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The Water Cooler
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Anybody own rental houses? Needing advice
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<blockquote data-quote="Belthos" data-source="post: 2112895" data-attributes="member: 24944"><p>I own a number of rental properties, these days it's what I do for a living.</p><p></p><p>Make certain you get the lead based paint disclosure pamphlets, give them one when they sign the lease.</p><p>There is a disclosure form that shows they got the pamphlet make certain they sign it.</p><p></p><p>If you think this is a hands off way to make money, look elsewhere.</p><p>That said if you can handle the showing, cleaning, repairing, and debt collection yourself you can make money.</p><p></p><p>In Oklahoma county it's closer to $230 to get someone evicted by the sheriff once you include all the court costs.</p><p>I don't do it often enough to remember off hand and I'm too lazy to check my records right now <img src="/images/smilies/wink.png" class="smilie" loading="lazy" alt=";)" title="Wink ;)" data-shortname=";)" /></p><p></p><p>You will need to pay special attention to how much the property taxes are, some of mine run over $1200 a year some are less than half that. </p><p>You need to remember that they have nothing to do with real market values, so whether or not your property goes up or down in value your taxes will continue to move upward every year.</p><p>If I recall correctly we paid over $11,000 in property taxes last year.</p><p></p><p>You do get to deduct your property taxes from your state and federal taxes but depending on your tax bracket you should expect property taxes to cost you more than the income taxes on the properties.</p><p></p><p>If there is a maintenance problem fix it right, fix it now. If you are really capable of doing a repair yourself you can save a lot of money.</p><p>If you do not know what you are doing you can run up your costs by trying to rig it yourself then pay a professional to fix the problem and the additional damage you did.</p><p></p><p>Electrical and plumbing can be very expensive, hire a professional it's cheaper than doing it yourself in the long run.</p><p></p><p>Charge the rent and deposit up front in cash is best, just always give them a receipt. If they do not have the ability to pay one months rent + a reasonable deposit, I usually charge 500-550 for deposit, do not expect them to catch up later.</p><p></p><p>You must put the deposit money into a separate trust account in a bank, never co-mingle your money and the tenants money. Remember the deposit is not your money unless they violate the lease and you can use it against unpaid rent, legal fees, cleaning etc. </p><p>Do not expect to make anything off their deposit, you will be lucky if it covers most of the costs if an event comes up.</p><p></p><p>Keep every receipt for each property in a separate file for tax purposes.</p><p></p><p>Seriously consider hiring a tax professional to do your taxes, it's not required but it's good peace of mind, you do not want to get audited and if you are audited you want to be sure you have your i's dotted and your t's crossed.</p><p></p><p>Dogs and other pets, I love my dog by the way, can cause phenomenal damage to a house, I've seen things you would not believe and would never want to have to clean up.</p><p>Expect to have to rip up carpet and pad when people allow animals to urinate freely inside the house, factor the costs of new carpet and installation, a small house will run you $1200-$1400 in carpet installed for decent rental carpet. </p><p>Choose mottled colors in earth tones, never put in solid color carpet. I bought a carpet steam cleaner years ago and it just keeps paying for itself.</p><p></p><p>If you want to make money renting homes you really can make a living at it.</p><p>If you are not prepared to be hands on especially for cleaning, basic maintenance, doing your own collections and evictions, you will be eaten alive in expenses.</p><p>Bear in mind you will have to lose a day of work if you need to evict someone, it is simple to do and you do not need an attorney.</p><p></p><p>You will make much less per house than you expect after expenses, vacancies, taxes.</p><p></p><p>I paid cash for mine and I strongly advise caution if you are trying to buy rental properties by financing them and trying to use them as a stream of cash flow venture.</p></blockquote><p></p>
[QUOTE="Belthos, post: 2112895, member: 24944"] I own a number of rental properties, these days it's what I do for a living. Make certain you get the lead based paint disclosure pamphlets, give them one when they sign the lease. There is a disclosure form that shows they got the pamphlet make certain they sign it. If you think this is a hands off way to make money, look elsewhere. That said if you can handle the showing, cleaning, repairing, and debt collection yourself you can make money. In Oklahoma county it's closer to $230 to get someone evicted by the sheriff once you include all the court costs. I don't do it often enough to remember off hand and I'm too lazy to check my records right now ;) You will need to pay special attention to how much the property taxes are, some of mine run over $1200 a year some are less than half that. You need to remember that they have nothing to do with real market values, so whether or not your property goes up or down in value your taxes will continue to move upward every year. If I recall correctly we paid over $11,000 in property taxes last year. You do get to deduct your property taxes from your state and federal taxes but depending on your tax bracket you should expect property taxes to cost you more than the income taxes on the properties. If there is a maintenance problem fix it right, fix it now. If you are really capable of doing a repair yourself you can save a lot of money. If you do not know what you are doing you can run up your costs by trying to rig it yourself then pay a professional to fix the problem and the additional damage you did. Electrical and plumbing can be very expensive, hire a professional it's cheaper than doing it yourself in the long run. Charge the rent and deposit up front in cash is best, just always give them a receipt. If they do not have the ability to pay one months rent + a reasonable deposit, I usually charge 500-550 for deposit, do not expect them to catch up later. You must put the deposit money into a separate trust account in a bank, never co-mingle your money and the tenants money. Remember the deposit is not your money unless they violate the lease and you can use it against unpaid rent, legal fees, cleaning etc. Do not expect to make anything off their deposit, you will be lucky if it covers most of the costs if an event comes up. Keep every receipt for each property in a separate file for tax purposes. Seriously consider hiring a tax professional to do your taxes, it's not required but it's good peace of mind, you do not want to get audited and if you are audited you want to be sure you have your i's dotted and your t's crossed. Dogs and other pets, I love my dog by the way, can cause phenomenal damage to a house, I've seen things you would not believe and would never want to have to clean up. Expect to have to rip up carpet and pad when people allow animals to urinate freely inside the house, factor the costs of new carpet and installation, a small house will run you $1200-$1400 in carpet installed for decent rental carpet. Choose mottled colors in earth tones, never put in solid color carpet. I bought a carpet steam cleaner years ago and it just keeps paying for itself. If you want to make money renting homes you really can make a living at it. If you are not prepared to be hands on especially for cleaning, basic maintenance, doing your own collections and evictions, you will be eaten alive in expenses. Bear in mind you will have to lose a day of work if you need to evict someone, it is simple to do and you do not need an attorney. You will make much less per house than you expect after expenses, vacancies, taxes. I paid cash for mine and I strongly advise caution if you are trying to buy rental properties by financing them and trying to use them as a stream of cash flow venture. [/QUOTE]
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