Building A New House. Is Keeping The Current House As A Rental A Good Idea?

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#132351 - 02/20/07 07:53 PM Building A New House. Is Keeping The Current House As A Rental A Good Idea?
P.A. P.A. Planeteer Registered: 09/14/04 Posts: 5181 Loc: Portland, OR	I inherited an acre. I'm thinking of building a house. * My question is about my current house. I'm thinking about keeping it and renting it out. I should be able to get a couple of hundred dollars more a month than the house payment to cover maintenance. The house is in pretty good shape (no obvious major repairs currently needed). Is this a good idea? Can I (legally) drop in unannounced and ask to come in (to see if they're ruining the place)? My wife thinks it will be a hassle. I think it "could" be a great investment with the right tenants. (How hard is it to find good tenants who don't make meth?) * Any comments from experienced rental property owners welcome!
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#132352 - 02/20/07 07:59 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
vvvm vvvm Planeteer Registered: 07/29/05 Posts: 19598 Loc: Clark & Washington	Not knowin' the market up there, I cain' sez alot axept az a long-tine renter it'z good to know yer tenuntz haz money. So whut'z my point? Well, mebbe ya shood considder sum "good tenants who do make meth." _________________________ VSPlanutt Arteeste Toonajz . Sum mo' choonz. Da Blog. Spankin' trolls and makin' 'em cry since the last century.
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#132353 - 02/20/07 08:00 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
T57Strat T57Strat Artist #40 Planeteer Registered: 12/31/99 Posts: 18923 Loc: Keller, TX	It's a nightmare and will hurt the property value unless you have really good tenants. Good tenants can usually buy their own house, thus they are hard to find. Sell the house and invest the profits in a mutual fund. Less hassle, more return :p
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#132354 - 02/20/07 08:06 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
glensimonds glensimonds Planeteer Registered: 12/14/02 Posts: 19708 Loc: Brooklyn Park, MN	I agree good tennants are very hard to find and also not so easy to evict na since they do not own they properity are less likely to take good care of it, also u will be responsibile for all repairs, on the other hand if you want monthly income u could do a contract for deed, the renters would then be responsible for all repairs, you would have a monthly income, and more than likely end up owning the properity anyways _________________________ Let's have another beer $\:\)$ VS PLANET RADIO
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#132355 - 02/20/07 08:16 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
P.A. P.A. Planeteer Registered: 09/14/04 Posts: 5181 Loc: Portland, OR	I realize this all hinges on good/bad tenants. I bought this house in 1994 for $80,000. It's currently worth $300,000. It's hard to walk away from that kind of appreciation, especially if someone else (the renters) are gonna buy it for me. I'm looking for success stories here $\:D$ I'm currently in the (thinkin' about it stage).
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#132356 - 02/20/07 08:36 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Doug C Doug C Planeteer/Artist # 78 Planeteer Registered: 01/06/03 Posts: 10922 Loc: Clayton, California	If you can swing it, keep it. It's a great asset that will most likely keep appreciating. And don't forget the tax write offs! _________________________ Doug C
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#132357 - 02/20/07 08:43 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Vito1 Vito1 Planeteer Registered: 07/29/02 Posts: 7944 Loc: Florida, USA	Depends on your tax bracket and tolerance to abuse to your property. (No one will treat it good after the first month unless you are fortunate enough to rent it to an elderly couple) and Are you a handy man, and What would be your overall benefit to taking the profits and putting it into a diversified Roth IRA say over the next 10 to 20 years? and NO, you may NOT walk in unanouced... Read your "Tenents Bill of rights" for your state _________________________ Uploaded with ImageShack.us VSPR Rocks!!! Blessings to You ALL.
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#132358 - 02/20/07 08:55 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
paulb paulb Planeteer Registered: 06/25/03 Posts: 23691 Loc: Rural Kansas. Sometimes in Oz.	I would certainly consider options. $300k is a considerable investment opportunity. Is it worth the combination of that, as well as on-going property management, as well as risk involved in land lording? I have a few houses that I rent, but I'm pretty sick of it. And, again, if you actually net $300k, you have a lot of options. I would weight all of these factors out carefully, then decide from there.
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#132359 - 02/20/07 09:04 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Wild Wild Planeteer Registered: 09/17/02 Posts: 3849	PA, if your current house is in Portland, you might want to keep it for awhile. Read about the market, talk to knowledgeable people. My guess is that Portland still has considerable upside potential. It certainly makes sense to hold on to it if it is going to appreciate by $10K, or $20K or $40K a year. My Northwest house has been a great investment, I do nothing and it keeps appreciating. So, I guess I would say, try to assess whether it can be expected to appreciate. My guess is that it will, because Seattle, Salem, Eugene, Portland, Tacoma still have a lot of population pressure on them, Asians keep coming to the west coast in droves, escapees from the horrors of California cities and Midwest and East Coast cities keep coming here. Do some research, make an informed decision. If you are going to rent, really check out your potential tenants first, investigate their credit and check with their past landlords.
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#132360 - 02/20/07 09:13 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Memphis Monroe Memphis Monroe Loquacious Planeteer Registered: 05/12/02 Posts: 30423 Loc: Pensacola, FL	PA, I don’t currently own any property myself, but my family—mom and dad—own quite a bit (a fairly substantial amount of both residential and commercial properties throughout Northwest FL). Much of it is or was at onetime rental property. I’ll tell you what they’re experience has been; but take it for what it’s worth. Duplex and apartment type units are the best and most profitable to rent, but they also require the most attention. Most of the time residential property is a hassle to rent, and unless you’re making a substantial profit it’s probably not worth your time. . . remember, time is money. “The right tenants” is the operative term, but even with “the right tenant” there are still many costs that you’re probably not considering. Things go wrong with older houses, and I can tell you that before too long your regular upkeep for the tenants can easily exceed an annual $1,200 escrow-type of account for upkeep and repairs. But there are many considerations to take into account in your decision. What is the property and housing market like in your area? Also consider that generally speaking people—even otherwise good and decent people—will not always respect your property. That’s certainly been my family’s experience anyway, and often you’ll end up taking a hosing in repairs long after the tenants have left. If it were me I’d probably just sell my house if I thought I could get out from under it with a little profit; however, if you can foresee a significant spike in housing prices over the next few years then you might consider holding on to it. On the other hand, I don’t see that happening in too many places in the country. I think prices will continue to decline for a while. If you are going to rent then do your research, and the know the laws in your state. For example, I believe that every state requires you to give a certain amount of notice before showing up at the tenant’s residence. While the tenant is renting from you under an agreed lease or even a verbal understanding he/she maintains rights that are equivalent to that of owner’s rights. In other words, they own the right to privacy, along with other things. So, be mindful and respectful of that. Treat them the way that you’d want to be treated, and remember that in most states you have to provide at least a 30 day notice before eviction—some may be a little more or less but 30 days is the average I believe. Good luck, Chris _________________________ http://soundcloud.com/the-lost-keys-1
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#132361 - 02/20/07 09:21 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Memphis Monroe Memphis Monroe Loquacious Planeteer Registered: 05/12/02 Posts: 30423 Loc: Pensacola, FL	Just saw this: Quote: bought this house in 1994 for $80,000. It's currently worth $300,000. If you’re sure that you’re going to build this other house then I say SELL. Get out now while you still can. A year from now I doubt that your house will be worth that much.. . it’s a no-brainer to me PA. Cheers, Chris _________________________ http://soundcloud.com/the-lost-keys-1
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#132362 - 02/20/07 09:24 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Wild Wild Planeteer Registered: 09/17/02 Posts: 3849	Memphis, housing is not going to decline in the Pacific Northwest the way it is in many parts of the country. All that has happened in the so-called housing slowdown BushEconomicDisaster here, is instead of 15-20% annual appreciation in property prices as in the past, real property is instead appreciating now 5-12% a year. Look this up, PA, it's all on the Net. It would not be a smart financial decision for PA to walk away from a property that may gain $30,000 a year for the next couple of years. The appreciation on my property is the easiest money I have ever made, didn't lift a finger, just sat around, property appreciated phenomenally. And it is still doing it. P.A., if you are new at landlording, go to the Portland Library, or the law library in the Multnomah County Courthouse, and get a book on being a landlord, and landlord-tenant law, and read about your rights and duties and the experiences of others whose gone this route. It's not rocket science. As to how much upside potential your property still has, what is its square footage, what is the neighborhood like.
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#132363 - 02/20/07 09:38 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
theotherfredolsen theotherfredolsen Planeteer Registered: 09/23/00 Posts: 562 Loc: CT	What I would suggest is entirely based upon your local market conditions. 1. If your local market is like the national averages (meaning substantially down), now would not be a great time to sell. The risk/reward equation might be a little more balanced on the side of renting the property for a year or two while you wait and see if market conditions are going to improve and you don't end up selling too low. 2. On the other hand if the market is good where you are, then you might consider selling now. In either case, your construction costs on the new place ARE going to go over budget. Sorry, but that is just a given. So if you sell now, some of that money will get used to pay for building the new place and if you don't sell now, then you will have to suck some equity out of the old place to finish building the new house. I repeat --- YOUR CONSTRUCTION COSTS ON THE NEW PLACE ARE GOING TO GO OVER BUDGET
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#132364 - 02/20/07 09:50 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Memphis Monroe Memphis Monroe Loquacious Planeteer Registered: 05/12/02 Posts: 30423 Loc: Pensacola, FL	Quote: 7361 posted 02-20-2007 02:24 PM -------------------------------------------------------------------------------- Memphis, housing is not going to decline in the Pacific Northwest the way it is in many parts of the country. All that has happened in the so-called housing slowdown BushEconomicDisaster here, is instead of 15-20% annual appreciation in property prices as in the past, real property is instead appreciating now 5-12% a year. Look this up, PA, it's all on the Net. It would not be a smart financial decision for PA to walk away from a property that may gain $30,000 a year for the next couple of years. The appreciation on my property is the easiest money I have ever made, didn't lift a finger, just sat around, property appreciated phenomenally. And it is still doing it. Perhaps this is good advice, but it seems to be based on some iffy assumptions—that being that the Pacific Northwest’s housing market will maintain a general appreciation. The way I see it PA already has a $220,000 gross profit on his home. While the Northwest may or may not follow current market trends I just wouldn’t gamble given the generally unstable market right now. I’d take my profit and go, but that’s just me. Cheers, Chris _________________________ http://soundcloud.com/the-lost-keys-1
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#132365 - 02/20/07 09:59 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Vito1 Vito1 Planeteer Registered: 07/29/02 Posts: 7944 Loc: Florida, USA	While your roughing in your new house check out instaling this .. http://www.spacepak.com/ _________________________ Uploaded with ImageShack.us VSPR Rocks!!! Blessings to You ALL.
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#132366 - 02/20/07 10:32 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
White Rabbit White Rabbit Planeteer/Artist # 100 Planeteer Registered: 08/04/00 Posts: 3828 Loc: Born in Scotland, but live in ...	I think the biggest question should be can you afford to pay for both if the house is not renting? I think that's one of the first questions you should be asking. _________________________ It's all just tricks, there is no magic WR My live recordings
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#132367 - 02/20/07 10:34 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Brock Brock Planeteer Registered: 10/26/01 Posts: 682 Loc: california	Quote: Originally posted by P.A.: I bought this house in 1994 for $80,000. It's currently worth $300,000. If you lived in the house for 2 of the last 5 years (primary residence) you can deduct 250k of the capital gain, or 500k if you are married and file together. $220,000 profit tax free :clap:
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#132368 - 02/20/07 10:47 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
paulb paulb Planeteer Registered: 06/25/03 Posts: 23691 Loc: Rural Kansas. Sometimes in Oz.	Hell, if you are thinking retirement, just check what you average mutual fund will bring over 20 years. That's a LOT of money, and little to manage or risk.
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#132369 - 02/20/07 10:47 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
SteveW SteveW Steve White Planeteer Registered: 06/06/05 Posts: 18405 Loc: Rhode Island	Hi Get a good financial adviser and see what they say. Time would be the big one for me. Heat calls in the middle of the night really suck! I worked in the field taking care of houses and apartments and the call time involved is a big one. Get some pro advice and follow it. $\:\)$ Steve _________________________ Steve
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#132370 - 02/20/07 10:50 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Wild Wild Planeteer Registered: 09/17/02 Posts: 3849	Yes, Memphis, he already has over $200,000 profit on his house and if he waits another few years, he may have another $200,000 profit. The Northwest is not going to become undesirable just because real estate is tanking in the rest of the country. Here is part of what's happening. Just to the south, California sucks, it has 28 million people, it is crowded, expensive, crime ridden, large portions becoming non-English speaking, no one except the very rich would want to raise a family there. Real estate in CA is over the top, a million dollars won't buy crap in San Diego or San Francisco. So all these Californians keep coming up to the Northwest to get away from crime, crowds, ridiculous housing prices and all the crap and smog and pollution and ridiculous traffic of California, they want to live where they can afford a house and where their kids can be safely raised, and they keep bidding the housing prices up here. As long as there is population pressure --- meaning more people are incoming than outgoing --- real estate prices will go up. I am not making assumptions, I follow Northwest real estate. I've been watching the numbers and all. PA, I would say this, when regular houses in Seattle hit $300,000, I thought that was going to be the top of the market. Wrong. The equivalent of houses that are now valued at about $300,000 in Portland are now selling for $600,000 - $700,000 in Seattle. Portland is behind Seattle, but I suspect the houses in Portland will continue to appreciate until they parallel current Seattle prices. Talk to some Portland realtors, check out the data on sales and appreciation. Do some research, gather data, draw your own conclusions, and trust in your own intellligence and wisdom and judgment to make the right decision for you.
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#132371 - 02/20/07 11:27 PM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Memphis Monroe Memphis Monroe Loquacious Planeteer Registered: 05/12/02 Posts: 30423 Loc: Pensacola, FL	Quote: Yes, Memphis, he already has over $200,000 profit on his house and if he waits another few years, he may have another $200,000 profit. The Northwest is not going to become undesirable just because real estate is tanking in the rest of the country. Here's part of what is happening. California sucks, it has 28 million people, it is crowded, crime ridden, no one except the very rich would want to raise a family there. Real estate in CA is over the top, a million dollars won't buy crap in San Diego or San Francisco. So all these Californians keep coming up to the Northwest to get away from crime, crowds, ridiculous housing prices and all the crap and smog and pollution and ridiculous traffic of California, they want to live where they can affod a house and where their kids can be safely raised, and they keep bidding the housing prices up there. As long as there is population pressure --- meaning more people are incoming than outgoing --- real estate prices will go up. I am not making assumptions, I follow Northwest real estate. I've been watching the numbers and all. PA, I would say this, when regular houses in Seattle hit $300,000, I thought that was going to be the top of the market. Wrong. The equivalent of houses that are now valued at about $300,000 in Portland are now selling for $600,000 in Seattle. Portland is behind Seattle, but I suspect the houses in Portland will continue to appreciate until they parallel current Seattle prices. Talk to some Portland realtors, check out the data on sales and appreciation. I wouldn't only talk to realtors because they have a vested interest in hyping the market. I doubt that a realtor will ever tell you "the housing bubble is about to bust." I'd talk to realtors, but I'd also talk to a financial advisor. Wild, one thing I’ve learned thus far is that property is always going to depreciate and appreciate at given times. The entire housing market might crash tomorrow, but if you hold on to your property long enough it will come back up in value eventually. The question really is, "how long are you willing to hold on to it and at what cost?" The decision to sell or take the current market value is one that mitigates future market uncertainties and increasing costs—insurance, taxes, etc—against certainties (i.e., the fact that PA stands to gross $220,000 in profit if he sells now). Having said that, you may be 100% correct in your assessment of Northwestern housing market. I’m certainly no expert by any stretch, but I can say that those of us here in Northwest FL and lower AL are in a similar situation to that which you’ve described. In fact, the area that I’m from is the fastest growing county in FL, and one of the fastest growing areas in the U.S. A lot of folks flock up from south FL and down from the northern states to escape the same things you’ve described. In fact, this part of the country is comprised mostly of people who have recently migrated this way. One year ago my wife and I started looking into buying a home in this area. Prices were really inflated, but every realtor that we talked to said “prices aren’t going to go down” and they claimed this for many of the same reasons you have cited. Yet, a buddy of mine—a part time real-estate investor—encouraged us to hold off. I’m glad we did because housing prices have plummeted significantly over the past few months. The bubble has started to burst over here, and I suspect that it will there too and for much of the same reasons. If we had bought last year we'd be upside down in a mortgage. Nevertheless, I don’t think any of us are experts on this; therefore, I would agree with SteveW’s advice. I think PA should get a financial advisor to help him look at the situation. If he can afford the risk then it might be well worth it in the long run, as Wild has suggested. My initial thought is still, "a bird in the hand is better than two in the bush.". . At least in this case. mm _________________________ http://soundcloud.com/the-lost-keys-1
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#132372 - 02/21/07 12:07 AM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
P.A. P.A. Planeteer Registered: 09/14/04 Posts: 5181 Loc: Portland, OR	Great Info, Thanks!
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#132373 - 02/21/07 12:16 AM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Wild Wild Planeteer Registered: 09/17/02 Posts: 3849	Memphis, another thing that happens here is that everytime there is a sizeable earthquake in California, another couple hundred thousand of them scurry up to the Northwest. To CA, a couple of hundred thousand people is just a drop in the bucket, here those numbers put major pressure on the housing market. Portland is not only getting people coming in from CA and Asia, people who have gotten priced out of the Seattle housing market are moving to Portland. Memphis, the real estate bubble burst here already, the BushEnomicsDisaster already happened and the result of the bubble bursting means what I said earlier: Instead of 15-20% appreciation a year, real estate appreciation in the NW is now 5-12% a year. Like with any investment, PA needs to keep a close eye on things. I am betting NW real estate in not going to get any cheaper, au contraire.
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#132374 - 02/21/07 12:22 AM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Kenex Kenex Planeteer Registered: 06/06/03 Posts: 6198 Loc: Portland	PA I do not know much about property etc but a friend of mine here in Portland recently told me that if you have tenants staying in your property and they fail to pay the rent you will have a big problem trying to evict them legally. He said something to the effect that they could stay in your property for 3 months without paying the rent and without you being able to toss them out legally. I am not sure how true this is but I do trust the source as he owns properties and has renters. _________________________ I don't know..but I can't say!!
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#132375 - 02/21/07 12:46 AM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
lsmft lsmft Planeteer Registered: 05/17/06 Posts: 2534	Quote: Originally posted by Memphis Monroe: Just saw this: Quote: bought this house in 1994 for $80,000. It's currently worth $300,000. If you’re sure that you’re going to build this other house then I say SELL. Get out now while you still can. A year from now I doubt that your house will be worth that much.. . it’s a no-brainer to me PA. Cheers, Chris I agree - sell now. Values are going to be flat at best as the ARM's go to foreclosure. read this: http://articles.moneycentral.msn.com/Inv...eBeginning.aspx Many people are already or will soon be "upside down" on their mortgages. Consolidate your gain. _________________________ "When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a communist." Dom Helder Camara
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#132376 - 02/21/07 12:48 AM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
CLEAN CLEAN Planeteer Registered: 04/24/00 Posts: 9707 Loc: CA	P.A., I'm just curious - what kind of tax liability will you incur if you sell your current home? _________________________ Mark https://www.soundclick.com/artist/default.cfm?bandid=846651
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#132377 - 02/21/07 01:24 AM Re: Building A New House. Is Keeping The Current House As A Rental A Good Idea?
Chimp Chimp Planeteer Registered: 01/25/03 Posts: 13625 Loc: Overland Park	P.A. I am renting a house and have no problems. Good tenant tho. It is good to be diversified. If you have some 401K money et all then it might make sense. I personally am into leveraging on rentals (I could have paid cash but the rate of return is much higher on borrowed money). To really leverage ... You would have to take equity out and buy a few more houses with minimal down payment. Then if you have positive cash flow you are in good shape. It has not been a pain in the ass for me. BUT I do have very good tenants ...he is a medical student living on student loans and finishing his internship. They paid us the first 6 months of this years rent in advance. _________________________ Go to Junior\'s Flat Six Buy the CD HERE See a video about the band HERE VS Artist # 126
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