Landlords, property owners...thoughts and advice

[Luke0927]

Hey folks sorry if this ends up being a long one. I know we have a good group of folks on here with a lot of knowledge and experience; I would like to hear some of you weigh in.

Looks like I have the opportunity to purchase my great grandfathers house that I could use for a rental property. This house is owned by my grandparents, I lived/rented it for probably 3 or 4 years until I built my home 6 years ago basically next door.

My uncle moved in after my wife and I moved out. Long story short he relied on my grandparents a lot and unfortunately he passed away about 2 weeks ago, my grandparents are at that age they do not want to deal with renters and said they will just board it up, they don't want family members or friends asking to rent etc...

Here are some details of the house. It was built by my great grandpa for a wedding present for my great grandma in the 30's, this land was his side of the family as well. It is basically an old farm house. Kitchen, living room, 1 original bedroom, a porch that was closed in for an additional room years back, and the kitchen was also sectioned off to make a 2nd bedroom, 1 bath room accessed from the bedroom made from the kitchen.

The house is probably 1-1200 sq foot. The house structurally was solid the last time I was under the floor, several years ago, there is a sway in the middle (not a lot with carpet you can't really even tell) of the living room, original hardwood floor is under carpet. It just needed jacking up and some new piers to level it out.

The band was solid oak heart wood with joist being pine. I would lite the furnace for the house every fall so last time I was up there was last fall. Rafters and bracing are solid rough cut 2x6 lumber very solid, Tin roof has replaced the original (needs a new coat of paint), no leaks that I'm aware of.

So all in all a good inspection is due under the house, to check band and joist for termite etc...I replaced most of the polybutylene if not all of it years back (there is not much with only 1 sink and bathroom) The fuse box is still the old screw in type fuses so electrical is old.

The house is located in north Forsyth within a few mins of multiple boat ramps on Lanier, 10 mins from Dawsonville, and 15 mins from Cumming great location I don't think I would have any trouble renting.

A couple of question with a little clean up and paint etc... I could probably get $600-800 a month around the area. What I'm wondering is in that price range what type of renters are you going to get (not meant in a negative way I would prefer to rent to young couple working on buying their first home etc...). If you wanted to sink some money in the place you could make it a nice restored type farm house and based on rents in the area do very well, I'm now wanting to put that much in it any time soon.

For those of you that rent, what are your thoughts. Would you rather have a rental property you are this close to to keep an eye on it?

When you purchase a rental or investment property if you are not looking to sell any time soon how many years would you like to have your ROI back?


Thoughts or questions, I would appreciate it....

 

[Jim Baker]

Will you be paying cash or financing? Will you be able to stand a few months with no rent coming in? Are you handy at fixing things. Faucets, drains, toilets, dood locks, etc.?

How much are taxes and insurance? Remember if you are financing, rates and requirements are different than a home mortgage.

Don't furnish any appliances!!!

 

[Luke0927]

Will you be paying cash or financing? Will you be able to stand a few months with no rent coming in? Are you handy at fixing things. Faucets, drains, toilets, dood locks, etc.?

How much are taxes and insurance? Remember if you are financing, rates and requirements are different than a home mortgage.

Don't furnish any appliances!!!

I couldn't liquidate all the cash without some tax liability, I would rather try and get a 10 year or so mortgage since rates are low (could pay off in about 5 depending on price). I could pay this without any renters. Handy with things, besides HVAC (house has a small furnace gas) getting up in age, compressor was replaced few years back and serious electric (luckily wife's father is an electrician so have help there)

The taxes are something I will be looking into. The house sits on property that is in land conservation for reduced tax. This piece would not touch my property due to my grandparents driveway being between us. We have moved property around in the easement before without issue. Since I wouldn't have homestead I would be interested in how the tax is running.

The assessed value is pretty low for just the house, the value maybe more in the land. I could possibly just pay my grandparents owner type finance as I could possibly save them some some tax dollars as well; but I would rather give them a lump some so they can do with it what they want while they are both able.

 

[Dr. Strangelove]

Will you be paying cash or financing? Will you be able to stand a few months with no rent coming in? Are you handy at fixing things. Faucets, drains, toilets, dood locks, etc.?

How much are taxes and insurance? Remember if you are financing, rates and requirements are different than a home mortgage.

Don't furnish any appliances!!!

I'm curious about not furnishing any appliances, I know here in Athens you're not going to rent a house without including a fridge and range, washer/dryer are usually included but not necessarily.

I know all markets are different, but which appliances do you mean?

 

[Jim Baker]

I'm curious about not furnishing any appliances, I know here in Athens you're not going to rent a house without including a fridge and range, washer/dryer are usually included but not necessarily.

I know all markets are different, but which appliances do you mean?

All I ever furnished was range. Except in the college area where all you got were basically short term leases.
Washer and dryers get abused and you have to repair. If you furnish a fridge, basic model no Ice maker
You spend enough time unstopping drains and toilets.

In residential areas where you are renting to families they generally have a washer dryer and fridge.

But then I got out of residential rentals many years ago and things change.

 

[Jim Baker]

I couldn't liquidate all the cash without some tax liability, I would rather try and get a 10 year or so mortgage since rates are low (could pay off in about 5 depending on price). I could pay this without any renters. Handy with things, besides HVAC (house has a small furnace gas) getting up in age, compressor was replaced few years back and serious electric (luckily wife's father is an electrician so have help there)

The taxes are something I will be looking into. The house sits on property that is in land conservation for reduced tax. This piece would not touch my property due to my grandparents driveway being between us. We have moved property around in the easement before without issue. Since I wouldn't have homestead I would be interested in how the tax is running.

The assessed value is pretty low for just the house, the value maybe more in the land. I could possibly just pay my grandparents owner type finance as I could possibly save them some some tax dollars as well; but I would rather give them a lump some so they can do with it what they want while they are both able.

You can't rent a house on tax conservation covenant land. Any violation can call for treble repayment of the amount of tax reduction. I have seen the letter from Tax Commission stating so.

I think that only a twice removed relative (grand parents to Grand child) from covenant holder can even live in the home without tax concerns. There are some regulation concerning early termination the tax covenant. You can look them up on line.

 

[Dr. Strangelove]

All I ever furnished was range. Except in the college area where all you got were basically short term leases.
Washer and dryers get abused and you have to repair. If you furnish a fridge, basic model no Ice maker
You spend enough time unstopping drains and toilets.

In residential areas where you are renting to families they generally have a washer dryer and fridge.

But then I got out of residential rentals many years ago and things change.

Makes sense to me, especially if it's college kids. Sounds like a good way to control who you rent to without running afoul of any laws as well.

My parents rented out some family property a time or two, it was a nightmare. One thing I took from that is you may as well take dogs with a non-refundable fee, because people are going to have them no matter what the lease states.

 

[Luke0927]

Thanks Jimbo, It's on my list to discuss the covent at the county.

The more I think about it I'm talking myself out of the rental idea and financing anything on it. I might just put a wood heater back in the house and turn it into my honey (from my beehive), canning, processing things like that. Just a usable farm house, a Man type place if you will! (Sure wife will have other thoughts)

I kind of think something like that would be neat to have.

 

[Atlanta Dawg]

We rented out a home we owned when I was transferred a number of years ago-had a lot of repairs to do in spite of the reality that they were pretty good tenants......3 tenants in 5 years....Had a house we inherited-rented it for a long time to an elderly lady-when she became too old to remain-had a lot of work to do to replace subflooring where her dog....that she was not supposed to have...had been using a spare bedroom for its "bathroom".....odor was a big deal! Spent $14k fixing it up....wife wanted to keep renting it.....had a good tenant for 5 years.....still not all good.....and had to replace water heater's, garage door repairs, electrical upgrades to pass code, furnace, paint and repairs, etc.......

I would NEVER RENT out a property again.......

And with laws that are now on the books......one would struggle to get someone out who didn't pay or caused damage.....We never missed a rent check.....but.....I would not do it !

 

[steeleagle]

With such sentimental value, why risk renting it? Being a landlord has tons of hassles. If you are looking for investment returns, try a Vanguard 500 ETF.

 

[rjcruiser]

The wife and I have a rental we bought probably 5-7 years ago. We did the management for about 4 years....was great. Then the tenants left and we went with a management company. It has been awesome with them managing it. No responsibility and we get a check every month. They charge 8%.

If it was a place right next door, it be tough to rent. I'd be afraid they'd keep knocking on my door when something needed to be fixed. Maybe if it was a family friend that you went through a list of rules.

 

[Backlasher82]

You can't rent a house on tax conservation covenant land. Any violation can call for treble repayment of the amount of tax reduction. I have seen the letter from Tax Commission stating so.

I think that only a twice removed relative (grand parents to Grand child) from covenant holder can even live in the home without tax concerns. There are some regulation concerning early termination the tax covenant. You can look them up on line.

Early termination of the conservation agreement results in treble repayment of the tax reduction from the date of the agreement to early termination date. Depending how far it is into the 10 year agreement it could be a very substantial amount.

 

[Jim Baker]

Early termination of the conservation agreement results in treble repayment of the tax reduction from the date of the agreement to early termination date. Depending how far it is into the 10 year agreement it could be a very substantial amount.

I have a friend whose son rented a small house on a 1200 acre of land. Two months after he moved in the landowner who had bought the property on a few months earlier and continued the conservation use covenant got a letter giving him 30 days to remove anyone renting the house from the property or face $65,000 in repayment and penalties. He couldn't go back and cut that property out except to give it to his child or grandchild and then only 5 acres if I remember correctly.

Illness or death are about the only way to cancel the covenant. I did a good bit of reading on this as my DIL grandmother is giving her 5 acres to build a home. And they have limited time to begin building can't remember exactly.

 

[RossVegas]

I had a duplex and a rental house got rid of them around 2000. You'll have difficulty renting without appliances. I'm talking frig, stove. Wouldn't provide washer & dryer. Someone mentioned the taxes, can't say a lot about that except expect them to go up. you'll loose any exemptions they would have had. Screw in fuses will give you a problem. No insurance company will insure it with them. Hasn't been an issue for your grand parents, because it hasn't been looked at. When you goto get insurance, they'll probably come inspect the house.

 

[Luke0927]

Thanks folks. I spoke to my grandmother probably going to make other arrangements to purchase it from them and not have to deal with a bank. Probably keep the house up by like I said, use it for canning and processing and farm type things slowly work on it over time. I have 4 kids they are young, but in few years would be a good place for them once in college or something like that.

We have a nice wood heater and stove in one of the old building probably put it in there where I don't have to turn any heat on this winter, keep the power on to it. If I just want to go down and sit around for a while.

I think dealing with renters unless it was someone or a family you knew and could all be done without hassle and being able to keep it on the down low it's not worth the hassel.