User Panel
User Panel
User Panel
|
Posted: 1/4/2007 8:04:06 AM EDT
Last week Friday I leased my house in Michigan to a couple for 2 years. The rent is going to cover all but about $200 of my monthly payment on the place and after 2 years of not having any money coming in from the joint it is a welcome relief.
The other side of the coin is that the place has been unoccupied for 2 years now and stuff has to be replaced. The dishwasher stopped working, the stove has had irreplaceable components die (it's a 1962 off brand stove), 3 flourescent fixtures have gone out, 2 sink traps are leaking, the kitchen faucet has a leak, the garage has a broken window and the water heater is on it's last legs. I'm having my property manager fix everything for me but the water heater (it still works and I want to get a rent check before I replace that one) this month. Total including labor is $1,215. So, I have been a landlord for a week and already I'm out $1,200. 
|
|
|
|
Posted: 1/4/2007 8:05:49 AM EDT
[#1]
That sucks.....I guess I haven't kept up.
I thought you sold that house. Why so long to rent it? |
|
|
|
Posted: 1/4/2007 8:06:44 AM EDT
[#2]
but think of the tax savings....
|
|
|
|
Posted: 1/4/2007 8:08:42 AM EDT
[#3]
"Toilets & Tenants" are what cause most people to get out of the rental business.
|
|
|
|
Posted: 1/4/2007 8:11:01 AM EDT
[#4]
Ha!
In a few months, you'll look back at that measly 1200 and think "Ahhhh, the good old days" Sux to be you.  |
|
|
|
Posted: 1/4/2007 8:11:35 AM EDT
[#5]
No shit, i will NEVER be a landlord again. We bought a house with a rental (to help with the mortgage) after less the 2 years we sold it and are just going to rent for now. NEVER, NEVER again will I have tenants 
|
|
|
|
|
Posted: 1/4/2007 8:19:28 AM EDT
[#6]
A 2 year lease?
Why so long? Is it some type of option to buy deal? |
|
|
|
Posted: 1/4/2007 8:23:59 AM EDT
[#7]
Only thing worst than being a landlord is being an absentee landlord.
Most Landlord setups (with less than a "few" units) that work include income from another source that gets offset by tax "losses" on the rental property, the ability to do much of the upkeep at below market cost (you do it yourself, or you have very cheap labor, and you know where to get supplies/appliances for cheap), and the property is at least holding its own on market value. You can get fried bigtime if you can't get the overhead down, unless you have a 1 in a million tennant that fixes things for you and doesn't destroy the place. |
|
|
|
Posted: 1/4/2007 8:25:39 AM EDT
[#8]
I've been there, Motown_Steve. I had a house that didn't sell for over a year, so a coworker of my then-wife was renting the place from us. It was good because we were getting a little money to offset the mortgage payment, and real estate people hate showing empty houses. The girl who was living there had really nice furniture, kept the place clean, put up nice decorations and so on. However, in the six months or so that she lived there, we probably poured $5,000 into the place on repairs and other work, and untold hours. It all worked out fine in the long run, but I confirmed exactly what I had suspected all along: I don't have the patience to be a landlord.
Good luck. |
|
|
|
Posted: 1/4/2007 8:28:27 AM EDT
[#9]
I was trying desperately to sell it. I had it sold twice, and both deals fell through at the last minute. I decided to try and rent it out in November because I had been just dumping money into the place with nothing coming back for more than a year and a half. Now I finally have a tenant and at least I'll have something coming back to me. |
|
|
|
|
Posted: 1/4/2007 8:32:23 AM EDT
[#10]
that's called an alligator, and it's a bad thing That means you ALWAYS lose money before things go wrong (and they will) It will slowly eat you alive I wish you luck, you're going to need it. |
|
|
|
|
Posted: 1/4/2007 8:36:37 AM EDT
[#11]
I am a commercial and a residential landlord. Both suck equally with a slight nod toward the commercial. However, they are a good source of income and worth it until I am ready to sell or long-term lease the properties. |
|
|
|
|
Posted: 1/4/2007 8:40:56 AM EDT
[#12]
Could you explain to him and me exactly why this is worse than his previous situation and how it's going to "eat him alive"? I own, rent out, and manage a not insubstantial amount of real-estate in California (yes, CA. don't bother telling me about difficult places to do business ) and while it has its headaches, I promise you, I win all the way around. 
|
||
|
|
|
Posted: 1/4/2007 8:43:01 AM EDT
[#13]
I'm damned if I do, damned if I don't. The $1,300 mortgage payment for a house I wasn't living in was eating me alive and I would have had to get all of this shit fixed anyways. Yes, stuff is going to break. It would have broken anyways. Yes, I'm losing money. I was losing money before though. If I can lose less money with a tennant than I was losing without one then I'm better off no? Besides, how many things can......well, I better not...I don't want to know.
|
||
|
|
|
Posted: 1/4/2007 8:47:33 AM EDT
[#14]
I wouldn't like to be a landlord.
|
|
|
|
Posted: 1/4/2007 8:47:36 AM EDT
[#15]
sell the freaking house You've already lost 1300 X 24 months = 31200 dollars you could have lowered your price 31000 dollars 2 years ago and still been even. Now, at best you are going to lose another $5000 (200 x 24) over the next two years. Gauranteed That's worse than vegas You'll actually lose more than that as things go wrong (they always do) |
|||
|
|
|
Posted: 1/4/2007 8:49:17 AM EDT
[#16]
Are your rental payments more than your monthly nut? That's the question In his case, ti's not and he's gauranteed a loss he's signed up for a loss, that's an alligator and slowly you lose money, month over month. That's not a good investment. It works in rapidly rising markets, but the market in Mich is not growing, in fact it's shrinking, so, at the end of two years of losing at least 5000 dollars, he's still going ot have to sell for less. That's not good. |
||
|
|
|
Posted: 1/4/2007 8:49:55 AM EDT
[#17]
How many? All of them. Generally not all at once though lol. Today I am dealing with an SBC trunk problem that has pretty much shut down my commercial's fire alarm system due to line problems.  They'll have it fixed by 10 AM tomorrow though I suppose. I should probably ask my lawyer if I am indemnified against any liabilities if the place burns down today though, since this is an SBC problem out at the trunk and there is literally nothing I can do (as a landlord) to improve the situation. Take the rent, use it against your mortgage and take the fixes and troubles as things that would happen anyway. Besides, you want to see shit go wrong? Try leaving property unattended for a few months or longer. As long as your tenants aren't losers, you'll be fine. |
|
|
|
|
Posted: 1/4/2007 8:51:12 AM EDT
[#18]
Where's Slumlord? Isnt it time for another of his photo threads?
Kharn |
|
|
|
Posted: 1/4/2007 9:00:46 AM EDT
[#19]
I own both outright, so the answer to that is yes. I am using a portion of the rental revenue to completely pay for another piece of real estate. That is how the game is played. Tenants A and B pay the mortgage on the new property and building that tenant C is in. Tenant C's rent is additional revenue that combined with A and B cover all expenses and leave me with a nice little profit. I will direct that money into more real estate as the time becomes right. I did not say being a landlord was for everybody.
Versus, running a $1200 per month payment into a house that's depreciating whether someone lives in it or not, and then being stuck with an assload of improvements and fixes as the house deteriorates? Tell me again how the $5000 loss is worse than the 30 grand or so in payments over two years with absolutely nothing coming back? It will sell eventually, the question is how much living money should this guy lose during that time just because he didn't want to shell out 5 or even 10 grand in property management costs? |
||
|
|
|
Posted: 1/4/2007 9:01:41 AM EDT
[#20]
It is amazing too me how foreign this concept is too people. My wife is a realtor and she sees this all the time. Sellers with a new house already will get all emotional over 1% difference between them and the buyer, kill the deal, then gladly make 3 more double mortgage payments just to get back to the table with a new buyer. |
|
|
|
|
Posted: 1/4/2007 9:06:26 AM EDT
[#21]
That is true. But he didn't. My points only address what he is doing now and where he is at. I don't tell people what they SHOULD have done. That's easy but it doesn't help now. I should have edited my posts to add... While you are renting and doing the landlord thing, simultaneously you need to be aggressively marketing the house for a sale. |
||
|
|
|
Posted: 1/4/2007 9:08:46 AM EDT
[#22]
That's a great idea. Why didn't I think of that?  There are factors that figure into this equation that go beyond the figures. One of these factors is the fact that my house is in Metro Detroit. The economy there is deader than disco and people aren't buying many houses right now. I would love to drop the price on my house $30,000 and sell it...but you see, I don't have $30,000 and I don't have anything that I can put up as collateral to borrow $30,000 against, which means that I can't drop my price $30,000...and I don't have any room left in equity either. I had the house for sale for 8 months, asking nothing more than what it would take for me to close on the house. I've had a couple of people try and buy the place but they fell through at the last minute. The problem is that there are more houses for sale in Metro Detroit then there are people buying houses and I can only drop my price so far. Like I said, I'm damned if I do and damned if I don't. |
||||
|
|
|
Posted: 1/4/2007 9:13:52 AM EDT
[#23]
I don't want to speak for motown_steve, but I think you guys are missing something. For Steve to agree to this, his hands must be tied. He evidently owes so much on the house, that he absolutely cannot sell it for less than a certain amount - an amount that buyers in Michigan apparently don't like. If he were to lower the price 1300 X 24 ($31,200) two years ago, he would've had to cough up $31,200 immediately to cover the loan. My guess is, he didn't have that kind of scratch laying around.
The bank wants their money evey month, so he's stuck. By renting it, he now has $1100 a month freed up that he can sock in the bank for two years. Now, he's gonna have some property management costs during that time, but if we assume that he makes enough money to cover these from his regular paycheck, he might very well be able to have 1100 x 24 ($26,400) in the bank when the lease is up. At that point, he'll be able to knock the price of his house down $26,400 (plus a little more, since the principal will have been reduced somewhat during that time). I read it like he's between a rock and a hard place. |
|
|
|
Posted: 1/4/2007 9:14:47 AM EDT
[#24]
And where is someone supposed to get the money to close on the damn house? As I said, I would love to drop my price $30,000 to sell the house...but I don't have $30,000 in the bank (hell, I've been making $1,300 mortgage payments, plus utilities on a house that I haven't lived in for almost 2 years, and I've had to pay rent and utilities on my apartment in TX) and I don't have anything that I can mortgage to get $30,000 (except the house I'm trying to sell), and I have cut ever cent of equity out of my asking price. So you tell me Mr. Trump, and ask your wife if you need to, where do I get the $30,000 to bring to closing when I drop my price by $30,000? My first real-estate agent tried to tell me the same thing. She kept telling me that I might need to sell the house for less than I owe. When I asked her where I was supposed to get the money to come to closing, well all I got was some studdering and mumbling. |
||
|
|
|
Posted: 1/4/2007 9:17:48 AM EDT
[#25]
My rental diswasher stopped working as well. There are some very stiff seals/bushings in the motor. If you get under the dishwasher, and can "hand prop" it while it is in a run mode it might start working just fine.
Best of luck. |
|
|
|
Posted: 1/4/2007 9:18:53 AM EDT
[#26]
BozemanMT gets an A+ in both math and economics  |
|
|
|
|
Posted: 1/4/2007 9:19:44 AM EDT
[#27]
And an F in reality. |
||
|
|
|
Posted: 1/4/2007 9:24:06 AM EDT
[#28]
It's called a short sale. I do them all the time. |
|||
|
|
|
Posted: 1/4/2007 9:33:00 AM EDT
[#29]
Touche markl32 -> I did not realize you were that upside down on the equity. Furthermore my apologies. My example above the sellers have some "number" in their heads they need to make on top of five figure equity they are already making. This number is usually fueled by west coast real estate boom hysteria. I don't have an answer to your delima. You need to find a serious mortgage broker and ask them. There are thousands of ways to do this stuff. lastly, I was born and raised in Michigan, lived there 30 years. I have lots of friends and family still there. I hear about the local economy all the time. |
|
|
|
|
Posted: 1/4/2007 9:34:16 AM EDT
[#30]
Mortgagte company wouldn't go for it. I had a broker lined up to buy the place and she was trying to get the mortgage company to approve a short sale. They basically said that they would approve it as long as I paid the difference. |
||||
|
|
|
Posted: 1/4/2007 9:35:34 AM EDT
[#31]
Really? Explain how he can sell a house for 30K less than he owes on it. Explain a short sale, AND explain the implications of doing one. I'm all ears. EDIT: I'm genuinely curious, here. |
||||
|
|
|
Posted: 1/4/2007 9:37:41 AM EDT
[#32]
Yeah, talking about this house gets me frustrated, angry and generally puts me in a fighting mood. Don't take me personally.
|
||
|
|
|
Posted: 1/4/2007 9:40:35 AM EDT
[#33]
Some banks will accept a short sale they know that’s all they will get for the house and if you hand them the keys they are out even more. A sale of the house would be contingent on the acceptance of the short sale by the bank. There are Attorneys that do many short sales especially in economically depressed areas.
|
|
|
|
Posted: 1/4/2007 9:41:49 AM EDT
[#34]
yes, we understand that, it's called a short sale There's going to be a lot of them in the coming years. now, maybe it didn't have to drop 30k, but maybe 10k and you'd still be better off. Credit cards, short term personal loan, whatever, but sometimes you gotta take some short term pain for a long term gain. now you're totally screwed, because no one is going to buy a house that has renters in it that isn't a landlord, and a good landlord isn't going to buy a house at a rate that doesn't ake him money. So, he's only going to pay enough for that 1100 to cover his monthly nut. Because their lease lets them stay even with a new buyer so no one is goin to buy it to live in it up until the end. I think you're in a bad spot, no argument, and it sucks and I'm sorry, but in my opinion I think it's now worse. (I know, my opinion means exactly d*ck, but hey it's a forum  )Oh well, water under the bridge, can't change it now, just gotta make the best of it. Better save every damn dime of that 1100, because you are going to need it to cover your short sale in 2 years.  So, when people continue to tell me that "no one loses money in real estate" I'm going to mention this. $hit happens to even the best of people. |
|
|
|
|
Posted: 1/4/2007 9:42:52 AM EDT
[#35]
What happens to your credit, since you were not able to meet your obligation to the bank? |
|
|
|
|
Posted: 1/4/2007 9:44:25 AM EDT
[#36]
yep or even borrowing more against other thigns will do it the only other way is bankruptcy (you just walk from the house, happened a lot in the 1980's) But, remember that money forgiven from a short sale (say in your case 10,000 that the bank forgives, you don't have to pay), is taxable!!!!!!!!!!!!!! somehow you get taxed on the magical 10,000 that you didn't have. |
|
|
|
|
Posted: 1/4/2007 9:45:13 AM EDT
[#37]
I have to say the "Mr. Trump" comment made me LOL. Well timed and well deserved. |
|
|
|
|
Posted: 1/4/2007 9:46:37 AM EDT
[#38]
You (or your Agent) just haven't spoken with the right person, or it hasn't been explained to them in terms they can understand. Never take no for an answer from someone that doesn't have the authority to give it in the first place. And instead of just calling, find the Asset Manager and send him a certified letter along with comparable sales stating your intentions. Tell the lender to take a short sale, or let the lender try to sell it themselves and lose even more money. Sometimes the best course of action is to just stop the bleeding and move on. That's what you've been paying mortgage insurance for anyway. |
|||||
|
|
|
Posted: 1/4/2007 9:48:07 AM EDT
[#39]
Subnet, Nothing happens to your credit as it is a contract that you both agree to, you have to play hard ball with the Bank, taht means you need a Lawyer that is very familar with real estate and short sales.
|
|
|
|
Posted: 1/4/2007 9:49:49 AM EDT
[#40]
Now there's something that I agree with you 100% on. Real estate is USUALLY a good investment, but people do lose their asses in real estate. Buying real estate DOES NOT automatically mean you are going to make money or even brake even. Not by a long shot. |
|
|
|
|
Posted: 1/4/2007 9:55:18 AM EDT
[#41]
It's really a shame that most people have to really get their ass kicked hard a time or two to learn this. Real Estate is a commodity subject to market conditions. The current value has nothing to do with what was paid, how much was spent, or anything else--except market condition. |
||
|
|
|
Posted: 1/4/2007 9:57:48 AM EDT
[#42]
That's true with anything, not just houses What you paid and/or what you owe doesn't have diddly doo to do with what it's worth right now. I always think of that scene in trading places where Dan Ackroyd is trying to pawn his watch and he goes through all the wonderful things about it and the guy says "well, in Philadelphia, it's worth fifty bucks" |
|
|
|
|
Posted: 1/4/2007 10:02:56 AM EDT
[#43]
I have purchased property as a short sale. The seller was forgiven an amount and kicked in some cash. Real estate was depressed at that time; the value now of the property is much more now. Real estate is cyclic we are seeing the down ward slide now; soon cash will be king and a good time to buy.
|
|
|
|
Posted: 1/4/2007 10:16:10 AM EDT
[#44]
That sucks.
I wouldn't mind being a landlord if I could expect tenants to act like me. I fix my own shit unless it is impossible for me to fix, like my sink is now. I think there is a mineral deposit or something in the faucet, but I can't figure out how to get to it. I hate the idea of the landlord or anyone else I don't know being in my house. I also pay my rent two or three months in advance when possible. |
|
|
|
Posted: 1/4/2007 10:39:43 AM EDT
[#45]
fuckabunchaslumlording.
I rented a house for a year, the tenants constantly harassed me over stupid shit and the guy refused to do anything but sit there and get drunk. I had to nuke the place with bug bombs, and repaint 100% of the inside (after the sheet rock repairs), scrub all the tile (three times with acid), have the hardwood floor refinished and hang new interior doors and window blinds throughout before it was livable again. They demolished the place and then vanished a month before the end of the lease. I don't have the tolerance for that sort of thing. |
|
|
|
Posted: 1/4/2007 10:46:04 AM EDT
[#46]
Keep the house for 2 years.
In Calif. you rent a house out for 2 of the last 5 years it becomes business property. The means if you sell it for less then you paid for it you can write the loss off on your taxes. In the mean time you can write a lot of expensives off. I did this and it helped me since I sold stocks off darning this time frame. Instead of taking a loss on the house and paying taxes on the stock gain I could balance the gain with a loss for 3 years. I didn't make a lot but I didn't lose anything. |
|
|
Win a FREE Membership!
Sign up for the ARFCOM weekly newsletter and be entered to win a free ARFCOM membership. One new winner* is announced every week!
You will receive an email every Friday morning featuring the latest chatter from the hottest topics, breaking news surrounding legislation, as well as exclusive deals only available to ARFCOM email subscribers.
AR15.COM is the world's largest firearm community and is a gathering place for firearm enthusiasts of all types.
From hunters and military members, to competition shooters and general firearm enthusiasts, we welcome anyone who values and respects the way of the firearm.
Subscribe to our monthly Newsletter to receive firearm news, product discounts from your favorite Industry Partners, and more.
Copyright © 1996-2024 AR15.COM LLC. All Rights Reserved.
Any use of this content without express written consent is prohibited.
AR15.Com reserves the right to overwrite or replace any affiliate, commercial, or monetizable links, posted by users, with our own.
