All Forum Posts by: John Suralik

I'm curious to see what from seasoned pros have to say about adapting during this cycle change as well. Did experienced buy and hold guys sell any part of their portfolio in 2004-2006, or hold it and weather the storm? 

 There are definitely markets where buying retail and renting may work and it all depends on the exact property and situation, but I've seen people take it off the noggin renting their primary home.  

@Steve Vaughan Yeah, my first line was confusing. I totally agree with you about house hacking: lowering your personal housing costs is the goal.  What I wanted to get at was the dangers of renting out a primary residence that was purchased at retail and not purchased with enough meat on the bone. In my friend's case, he literally paid 10% of his home's value to rent it out for one year. He did have a few months of vacancy, some HVAC issues, but nothing too out of the ordinary.  When he was living there, the costs wasn't a concern because he liked living there and his goals were not to make money on the home.  

@Jeff Cox Yeah, definitely. I'd love the see the math on renting out a house that was purchased at retail. Maybe a chart over 30 years. In my friend's case, it seems like he would have lost a few hundred thousand over 30 years. 

@Nathan Gesner I only have two rentals and haven't ran into the cat problem yet, but thanks for the advise. 

I know there is a lot of discussion on house hacking on BP and it can be a great strategy, but renting out a house that was purchased as a primary residence is a good way to go broke. I've recently gotten a phone call from a good friend that motivated me to write this post. He called to give me his condolences for me being a part-time landlord. "I don't know how you do it. I'm putting my house up for sale." His call came after 18 months of renting out a house that started out as his primary residence. He went on to tell me that renting out his house costed him $19,000 last year. "The rent was covering the mortgage, but with taxes, insurance, and upkeep I'm going broke." he said. Some one else told me this week that their primary house would cash flow because the rent, insurance, and taxes came to $1200 and it would rent for $1500. I wanted to hug them and tell them it would be alright, but I'd be lying. 

I thought about it, and I've seen this time and time again with people trying to get started in real estate investing. Renting a house that loses money every month is like starting a business and selling goods for less than you buy them for. People hear about making money in real estate and they decide to rent their once primary residence out when the time comes that they need to move. The problem is that the investment was never purchased with renting as the endgame, so the house doesn't cash flow. There isn't enough meat on the bone to cover capital expenditures, repairs, property management, HOA fees, and other costs. I'm curious what kind of honest experiences BP members have to share with renting out their primary residences.

I would have to echo @Walter Key's question. I am planning on doing a HELOC this spring, and using it to buy a 4th buy and hold investment, but that is the investment strategy that I feel most comfortable with for my goals, skill sets, and where I am in life. I have a career out of real estate that I love. Buy and hold fits into that my life nicely.

Also, I don't like the idea of paying all the seller's cost to liquify my properties right now. I'd rather pull out equity and have someone else pay off the note. Having said that, I really like the investments that I have right now. They are low maintenance, in goo neighborhoods, and cash flow nicely. 

My CPA has me writing off lawn maintenance, travel back and fourth to the house (I think it is .50 a mile from my primary) and some other smaller deductions. However, I think most of the tax benefit is found in the depreciation. If you had 20 of the same rentals, the first $80,000 in income is written off in depreciation. When scaling depreciation tax break it becomes substantial.  

@Mark Creason And as Mark stated hopefully depreciation is only on paper. If you you are factoring in expenses such as maintenance and capital expenditures, so your property is being kept up, you are doing your part to fend off depreciation.  

@Angie Jordan Thank you for the post. I told the tenant that I would have to get back to them, then posted it on BP to get some direction. I can tell it's an emotionally charged situation for them and they want me to act as the divorce lawyer and "grant" them the lease, which is obviously illegal. 

@Sarnen SteinbarthI've been told that there will be a restraining order on one of the tenants because he/she wouldn't leave. I did find where all parties need to be consensual, but this is new territory for me. I would be eternally grateful for information on state laws. 

Two months into a lease, the couple renting the home is separated and have starting the process to get a divorce. One of the tenants want me to reissue a lease without the other person. Both individuals have good paying jobs and have been dependable dependable and clean tenants. What is your experience with changing a lease? What do laws do I need to be mindful of? 

Two months into a lease, the couple renting the home is separated and have starting the process to get a divorce. One of the tenants want me to reissue a lease without the other person. Both individuals have good paying jobs and have been dependable dependable and clean tenants. What is your experience with changing a lease? What do laws do I need to be mindful of?