Posts Tagged ‘Terry Sprouse’

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“Turn Your Home Into a Rental House!” finally sees the light of day

Wednesday, May 15th, 2013

 

Although it took a little longer than we anticipated, “Turn Your House Into a Rental House Instead of Selling It!” has finally popped out of the incubator and is available as a paperback book.

In a nutshell, what is this book about?

With my charming wife and business partner, Angy, as co-author, we have created a guide on how to find properties, live in them, and then turn them into a rental house, instead of selling them.

According to the “American Association of Realtors,” the average American purchases seven houses during their lifetime. Angy and I believe that those seven houses should be converted into rental houses and held for the rest of our lives. They are valuable assets that will generate monthly income for the hard years to come, and provide further assurance of long-term economic family security. Like the old folktale says: “Don’t kill the goose that lays the golden eggs.”

How does this book help the average Joe?

We show the average Joe where to find the best properties, how to pay for your houses, property inspection, the nitty-gritty steps on how to prepare your new rental house for tenants, how to attract and screen tenants, managing tenants, and complying with EPA regulations. The appendix includes samples of leases, property inspection sheets, tenant selection rating sheets, and many other valuable forms to get you started in your rental house business.

What do millionaires do that most people don’t do? 

Go into politics?

Buy their own Starbucks?

Become a bearded recluse?

Well, those are some of the things they do, but according to Thomas Stanley, in The Millionaire Next Door, most American millionaires own their own houses, and they own at least one rental property.

Our perspective is, “If it works for millionaires, it ought to work for us too.”

Our hope is that this book will inspire you to buy a rental property and to receive the enormous benefits from that one bold action. Even if you buy just one rental property throughout the course of your entire life, your economic picture will almost immediately get better.

You may wonder, as we did, “Why didn’t we do this a long time ago?”

Where do we order this book?

Click here to order the book through Amazon.com.

—–

Recommended reading:

The Short and Sweet Guide to Target Retirement Funds at Fearless Men

Creating an Outsourcing Master Plan For Your Business at Louisville Gals

Top Sights In Australia For The Adventure Seeker at Untemplater

Is There Right Time to Buy Real Estate? at KrantCents

How To Easily Reduce Your Utility Costs | 5 Simple Steps FRugal Habits

How Big Should Your Emergency Fund Be? at Work Save Live

Working Towards A Debt Free Lifestyle In 8 Steps at Canadian Budget Binder

Help Me Spend $1100! at Eyes on the Dollar

How You Can Start Freelancing at the End of This Article at Modest Money

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Posted in how to turn your home into a rental property, purchase second home and turn current home into rental, real estat investing, real estate books, real estate investing, real estate principles, rental houses, rental management, rental properties, rental property, rentals, renting, turn my home into a rental, turn your house into a rental, turning a primary into a rental, turning an owner occupied home into an investment property, turning my home into rental property, turning your home into a rental property | 18 Comments »

Follow Schwarzenegger’s Advice to Put Fuel on the Fire

Thursday, December 13th, 2012

“Adversity causes some people to break, and other people to break records.” — Anon

The Governator

I think one of the most powerful motivations in my life is when someone tells me that I can’t do something.

In his autobiography, Total Recall, Arnold Schwarzenegger puts it this way:

Sometimes you have to appreciate the very people and circumstances that traumatized you. Today I hail the strictness of my father, and my whole upbringing, and the fact that I didn’t have anything that I wanted in Austria, because those were the very factors that made me hungry.

Every time he hit me. Every time he said my weight training was garbage, that I should do something useful and go out and chop wood. Every time he disapproved of me or embarrassed me, it put fuel on the fire in my belly. It drove me and motivated me.

What strikes me, is that it wasn’t the fact that Arnold was tormented that made him into the over-achieving force of nature that he became (warts and all), it was the the way that he used that ordeal as motivation to reach his goals.

Arnold’s motivational story:

 

My favorite blog articles for the week:


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Posted in Achieving Excellence in Life, inspiration, investing financial independence, mortivation, motivation, multiple careers, overcoming obstacles, prosperity, success | 26 Comments »

10 Most Frequent Problems Found by House Inspectors

Tuesday, December 11th, 2012

These kids come to me and ask, ‘Hey Arnie, are you God?’. I just laugh and say ‘Nice try, but keep looking.‘

— Arnold Schwarzenegger

Buying fixer-upper houses, living in them, repairing them, and eventually renting them out is a safe way to generate short-term income and long-term economic security.

Even Arnold Schwarzenegger,  in his new book Total Recall, cites investing in real estate as a valuable step on his road to financial success.

But, how can you be sure that a house is worth what you are offering to pay for it? Based on experience, we can “eyeball” the property and probably be able to make a pretty accurate estimate of its worth, maybe 75% of the time

That’s probably closer to 95% of the time for Arnold, with that Terminator vision of his.

Get a professional inspection

However, that’s not good enough. We need more information than our educated eyeball can provide in order to:

1.) Avoid any surprise defects. After you buy the property, trying to get reimbursed for those defects will be too late.

2.) Negotiate a lower selling price for the house.

I hire a professional inspector to provide me with a complete written inspection report that can be used to negotiate a lower price on the house if it uncovers anything that is in need of repair.

Looks straight to me. Why do you ask?

When having the physical inspection done, you should be aware of the most common house problems.

Ten Most Frequent House Problems

 A survey of U.S. home inspectors resulted in this list of the most frequently encountered problems:

 

1.) Improper Surface Grading/Drainage 
This is responsible for the most common of household maladies: water penetration of the basement or crawl space.

2.) Improper Electrical Wiring 
Includes such situations as insufficient electrical service to the house, inadequate overload protection, and amateur, often dangerous, wiring connections.

3.) Roof Damage 
Involves roof leakage, caused by old or damaged shingles or improper flashing.

4.) Heating Systems
Problems in this category include broken or malfunctioning operation controls, blocked chimneys, and unsafe discharge of exhaust.

5.) Poor Overall Maintenance
Includes signs such as cracked, peeling, or dirty painted surfaces, crumbling masonry, makeshift wiring or plumbing, and broken fixtures or appliances.

6.) Structural Problems
Many houses, as a result of problems in one or more of the other categories, sustain damage to such structural components as foundation walls, floor joists, rafters, window and door frames.

7.) Plumbing 
Problems consist of the existence of old or incompatible piping materials, as well as faulty fixtures and waste lines.

8.) Exteriors 
Flaws in a home’s exterior, including windows, doors, and wall surfaces, are responsible for the discomfort of water and air penetration. Inadequate caulking and/or weather-stripping are the most common culprits.

9.) Poor Ventilation
Perhaps due to overly ambitious efforts to save energy, many home owners have “over-sealed” their homes, resulting in excessive interior moisture. This can cause rotting and premature failure of both structural and non-structural elements.

10.) Miscellaneous
Includes primarily interior components, often cosmetic in nature. May include dents in doors and walls from children’s unsupervised indoor karate practice, or possibly from having Bigfoot (or the Governator) as a former resident. (I inserted those last two examples based on some unfortunate personal experiences I have had.)

A specialist in mold removal or riled up Governator?.

A home inspector’s standard practice typically does not include the following, for which a specific license to inspect and identify is required:

  •  Asbestos
  • Radon Gas
  • Lead Paint
  • Toxic Mold
  • Pest Control

If you suspect the presence of any of these items, you would contract with inspectors in these areas independently.

 

 Related Posts

Remove that Garbarge Disposal Now!

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

5 Steps to take if your house is flooded

Some perfectly legal ways to maximize your rental profits

Add “Start a Rental House Business” to Your Bucket List

The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

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Posted in buying real estate, how to turn your home into a rental property, investing financial independence, investing in real estate, investing in your spare time, investment house, investment property, investments, investmet properties | 22 Comments »

Strategic Use of Memos to Manage Tenants

Thursday, November 29th, 2012

Update on “Best Real Estate Investing Blog” Contest

The results are in for the Best Real Estate Investing Blog Contest, and while I did not win, I took the loss in stride, with a minimal of gratuitous moping and whining.

I want to express my heartfelt gratitude to all of you who voted for my blog. Thank you for your support!

Congratulations to Susan Lassiter-Lyons at The Investor Insights for winning the blog contest!

Memos and Tenants

A light, tender, sensitive touch is worth a tone of brawn.

–Peter Thompson

As I mentioned in an earlier post, when we hear our tenants humming “Stairway to Heaven” that’s a sign that they may be  they ready to move on.

However, my wife and I do everything in our power to keep them from ever even consider moving. We want them to stay forever! It’s the best way to keep our business operating smoothly and profitably.

In the rental house business, we use a light touch when communicating with tenants. A phone call is good when you need to quickly get in contact with your tenant, but if it’s not an urgent matter, our preferred means of communication with tenants is by sending them memos by regular mail.

Use the low-key approach

For example, if the tenant is not keeping up the yard work around their rental property, as agreed upon in the rental contract, we will write them a note in a calm and respectful manner identifying the problem. We may make a reference to the section of the contract that requires them to keep up the yard (but only if they are a repeat offender), and describe what needs to be performed to meet the terms of the agreement.

A phone call could easily put them in a defensive position, and turn into a heated conversation, which is the last thing we want. With a memo, the tone stays calm and the point gets made. And, we have a written record of what we have told them that we keep in the tenant’s file folder.

Keeping tenants informed

We keep our tenants informed about activities that we have planned for their property. We will usually call and let them know well ahead of time if we plan to do some preventative maintenance, on the roof, for example. If a plumber cancels an appointment, we’ll call them so they are not waiting around all afternoon for no reason. It’s really just practicing common courtesy.

As an example, here is a memo that I recently sent to two of  our best tenants:

MEMO

Date: November 5, 20xx
To: xxxx and xxxx
Location: 2551 N. Banyon Blvd.
Re: Yard work

 This is just a friendly reminder that the front yard looks like it might need a little maintenance. I noticed that the weeds were starting to take over the yard a little.

 If you could tidy it up a bit, I’d appreciate it. If you need a weed wacker just let me know. I’d be happy to loan you one.

 I’m very grateful to have you as tenants. You have been really great about taking caring of the property.

 If anything comes up where you need any help with repairs or anything else, please don’t hesitate to contact me.

 (If you have already done this yard clean up, please disregard this letter.)

With best regards,
Terry Sprouse
270-xxxx

 ——–


 

 

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Posted in Fix em Up Rent em Out, How to manage tenants, how to turn your home into a rental property, managing tenants, tenants, tenents, turn my home into a rental | 19 Comments »

Vote for “Fix em Up Rent em Out” Blog!

Friday, November 23rd, 2012

Patrick Henry

Vote for Fix em Up Rent em Out!!

You may have heard that my blog, Fix em Up, Rent em Out has been nominated for Best Real Estate Investment Blog.

Don’t miss this opportunity to strike a blow for freedom of speech, mom, and apple pie by voting for my blog.

My blog also comes down firmly on the side of babies and puppies.

Click here to cast a vote in support of my blog.                                    (www.reiclub.com/blogcontest)

The fate of the free world is probably not hanging in the balance if you don’t vote.

But why take that chance?

The contest ends November 25th, so vote now!

Help me to make the world safe for babies and puppies to play together:

Click here to cast a vote in support of my blog.                                    (www.reiclub.com/blogcontest)

Here is a list of some of my favorite blog articles for the week:

 Booting Out Unlawful Tenants: Be A Man And Have Her Stay With You! at Financial Samurai

10 strange habits I have picked up living in the tropics at Reach Financial Independence

How Much Crazy Black Friday Shopping Do You Do? at Money Beagle

What’s In My Wallet at Evolving Personal Finance

How to Shop for the Holidays at Krantcents.

3 Steps Towards Retirement Planning at My Multiple Incomes.

Winter Commute Options at Leigh’s Financial Journey

Being Thankful For The Things We Have: My Heart-Stopping Experience at Untemplater.

Buy Whatever You Want On Black Friday… at Planting Our Pennies

Holiday Safety Tips for Landlords and Tenants at Louisville Gals

Frugal Friday: Posts That Ruled This Week, I Ate Too Much Turkey Edition at Frugal Rules

Conscience Spending: How to Buy Whatever You Want Without Guilt at Frugal Habits

Save Money this Christmas – How to Make Your Own Christmas Cards at WorkSaveLIve

Deals You Can’t Miss This Black Friday at Fearless Men

Killing Your Mortgage In 3 Easy Steps at Canadian Budget Binder

Leftover Turkey Recipe at Eyes on the Dollar

November 23 2012 Blog Update at Modest Money

Thanksgiving at IHeartBudgets

Is Your Family Time For Sale? at Blue Collar Workman

Thankful I’m Old(ish) at Any Shiny Thing

Toys ‘R Us Corporate Policy: Stealing?!? at Club Thrifty

Two Ways To Save Money This Holiday Season at Money Smart Guides

Click here to cast a vote in support of my blog.                                    (www.reiclub.com/blogcontest)

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Posted in Fix em Up Rent em Out | 32 Comments »

5 Reasons to be a Substitute Teacher

Thursday, November 22nd, 2012

 

What do you do when you need to earn some money quick, and the job market is tight?

When you rely on multiple streams of income, and you don’t have a regular eight to five job, it’s good to have a job that you can turn to that is certain to generate income when you are in a financial tight spot.

For me, one such job is to become a substitute teacher.

We can all think of many reasons not to like about being a substitute teacher, but one overriding reason to like it is that you can generate some quick cash.

The only requirement is that you must have a teaching certification to quality. You don’t have to have actually taught in the past, but you need that certificate in hand. If you already have a degree, there are universities where you can earn a certificate in one year, while studying part-time.

I have been a substitute teacher two times. Once, when I returned from working in Honduras with the Peace Corps, and the second time was when I started again just last month.

5 Reasons to be a Substitute Teacher

1.) Steady money. In the district I work with, substitute teachers are paid between $75 and $125 per day, depending on location of the school and teacher experience.

2.) Short hours. It’s usually 6 to 7 hours.

3.) Interesting people. Teachers and school volunteers turn out to be very interesting people to get to know. Some of them are down right inspiring. I met an effervescent grandfatherly gentleman last week at lunch in the teacher’s lounge who was a minister/substitute teacher. He had worked on the Indian Reservation, and several other remarkable places, as part of his career.

4.) To get a microscopic view of our educational system. I have a better understanding of the strength and weaknesses of the education system. The system is good in that it funnels the energies of many dedicated teachers into schools, but I found many kids attending schools are not prepared to succeed in school, mainly through a variety of issues in their home life.

5.) You get paid no matter how bad the day goes.

3 Reasons not to be a Substitute Teacher

1.) You can be stuck with bad students for the entire day. Sometimes all you can do is grit your teeth, and just try to get through the day.

2.) You have to connect with kids quickly. Not so easy when you don’t know their names or backgrounds, and they see “having a substitute” with synonymous with “having a free day.”

It’s a great feeling when you do connect with kids. Recently, I had one student come up and talk to me what his goals in life were, and one of his goals was to become a teacher. Sometimes students will come up to me after class and tell me that appreciated having me as their substitute teacher, or ask when I’m coming back again. That always helps the old ego.

3.) Some kids won’t like you no matter how good you are. They don’t want to be in school, and they don’t want people telling them what to do, least of all a substitute teacher.

Coping mechanisms to maintain some control of the classroom

Here are some ways that I have discovered to keep the kids pointed the right direction, and to maintain some shred of professional dignity in the process.

1.) Keep kids busy. A good teacher will leave a lesson plan for you that keeps the kids productively busy all day. The bad teachers leave a lesson plan with too few activities for the kids, or in some cases, they leave no lesson plan at all. I always bring my own lesson plan, just in case.

2.) Deal with problems with some sort of consequences, if only to write names on board.

3.) Don’t dwell on bad experiences; start with a clean slate each day. Let criticism roll off you like rain off duck’s back.

4.) If one thing doesn’t work with the kids, try something else. I have certain activities, like games and brain twisters, to fall back on that work in most circumstances. This is easier to do, the more experience that you have.

 Of course, there is a humorous side to being a substitute teacher:

Important Notice about Fix em Up Rent em Out:

My blog has been nominated in the Best Real Estate Blogs Contest.  If you would like to cast a vote in support of my blog:

Vote here for Fix em Up Rent em Out as the Best Real Estate Blog! (www.reiclub.com/blogcontest)

 

Related Posts

What Mr. Lincoln Taught Me about the Power of Stories

Convert Affliction to Anecdote – Utilizing the Stories from Your Hero’s Journey

 

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Posted in money, multiple careers | 16 Comments »

Dreams, Investment Houses and Creating Books

Thursday, November 15th, 2012

Freud

Sigmund Freud said, “Dreams are often most profound when they seem the most crazy. ”

But what really are dreams? Fearless Men shares a tantalizing glimpse in What Dreams Mean: How To Know What Your Dreams Are Saying To You.

As a fervent believer  in investing in fixer upper houses, I also like Fearless Men’s article Investment Properties Offer a Long-Term Source of Income.

Book writing and self-publishing is another passion of mine and I read with great interest Should I Create An eBook?  at untemplater.

Here are some other favorite posts from the precious week:

Wholesaling Do’s and Don’ts at Louisville Gals.

Are Large Companies Immune to the Fiscal Cliff? at Frugal Rules.

First Cruise Ship? 5 Big Ticket Items To Watch Out For at iheartbudgets.

5 Simple and Odd Things I do to Save Money at Frugal Habits.

PerkStreet Financial Review – The Best Online Checking Account at WorkSaveLive

Our $50K Duplex Is Worth $97K – Why? Part 2 ar Planting Our Pennies.

Old Buildings That Go Untouched at BlueCollarWorkman.

Being Thankful, Not Just For Thanksgiving – Giveaway at ModestMoney.

My Best Financial Tip at Canadian Budget Binder.

Choosing organizations to donate to: What do you factor in? at Young Adult Money

The Amazing Power of Debt at Club Thrifty

Being Thankful and a $100 Giveaway! at Eyes on the Dollar.

No Picnic for Young People, Either at AnyShinyThing.

Waking Up Early Black Friday? No Thanks at Pelican on Money.

 

 

 

_____________________

Coming VERY Soon!

How to Turn Your Home into a Rental House, Instead of Selling It

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Posted in best blog posts, blogs, book publishing, book writing, fixer upper houses, fixer uppers, fixer-upper business, fixing rental houses, real estat investing, self publishing, Uncategorized | 21 Comments »

5 Steps to Get Your House Ready to Rent by Terry Sprouse

Tuesday, November 13th, 2012

“Life is either a daring adventure or nothing.”

— Helen Keller

If you are following my suggestion and turning your old home into a rental house, or if you are just purchasing an investment fixer upper house, use these 5 steps to prepare your house to rent out.

 Step 1:  Remove Furniture

Move all of your furniture and personal belongings out of your old house. The absence of these items makes the house look bigger and the home is more inviting if it is not cluttered up with beds, chairs, food supplies, and toys. It also makes it easier to do a thorough job of cleaning the house.

This only applies to the first time you rent out your new rental house. After tenants leave in the future, they will take most of their things with them. Of course, some tenants do not follow the normal procedure, and they may leave in the middle of the night to avoid paying their last rent check.

(Occasions like this make it tempting to slip a magnetized GPS tracking device under the fender of the renter’s car.)

An incident like this happened to me a couple of years ago. Not only did the tenant leave a pile of clothing, bottles and boxes of cleaning supplies, cupboards of food, and a sofa, but also left behind a car that didn’t work. (So much for the GPS idea.)

Renters like this one are the exception. Tenants normally take all their things with them when they leave, making it easy for me to prepare the property for the next tenant, and without much effort, present an appealing yet empty house.

Step 2:  Clean Up

 Thoroughly clean the house. This includes painting walls (a fresh coat of paint makes the place look and smell good), washing floors, cleaning appliances (especially the oven), shampooing carpets, washing the windows, cleaning the bathrooms and checking the roof.

 Step 3:  Make Repairs

 Take care of all repair work. Leave nothing to chance and make all repairs before tenants move in. Change broken outlets and switches, patch holes, remove stains, replace cracked and broken glass, repair dripping faucets, replace missing shingles, and fix roof leaks.

The old saying that “Left to themselves, things always go from bad to worse,” is especially true with rental houses. It’s tempting to assume that that small leak in the bathtub, or a toilet that flushes most of the time, won’t bother anyone. But trust me, you will get that call to repair the bathtub or toilet at the most inopportune time.

This doesn’t mean that everything in the house has to be new, but everything should be in working order.

It is a rental house after all, and not Buckingham Palace.

For example, bedroom doors do not have to be replaced every time they have a crack or a hole in them. I rehabilitate the door with wood putty, and a fresh coat of paint. The guy in the “Easy Repair of Hollow Core Door” video below uses drywall mud to fill the hole, with equally good results.

 Buy used construction materials

Missing or broken light switches, outlets, covers can be replaced inexpensively with quality used ones. I have also purchased reliable doors, cabinets, stove tops, dishwashers, and toilets at stores that recycle construction materials, for pennies on the dollar. The Habitat for Humanity Store is one such place that I frequent for good used materials. There are 825 Habitat Restores in the United States and Canada. You can locate a store near you at www.habitat.org

Buy new or used appliances?

 If broken clothes washers or dryers cannot be easily repaired, our policy is to replace them with a quality used one, or with lower end new appliances (like the Kenmore brand from Sears).

 Buy bargain appliances before you need them

 Craigslist and yard sales are great places to find good used appliances at bargain prices. If I see a nice working appliance for a good price, I will purchase it, even though I don’t have any immediate need for it. I’ll just store it in our shed until I need it.

I bought a like-new furnace at a yard sale for only $40 and installed it into a rental house and it has worked great. For furnaces, there are very few moving parts to worry about, and the wiring is relatively simple. As long as the motor works, you’re home free.

I once literally picked up a clothes dryer from the side of the road that had a “Free Dryer” sign taped to it. I gave it a new home and it has been working

Low maintenance yard (in the southwest)

reliably for over 10 years now. The only repair, about five years ago, was that I had to change the on/off switch on the door.

Step 4:  Simplify Landscaping

The front yard of your rental houses must look great. Curb appeal gives the potential tenants a good first impression. Simple and neat landscaping gives the client  comfort that the yard is low maintenance and ecologically and economically low in water consumption saving the tenants money on water and saving you time later not having to replace a yard of dead plants.

This yard went too low maintenance!

I personally like to utilize decorative rocks on our rental yards, and plants that don’t require any watering, like Mesquite and Palo Verde trees, which have long roots that tap into the aquifer.

 Step 5:  Re-key the Locks

 One other thing that I like to do before a new tenant moves in is to re-key all the locks. This is cheaper than buying new doorknobs, and it provides security for our tenants. This protects you and your tenants in case a previous tenant has surreptitiously kept an extra copy of a house key.

 

Related Posts

Remove that Garbarge Disposal Now!

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

How I Evicted A Problem Tenant in 4 Steps

When to Hire a House Inspector – Radio Interview with Rich Peterson

Getting Rid of Bad Tenants

“Turn your home into a rental” on Mark Wayne Show

7 Reasons to Live in a Fixer-Upper House While You Repair It

6 Steps to Roof Maintenance (for the Home that will Turn Into a Rental House)

Our First Rental House Plunge

10 Most Frequent Problems Found by House Inspectors

5 Steps to Get Your House Ready to Rent by Terry Sprouse

5 Steps to take if your house is flooded

Some perfectly legal ways to maximize your rental profits

Add “Start a Rental House Business” to Your Bucket List

The 5 Rules on How to Lose Money and Get Your Rental Property Trashed by Tenants

Window Repair with #2 Son

Required Roof Maintenance for Fixer Upper Houses

Learn to Repair Your Fixer Upper Houses

How I Got Started In Fixer-Upper Houses

How to learn to operate a fixer upper house business

The Peaceful Warrior and Fixer-Upper Houses

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Posted in buying fixing renting rehabs, buying real estate, fix up houses, fixer upper houses, fixer uppers, fixer-upper business, for rent, how to make money renting housing, how to turn your home into a rental property, making repairs, rental house improvements, rental houses, rental properties, rental property, rentals, renting, repair, repairs, tenants, turn my home into a rental, turn your house into a rental, turning a primary into a rental, turning an owner occupied home into an investment property, turning my home into rental property, turning your home into a rental property | 24 Comments »

Claiming a Tax Exemption When Selling a Home That is Now a Rental

Wednesday, October 10th, 2012

I’d like to share with you a recent question that I received from a reader of my blog. The question was:

“I lived in my primary home for two years and now it’s a rental, can I sell it without paying capital gains?”

My “short” answer is:

That depends on how long the house has been a rental.

No need to push when  selling your primary residence

By Way of Background Information

The 1997 Taxpayer Relief Act was a great boost for average people who wanted to sell their home and buy a new one. It was also a great boost for investors. Couples are allowed to exclude up to $500,000 of the capital gain on the sale of their primary residence. Single individuals can exclude up to $250,000.

In other words, the sale of the house is never reported on your federal IRS forms if the capital gain is less than the $500,000 and $250,000 limits.

This exclusion is based on compliance with two requirements:

1.)  The home must have been the primary residence for both spouses during two of the last five years. The two years do not have to be consecutive but if you rent out the primary residence for more than three years you would be required to occupy it again for two years.

 2.)  The exclusion is available only once every two years.

What if you sell you house and your capital gains exceed the established limit?

Capital gains above $250,000 for singles and $500,000 for couples are taxed at the applicable rate.

What if you sell your house before meeting the two year requirement?

If you qualify under one of the “unforeseen events” listed in  Internal Revenue Service Publication 523 Selling Your Home, such as a job change, illness or an unusual hardship, you can still qualify for a prorated exclusion.

The Ideal Strategy for the Pathologically Conservative Investor

Typical conservative investor.

Utilization of this tax exemption is the safest investment strategy for the conservative investor who wants to take few risks. This is the type of investor who wears both suspenders and a belt to hold up his pants. They like to play it really safe.

Under this strategy, the investors can qualify for the least expensive type of  loan, the owner-occupied loan. There is no need to worry about tenants destroying your rental property or not paying the rent. You completely control the investment by living in the property yourself. When you sell, you have the opportunity to make up to $500,000 tax-free profit every two years.

So, following that long-winded, yet surprisingly informative, background spiel, my “final” answer to the question is:

If you have lived in your house 2 of the last 5 years, you are entitled to take the exemption.

 

Coming Soon!

How to Turn Your Home into a Rental House, Instead of Selling It

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Posted in invest real estate repai and sell or rent, investing, investing in real estate, investment house, investment property, investments, investmet properties, real estat investing, real estate, safe ways to invest in real estate, tax, tax exemption, Tax Tips, taxes | 17 Comments »

What Riles Me Up – How to be a great radio show guest

Wednesday, October 3rd, 2012

Yesterday, I participated in a telephone seminar on “how to be a good guest on radio shows.” I have been on many radio shows to promote my books, but I’m always looking for new ways to be a better guest, or perhaps more appropriately, a greater guest.

One point that the presenter mentioned really struck me. He said that radio shows prefer guests who have a strong opinion. They want you to be riled up about something.

Not gonna take it.

The presenter asked, “Why are you angry? What are you going to do about it? What makes you angry about your profession?”

I told the presenter, “I buy fixer upper houses in Arizona and turn them into rental properties, and I write books, but I’m not really angry about anything.”

He said, “Aren’t you angry about the economy, or the fact that a lot of Canadians are buying up foreclosed houses in Arizona?”

I said, “No way.

Let me entertain you, eh?

Sure, our Canadian friends have infiltrated the entertainment industry with singers, actors, and comedians practically indistinguishable from their American counterparts, but they don’t buy fixer upper houses, which is my gig; and the recession makes houses cheaper for me to buy.

But, I was angry when I had my work hours reduced during the 2001 recession. That forced me to change my way of thinking about what constituted economic security, and got me started on my fixer-upper house business. That’s also motivated me write my first book.

Looking back, I was wrong to be riled up at the recession. What I should have been riled up at was my own blindness and misplaced faith in something as ephemeral as a steady economy. I should have been riled up that I waited for a disaster to strike before I took action.

Maybe my approach should be that I am riled up about other people who don’t learn from their own painful experience, or from mine. Not that everyone should run out and buy fixer-upper houses, but everyone should  establish economic security, or carve out their niche, apart from, or in addition to, their 9-5 job.”

He replied, after a thoughtful pause, “maybe that’s it … people who never plan for a safety net.

This is the major problem we are seeing … if people prepared, they wouldn’t be so panicked.”

So that’s it.

Now I have something to be riled up about; to express my rightful indignation over.

Preparing for my next  radio interview

Watch out!

When I hit the radio waves to promote my next book I’ll come out swinging! Grrrr!

Weekly Blog Roundup

Additional recent blog articles that I liked:

How to make a vacant property look occupied at Landlord Investor

Amazing Entrepreneurs – Interview With Diane Conklin at Louisville Gals

5 Thoughts Women Wish Men Knew and Theodore Roosevelt at Fearless Men

5 Easy Methods to Save Money without Thinking at Frugal Habits

Greek Hummus Dip Recipe at Work Save Live  (mmmm)

PoP Balance Sheet – September 2012 at Planting Our Pennies

What Happens to Kids Who Were Bullied? at Blue Collar Workman (Are you looking at me?)

GRE Tips: Acing The GRE As A Middle Aged Person Long After College at Untemplater

Tax Implications Of Running A Blog at Modest Money

Why buying the most expensive motorcycle on Ebay saved me money at Reach Financial Independence

Too Old To Have This Much Crap at Any Shiny Thing

Rental Property Series: How Much Did it Cost at Eyes on the Dollar

Extra Income During the Holidays at Making Sense of Cents

 

Coming Soon!

How to Turn Your Home into a Rental House, Instead of Selling It

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Posted in book publishing, book writing, carve out your niche, Fix em Up Rent em Out, how I got started in fixer uppers, how to turn your home into a rental property, radio guest, radio interview, radio interviews | 22 Comments »

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