Need info on purchasing a home to be rented out.

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  #1  
Old 02-13-2011, 11:32 PM
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california dreamer california dreamer is offline
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Default Need info on purchasing a home to be rented out.

Does anyone have an idea of where I could get a rough expense/income analysis example of purchasing a home for rent in TV? We may go the route of purchasing a smaller home and renting it out to other people for a couple of years at the most. Don't expect to get rich, just want to make sure we don't get in over our heads.
Would need to know costs of keeping utilities on, say for a 1200 sq ft home.
How about some of you out there that are homeowners of TV and rent your home out to others?
A big thank you for your help!
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Old 02-14-2011, 02:55 AM
RealJudy RealJudy is offline
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I have a patio villa that I purchased several years ago as an investment. During season, I get $2700 w/o a golf cart or $3000 with a golf cart, per month. Out of season, I get $1300 per month and will rent it on a weekly basis (no less than a week). For long term, I rent it for $1100 per month. In all cases, I pay utilities to keep from changing them.
You can expect utilities to be about $80 month. You can shut down cable and put phone on vacation while not rented; otherwise, those will run about $45 and $35 respectively. Cleaning services between renters will be about $50. Water, sewer, and garbage will be about $70 or less when not occupied.
  #3  
Old 02-14-2011, 05:41 AM
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l2ridehd l2ridehd is offline
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I think the numbers from RealJudy are low. I have two rentals, a ranch and a designer. I set aside about $800 a month for everything on each home. That includes most every expense, cable, gas, electric, lawn, shrubs, home washing, phone, repairs, sprinkler adjustments, home watch, ads, cleaning and a few things I missed. I average about 7 months rented with an income that exceeds the expenses and covers about 50% of the mortgage. So you do not break even. In 2010 for the designer home actuals were $721 a month for all expenses.

Unless you are doing it to have a place to use when not rented and you believe real estate is a good value right now so building equity will provide a future return, don't do it. I lose about $500 a month on each property. However I am paying down a mortgage about $300 a month on each property. Between income tax advantages and equity build I still lose a small amount each month. My bet is that property values will improve in a few years and far exceed that loss.

Also when I move there full time I will reduce the expenses by doing a lot of the monthly work myself and then cash flow and equity build less taxes will be positive.
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Old 02-14-2011, 12:59 PM
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L2ridehd,

Thanks for the thoughtful assessment of costs. Your ideas reflect our reasons for purchasing a new home now, instead of a resale in a couple of years when we are ready to move permanently.

On Wednesday we are closing on a Designer Jasmine 3 in Pennecamp. By the end of the month it will be all outfitted for rental purposes. We are already Floridians, so we are hoping to rent out the new home as much as possible. Hopefully, when we are ready to move in, our North Palm Beach condo will have gotten some of its lost value back.
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Old 02-14-2011, 02:51 PM
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TrudyM TrudyM is offline
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Default More figures

I am wondering if the number of months you can keep it rented might be very different from a patio home to a designer. When I look at the rental sites it seems there are a lot of patio homes not rented for more than the three top months.
We were thinking of doing the same thing buy now and rent however the unknown variables, (how much the value will actually increase, the economy etc.) and the added stress of a second property to manage made us decide not to do it. If you buy something you wouldn’t be comfortable living in then you have the real estate commission and sales expense of trading up to add into your calculations and when I did that It was too iffy for me. But here are some of the numbers I came up with and they do work if you buy what you really want and if nothing goes wacky in the world.
Here is what I came up with on the after tax cost of the mortgage if that’s helpful.
We were looking at a courtyard villa at the minimal as I was afraid the patios wouldn’t stay rented so for example sake I used a $175,000 Beauregard. So if 20% down plus closing costs a Mortgage would be $140 thou. I used a marginal tax rate (the rate on the last dollar you earn ) of 25% as we are both working currently and a mortgage interest rate of 4.5% to figure the real cost after taking in income tax deductions into account.
Cost of mortgage per thousand after tax is 4.108769 per month.
Sumpter county tax mil rate 14.4368 or per thousand after tax is 0.9023 per month.
So that would be $575.23 for the Mortgage and $157.90 for the taxes (Not including bond) so a total of $733.13 a month, If you use L2ridehd’s estimate of the mortgage not being covered that would be a negative of $3451.37 a year at a minimal. A designer (what we really want ) is about 50 thousand more or $250.55 more a month. Or if 50% covered an additional $1,503.32 negative.
So a designer at $225,000 would have a negative cash flow of $9,909.37 over two years so it would hve to have increased to $234,909.37 or 2.2% a year which is very possible.
The paid down principal that is included in the negative cash flow is 1.3169 per thousand per month if you want to adjust for that I didn't as I wouldn't get the money back just a paydown on the future, I also did not calculate the value of getting a low rate loan now as in retirement we will pay off our loans.
These are kind of rough and may not be accurate just what I came up with. Sorry for the run on post.
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Old 02-14-2011, 04:51 PM
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Good additional data Trudy. I do not plan to live in either home as we already have our retirement home also in TV. My rational was at the time the stock market was not doing so well, real estate pricing and mortgage interest was at an all time low, so I felt buying real estate was a better place to invest then the stock market. So far it has worked out well. I have been very lucky with renting by getting someone for 6 months in my first home every year as that eliminates the Florida state tax requirement. I now have to address that with the new home. After I retire, I plan to use these properties to provide a day a week work for me and some extra income as I pay down the mortgage. And when we get to a point they are to much to handle, will sell them for the equity.

I have even been studying how to be successful doing a FSBO and believe I have that down to a working plan as well. Getting ready to test it for a friend of ours.
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Old 02-14-2011, 07:08 PM
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Default thanks!

oh my gosh! thanks for the info. I was hoping to find people who are actually renting out their properties so thanks for the information.
We may just pay cash for a home in TV (we don't like debt). So in that case, with all the utilities, HOA, taxes, insurance, rental management fees, etc; is there a chance we can still come out even or better than even??? I'm thinking of a home around $150k or less.
And so we would have to have the home rented for 6 mos in order to avoid high taxes, is that right? I am hoping we would use it ourselves, during low season, for 2-4 wks in the year.
I am looking at all options to how we can be home owners in TV. From just dreaming to making it a reality.
TOTV is the best!
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Old 02-14-2011, 07:29 PM
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Quote:
Originally Posted by california dreamer View Post
oh my gosh! thanks for the info. I was hoping to find people who are actually renting out their properties so thanks for the information.
We may just pay cash for a home in TV (we don't like debt). So in that case, with all the utilities, HOA, taxes, insurance, rental management fees, etc; is there a chance we can still come out even or better than even??? I'm thinking of a home around $150k or less.
And so we would have to have the home rented for 6 mos in order to avoid high taxes, is that right? I am hoping we would use it ourselves, during low season, for 2-4 wks in the year.
I am looking at all options to how we can be home owners in TV. From just dreaming to making it a reality.
TOTV is the best!
When I bought my patio villa I was thinking of renting out during high season. Wife and I decided being landlords from a distance and the fact that we wanted also to be there in High Season. For us it was not worth renting it out. Being Honest, the use of the villa and the get away has been worth the loss of rental income. Just my thoughts
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Old 02-14-2011, 09:40 PM
villagerjack villagerjack is offline
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Where do you advertise to obtain tenants? ****? or ??
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Old 02-14-2011, 10:02 PM
hdh1470 hdh1470 is offline
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Speaking to rental agents I have met 3 months a year and maybe 4 is what you can expect.People expect t0 rent for more then that but on average this is all you should expect.And with the economy being what it is 3 months might be tuff.
  #11  
Old 02-15-2011, 10:08 AM
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LI SNOWBIRD LI SNOWBIRD is offline
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Default Villa renting

Quote:
Originally Posted by nkrifats View Post
When I bought my patio villa I was thinking of renting out during high season. Wife and I decided being landlords from a distance and the fact that we wanted also to be there in High Season. For us it was not worth renting it out. Being Honest, the use of the villa and the get away has been worth the loss of rental income. Just my thoughts
Bought a villa in Tall Trees and were snowflakes a few years now snowbirds never considered renting our HOME.
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Old 03-18-2011, 03:49 PM
inda50 inda50 is offline
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'' I have been very lucky with renting by getting someone for 6 months in my first home every year as that eliminates the Florida state tax requirement.''

Please tell me how this works,
Thanks
  #13  
Old 03-18-2011, 04:00 PM
ladydoc ladydoc is offline
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I thought Florida did not have a state income tax?
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Old 03-18-2011, 04:11 PM
Ohiogirl Ohiogirl is offline
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Florida and whatever county you are in (Sumter, Lake or Marion) have a hotel tax - in Sumter the combined tax is 9%. You file it monthly (online) if the rental period is less than 6 mos. I rented my CYV out for over 4 years, averaging 6-8 mos every year, including some summer months/weeks.

I used vacationrentals.com and also thevillages4rent.com the last year. A friend who bought 2 years ago (both of us needed tax deductions and looked on our villas as future homes) says she is now getting the vast majority of her inquiries from thevillages4rent.com. I think it is becoming well known and probably pops up in searches. Not sure it was out there when I started renting. I got inquiries from both. Also repeat tenants.

Do not rent Feb. or March until you have January rented, or included. You could rent March by itself about 100 times. Having a golf cart was the key to renting it more than just Jan-Feb-March. Also high speed wi-fi internet. I didn't the first year and I rented it only about 5 mos.
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Old 03-18-2011, 04:25 PM
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We own a "Gardenia" designer home (2000 sq ft). As landlords who reserve the month of January for ourselves our monthly expenses for lawn, golf cart ins, homeowners, management (Villagers Homewatch), cable/phone/internet, electricity, gas, water, sewer, irrigation, trash, amenities fees, and RE taxes is approx. $1000. This does not include bond or mortgage payments. Last year we rented all months except June, August, and Sept. This year looks like it will be about the same (too early to say for sure). We already have Feb & March 2012 rented. Expenses above did not include cleaning fee, but we charge each tenant for that in addition to their rent.
Hope this info helps you, feel free request more info from us.
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