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  • #16
    If he has roommates, no way.
    "Yeah, but never trust a Ph.D who has an MBA as well. The PhD symbolizes intelligence and discipline. The MBA symbolizes lust for power." -- Katy Lied

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    • #17
      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

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      • #18
        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.”
        "All things are measured against Nebraska." falafel

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        • #19
          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?


          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

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          • #20
            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.

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            • #21
              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

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              • #22
                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.

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                • #23
                  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

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                  • #24
                    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.

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                    • #25
                      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

                      GIVE 'EM HELL, BRIGHAM!

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                      • #26
                        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??
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                        • #27
                          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.

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                          • #28
                            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
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                            • #29
                              Originally posted by TripletDaddy View Post
                              Is there any doubt that I have read the entire board??
                              Triple's practically written the entire board.

                              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.

                              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

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                              • #30
                                lol nice Circ 230!
                                Fitter. Happier. More Productive.

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