Just bought a new house and we were planning on listing current home but are pondering renting it out. It’s a starter but nice home. Probably would sell for $250,000 or thereabouts. Only reason it came up is house next door is similar and has had renters for 2 years or so. I don’t know what they pay as the owner isn’t local and never met him. I know people that pay more in rent for an apartment than our mortgage so wondering if anyone has thoughts about keeping as an investment. Probably not worth the hassle but appreciate any input.
General Discussion
Sell or rent out my house?
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BM,
When I was young, I used to buy houses, fix them up and sell them, way too much work for this old guy now - 0 interest at my age.
Many times people think of rentals as an older house, or a fixer-upper, I think that may be where the disconnect is.
If you’re going to get into the rental game, buy a single family home in a nice non-rental subdivision. Also, try to make it maintenance free, vinyl siding, vinyl windows, things that keep a paintbrush or a wrench out of your hand.
The only thing I’ve had in 10 years are major items such as a furnace, or a new dishwasher.
You have to put a lot of work on the front end to get the right tenant, and with a multi tenant building, that is almost impossible to do - nothing but headache after headache after headache, my wife and I learned the hard way on that one, and we will not own another duplex.
Single-family homes are absolutely the way to go. Also, the price point is considerably higher than renting a one-bedroom apartment or a duplex, so you’re getting people at a price point where they’re at a different season in their life, they’re typically older and have been around the block once or twice.
It’s not without effort, but if you do it right, it is minimal effort. Other than collecting the rent, I haven’t heard from my tenants in over a year…
It really is more work on the front end than work over time.
To a point yes. You still have to have more than a property you are burdened with. My brother has many and during covid I guess had a hard getting the non rent payers out. Not sure how that will now. I would rather flip now then be burdened. Like you say we are all different. Sometimes I wish I was renting so I could say fix it now! This is unacceptable! Fix it! When your young great. Us elderly folk can’t wait that long. Lol.
And whip guy, landlords never have all the power, when it goes to court the landlord is sunk!
When you go to court, the letter of the lease prevails, if you know someone who said the landlord has all the power, they likely signed a very crappy lease!
Not everyone is suited to be an HVAC guy, plumber, engineer, school teacher, carpenter, truck driver, retail clerk, IT guy etc…
We’re all good at different things.
My simple point is that real estate builds wealth over time.
Do a Google search on nominal home values, it is a 45° line on the graph.
See attached. On average, a home worth 20k in 1975 was worth 80k in 1995 and in 2015 was worth 200k.
Understanding the real estate game is no different than learning a trade, or becoming a truck driver.
When I retire it will be on the heals of real estate / rental properties, and not my 401k through work.
If that’s not for you, that is perfectly OK :), but it is a great way to build financial security over time.
Maybe Brent could carry on here with this,as seems to be experienced.
I bought duplex rent to own $5k down/take over payments/5 yrs covers down payment.That was not true according to bank.After 41/2 yrs I still had to put down $$$ thousands.Purchase price from bank was $83,000.I stayed another 5 yrs.,before renting out my side.I sold for $130,000 11yrs after purchase.I
took second mortgage bought new boat for $9k about 2yrs before selling.
After I sold,ended up $32k in pocket.Put $14 k on new house (refinance)in 2002.Payed back 5k loan to parents.Put 5k in CD(which cleared $37 in 6 months)My semi retired accountant,in business 40+ yrs,said "capitol gains" tax between 8-9 thousand,and all I remember was the word "depreciation"She out of state,I contacted another acct.Pretty much same story,except closer to 8k tax.
Come tax season 2003,Uncle Sam said $10,800 capital gains tax.11yrs of "owning rental property" left me pretty much even:thankfully I didn't have to sue tenants because rumor was back then up to 6 months they could have stayed.I asked landlord I sold to what he did to handle this-he said"my lawyer costs more than theirs"
Something about owner/occupied??WAY beyond whatever I learned besides I'd never be a landlord again.My wife at time had a condo,rented to 2 tenants,both she knew,neither stayed two months,yet no tax penalty as she sold condo next year.
Obviously this plan works for some,as I see Brent speaks of rentals,and obviously rental(resort).
I use the years as to whatever tax laws were at the time,as if to help.
Obviously,I am biased on this subject,as lesson learned hard way.Not to scare,but of experience.I was out of my league,and would never try situation again.
Looks like capitol gains going to what 37 percent (or trying to?)Maybe to sell now better off-writing that check to Uncle Sam sure did suck!
BTW,guy I rented to I worked with always there,and used to keep carpet samples ( trap more dirt)instead of floor mats,in all his cars/work truck,and a freak with Armor All to keep dash/seats/tires shining bright and clean-I did notice that.
The only way to rent is to have a company that provides the landlord service. If you do not have property management I would suggest to everyone do not rent. Unless you think that stuff is fun and economical and it is not I would suggest always sell.
RC,
Not a big fan of RIETs, look what is happening at 100 East Wisconsin in DT Milwaukee.
If you invested in that you’d be losing your shorts…
DB-
My wife and I started out with duplexes too, but it was just too much - I completely agree!
Most folks who rent a duplex have a life that is in a state of change…
Just got married, just got divorced, just turned 21 and looking to rent their first home, just got a job, just lost a job, just got transferred etc. If there’s one thing you can count on is that they likely won’t live there very long…
Renting a single-family home in a nice non-rental subdivision is much easier, and you tend to get very long-term tenants…
I know my wife and I would not purchase a multi-tenant home again
Have to agree with some sentiment here. The Wiscosnin state law and the courts are stacked in favor of deadbeat tenants. If you have thick skin and willing to with stand the numerous issues then you can make a good living at it. Other wise put the monies toward REIT investments and let the professionals handle the dirty work.
Displaying 1 to 15 of 78 posts
