The Home Ownership Thread

[idfnl]



G's question got me wondering about residential rental property, something I've considered off and on for a couple years. Where I live, there is decent rental demand and the monthly rental rate is roughly 1% of the purchase price of the property so more than would be required to cover a mortgage payment, insurance, and small-to-medium maintenance expenses on the property. The value of the rental property itself is unlikely to either appreciate or depreciate much. What other kinds of things factor into evaluating the investment value of residential rental property?

Tax implication, you can depreciate the property.

 

[idfnl]



Thanks for all the input, guys. I really do appreciate it.

One option I've found is a company that offers a tenant-placement service where you pay them a flat fee to find someone, do the background check, and get the lease/legal stuff worked out, and then you do the actual management. That might not be a bad approach, given it would cost less but still get some help with placing a tenant, which is what concerns me the most (at least right now).

I view this as high risk. You're opening yourself up for them sticking whatever hobo shows up at the door first. If you go this route, make sure you have an explicit right of refusal. Placing a tenant is fairly easy, the hard part is managing the property.

For what it's worth, I was told the 1% number when I got in touch with the agent who sold me my house, and it's looking like that's completely off. I'm looking at more like 0.7%

1% of the homes value? No way, at least not in my area. In my area is more like .4%. Check out the tax impact as well.

 

[idfnl]

Someone told me recently that a full freezer uses less energy than an empty one. Is there any truth to this?

 

[Ataturk]

When you open the door less air is going to escape and be replaced with warmer air, so, yeah, I guess.

 

[aravenel]

Stuff in the freezer means more thermal mass which will keep the temperature more steady--meaning that the compressor has to turn on less often to cool it down. So, yeah.

 

[Piobaire]

G, I've done just this in the last year. We went with a well known rental company. They take 10% of collected rent. That "collected rent" is important as if the tenant doesn't pay they do not get paid. Also, I pay $5 a month to the rental company as insurance so they will take care of and cover the cost of any eviction needed. The house was on the market for three weeks before they lined up a great tenant. So far we're very happy. If you decide to do this on your own I would suggest buying an American Home Shield type policy as this will give you some certainty in things. You will not get whacked with a huge bill and you have an automatic resource to call and get things fixed.

Okay, tax situation. What your AGI is will be important. Rent is passive income so if your property for the year is a net negative that's passive loss. The IRS, to prevent the HIWS from becoming landlords, has ruled that you cannot claim passive loss at some point. I'm not sure what that limit is I just know it prevented me from deducting my passive loss for 2012. That's okay though as it is carried forward and my worse case scenario is I claim 100% of it the year I sell the house (which should be in a few years.)

To whoever that was that asked about accessing rental investment value there is a ton of easy to understand stuff from most real estate schools. Start off with reading this: http://en.wikipedia.org/wiki/Gross_Rent_Multiplier and then go on to http://en.wikipedia.org/wiki/Capitalization_Rate

 

[idfnl]



When you open the door less air is going to escape and be replaced with warmer air, so, yeah, I guess.

Stuff in the freezer means more thermal mass which will keep the temperature more steady--meaning that the compressor has to turn on less often to cool it down. So, yeah.

What about the energy it takes to freeze items? Doesn't that counter the gains?

 

[aravenel]

Sure--if you were measuring over a short period of time, obviously it would require more energy to cool off a lot of items. But if your freezer is anything like mine, things stay in there for quite a while, which changes the equation...

 

[Piobaire]

If you're worried about the cost of a full vs. empty freezer you should unplug it.

 

[mike1445]

are you trying to answer a physics problem?

 

[aravenel]



If you're worried about the cost of a full vs. empty freezer you should unplug it.

That too.

The place where it makes a lot of sense is if there is the possibility of power loss--e.g. impending hurricane. Fill that fridge and freezer full to the top a few days before the storm hits, and it will stay cold for much longer than it would if half empty.

 

[patrickBOOTH]

Installed the new over the range microwave. Glad that is over. It was a royal pain. This unit is much nicer, however.

 

[mike1445]

current state of our kitchen. I was tearing **** down and the wifey just shoveling insulation like it were new fallen snow.

 

[aravenel]

Dear God I hope yall were wearing respirators... All that old plaster dust and insulation...

 

[mike1445]

oh yeah, windows and doors open, respirators, goggles, plenty of breaks for fresh air. skipped the whole St Pattys parade and got **** done. Electrician and plumber coming in the next few days, to give us all the bad news.