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05-28-2019, 05:39 AM
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#85
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Senior Member
Join Date: Nov 2015
Location: Myrtle Beach, SC
Posts: 196
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Never
Go talk to a trusted CPA. If you divert money from an appreciable asset (real estate) to a depreciating asset (cars, boats, RVs), how much of your hard earned equity will you give away! Pay cash for the toys, they are NOT investments.
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05-28-2019, 06:38 PM
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#86
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Member
Join Date: Oct 2013
Location: lake charles, oak grove, La
Posts: 42
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taxes
the taxes on property are on net income; sales taxes don't apply.
if u keep the house, it would be hard for me to do but i would consider borrowing against it and use the money the way i wanted. your interest, taxes, and repairs are deductible and you can still take the standard deduction on urself.
what got me into the landlord business was my fear that the house that i was buying might be more than i could afford. in ur case, if full timing doesn't work out, u still have ur home.
my houses would stay vacant about 2 weeks between renters. that was usually when i would repaint. my renters averaged staying about 5 years. one stayed 2 mos and one stayed 16 yrs. i never showed property while it was rented.
eviction can be different from city to city. here, if they are a day late, u can start eviction. first i would send a certified letter. at 10 working days, i filed with the court. they would give them 10 working days to leave or appear in court. once in court, they gave them until noon the next day.
it isn't as horrible as most would think. just be involved in inspections and keep enough in reserve that u can cover the expenses for 3 mos. it is a business and has to be treated that way. like a business, it owns u; u dont own it.
to get an idea about taxes, get irs pub 17 and read the part about rental property.
my decision to get out was based on my age.
there is another option, u can sell on a contract, get a down payment and collect payments like an owner finance but the property doesn't go over until the contract is satisfied. i worked with a guy that swore by them but i know very little about them.
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05-28-2019, 08:42 PM
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#87
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Junior Member
Join Date: Jan 2019
Posts: 23
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I can't recomend it either.
The damage is one thing.
The lost rent is another.
Then there are taxes, insurance and maintenance..
And worst is that renter that seemed OK but let her friend move in and then got mad at the friend and she moved out and the friend then has possession and you get to go to court to eventually remove him. While he removes everything of value. Sometimes it can be very frustrating and very expensive to be a landlord.
After learning all the things not to do the hard way, I have 4 rentals that haven't given me any trouble for some years now.. But they need to be painted and they need new roofs and the lights switches break and the toilets leak and renters don't do any of that themselves.
Many people are renters because they couldn't be an owner for one reason or many others.
I would get 1st and last and a very large security deposit. More than the renter can afford to lose. Don't be their friend or do them favors. You'll regret it.
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05-28-2019, 09:58 PM
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#88
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Member
Join Date: Jun 2017
Posts: 57
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Quote:
Originally Posted by paddler1954
Why not just sell the house, get a loan to buy the motorhome, bank the equity. This way you don't have renter whoas, if you find RVing is not your cup of tea, you have a nice tidy bank account to purchase another sticks & bricks.
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I would have to agree with this statement......
__________________
2003 Fleetwood Discovery 39S/ 3 slides
Now using a Toad
2014 GMC Sierra All Terrain 4x4
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05-28-2019, 10:41 PM
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#89
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Member
Join Date: Jun 2017
Posts: 96
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I see someone from Louisiana said that sales tax does not apply, so I guess it is a by state thing. Here in Florida, you had better collect tax and turn it over to the state. I had gotten smart and had quit being a landlord, but after several years of bliss-free, renter-free life, I rented out some space in my warehouse to my son's business for only 3 months and I had forgotten about sales tax. About 2 years later, long after I wasn't renting space out to him anymore, sure enough, the state came knocking. Fortunately I had only collected about $4,000 in rent, so it was no big deal. But, had I been renting space all of that time, it would have been a much bigger deal. So, you had better look into your state's laws before you collect rent.
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05-29-2019, 02:58 PM
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#90
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Registered User
KZ RV Club
Join Date: Sep 2015
Location: Elephant Butte, NM
Posts: 1,197
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Quote:
Originally Posted by jaz
the taxes on property are on net income; sales taxes don't apply.
if u keep the house, it would be hard for me to do but i would consider borrowing against it and use the money the way i wanted. your interest, taxes, and repairs are deductible and you can still take the standard deduction on urself.
what got me into the landlord business was my fear that the house that i was buying might be more than i could afford. in ur case, if full timing doesn't work out, u still have ur home.
my houses would stay vacant about 2 weeks between renters. that was usually when i would repaint. my renters averaged staying about 5 years. one stayed 2 mos and one stayed 16 yrs. i never showed property while it was rented.
eviction can be different from city to city. here, if they are a day late, u can start eviction. first i would send a certified letter. at 10 working days, i filed with the court. they would give them 10 working days to leave or appear in court. once in court, they gave them until noon the next day.
it isn't as horrible as most would think. just be involved in inspections and keep enough in reserve that u can cover the expenses for 3 mos. it is a business and has to be treated that way. like a business, it owns u; u dont own it.
to get an idea about taxes, get irs pub 17 and read the part about rental property.
my decision to get out was based on my age.
there is another option, u can sell on a contract, get a down payment and collect payments like an owner finance but the property doesn't go over until the contract is satisfied. i worked with a guy that swore by them but i know very little about them.
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and there in lays the problem, I can guarantee it is not like that in WA or NM where I have had rentals. Like I have said: look up land load tenant act for YOUR state, it's not always easy the hoops YOU need to do for eviction. There are laws there that protect both side. If you plan on renting you had better know them or have an attorney on retainer.
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05-30-2019, 06:01 AM
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#91
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Member
Join Date: Oct 2016
Posts: 98
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Uncle Sam and cousin county !
I would have to agree with most of what has been mentioned above. We had a few rentals with both good and bad experiences. The thing not mentioned is that as soon as it becomes “income property” an not your primary residence the principal amount of the loan will be deprecated over , around 26 years. So if your pay off is anything less you will owe more income tax than your actual income. Got to love that tax code ! Additionally in our state property taxes go up a ton when it’s a rental. Insurance too ! Just sell it. That’s what we did. Had the coach for 2 years, took a beating on sales tax but in the end a better way to go. Good luck, keep your dream alive !
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05-30-2019, 06:55 PM
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#92
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Senior Member
Damon Owners Club
Join Date: Jun 2017
Posts: 525
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Why would you make such a big investment on a MH to live in through the week and only use to travel on the weekends when you have a perfectly good house to live in? How far are you planning on going on weekends?
A nice Class C may be a better fit, and those can be had used for under 30k. Live in the house and use the MH on weekends.
Being a landlord is a full time job, and it doesnt pay well. In fact you can probably make more money working part time at a box store........
Ive owned rentals and unless you have a large positive cash flow and/or the skills to do repair and maintenance work yourself, you will always be on a shoestring budget, sweating to break even. When you shift your home to a rental property, home owners insurance goes up and there are tax implications if you decide to sell.
IMO the better scenario would be to downsize into a less expensive home and/or relocate to a lower cost of living area?
In addition to the purchase price, how much is storage, insurance, maintenance, taxes and operating expenses going to run you per month?
2 years ago we were gungho to buy a MH and start traveling. We soon realized that we were 4 years away from that goal based on our age and financial situation. So we have been spending this time, reading, learning, looking and planning.
We decided that our number one priority was that the MH would have zero financial impact on our ability to keep our home and pay our bills if something catastrophic happened.
I enjoy these threads, they are thought provoking.
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06-01-2019, 09:31 AM
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#93
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Member
Join Date: Oct 2013
Location: lake charles, oak grove, La
Posts: 42
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if u go the rental route, the house becomes theirs as far as u walking in. cant do it w/o permission or a very good reason. should they leave in the middle of the night (no notice, no key return), it is still their residence. to get access, u will need to go thru the eviction process.
if u sell the house, keep it, borrow; when u buy the motor home, ur investing in a depreciating item. if u opt to keep the house and buy the motor home, at least u still have the appreciable asset.
the 26 years mentioned above is on the property and it is based on your basis. the depreciation, taxes, loan interest, repairs are used to reduce the income for tax purposes. when u sell, the difference between what u sell for and what u have depreciated the property to becomes taxable as a capitol gain or loss. points on a loan are taken over the life of the loan.
if u opt to sell instead of turning it into rental property, u may be able to avoid paying federal taxes on the sale. this could be an advantage over turning it into rental; especially if only rent for a few years.
if u are unable to show a profit w/o the depreciation, don't do it. (u will still need to depreciate it though).
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06-01-2019, 05:33 PM
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#94
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Member
Join Date: Jun 2018
Posts: 63
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Property Management Company
I live in California. I tell EVERYONE who is thinking about selling.... Don't. Rent it out!
A previous company I worked for was purchased by a mobile telecom entrepreneur, who's management teamwere from West Des Moines. ALL of them.
Guess what? They moved the company to West Des Moines. So everyone that wanted to stay with the company moved. MOST sold their homes and moved. I told them all if you sell... you won't be able to afford to come back. All were asked to take a pay cut within a year.
Keep your house and hire a property management company to... manage it. You'll probably need a cushion of cash in the bank for the dry times (no renters) but you really don't have to worry about the day to day stuff. Once you get your first rental going, you'll be ready to invest in another. PS: Insurance!
So Go For It! You can always move back.
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06-02-2019, 04:16 PM
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#95
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Registered User
KZ RV Club
Join Date: Sep 2015
Location: Elephant Butte, NM
Posts: 1,197
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Quote:
Originally Posted by Stannman
I live in California. I tell EVERYONE who is thinking about selling.... Don't. Rent it out!
A previous company I worked for was purchased by a mobile telecom entrepreneur, who's management teamwere from West Des Moines. ALL of them.
Guess what? They moved the company to West Des Moines. So everyone that wanted to stay with the company moved. MOST sold their homes and moved. I told them all if you sell... you won't be able to afford to come back. All were asked to take a pay cut within a year.
Keep your house and hire a property management company to... manage it. You'll probably need a cushion of cash in the bank for the dry times (no renters) but you really don't have to worry about the day to day stuff. Once you get your first rental going, you'll be ready to invest in another. PS: Insurance!
So Go For It! You can always move back.
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Where absolutely everything is over priced, 4.29 a gallon for diesel when it's 2.64 across the state line? California's a country of it's own.
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06-06-2019, 05:21 PM
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#96
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Senior Member
Join Date: Apr 2018
Posts: 634
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You're right....you didn't think it through. Taking out a loan on your equity for a item that will take a huge depreciation as soon as you title it? No way! That is just throwing money away.
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