listens to Turtle."
    -Turtle

  13. #13
    Liberal Feminazi Pheidippides's Avatar
    Join Date
    Nov 2008
    Location
    Houston, TX
    Posts
    14,622

    Default

    Quote Originally Posted by Surfah View Post
    Eff that. I'd never sign that.
    Me either.
    Awesomeness now has a name. Let me introduce myself.

  14. #14

    Default

    Yeah, no way in hell. That is clearly designed with the hopes that you are 1) wealthy enough (or careless enough with money) that you'll just sign, and/or 2) so wrapped around your son's finger that if he pouts about your refusal to sign, you'll give in.
    Prepare to put mustard on those words, for you will soon be consuming them, along with this slice of humble pie that comes direct from the oven of shame set at gas mark “egg on your face”! -- Moss

    There are three rules that I live by: never get less than twelve hours sleep; never play cards with a guy who has the same first name as a city; and never get involved with a woman with a tattoo of a dagger on her body. Now you stick to that, and everything else is cream cheese. --Coach Finstock

  15. #15

    Default

    I can see them asking for a co-signer. We ask for that in our rental property for younger renters that don't have any credit history. However, asking for it because you are the parent/guardian seems a little off. It could be that it was poorly worded.
    "To the man who only has a hammer, everything he encounters begins to look like a nail."
    —Abraham Maslow

  16. #16
    Stepping Razor wuapinmon's Avatar
    Join Date
    Dec 2008
    Location
    Hartsville, South Carolina
    Posts
    24,626

    Default

    If he has roommates, no way.
    "LDS people need to lighten up and not take religion so seriously." --CardiacCoug
    "[...]
    liberals tend to take the moral teachings of the New Testament literally and the stories figuratively while conservatives do the opposite." -- Harry Tic

  17. #17
    Senior Member il Padrino Ute's Avatar
    Join Date
    Nov 2008
    Location
    Murray, Utah
    Posts
    18,895

    Default

    I wouldn't sign it. If it were my son, I'd encourage him to find another place than be subjected to a weasel like that as a landlord.
    "Socialism is a philosophy of failure, the creed of ignorance and the gospel of envy; its inherent virtue is the equal sharing of misery." - Winston Churchill


    "I only know what I hear on the news." - Dear Leader

  18. #18
    Signature won a Pulitzer Paperback Writer's Avatar
    Join Date
    Nov 2010
    Location
    In the Darkness on the Edge of Town
    Posts
    3,287

    Default

    Quote Originally Posted by Clark Addison View Post
    This thread is as good as any for this somewhat random question, I guess.

    My son, as many know, is in college. Next year, he will be moving off campus. He just found an apartment, and he sent me over a document the property manager said I need to sign. It reads:



    What in the. . .? When I was a student, my parents never needed to sign anything for a place I rented. I was an adult, as is my son (legally, at least). Is this sort of thing standard now? Are college students so unreliable these days that they can't be trusted to rent an apartment without guarantees from their parents? I am not thrilled about a hit on my credit report, and I am sure not thrilled about the possibility of the Property Manager coming to me with a bill in a year for some sort of vague claim about damages.
    Maybe things work a little different on the East Coast or Atlantic Coast. I got a request like that from my younger sister who was trying to rent an apartment in Brooklyn, NY. She had little renting credit history since a roomate, to that point, was always named on the lease. Our parents wouldn't cosign because they had already said "No" to one of our brothers trying to buy his first house and our older sister cosigned instead.

    I wasn't going to cosign but our older sister called and both sisters together did a full-court press. My wife and I were the only ones that could help because we were dual income earners and topped a certain income threshold and had a high credit score. She had undergraduate and graduate degrees from top schools, had a good job, but would soon be homeless on the mean streets of NYC unless she could get this apartment. So I cosigned and she got the apartment. Now, I've got a place to stay if I ever visit NYC.

    Anyway, I think this is common in NYC for renters with no renting history. Not sure about a college town though. I would guess landlords are used to this and its reflected in rent prices. Isn't that what last month rent is for?
    “Not the victory but the action. Not the goal but the game. In the deed the glory.”

  19. #19

    Default

    It's looking like we'll end up with a rental property, assuming nothing falls through with the house we're currently in the process of buying. Our present home is nearly back above water. We were able to refinance a couple years back and lock in a really low rate, so the current monthly payment, including property tax, insurance, and HOA dues, is right near its monthly rental value. Does anyone have any tips for a first-time landlord?


    Quote Originally Posted by HBCoug View Post
    I have a former home that we've used as a rental since moving into our newer home (about 4 years ago). The home was built in 2002 so there hasn't been a lot of maintenance and upkeep as of yet but this last group of girls (BYU grad students) has really tried my patience. Prior to this year everything had gone perfectly. It's tough to say at this point whether or not I'm getting a decent return as we're in it more for the long haul. The rent pays the full mortgage, HOA, plus a little each month that we stash away in a rental slush fund. Having the rental is great come tax time. Send me a boardmail or post more specific questions here if you'd like.
    How are things going, 4 years later? I'm curious to hear about the tax implications. Also, did you set up an LLC to manage the property/funds, or do your tenants just write the check directly to you?
    Prepare to put mustard on those words, for you will soon be consuming them, along with this slice of humble pie that comes direct from the oven of shame set at gas mark “egg on your face”! -- Moss

    There are three rules that I live by: never get less than twelve hours sleep; never play cards with a guy who has the same first name as a city; and never get involved with a woman with a tattoo of a dagger on her body. Now you stick to that, and everything else is cream cheese. --Coach Finstock

  20. #20
    sweet triple TripletDaddy's Avatar
    Join Date
    Nov 2008
    Location
    Orange County, CA
    Posts
    52,845

    Default

    Quote Originally Posted by Donuthole View Post
    I'm curious to hear about the tax implications. Also, did you set up an LLC to manage the property/funds, or do your tenants just write the check directly to you?
    I know you are only kidding when you ask this.
    Fitter. Happier. More Productive.


  21. #21

    Default

    Quote Originally Posted by TripletDaddy View Post
    I know you are only kidding when you ask this.
    It is a genuine question*. In all candor, I have never considered owning a rental property before, so this is not something I've ever researched. Any input you can provide as to why this is a dumb idea or no-brainer is greatly appreciated.
    Prepare to put mustard on those words, for you will soon be consuming them, along with this slice of humble pie that comes direct from the oven of shame set at gas mark “egg on your face”! -- Moss

    There are three rules that I live by: never get less than twelve hours sleep; never play cards with a guy who has the same first name as a city; and never get involved with a woman with a tattoo of a dagger on her body. Now you stick to that, and everything else is cream cheese. --Coach Finstock

  22. #22
    sweet triple TripletDaddy's Avatar
    Join Date
    Nov 2008
    Location
    Orange County, CA
    Posts
    52,845

    Default

    Quote Originally Posted by Donuthole View Post
    It is a genuine question*. In all candor, I have never considered owning a rental property before, so this is not something I've ever researched. Any input you can provide as to why this is a dumb idea or no-brainer is greatly appreciated.
    The main reason you want to put your rental into an LLC is for liability purposes. You want to protect your own home in the event of litigation (slip and fall in your rental property, for example). I guess that depends on how risk averse you want to be, but in my opinion, the costs of forming and managing an LLC (minimal) are far outweighed by the hedge against personal liability. From a tax perspective, there can be great benefits depending on how many members of your LLC (basically, the benefit of a pass-through is that your rent is taxed only once at cap gains per your ownership shares in the LLC). There are other benefits, including transfer (estate) issues, as well.

    In another life I saw loads of these and rarely did I see rentals held personally. LLCs ruled the day.
    Fitter. Happier. More Productive.


  23. #23

    Default

    Quote Originally Posted by TripletDaddy View Post
    The main reason you want to put your rental into an LLC is for liability purposes. You want to protect your own home in the event of litigation (slip and fall in your rental property, for example). I guess that depends on how risk averse you want to be, but in my opinion, the costs of forming and managing an LLC (minimal) are far outweighed by the hedge against personal liability. From a tax perspective, there can be great benefits depending on how many members of your LLC (basically, the benefit of a pass-through is that your rent is taxed only once at cap gains per your ownership shares in the LLC). There are other benefits, including transfer (estate) issues, as well.

    In another life I saw loads of these and rarely did I see rentals held personally. LLCs ruled the day.
    Ok. For some reason I was interpreting your question as an implication that I should not set up an LLC, so you had me second guessing myself.
    Prepare to put mustard on those words, for you will soon be consuming them, along with this slice of humble pie that comes direct from the oven of shame set at gas mark “egg on your face”! -- Moss

    There are three rules that I live by: never get less than twelve hours sleep; never play cards with a guy who has the same first name as a city; and never get involved with a woman with a tattoo of a dagger on her body. Now you stick to that, and everything else is cream cheese. --Coach Finstock

  24. #24
    sweet triple TripletDaddy's Avatar
    Join Date
    Nov 2008
    Location
    Orange County, CA
    Posts
    52,845

    Default

    Quote Originally Posted by Donuthole View Post
    Ok. For some reason I was interpreting your question as an implication that I should not set up an LLC, so you had me second guessing myself.
    Definitely do it. Also, please clarify your use of an asterisk above. thanks.
    Fitter. Happier. More Productive.


  25. #25
    My Mic Sounds Nice falafel's Avatar
    Join Date
    Mar 2009
    Location
    Las Wegas!
    Posts
    19,716

    Default

    Quote Originally Posted by TripletDaddy View Post
    Definitely do it. Also, please clarify your use of an asterisk above. thanks.
    Please read the entire board before asking questions like this.
    Ain't it like most people, I'm no different. We love to talk on things we don't know about.

    "The only one of us who is so significant that Jeff owes us something simply because he decided to grace us with his presence is falafel." -- All-American

  26. #26
    sweet triple TripletDaddy's Avatar
    Join Date
    Nov 2008
    Location
    Orange County, CA
    Posts
    52,845

    Default

    Quote Originally Posted by falafel View Post
    Please read the entire board before asking questions like this.
    Is there any doubt that I have read the entire board??
    Fitter. Happier. More Productive.


  27. #27
    Peanut Gallery Asshat HBCoug's Avatar
    Join Date
    Dec 2008
    Posts
    1,348

    Default

    How are things going, 4 years later? I'm curious to hear about the tax implications. Also, did you set up an LLC to manage the property/funds, or do your tenants just write the check directly to you?
    Sweet Triple has the LLC convo on lock down so I'll leave that to his expertise. Definitely the way to go, by the way. 4 years later and things are still fairly smooth. I've added a couple rentals in the same complex since this post 4 years ago, and have really enjoyed the experience. My best advice is to do your due diligence in who you allow to rent your place. It's a tough balance because there will be times where tenants want out early / you're looking at having places vacated for a period of time, and you get antsy thinking you just want someone / anyone in there to take the load of the mortgage off your shoulders. Getting the right people in there who actually give a crap about caring for the place makes all the difference, at least in my experience. It pays for itself in less maintenance / repair. I've never hired out a management company to take care of the day-to-day operations for me. I can see the benefits of doing it that way, and I may need to explore that option as I'm potentially taking a job in Denver pretty soon, but I've always handled the renters and their issues myself. As the properties are relatively new (built in '02), I've been really lucky with repairs / upgrades. We usually take a day or two as a family to patch / paint / clean in between renters, and I think it's been a really good experience for the kids to work on the places with us. If you're going to manage the rental yourself, I'd say put in the time and money to keep the place looking great every year. You'd be surprised at how many landlords don't care about simple patching and painting upkeep, but you can definitely charge more when your places show well and look really clean.

  28. #28
    Where's Wallace? Surfah's Avatar
    Join Date
    Nov 2008
    Location
    V to the izz-A.
    Posts
    31,971

    Default

    I have a buddy who has a townhome he rents out. The first tenant they scrutinized every applicant. Finally accepted someone who was 700+ credit, dual income, no kids married couple. Thought it was going to be great. I think they paid just one month's rent, ended up trashing the place and it took him like 6 months to finally evict them. He was so jaded by that experience he thought of selling it but they ended up renting it out again this time to a Hispanic family with a couple extended family members living with them. They had zero credit and had to pay cash but he said they were the best tenants ever until they ended up buying a home of their own. Now he rents it out to the state who houses a couple of high functioning disabled guys there in a sort of group home. He's looking to add to his rental portfolio now.
    "Nobody listens to Turtle."
    -Turtle

  29. #29
    Bald not naked Pelado's Avatar
    Join Date
    Sep 2010
    Location
    The 208
    Posts
    4,734

    Default

    Quote Originally Posted by TripletDaddy View Post
    Is there any doubt that I have read the entire board??
    Triple's practically written the entire board.

    Quote Originally Posted by HBCoug View Post
    Sweet Triple has the LLC convo on lock down so I'll leave that to his expertise. Definitely the way to go, by the way. 4 years later and things are still fairly smooth. I've added a couple rentals in the same complex since this post 4 years ago, and have really enjoyed the experience. My best advice is to do your due diligence in who you allow to rent your place. It's a tough balance because there will be times where tenants want out early / you're looking at having places vacated for a period of time, and you get antsy thinking you just want someone / anyone in there to take the load of the mortgage off your shoulders. Getting the right people in there who actually give a crap about caring for the place makes all the difference, at least in my experience. It pays for itself in less maintenance / repair. I've never hired out a management company to take care of the day-to-day operations for me. I can see the benefits of doing it that way, and I may need to explore that option as I'm potentially taking a job in Denver pretty soon, but I've always handled the renters and their issues myself. As the properties are relatively new (built in '02), I've been really lucky with repairs / upgrades. We usually take a day or two as a family to patch / paint / clean in between renters, and I think it's been a really good experience for the kids to work on the places with us. If you're going to manage the rental yourself, I'd say put in the time and money to keep the place looking great every year. You'd be surprised at how many landlords don't care about simple patching and painting upkeep, but you can definitely charge more when your places show well and look really clean.
    Absolutely.

    Quote Originally Posted by Donuthole View Post
    It's looking like we'll end up with a rental property, assuming nothing falls through with the house we're currently in the process of buying. Our present home is nearly back above water. We were able to refinance a couple years back and lock in a really low rate, so the current monthly payment, including property tax, insurance, and HOA dues, is right near its monthly rental value. Does anyone have any tips for a first-time landlord?




    How are things going, 4 years later? I'm curious to hear about the tax implications. Also, did you set up an LLC to manage the property/funds, or do your tenants just write the check directly to you?
    Welcome to the wonderful world of landlording.

    For liability protection, yes, get an LLC (NOT a corporation). As for the tax implications, as 3D mentioned, it depends on the ownership. If you own the LLC individually, the LLC will be considered a disregarded entity and you will report the activity on Schedule E of your form 1040 as if there were no LLC.

    If you have additional owners, then the LLC will be considered a partnership for federal tax purposes, and you'd file form 1065 (the rental activity would go on form 8825). Your portion of the activity would be reported from the LLC to you on schedule K-1, which you would then report on page 2 of Schedule E of your form 1040.

    Rental properties can often provide a tax loss in their early years, even when they are cash flow positive. As an active participant in the rental real estate activity, you'll be able to claim up to $25,000 per year in losses which phases out if your adjusted gross income exceeds $100k. If you're over $150k AGI, then you can claim no current losses - instead they are suspended for use in a future year.

    Circular 230 Disclaimer: Any U.S tax advice contained in the body of this communication was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.
    "I think it was King Benjamin who said 'you sorry ass shitbags who have no skills that the market values also have an obligation to have the attitude that if one day you do in fact win the PowerBall Lottery that you will then impart of your substance to those without.'"
    - Goatnapper'96

  30. #30
    sweet triple TripletDaddy's Avatar
    Join Date
    Nov 2008
    Location
    Orange County, CA
    Posts
    52,845

    Default

    lol nice Circ 230!
    Fitter. Happier. More Productive.


Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •