Good luck sir. Sounds like the house issue is being handled.
How about the FILs employment status,

 

He really can't start looking until he is here, so we will cross tha bridge once he arrives.

He is already (supposed to be) looking online at what is available to get an idea and start formulating a plan, but I know that will be a significant hurdle and one he is afraid of and prone to avoid... I envision a fair amount of "interview coaching" being provided by me. Heck, "life coaching" is more like it.

 

You are a good SIL. Hope the wife appreciates the effort.

 

Anyone want to buy a flipper type property in Clearwater?

Listing is on MLS. Now, where is the "Phase-1-complete" champagne?...

 

Only beer here for ya...

 

Six weeks on the market, a number of showings, no sale yet...

I am having thoughts...

About taking over the house and keeping it as a rental.

I mean, who else gets to buy a rental unit without putting 20% down? I may be able to swing this with 5-10% max.

Maybe pay FIL the profit he (un?)realistically thought he would get ($5k-$8k) and take the payments from him... New AC is already there, new windows were installed last year, probably needs $3k-$4k in reno to make it rent-able... I need to find out what the rental price per SqFt is in the area...

 

Renting out property beyond 100 miles can be a tough business with many more headaches than profit checks.

 

if you keep enabling people to make bad decisions, how again are you exactly helping them?

what the man needs to do is get his affairs in order and then after that you can help him.

sometimes you guys cannot see past your own noses.

I can cite 2 examples of my own family where we kept helping them financially and they never learned how to take care of themselves

my uncle got at least 5 cars from my father and I plus untold thousands in cash and other help... he NEVER got his stuff together as he kept depending upon the rest of us. He died broke and penniless....

my own sister.... moved out at 16 instead of staying at home and following the simple rules

1. no smoking
2. no drinking
3. be home at curfew

She has literally lived off my parents using her kids to get assistance from them. She has been divorced 2 times and received alimony from both of her husbands.. Today, 30 years later she is broke and homeless and has cost custody of her daughter . My parents paid for her to start college twice and each time she quit after a week.

My parents also paid for food, diapers, car repairs, etc...

no money for rent but has money for tattoos, cigarettes, alcohol, fancy phones, etc... never held a job for more than a month...etc.

Now, I hit rock bottom when I was younger but the difference is I turned my life over to God, pulled my head out of my rear end and now I live in my own house, am married, have 2 cars, got my retirement affairs in order, etc and now I take care of my parents as best I can

You help people in actual NEED but you do not enable them to keep making bad choices


my sister's first husband made 90K a year and they were STILL broke

second husband made north of 50K and they were still broke..

Go a head help him if that makes your wife happy but be careful of what you are getting yourself into as you already admitted he has financial issues....

 

Inbelievable.

Please stop offering me advice.

Thank you,

 

<p>sounds like a a keeper.. </p>

 

[QUOTE=YeuEmMaiMai;15517642 I turned my life over to God, pulled my head out of my rear end [/QUOTE]

Pretty sure if you "turn your life over to God" you've just stuck your head even deeper up your ass.

 

patiently waits for thread titled

"I helped my father in law move here and now my marriage is ruined"

Good luck and keep enabling him..... as he knows he can take whatever he wants from you and your wife....

 

I feel pity for you...

 

I'm having the same thoughts about the house we bought for my FIL - whether to rent it or sell it when the time comes. I think it may depend on how you want to profit from it and when (profit from the rent, or profit from the eventual sale of the property). My issue is the housing market has tanked since I bought it, so I may have to rent while the market recovers and I can get out of it. But in crunching the numbers, rent for that area barely would cover the mortgage, so month to month it's a break even. Where I'm exposed are in major repairs - roof, paint, water heater, etc. My brother had to move for his job and for the same reason (housing market) had to rent his old home instead of sell. It's a break even proposition month to month, but just had to shell out $8K for a new roof and $4K for a fence replacement. So he holds out hope that one day when the housing market is good enough he can recover that and get out. But in the mean time he's stuck with those liabilities.

I think if you want to profit month to month, you have to really put like 50% down or something significant enough to where the mortgage is small enough that you get some profit from the rent.

If the house is in a good area where prices are going up, renting even on a break-even basis isn't bad if you can hold it for 4-6 years and sell it for a profit.

I've considered just focusing on paying the rental off and having the income there as a component of retirement, but that requires a lot of financial resources right now. I still have my main home to worry about.....

Talking to an accountant about the taxes may help you decide as well. I did informally rent that house to my FIL for 2 years until he ran out of money and I took over his payments. The income I had to declare was largely offset by the depreciation of the home, and I do get to deduct the mortgage interest as well. But there may come a time when the income from the rent outpaces the depreciation and you have to start dealing with paying taxes on it.

 

Sometimes its not that simple. And an internet forum is a difficult place to get a complete story. You are assuming that "tough love" fixes any situation and it does not. Sometimes your only choices are to walk away completely or accept some suffering on behalf of a loved one. I have a similar scenario as stogie with my FIL, just with some different details. Cutting off a parent isn't easy, and in my case my wife couldn't do it. So we make the best of it. But to simply accuse someone of enabling doesn't acknowledge how complicated the parent child dynamic can be. And don't forget the strain this puts on stogie and his wife. It's not an easy situation and the answers are rarely simple.

 

Just need a good management company to take care of things. They'll take 8-15% to manage it, but then all you need to do us cash the check. Unless you want to make property management your full time job, let the pros handle it.

Besides, unless it *is* your full time job, you can't claim much on your taxes for managing it. Sure, you can get depreciation and some misc deductions, but you can't deduct any management expenses if you're only doing things now and then.

Need to address the income in and out. Figure out how much you'll have coming in after paying the mortgage and management fees. If the house pays for itself, or is close and in an appreciating market, then give it a go. Look at it as a long term investment... The old 2000s buy/flip/profit days are gone. But you can still find some decent 10-30 year prospects. Treat it like a 401k and not a daytrade and you'll do OK.

Just my YMMV

 

For someone who is claiming to have given their life to God, you sure are being one judgmental bitch.

 

You say this a lot. Except you fail to realize I don't care what you think.

Now, you may carry on with your constant whinings about your life, and supposed to devotion to a religion whilst constantly contradicting those doctrines on here.

 

Turns out that rent per square foot for similar condition homes in the area ends up being 100% more than the monthly mortgage payment... This is becoming a more serious consideration.

Additionally, excellent advise to talk to an accountant re:taxes.

We are considering replacing the tired kitchen with Ikea kitchen, and based on the size of the kitchen, should be able to do this for 2-4K, installed (tiny kitchen).

 

do it.

Remember though, if you take it on as an investment, it's not your house, it's your income.

If you'll get the same rent with or without the kitchen redo, then don't worry about it. Sock that 2-4k away for unplanned future repairs. But if you do it, IKEA isn't bad. Friend redid his kitchen and it turned out pretty darn nice for Swedish flat pack.

Not sure what the accountant can really tell you. You know your finances and if you can afford to take it on. With the rent income, your household income will go up so your taxes will go up. You still end up with more in your pocket though. If you already itemize then this will just add to it in a separate section. A couple more schedules to fill out but its nothing too difficult. Maybe they'll give you an idea of how your overall finances change, but in general it'll just be more income.

 

I think it would be worth your while since it looks like you might make a profit month to month. Also, look into state taxes in Florida as well, because if you make income there you may have to deal with state income taxes. My FIL home is in Montana, and for the 2 years I collected rent MT flagged that as income and came after me for state income tax. Fortunately, home depreciation was greater than rent collected, so I didn't have any net income to declare. But I was surprised when they came calling - I didn't consider state income tax.

 

Yeah, you made money in that state. That state wants a cut. Pretty standard. Just need to file a nonresident tax return every year.

 

I am sure we will have to pay FL state income taxes, just need to make sure my Accountant understands what we are doing and see if he has any ways to limit the exposure.

Truthfully, I am planning on putting a majority, if not all, the net income (less a repairs contingency and a few months rent if it sits vacant) into a retirement account for the FIL, since he basically has no savings. Then, when we decide to sell the house, we will keep any proceeds.

 

Does FL have property taxes, or was that included in the "mortgage"? Also, insurance is supposedly outrageous out there (hurricanes). Be sure to account for that.

CU2Wagon, good idea on the management company. In the case the roof blows off, do they hire the contractor and send the bill (labor + supplies) to stogie? What about a water heater, etc.?

 

In general, a good management company will handle almost everything dealing with the property. In my experience, there is some dollar limit, like $250, where they don't even bother notifying, they just do what needs yo be done. Like backed up toilet, broken doorknob, AC service, etc. For larger ticket items like dishwasher, water heater, carpet, etc. They'll contact you to see what you want to do.

For ex. Dishwasher breaks, they call and ask what to do (and a good company will call and already have an idea like cheap, midrange, high end replacement would be xxx). You tell them, do xxx and they take care of getting it bought, getting a guy in to replace and haul off, etc. Payment for parts/labor just comes out of next months disbursement.

An established and good mgmt company will have dealt with it before and usually has a maintenance guy they work with and know what to do so its minimal headache for you.

If you lose a roof, then you're probably dealing with insurance. Plus you probably lose the tenant for a while when repairs are being made. Big headache for you. But if you have a company, they deal with getting the tenant set up and should work with you on dealing with insurance to get fixed up.

Basically, a good mgmt company is acting on your behalf for whatever. I highly recommend if you're going the slumlord route! Get a pro, save the hassles.

 

Correct me, but FL doesn't have state income tax. Not sure if this holds true for rental properties though

 

No state income tax here guys! Annual property taxes yes. Being that it's investment vs owner occupied means you don't get any exemptions on the taxable value. Lease must be at least for 6 mos to avoid sales tax.

http://dor.myflorida.com/Forms_libra...t/gt800034.pdf

 

One other consideration popped into my mind - I wasn't able to get as good a mortgage rate on the second home as I did on my primary. The banks I talked to all had higher rates for the second home - about .5-1% higher. Also, because my primary bank didn't have a presence in Montana, I had to go to another bank for that mortgage that did. So if you use a local bank or credit union that's not in FL, you may have to look at a larger lender.

 

Louder, If the mortgage is non-assumable (checking now) we may just leave it in FIL's name and make the payments. We are trying to avoid a new mortgage, as we would have to put up 20%, etc... The mortgage already exists so we may do a quit claim on the house (I know the mortgage company does not recognize this) and have a contract with FIL to cover a long term sale of the house, etc.

We are really not doing this to generate income for Wifey and I, just see it as a good way to generate a retirement account for FIL since he has nothing. All the net profit from rent will go to a retirement account for him. If we ever sell, we will split the sale profit with him 50/50.

 

^ Hope it works out!!

 

Wow, just got all caught up. I think it'd be a great idea to set it up as a rental property stogie! I would have seconded the property management approach like cu2 suggested as well!


What you're doing for your FIL really shows your impeccable attitude towards life. Best of luck to ya and I know the karma of helping him out will pay back in dividends upon dividends (in the monetary and familial relations senses).

 

That sounds like a great plan and I highly recommend the management company. My mom has rentals and they become a real pain, they trash everything, and want you to come fix everything at all times of the day. This isn't some cheap place either :-/

 

Local property management company is looking at the house tomorrow to tell me what, if anything, we need to fix/update to make it more rent-able and give us a realistic estimation of the possible month rent. Excited for the news, either way.

 

Awesome! Congrats/Good luck.

From what I've gathered, you'll be in a unique situation as you've stated vis-a-vis FIL owning it but your involvement, etc. I'm pretty sure a mgmt co contract would be between them and your FIL meaning you wouldn't have legal influence on decisions. It sounds like (and no offense meant) *you're* the one doing the brunt of the effort and would be the logical point of contact in the owners side of the agreement with the mgmtco.

Complicating things might be that he's your in-law, but it might make sense to look into getting power-of-attourney or creating a pass through LLC to make it easier for you to call the shots. The mgmtco might be able to answer those sort of questions and an attorney (which I am not, caveat emptor) certainly would.

But if you're getting close to actually pushing forward, I'd urge you to make sure you're legally protected. Money and family make for strange bedfellows or something.

Again, good luck! And remember to not get emotionally involved with the property. Treat it logically and as a business.

 

A limited power of attorney in regards to this property specifically should be plenty. Biggest suggestion from me would be to consult with an attorney in Florida and preferably one who deals with real estate. I wouldn't be surprised if the management company has one in house they could refer you to.

 

CU2, and 007, both great suggestions.

I had planned on going the LLC route, but will consult with an attorney first for sure.

In terms of money and family, the beauty of this arrangement is that (once the home emergency fund) all the rent profit will go toward the FIL, which in turn is less money (meaning zero hopefully) that wifey and I need to put toward supporting him/retirement/etc. I don't plan to make a dime off the monthly rental, only on the backend of the sale when it happens at a 40% appreciation or above. Then we plan on taking 50% plus initial "fix-up" funds of a few thousand.

Really, I am trying to get FIL to a point where he is less dependent on others for financial stability and has a little financial security going forward. The guy is getting older and even if he is a stellar employee, will have to stop working eventually. Social Security just won't be enough. a few hundred a month into an IRA every month would be night and day for him.

 

Also, a genuine thanks to you guys all who are offering great ideas and suggestions.

 

OK, property MLS listing was pulled. Small fight with listing agent, but we paid cancellation fees and are free and clear.

Second of two management companies is looking at the house and giving us the breakdown on needed vs. wanted repairs and the rent both would command.

So far, it looks like the house will gross 100% over the mortgage on a monthly basis based on rental rates in the area for similar size/location/condition properties.

 

Oh the listing agent didn't get the rental listing?

 

No, they were not:
(a) chosen by me
(b) very good
(c) rental agents

Currently bidding out some minor repairs/updates that we want to do...