newbie seeks advice

[lkc15507]

What is the name of your state? MO

I have a SFH that was my personal residence for 8 yrs that I now need to rent or sell. Selling is unattactive because of the national economic state (I have no desire to lose my equity in a shaky money market etc etc). I have equity in the home, however it needs a rehab. If I rehab too much, I am in a negative situation which makes renting seem a likely alternative. But, I am a female working person, not a professional landlord. I am not seeking to turn the property into a cash flow profit, only preserve and maximize my equity / investment. I have visited this site and others frequently over a couple of months and I have purchased and read a landlord manual. However, the more I read, the more questions I seem to have. The property is .75 mi from my current residence.

In general, 1.) am I nuts to consider renting? 2.) where might I find good state specific guidance that is user friendly, (reading MO statutes / legalese gives me a headache - I'm in the medical, not legal profession). 3.) can private Joe, me, obtain credit reports etc. 4.) what rehabs should one do? The house is older, but sound. It mostly needs cosmetics, but which cosmetics are equitable? ie interior paint, carpet, replace sticky old windows (again, sound, but not new).....

U get my idea..... If it helps, this is a small community of about 10,000 population with a nearby (10-15 mi away) larger urban area that supports a large part of the outlying area. Rentals and sales are both assets in these outlying areas.

 

[abezon]

1. Not at all. Renting is a way to get a string of strangers to buy you a house.

2. Librarians are the deities of information. Ask for help with a friendly smile and they will bend over backwards to find you the perfect book. You can also see if there is a landlord association nearby.

3. Yes you can get credit reports. There are professional tenant screening companies out there who will run credit/criminal background checks, check references & job history, talk to old landlords, etc. There's a fee for their services -- just make it the application fee. (You'll have to pay the join up fee yourself.)

4. Anything that raises the market value of your house increases your equity. However, only structural changes can be added to your basis and depreciated. New windows would be depreciable. New carpet/paint is just maintenance and is expensed the year you do it. Renters are notoriously hard on carpets, so don't bother replacing them with the nice stuff you'd want to live on. Either just clean them really well or buy cheap carpet expecting to replace it in 5 years. Repairs done now are not rental expenses. Repairs that are necessary before you can rent the place are rental expenses. Repairs done after you start renting the place are rental expenses.


You need to collect enough rent to cover your mortgage & taxes. The depreciation you take will then give you a "loss" for tax purposes, which saves you taxes.

Where are you going to live? It doesn't make much sense to rent out your house if you're paying rent elsewhere, unless your rent is considerably lower than what you're collecting.

 

[lkc15507]

Abezon:

Thank you so much for your reply. I must admit that I feel a little silly that something as simple as a library had not occured to me! In answer to your question about where I am living, I am living at my childhood home. My mother, widowed, age 75, purchased a home in town as it was becoming difficult for her to maintain an 80-acre property with a two-story house. Her father owned it and sold it to my parents over 50 years ago. The community is growing and the property sits on the city limits. We are "speculating" a significant increase in value over the next few years. It is her desire to retain the property and be able to turn over ownership to myself and my sister. That was the reason for my moving from my own home.

Again, thank you for your reply. The info on repairs / maintenance / taxes is particularly helpful. Have a great weekend! lkc15507