All Forum Posts by: Chris DeTreville

I work for a management company and when someone gives their notice to vacate, we start to market the property and show it. Every now and then we get a person unwilling to let us in (most are ok), but our lease states that we can enter as long as we give them 24 hr notice. I show occupied apartments every day, and while it can be uncomfortable at times, we are legally allowed to do so, and we are obligated to get it re-rented as fast as possible. If you wait until after the 1st of the month when the person moves, you are missing out on all those people who need to move at the beginning of that month and you may have just guaranteed yourself 1 month of vacancy. Our owners don't expect us to sit on our hands and lose them a month of income just because it doesn't suit the tenant who is leaving.

That being said, we try our best to be patient and accommodate everyone. If we know someone has a child, or works nights, etc then we try our best to work with them.

Adam,

I relate completely to your situation. Your first two paragraphs fit me exactly, and the next two are similar enough to my current situation as well. Check out my thread here on how I am trying to think through getting started - http://www.biggerpockets.com/forums/12/topics/80843-turning-primary-residence-to-rental--make-sense

Also, I am in SC. What part of the state are you? Have you looked into joining an REI Club?

Some books I read (in order) are "Rich Dad Poor Dad" which helps kind of change the way you think about money and investing, though I don't recommend any of Kiyosaki's other books. Next was "The Richest Man in Babylon" does the same thing but does it in series of short fables. It's definitely different, but I found it useful. (This book is available in Audio version on itunes, so if you travel a lot you can knock it out in one or two trips, that's what I did) And right now I am almost through reading "The Millionaire Real Estate Investor" by Gary Keller. Good stuff so far. I open to more suggestions as well.

So, does the 50% rule apply here? Tell me what I'm doing wrong...

assuming my new mortgage payment + taxes and insurance is $650 and the rental amount when rented is $925...

Gross rents: $950
Operating Expenses using 50% rule: $475

Mortgage payment: $650

Thats a -$175 cash flow

If/when my taxes increase it is even worse. So I'm really struggling with this strategy...

If I were to save more and stay in my house as long as I can stand it, and then put it on the market once I have enough saved up...get it sold use the equity as a down payment on a new property-preferably a duplex that I can live in one side for the time being..isn't that a much better strategy? That way my savings would be cash reserves (or I could use some for closing costs, etc).

The problem with this is the timing of it all. I can sell my own house, but I can't guarantee when it will sell. (Not to mention I have to show it) Also, when it sells I have to be ready to move. What if I don't find the right deal by the time it sells? I'd have to rent month to month somewhere...And what if the right deal comes along for a duplex and my house is still on the market- I have to hope the owner is willing to accept a contract contingent on the sale of mine.

It would be a pain, but the more I think about it, getting out of this house seems to be the way to go. Any words of wisdom here? I'll add this, I want to keep the house and rent it. But what I want isn't always the smart way to go.

Steve Babiak here is what my county says regarding the homestead exemption:

"The homestead exemption is not to be confused with legal residence. The elderly (age over 65), the blind, the disabled, and a surviving spouse of an eligible Homestead Applicant may be eligible for a $50,000 deduction from the Assessor's market value appraisal of their legal residence. The owner's tax bill will show the assessed value reduction amount if the owner has qualified and applied for the homestead exemption."

Ha ha I can honestly say I didn't think my first welcome to the site would be from a dang ole Clemson Tiger. Thanks for the welcome and go Gamecocks!

I jumped the gun a bit and started a thread in the "starting out" forum but anyway, I have lurked long enough and decided to get vocal.
I am 29, and have been in real estate for 6 years. I suffered through a few years of new home sales as I started out...and I am thankful for the experience but glad I am in a new position. A year and a half ago I was hired as a leasing agent for a property management company. I came to the company with the intention to start and head a sales division(calling it a division makes it sound professional, but really we just joined MLS and I set the company up for sales with the help of my broker), and as fate may have it I closed on my first house with the new company today. While most of my job is servicing rentals and working for our owners...I am loving the ability to take on some listings and make some sales. We get a lot of owners who want to sell so in the future I believe most of our sales will be investment properties.

I also fully intend to become a real estate investor myself, and I have taken some preliminary steps toward that goal. That is why I'm here.

Anyway, enough about me. Thanks for the opportunity to share my thoughts and questions (there will be a ton).

Joe G. I appreciate your input. I work for a property management company and Fort Jackson plays an important role in our rental and sales markets. We manage a lot of owners who have done the exact same thing you have done. Some have worked out, some haven't. Working at this company has really opened my eyes. We have a lot of units that we manage so we see it all as far as service and maintenance issues. For me, when I bought the home 4 years ago I put in a brand new heating and air unit, new windows, appliances, etc. So I know this house inside and out which gives me some comfort. Also, though I haven't discussed it with my broker, if I were to have my own rental, I'd essentially be managing it myself even though I'd try and hang it under my company as long as she'd let me (for free or at a huge discount, of course).

As far as cash reserves, based on y'alls suggestions maybe I should bump my 10% savings and try to save more. Also, I have a credit card with a low balance that I could use for extreme emergencies but I don't like the idea of that. Also, I have read some on this forum about using a HELOC as a cash reserve but I am hesitant about that as well. Any input there?

What intrigues me the most about my position is the chance to hang on to this house, and go out- when I'm ready- to find a great deal (possibly a duplex ) and use the same buy and hold strategy and get the great rate as an owner occupant. If I were to put it on the market and try to sell, there are a lot of unknowns and I wouldn't be as flexible when it comes to finding the next deal. I don't know, it's a lot to consider. Sorry for the rambling.

Not to get too far off track..but what do your local taxes look like? Is there such a dramatic difference in owner occupying/ non-owner occupying where you live? I know my county is high..but I'm just curious as to how it compares around the country.

Thanks for the advice. I failed to mention I have a 401k so when I say I have zero saving thats not entirely accurate, but I cringe looking at that 401k statement. I'd rather have my money in a self directed ira or something like that where I could put it to work myself but I digress.

I struggle to accept the prospect of losing money on the house as a rental even if in the long term the equity may make up for it. This is my entire dilemma. I am confident of the location of the property. When I bought the house, across the street was a cul de sac full of duplexes (actually, they were my grandfathers duplexes) and they were run down. But I knew that the entire cul de sac was going to be sold and that they were going to tear out the duplexes and build new homes. That is why I jumped all over the property at that time. The subdivision took several years to take off but it finally started popping recently and the homes range from 250k-350k and they are selling and building like crazy as we speak.

Sorry I was pretty vague on that part. Here is how my county calculates it:

Taxable value $105,000.00
Homestead (if applicable) - $0.00
----------------
Net taxable $105,000.00
Ratio X 0.04
----------------
Total taxable $4,200.00
Millage rate X 0.2592
-----------------
Estimated tax for: 2012 $1,088.64

Local Option Sales Tax Calculation
Net taxable property value $105,000.00
Local option sales tax factor X 0.003124
-------------------
Local option sales tax total $328.02

Estimated tax total $1,088.64
Local option sales tax - $328.02
------------------
Estimated tax for tax year: 2012 * $760.62

I tried to copy and paste and I had to play around with it to be readable.. Hope that isn't a mess. 105k is what I bought the home for but the county has not adjusted yet to the new value of around 130k

Here is if I am the non legal resident:

Taxable value $105,000.00
______________


Ratio X 0.06
_____________

Total taxable $6,300.00

Millage rate X 0.5023
____________

Estimated tax for: 2012 $3,164.49

Local Option Sales Tax Calculation

Net taxable property value $105,000.00
Local option sales tax factor X 0.003124
____________
Local option sales tax total $328.02

Estimated tax total $3,164.49
Local option sales tax - $328.02
__________
Estimated tax for tax year: 2012 * $2,836.47