All Forum Posts by: Don O.

Thanks again everyone. Just for more perspective on my plight... I owe roughly $240k on main mortgage. I took out the $65 HELOC to buy new property w/ 20% down. So now this property is leveraged at around $305k. The sale that fell through was for $345k b/c they were told to fix the structure by digging out and redoing the basement walls would potentially be a $60k+ fix. So... I don't see how I can sell w/out being in some kind of a short sale. My hope is that renting at a point to cover my mortgage and possibly find a buyer who will be interested in purchasing in a couple years would allow prices to rise enough that I could break even. If something happens where I can't get renters or someone gets in and stops paying, I think I'd have to walk from the house entirely. Just trying to avoid going that route.

Appreciate the warning. I'm in a situation where rent or walking from it are my only real options right now. If I rent and in a perfect world clear $300/month. I'd have to have $3600+ in fixes a year to be in a negative cash flow. I understand if there are bad tenants, etc. I'm in trouble, but I'm using a realtor company that's supposed to be prequalifying and doing background checks etc.

I would be paying down only about $500/month of the principle b/c property taxes make up almost $900 of the mortgage payment (one of the main reasons I'm moving). I should be able to depreciate what I have invested in the place (cost/27.5) per year, which will help me lower my taxable income too. I was thinking that would be one benefit to consider.

Thanks again for all the perspectives. I currently have someone interested in a 1 year rental with the option to buy after. If I can get this to work out, that may be ideal.

Our place is a 4BR/2.5BA bungalow. Rentals in this area are $2300 on the low side for 3BR places to over $4k for larger homes. I checked on insurance and it will go down slightly ($100/year) and my taxes will go up about $900/year starting in 2017 (paid in 2018) b/c I'll lose my homeowners exemption.

Good to know on the "2 of last 5 years" thing.

Regarding structure... I have walls that were bowed when I moved in. My inspector's opinion was "it's an old house and doesn't look like it's moved recently". I put in steel beams vertically along one wall to "pin" the wall floor to ceiling. I had a structural engineer come in who said that will hold it from future movement. Buyer's had a different engineer say that it needs horizontal beams too, and that the "fix" is to dig up and redo the walls.

So... I'm in a situation where it's not in danger of collapse, is dry and hasn't moved since I put in the beams 3 years ago. But.. I think I'm going to have this same problem whenever I sell. Current sales price would be in the $350-$375k range if nothing was wrong. My thought is to rent for 3-4 years (to get out w/ tax break now), which will pay down about $10k of my mortgage. If I can sell for $300k-$320k at that point, I can pay off my mortgage and remaining HELOC and at least about break even. Our area tends to appreciate above national average too, so I'm hoping that may work in my favor so long as we don't hit a 2008 kind of situation.

Thanks

I will be moving soon to a new home, and plan to rent my current home - wasn't intentional but possible structural concerns w/ a basement wall killed a sale, so renting has become a good "second choice" for us. Luckily, I was planning to buy a property for rental in the next year and had some reserves and an open HELOC with no balance available to help me purchase the new house. I've lived in my current house almost 14 years and have repaired about everything. AC, Furnace, most of the electrical, plumbing, HW Heater, roof, etc. is new(er). My monthly mortgage is $2100 and the HELOC payment will be about $160-$200 unless interest rates go crazy. Tenants will pay utilities and I expect to rent for $2600-$2650. That should leave me with a "profit" of around $300/month which I plan to keep set aside for any repairs or fixes that I'll need to make after tenants leave. That's a little over 10%, which sounds like I'm good. Am I missing anything in this delta? I'm wondering if I should put aside more $$ up front of my own as a plan for problems.

My long-term goal would be to have someone live here 3-5 years and then either want to buy, knowing there may be a future expense w/ the structure to fix (so they'd be buying well below market value) or to maybe find another investor who would want the property if rents continue to climb. We're in a good school district just outside of Chicago... just have a 100+ year old house that I'm not willing/able to sink a lot of money into now when I need to move.

TIA for any suggestions on what I may not be thinking about.

I've been browsing the web and I don't believe I can write off any of my premium for life insurance but wanted to make sure I'm not missing anything.

I am currently looking at purchasing my first property as a "buy and hold". I have an LLC set up, tax id, and a business bank account. I want to be sure that I have adequate life insurance in place to cover the mortgage on my primary residence, as well as any rental property/s I may purchase so in the even I exit this mortal coil, my family can pay off any debt.

The agent I spoke with tried to tell me, "good news... you can deduct this if you have a business..." but I'm not seeing that as the case. Apparently if I was an S or C corp and the proceeds were paid to employees, maybe... but as an LLC where I'm the sole owner and will pass any profit/loss through my personal taxes, I think I'm on my own.

Thanks for any clarification or pointers.

Don