Investment Property 101 » rental property

How should I determain how much to rent my rental property out for.?

admin — Mon, 31 May 2010 13:51:24 +0000

I am looking to buy some rental property and trying to figure out how to determain what to rent them out for. How can I determain the rent cost of the rental property.

Get the classified ads from your local paper and circle the apt. for rent that sound like the ones you want to buy, then drive by and look at them. That gives you an idea of what the different quality apts. rent for in your area.

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If i purchase a rental property would i still qualify as a new home buyer?

admin — Wed, 26 May 2010 06:48:30 +0000

I am considering purchasing a rental property with a family member but i am worried i will not qualify for the new home buyer tax status.

No, investment property never does.

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What is the best way to refinance my rental property?

admin — Thu, 20 May 2010 00:07:35 +0000

We recently moved and because we were unable to sell our home, we decided to rent it. We were unable to refinance at the interest rate we wanted because it is now a rental property. We would like to lower our monthly payment, but have heard that many banks won’t give you a decent rate on a rental. Any ideas?

A previous answer said:
"Find a mortgage lender vice a mortgage broker – they will have more products and can find niche products suited to your needs."

This is the most ridiculous answer I have heard in a while. First of all, there is no lender or broker that will have any different programs on an investment property, it’s straight-forward, cut and dry. Whatever the par rate is on a primary residence, just add 1.75 points to the fees and be at 75% or under on loan to value. and that is the pricing for an investment property. It;s untrue that the rates are higher, it’s the discount points or fees that are higher.

There is also no way that a lender has more program options than a broker, that’s just plain wrong. A broker has multiple lenders at his/her disposal and they all offer different rates, programs/fees. Lender such as B of A has what B of A offers only, while any good broker has B of A as a wholesale investor along with 40-50 others. I really wish people on YA that don’t know what they are talking about would stop giving terrible advice.

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Should I buy a rental property or put more money down on my primary residence?

admin — Sun, 16 May 2010 08:00:34 +0000

I just sold my house in California (thankfully) and have about 150 grand to spend. I’m looking at moving into a new 125k house, but I’m thinking of getting a rental property and allow that to help offset my mortgage. Taxes are 2.7% here for real estate. I make about 100G’s a year, 42 and I live alone. Not sure about the hassle of rental property though.

I recommend you keep a small mortgage on your primary residence for the deductions. See an accountant for your other questions. It sounds like you have the right idea, though. Good luck..

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What % of rent do property managers of rental property on Nantucket typically take?

admin — Thu, 13 May 2010 00:20:33 +0000

If buying a rental/investment property on Nantucket Island, what should I budget for the property management fee to handle the rental of the house?

It depends on number of units in the building and projected turn over of tenants but usually 6%.

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What kind of Invetsment loans are available for Rental property?

admin — Tue, 11 May 2010 05:18:49 +0000

We are wanting to apply for a mortgage to purchase what will be our 2nd investment property. We currently own our home & have 1 rental property. However, we do not have the cash available for the required 10% down payment for an investment loan. Since the property is very nearby, my husband and I would be able to categorize it as a second home purchase for personal use. Our question is: If applied for as an investment property, are there 0 % down – type investment loans we could look at? (we are not wanting to use equity on the other properties…one has been used to that extent already for home improvements). If applied for as a 2nd home, what are the requirements for that type of loan?

They are different types of loans available out there. Most of them are dependant of you personal financial situation. The best way to really find out what is available to you is to stop by several mortgage places and evaluate what they have to offer

-J

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Is travel cost related to home improvement for a rental property deductible?

admin — Sat, 08 May 2010 07:41:21 +0000

I bought an apartment in 2007 as a rental property in a different state. The building is still being constructed and I have a loan on this property and am paying mortgage interest. In 2008, I traveled to this location to decide on customizations on the property (carpets, kitchen, and windows). Is my travel cost deductible? I am deducting the mortgage interest. Is this travel cost deductible? Which form should I file? Obviously, there is no rental income on this property.

Until the property is completed, advertised and available for rent, it is not reported on schedule E.

Until that time you can only deduct property taxes related to the building. You cannot deduct mortgage interest, travel, etc. All of the mortgage interest, travel, and other costs you incur are "capitalized" and added to your cost basis of the property. You care then allowed to depreciate this cost basis over 27.5 years beginning in the year you start to rent the apartment. Your travel costs using a mileage log and the standard mileage allowance can be added to the cost basis of the apartment.

So you do get a deduction, but it is spread out over many years after the apartment is being rented.

Richard K
Master Tax Advisor
Enrolled Agent

This advice is based upon my understanding of the tax law at the time it was written as it applies to the facts provided by you. See my profile for more information.

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What can we right off on our rental property in canada?

admin — Wed, 05 May 2010 18:00:33 +0000

We just purchased a second home that we are renting out. We are renovating the lower level as a second rental apartment. What can we write off on our taxes next year against this property? We live in Ontario, Canada. Can we right off garden supplies as well?

Landscaping expenses are deductible to the extent that they are not personal expenses. If you also live on the property, only the share of expense that applies to the rental part of the property is deductible.

See the complete list of allowable rental expenses on the CRA website here:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/bt/rprt/xpns/menu-eng.html

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What does it take to become a freelance rental property manager in Florida?

admin — Mon, 03 May 2010 19:56:32 +0000

hi! I want to become a freelance rental property manager on the Florida panhandle. Basically I will rent peoples’ condos and beach houses out for them, make sure they are clean, and arrange maintenance and things like that.
Does anyone know:
How/what percentage I get paid (ie 10% of the rental rate or cleaning fees, etc)?
Do I need any additional certificates (I have a BA in Bus Admin/Marketing)?
What laws go along with this?
Will the renter pay me directly then I pay the owner or vice-versa?
ANY INFO OR HELP WILL BE GREATLY APPRECIATED!
THANK YOU!

In Florida you need to have at least a sales associate license to rent out property for a year or more unless it is your own property. You cannot operate as a sales associate without being employed by a broker and cannot be paid by anyone but the broker. I’m not sure what the standard fee split between a property manager and broker is but that is always negotiable. I suggest you get your sales associate license and then speak with a few brokers in the area and see if any specialize in rentals. Sorry to rain on your parade but I think you will experience similar situations in other states.

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What are the implications of a lawsuit on a rental property?

admin — Sat, 01 May 2010 23:46:20 +0000

My parents own a rental house that they rent out. 2 years ago there was an old person who rented with younger family members. The old person fell down the stairs and was injured. That family is now suing my parents. The lawsuit will not be settled for at least another 2 years. If my parents try to sell the house before this is resolved, what are the implications for the new buyer of the property with respect to the lawsuit and with respect to the new buyer getting insurance. Will the lawsuit follow the house or follow my parents only? Will the new buyer be able to get insurance or will they face restrictions?

It stays with the people named in the case – your parents. The house isn’t a defendant, your parents are.

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