mctripat
10-16-2006, 06:53 PM
My husband and I have a rental problem/house we need help with. We have made a lot of bad decisions about our rental. Problem: we have a lot of personal debt due to not keeping house rented: making repairs, husband loosing job etc., health problems, time needed to drive to rental and back etc; plus we spent 25,000 renovating house from 1992 to 1997
Why was the house not rented? My husband had problems at his job. we found out he had MS in 1997(low energy level) Had lots of family problems, deaths, depression etc 2002 till 2005. We had to do the work ourselves. We could not find workers who would show up to do repairs. My depression is under control now.
Our biggest problem is our basis is too low. What can we do legally to change it? Putting in new windows, furnace etc does not help enough because they are depreciated over such a long time.. Our CPA added $5000 to our basis for improvements mentioned above. Our house is being depreciated at 25,000 a year or about 900 a year.
If we put the $25,000 on a home equity loan it would help a little. But we still have other problems. The house is 22 miles a way from our house 45 min each way there and back. The hardware stores are 30 min drive or more away should we need to buy something we forgot to bring.
The house is close to the university and tech school. It is hard to find responsible people under age 25. Families live around there too but, they are small lower income families.... what I mean is they can not afford to rent a decent house in a better neighborhood at $900. I guess the people have credit problems and are living on the edge. Some of the people are too transient making the crime rate higher. Others are 50ish and 60ish retired people living on a fixed income.
Also the house was built in 1950. Renters keep destroying inside. The house is not in a very good part of town. some parts are worse but most are better. The rent that can be charged is not increasing fast enough to offset the repairs that need to be made. The most we can get is $750.00 to $800.00
Also house has a flat roof. Other stuff is falling apart too that has no bearing on being rented. The house is just old and hard to maintain. The house is 2 bedroom 1 bath, converted garage. It can be sold or rented as a 3 bedroom. Most houses rent for around $900 to $1000. Houses in the newer parts of town rent for $1100 to $1500.
The house is in a older part of town, with most shopping 5 to 10 miles away and is not appreciating fast enough. ( maybe 3 to 5% a year) other parts of town are appreciating at 5%. Newer parts of town with 1200 to 1800 square feet houses, 3 bedroom, 2 bath and 2 car garage are going up some years 7% or more. They have major shopping within 5 miles and better elementary schools. Mid and high schools in this area are good but crowded. New schools are being built and planned..
Old house is paid for. We are thinking about trying to do a 1031 exchange and get a house within 5 miles of our house. The problem is qualifying for the new mortgage... ( We had a lot of credit card debt $60,000 because my husband lost his job in 1999. He got new job in beginning of 2001 at lower salary including benefits. So we have a large home equity loan on our house)
Old house is worth $110,000 to $120,000, a decent new house is probably about $220,000 if you can find one. Most houses in the area are $240,000 and up for kind of standard house (1200 to 1800 square feet). Most houses close to my home are newer, built for 1989 on... in some neighborhoods 1995 to 1997, 2000 to 2004 etc etc.
We hate to loose $20,000 to capital gains and other taxes. We kept hanging on to old house in case husband had to go on social security disability and we had to have a cheaper house. He did not want us to be homeless(non home owners)
We think we can maintain a house within 5 miles of us that is newer and closer to hardware stores. We also can attract other kinds of renters, more affluent people and middle class families. We can search for good property management companies.
I do think rent needs to be $1200 a month max. People that can pay that can afford to buy a house. I think houses that rent for more than that might be empty a long time.. because how many people will pay $1300 a month and up rent? Depreciation is what would make/ or save us money on an newer house.
If we did a 1031 exchange we would probably need to find owner financing, after the rest was rolled into it. I would like to not finance any more than $130,000 after doing the 1031 exchange. I would like to make around $10,000 cash flow on a rental house each year. That is the amount that makes it worth the work, time and money to me. We need the money to help us get out of debt.
Also if we were able to buy a house around $220,000 closer to us we might eventually sell our residence and move into it. If the house we can afford is smaller than we want, in around 5 years we would have enough equity to do another 1031 exchange. I think the smallest house we could live in comfortably is around 1700 square feet.. We are planning on staying in our residence for 10 years or more if possible.
I have to find a job to help get us out of debt. A year later I am starting to work on a Masters degree. I have to make more money. My husband is doing pretty good with his MS. In a few years, loosing money on the rental(annually) would be ok due to me working . We would pay less taxes which would save us money.
I have watched houses being built and checked out neighborhoods since 1991
I have a good idea of what some houses cost new and how fast they appreciated. I know what builders made cheaper houses and who the semicustom builder were. I can learn about newer semicustom builders. Most areas where new houses are being built now are more than 5 miles from our house, or too expensive($300,000 +) or large for us to use as a rental.
Our other alternatives to getting out of debt, besides what I mentioned are going to a consumer debt counseling agency or declaring bankruptcy. We have very good credit and always have. Part of the debt from when my husband lost his job is because we were supposed to get a settlement from his ex employer but, the company and individual ower declared bankruptcy.
What do you think the solutions might be? You can send e mails to mctripat@comcast.net if you would like to. I have not been able to be on the computer much due to working at the house.
Thanks
Trish
Why was the house not rented? My husband had problems at his job. we found out he had MS in 1997(low energy level) Had lots of family problems, deaths, depression etc 2002 till 2005. We had to do the work ourselves. We could not find workers who would show up to do repairs. My depression is under control now.
Our biggest problem is our basis is too low. What can we do legally to change it? Putting in new windows, furnace etc does not help enough because they are depreciated over such a long time.. Our CPA added $5000 to our basis for improvements mentioned above. Our house is being depreciated at 25,000 a year or about 900 a year.
If we put the $25,000 on a home equity loan it would help a little. But we still have other problems. The house is 22 miles a way from our house 45 min each way there and back. The hardware stores are 30 min drive or more away should we need to buy something we forgot to bring.
The house is close to the university and tech school. It is hard to find responsible people under age 25. Families live around there too but, they are small lower income families.... what I mean is they can not afford to rent a decent house in a better neighborhood at $900. I guess the people have credit problems and are living on the edge. Some of the people are too transient making the crime rate higher. Others are 50ish and 60ish retired people living on a fixed income.
Also the house was built in 1950. Renters keep destroying inside. The house is not in a very good part of town. some parts are worse but most are better. The rent that can be charged is not increasing fast enough to offset the repairs that need to be made. The most we can get is $750.00 to $800.00
Also house has a flat roof. Other stuff is falling apart too that has no bearing on being rented. The house is just old and hard to maintain. The house is 2 bedroom 1 bath, converted garage. It can be sold or rented as a 3 bedroom. Most houses rent for around $900 to $1000. Houses in the newer parts of town rent for $1100 to $1500.
The house is in a older part of town, with most shopping 5 to 10 miles away and is not appreciating fast enough. ( maybe 3 to 5% a year) other parts of town are appreciating at 5%. Newer parts of town with 1200 to 1800 square feet houses, 3 bedroom, 2 bath and 2 car garage are going up some years 7% or more. They have major shopping within 5 miles and better elementary schools. Mid and high schools in this area are good but crowded. New schools are being built and planned..
Old house is paid for. We are thinking about trying to do a 1031 exchange and get a house within 5 miles of our house. The problem is qualifying for the new mortgage... ( We had a lot of credit card debt $60,000 because my husband lost his job in 1999. He got new job in beginning of 2001 at lower salary including benefits. So we have a large home equity loan on our house)
Old house is worth $110,000 to $120,000, a decent new house is probably about $220,000 if you can find one. Most houses in the area are $240,000 and up for kind of standard house (1200 to 1800 square feet). Most houses close to my home are newer, built for 1989 on... in some neighborhoods 1995 to 1997, 2000 to 2004 etc etc.
We hate to loose $20,000 to capital gains and other taxes. We kept hanging on to old house in case husband had to go on social security disability and we had to have a cheaper house. He did not want us to be homeless(non home owners)
We think we can maintain a house within 5 miles of us that is newer and closer to hardware stores. We also can attract other kinds of renters, more affluent people and middle class families. We can search for good property management companies.
I do think rent needs to be $1200 a month max. People that can pay that can afford to buy a house. I think houses that rent for more than that might be empty a long time.. because how many people will pay $1300 a month and up rent? Depreciation is what would make/ or save us money on an newer house.
If we did a 1031 exchange we would probably need to find owner financing, after the rest was rolled into it. I would like to not finance any more than $130,000 after doing the 1031 exchange. I would like to make around $10,000 cash flow on a rental house each year. That is the amount that makes it worth the work, time and money to me. We need the money to help us get out of debt.
Also if we were able to buy a house around $220,000 closer to us we might eventually sell our residence and move into it. If the house we can afford is smaller than we want, in around 5 years we would have enough equity to do another 1031 exchange. I think the smallest house we could live in comfortably is around 1700 square feet.. We are planning on staying in our residence for 10 years or more if possible.
I have to find a job to help get us out of debt. A year later I am starting to work on a Masters degree. I have to make more money. My husband is doing pretty good with his MS. In a few years, loosing money on the rental(annually) would be ok due to me working . We would pay less taxes which would save us money.
I have watched houses being built and checked out neighborhoods since 1991
I have a good idea of what some houses cost new and how fast they appreciated. I know what builders made cheaper houses and who the semicustom builder were. I can learn about newer semicustom builders. Most areas where new houses are being built now are more than 5 miles from our house, or too expensive($300,000 +) or large for us to use as a rental.
Our other alternatives to getting out of debt, besides what I mentioned are going to a consumer debt counseling agency or declaring bankruptcy. We have very good credit and always have. Part of the debt from when my husband lost his job is because we were supposed to get a settlement from his ex employer but, the company and individual ower declared bankruptcy.
What do you think the solutions might be? You can send e mails to mctripat@comcast.net if you would like to. I have not been able to be on the computer much due to working at the house.
Thanks
Trish