Renting A Property At A Loss

[flexed1]

How many of you rent a property at a loss just to hold onto that piece of property? I have a house I don't want to sell as I know the area will close to douuble when the Austin economy picks up. Want to maybe lease it at 1,600 or so and pay the note which is $ 1,89 and the taxes which are 700 a month. Anybody doing anything like this? This house is to high to be a monthly investment property.

 

[HumorMe]

Taxes are $700 a month!!!???!!!

 

[gtrcivic]

Friend is doing it right now.. Bought 3 condos in the past 4 yrs.... Living in one of them, renting out the other, and the other is vacant.... Can't rent it out for the cost of the condo. So he has to rent it for less, but no takers right now.. If you can sustain it, i would and cash out when the property doubles........

 

[SofaGeorge]

It's an investment, bro. Sometimes you have to take it in the teeth to make it in the long run.

Of course, I've lost so much investing that my girlfriend made it a rule that I can't give investment advice... so don't listen to me.

 

[flexed1]

700 is monthly taxes on my house

 

[flexed1]

i can keep it for a monthly loss and possibly write off the loss.

 

[big4life]

I can't help you, but now I feel a lot better about the taxes on my house.

 

[ZKaudio]

just remember... interest is accumulating as well on this note, exponentially increasing your loss... you seem like a smart guy. You could always sell and buy in a more highly demanded rental area..

 

[flexed1]

would be no more than 3 years. the other option would be to allow chris to live in austin and come here on weekends and buy a condo or rent. I have an opportunity to help a company in Denver for major money with there business. Kind of what I do is help develop the busineess I am in so I move a bunch. Already own enough things so not wanting to move to denver and buy there just need to figure out the best way to do this.

 

[vinylgroover]

Flexed,

I'm not sure of the tax laws in the US, but you should be able to negatively gear the property. Negative gearing however, is only effective if you are in the top tax bracket, and the property appreciates in value.

Negative gearing is a great way of using the bank's money and taking advantage of tax breaks to accumulate wealth, if you have the cashflow to cover the monthly losses.

You need to be relatively certain though that the property will appreciate in value, otherwise, your losses will be magnified through negative gearing.

 

[p0ink]

flexed,

go check out the information and the boards at www.clarkhoward.com

that place is really helpful for stuff like that.

 

[ZKaudio]

burn it, collect insurance.. then sit on the lot.

 

[flexed1]

Vinyl that was soemthing I was debating but need to check with my accountant. Tax bracket won't be a issue as I pay huge amounts of taxes. My area is brand new and my home was not only appraised for more than I paid the area has just had an increase as the houses are moving quickly. The houses of my size are going for 25,000 more than what I paid in February and Austin a huge high tech area is slowly coming back.

 

[AAP]

Yes, you can rent it out and take a loss at tax time on it.

Another option would be to put some $$ into it in some form of "office" type expansion or such. Then you can get a bigger tax break there as well. I helped my ex do this as he built an addition of 30'x40' onto the back of his which was a complete master bedroom, master bath, den and kitchen expansion. He wrote it off as his studio. (he was an artist). Doing this will not cut the rate of loss down, but it will reduce your taxes a little and thus add improvements to the house that will drive up the price when it comes time to sell.

Another option would be to rent it to someone at the loss and get "benefits" from them to cover the loss. Like lawn care at your additional properties.

When I moved here, I bought two corner condos side by side in a building. 2 bedrooms, 1.5 baths in each... floor plan was a mirror to each other (rooms reversed). I knocked the wall down between the two and combined the two units. I ended up with a extra large roommate style unit, 2 bedrooms with huge sitting area (which had previously been the second bedroom in each unit), extra large living room (almost loft style it is so big), huge kitchen, dining room, second dining room became a den/tv room, one half bath, the second half bath had the wall knocked down and the plumbing used for a wet bar, and more changes... But when it was all said and done, I still only had ONE unit. Which greatly reduced the taxes that I was previously paying for TWO units. And my rent is more than I would have gotten on two average units as well.

 

[flexed1]

sound right. really think i will live somewhere else buy a condo and let chris stay in the house and i will fly back and forth. it would pain me to allow someone else to live in this house and mess it up. shit the house was just finished in early february.

 

[Lumberg]

Hmm.......

DO you have either a really short term or high interest mortgage on the property? Because the rule is you can always buy for a lwoer monthly payment than you can rent. As least that's tru in DC.

I could rent my house for at least what my PITI is. As it is I am just rentign one room for about a third of it. I haev a 30-year mortgage at 5.75.

I know investment mortgages are at higher rates but still?

 

[flexed1]

just for facts. rent in austin is far from cheap. my 3 bedroom apt befor ei bought a house here was 1995 than lowered to 1845. i wanted to find the right area before buying a home. my realtor sent me home close to mine and they where renting for between 2100 and 2600 which surprised me. families relocate and like me look for a place to live. my house is 5 bedrooms on an acre with a 3 car detached agrage so its alot of space but for an executive family the right amount of space. the bad thing is i think renting it would allow me to lse control of the investment and selling it is not an option. which leaves chris lives here and i fly around. oh my motgage interest on this hpuse is 5.125%