All Forum Posts by: John Campbell

3) get a VERY good PM, you don’t want a professional tenant living there for a couple years without paying rent. While you pay for their utilities and repairs. And pray they don’t steal everything one the way out.

4) Be aware you probably can never kick them out if they keep paying (at least not without 3-6 months of cash relocation fees.) so be prepared for this to be a rental until they decide to move out, not you decide to stop doing it.

5) PLEASE sell. You’re looking at turning a $500k gain from tax free to a tax bill in excess of $125k. How many years will it take for you to earn $125k AFTER taxes as a landlord if everything goes perfect? (This doesn’t even include the interest you’ll be paying on that $500k to buy the new property, another $3,000/mo? This actually makes your rental cash flow negative

Hi Bill, apologies in advance of this question as I am extremely new to all of this. Can you elaborate more on: 5) “PLEASE sell”?

How does this work? How is that tax bill assigned by turning it into a rental? Very interested in convincing my wife to sell, can you spell it out as basic as possible so we can digest this more accurately?

1 Vote

Santa Barbara, California

New to renting, looking for advice.

Single family home valued around $1.1m. Roughly $510k owed. Converting it to a rental projected to rent @ $4500 monthly. Currently monthly is $2800 monthly on a 2.65%. Property Manager assigned.

Moving out of state, not willing to sell the property right now.

In addition to renters insurance and landlord insurance, which direction should I go as far as protecting myself? Factoring in filing taxes, maintaining LLCs, and overall cost vs security, I’m hearing many different options.

Current net worth is only $1million with retirement accounts included. New primary will be in Idaho.

Any suggestions on how I should structure this?

Thanks!

1 Vote

Santa Barbara, California

Quote from @Bill B.:

Really?

1)Santa Barbara home prices haven’t skyrocketed over the last 6 years and you aren’t sitting on a boatload of gains you can take tax free? (Turning it in to a rental makes those gains taxable and will probably take a decade just to break even on taxes.)

2) This is the ideal rental you would buy if you had the cash in hand instead of this home? Santa Barbara, CALIFORNIA?

3) Chances are HiGH you would make more money putting your tax free capital gains in a bank CD than using this property as a rental.

4) after all that. If you’re not going to make the smart move of selling tax free, and make the questionable move of being a landlord in Ca just because you already own the home…

A) No LLC, it won't help with taxes, liability, or anonymity but it will increase the cost of insurance, taxes, and any financing (and maybe the bank calls the current mortgage due.)

B) Get an umbrella policy if you are worth more than $1M, maybe $500k

C) Don’t even THiNK about doing this yourself. Hire a PM before you find you have a non-paying tenant living in your home for 6 months while you beg him to leave while paying his utilities/repairs and probably a relocation fee

I hope you sell, but good luck either way

Sitting on a 2.65% with a property value of $1.1m (around $500k owned). Reason for keeping it is to keep skin in the game in case we want to relocate back to our hometown (wife likes the security). Reason to rent is to have to a loan payed off and a few hundred dollars each month cash flow after all expenses. Selling is just not an option at this point in time due to wanting to retain a home in the area.

What strategies would you leverage to tap into the gains tax free?

0 Votes

Santa Barbara, California

My current primary was purchased in 2018 with a conventional loan. My intent is to convert my primary into a long term rental. I'm curious as to the strategies that are recommended to ensure I've covered all my bases in the process. I have a management company that is local for day-day management. I am able to obtain landlord insurance. Do I create an LLC to own the property and use a quit claim deed to transfer ownership? Do I include my mortgage company in that process? Looking for efficient ways to hold title while maintaining recommended safety nets as well as any other recommendations regarding LLCs/Trust/estate planning tips. Thank you for all of your insight!

3 Votes

Santa Barbara, California

All Forum Posts by: John Campbell

John Campbell has started 2 posts and replied 4 times.

Post: LLC vs Umbrella Insurance vs Other Options

Post: LLC vs Umbrella Insurance vs Other Options

Post: Steps to Turn Primary into Rental

Post: Steps to Turn Primary into Rental