All Forum Posts by: Troy P.

A few more things to consider...

Is an HOA involved? Townhome community HOAs can quickly eat up cash flow, especially with special assessments and increasing dues over the years.

What is your current tax amount?  Changing from primary to investment and removing any homestead exemptions will immediately increase your taxes and reduce cash flow.

What is the P&I on your current mortgage?  First rule of thumb is P&I should be half of market rent.  If your P&I is not under $900, this will probably not be a good rental.  Is the home worth $180K?  If it doesn't come close to meeting this 1% rule in this current market, it will probably not be a good rental.

It's usually very difficult to cash flow after putting 0% down.  If you account for all of the above plus 10% for capex and repairs and can still cash flow $1, it may be worth considering.  I read a book once that suggested if the home cash flows $1, it is a good investment.  The issue is most people do not accurately calculate their monthly expenses and quickly end up in a bind.  Do yourself a favor and don't cut any corners.  Be conservative with your estimates so there are no surprises.

Not sure if any state laws mandate this, but I usually provide refrigerator, washer, and dryer.  Not only do I not want tenants constantly moving these items in and out, hooking up incorrectly, etc., but it also makes your property more attractive.  I make sure to state the appliances should be in good working order when they leave, just like it was when they moved in.  We are not in the appliance rental business, but a few hundred bucks and a detailed lease agreement can go a long way. 

I'm currently in the market for a Tax Pro that can assist with my relatively basic returns and continue to assist with a tax strategy moving forward.

Thank you all for the explanations.  I understand it is supplemental to the primary coverage, which I have 300K+ for all properties.  I guess I was unaware it also had to include your auto coverage, which I was trying to keep at a minimum since the premiums are slowly getting out of hand.

Hi all,

I currently have 2 SFH rental properties with your average landlord policy covering them, and I recently contacted my agent to get a good umbrella policy in place for supplemental coverage, scalability for future growth, etc. She stated that I have to add an umbrella policy to my auto policy before it can be added to any real estate, and before I can do that, the coverage on my auto must be increased before they can write a policy on it. Is this really a thing? I was under the impression you can purchase a policy for real estate only without tieing it to auto or anything else. Could this be another example of Louisiana being a nightmare for insurance? Or am I missing something? TIA

Thanks for the input, Mike.  I have been asking my agent about putting a policy in place, but she says since it is personal assets, an umbrella policy must be applied to my auto policy and extend coverage to the real estate.  I find that hard to believe given so many others have umbrella policies on just real estate.. right?  I'm not going to argue with an agent, but I will get a 2nd and 3rd opinion.  I also have auto insurance through this agent and, not to go too far off topic, she says I have to first increase my coverage for my auto before they can include it in an Umbrella policy, which would be required to even write the policy... 

May want to check the laws in your area, but my rule of thumb is pet deposits are for pet expenses unless it is needed to cover any excess expenses from the general deposit.  Rosa is correct, a fee and a deposit are very different, so be sure you know which one was charged on your lease.  A deposit is potentially refundable, where a fee is not.

I went back and forth with the two and decided a deposit may work better since it gives the tenant incentive to give a $#!+ and less of a chance of repairs needing to be done.

I am in a similar situation, debating LLC vs personal. First of all, there is no privacy unless you spend a lot of time, money, and headaches on business entities, trusts, and nesting. Second, I always use a PO Box as my address on leases so the tenant would really have to do their homework to know where I actually live. Not that I would lease to a bad tenant, but you never know what people may do one day. Third, to echo the others, with good insurance and maintenance, you have the same risk exposure as before with the PM company. After all, YOU are still the owner of the property.

Some will be cheaper for one item on the closing statement but more expensive for another.  I just choose the one closest to my home with the best reviews.