All Forum Posts by: Aaron Ziegler

Hello BP community,

My first rental is coming up on the 5-year rule which has me tempted to sell as I lived there for just over 2 years so I qualify to avoid capital gains tax up to $250,000 (which is right around the equity/profit if I sell). As tempting as this is, I can't help but notice the interest rates creeping up and I live in an area where sadly $250,000 would barely be enough to put down on another investment property as prices have skyrocketed especial over the past 18 months. I'm torn between selling and trying to reinvest or should I keep it and continue to rent it. It's a mid-70s starter home 4 bed 2 bath 1,500 sf ranch style home in a small town. 

Unfortunately, I'm surrounded on both sides by rather unsavory folks who like to party a lot and frequently let drifters/squatters/rehabbers etc. live at these properties. Sometimes it's a makeshift lodging made out of a backyard shed and sometimes it's a 5th wheel camper parked in their driveway. No shortage 90s rock, beer, smoke, harder stuff, and more F-bombs can be heard than all other words combined (by both the permanent occupants and their guests). This is a big push for me to get rid of this problem property as I cannot control these external factors. 

So, the question is, do I sell and take the money from the sale try to buy something else (although it's difficult rolling it into another rental as prices are high and now interest rates have jumped). Or do I hold this rental and roll with the constant issues maintaining course as a long-term rental? It is currently purchased under a 30-year fixed mortgage at a 3.125% interest rate and cash flows around $750 a month. 

Thanks in advance to responders.

Hey Charles, I’m an investor here around the Bozeman area and a real estate fee appraiser. Part of my work is analyzing contracts for purchases, and I can tell you that it is very normal for properties to sell much higher than their already aggressive list price in this rapidly increasing market. Big Sky especially, if it’s under a million they go within hours and usually for much more than the list price. The main issue around here is simply the demand and very low supply. I’d encourage you to look off market if possible. 

Great job, Nicholas Wilson! 

@Ned Carey that is a good point. No extra money was offered as part of the request by the current tenant, so it sounds like I would just give two options; 1, say no - 2, say yes with the requirement for a new lease and increased monthly rent due. If they want another person in there without a rent increase then I just say no. This assumes I vet the potential new renter and he is ok of course.

Thanks @John Warren. Yes, definitely would screen new tenant if I go that route.

Hello BP community, this is my first post as a new landlord. I'm excited to have started this journey and would appreciate advice or examples and outcomes. For reference, I live in the same small Montana town as where this rental is located.

I recently purchased a single family house and turned my existing single family house into my first rental. My new tenants are a couple in their early 20s and I was asked if one of his friends (male) whos lease ends elsewhere in November could move in with them and be on the lease. I explained that only this couple is on the lease and can live there, that nobody else could, but I would look into options about this as I am brand new to being a landlord. 

My initial thought is no. I'm not sure if asking for a higher collective rent and rewriting a lease to include this person (who I have not vetted yet) in November could be a good thing for more cash flow or if its not worth the risk? More money was never discussed, and I did not say yes or no, but rather that I would look into it. 

I also hesitate to alter the dynamic of a young couples household by adding a third person to it because it has a potential major effect on a relationship. Even though there's a potential for increased cashflow, I'm not sure the risk would be worth it?

I'd appreciate any advice on this. Anyone that has done this, what was your outcome and would you advise yes or no?

Thanks in advance.