Posts Tagged ‘turn your home into a rental property’

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

Tuesday, June 18th, 2013

Turn a Rental House into Your Home; Then Your Home into a Rental House?

For small fixer upper house investors, like my wife and I, it can pay off big dividends to move into the future rental property that we are repairing. We don’t always do it this way, but we find there are compelling advantages to this technique. These advantages include:

1.) Reduce Financial Strain

We don’t have to make house payments on a property that has no tenants paying rent. In other words, living in the house while we repair it is better than having it empty. If I we live in it, we make the mortgage payment that I would normally have to make anyway. However, if we tried to repair the house, while still living in another house, we have two mortgages to pay, until we can finish repairs on the new house and then rent it out.

This can be a real strain on the budget, especially when repairs go on longer than anticipated. What we like to do is to turn our former home into a rental house and move into the fixer-upper. We usually plan to stay in the new residence anywhere from 6 months to 2 years.

2.) Better Loan Terms

We get better loan terms as an owner occupant. Interest rates on a loan can be one percent lower if we purchase the house as an owner occupant, rather than as an investment property. The less we pay each month during the repair process, the better.

3.) Learn Repair Skills

Instead of rushing through the repair process and having to contract out much of the work, in a more drawn out process we can take the time to learn new repair skills. It also affords us the luxury of being able to make mistakes and learn from them. For me, at least, that is an integral part of the learning process.

4.) Make More Money When Renting

Because of the lower loan terms and lower monthly mortgage payments, when we later rent the property out, we can turn a tidier profit each month. Or, we can make it more attractive to potential tenants by offering to rent it at a lower price.

5.) Accommodates Our 8-5:00 Jobs

Feverishly repairing a new rental property nights and weekends, puts a strain on my wife and I, since we both have day jobs. Stretching out the process reduces the stress level considerably.

6.) Get to Know the House

A slower repair process allows me to really get to know the idiosyncrasies of the house. Later when tenants request repairs, my in-depth knowledge of the house may make these future repairs easier.

7.) Reduce Taxes If We Sell

Although, we believe in the buy-and-hold strategy, if we live in the house for two years and decide to sell, we can sell without paying federal capital gains taxes. If the capital gain is less than $500,000 for couples, the sale of the house is never reported n federal IRS forms.

One Caveat

If you follow this strategy and have a family, expect to live under some primitive circumstances for awhile until you start to get things ship-shape. My kids are thrilled at camping out in a new house, and as long as I get the showers working fairly quickly, my wife is happy. If you take the perspective that it’s an exciting adventure, you won’t be disappointed.

 

Related Articles

 

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 how to turn your home into a rental property, investing in your spare time, learn to make repairs, loans, safe ways to invest in real estate, small investor, tax, tax exemption, taxes, turn my home into a rental, turn your house 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 | 16 Comments »

Our First Rental House Plunge

Wednesday, May 22nd, 2013

By Terry & Angy Sprouse

 

We (Terry & Angy) are partners in both marriage and in real estate business.

Who says married couples can’t be business partners? And the great thing is we have never considered divorce . . . murder sometimes, but never divorce. Well, never murder, really, but maybe forcing each other to watch, in an uninterrupted viewing, the horrifyingly bad movie, The Clan of the Cave Bear.

In reality, this business has been a bonding experience, not only for us, as husband and wife, but also for our two boys, who have been active participants in the business from the very beginning.

9/11 Attacks Take the Starch Out of Us

We started in real estate investing following the terrorist attacks on the World Trade Center. The ensuing economic recession forced our hand. The hours at Terry’s job were drastically reduced. We realized that for the security of our family, we needed to have a business on the side—a business able to provide regular cash flow in case Terry’s 9 to 5 job suddenly went away.

This led Terry to experience a very intensive period of soul searching and in-depth research (accompanied by gratuitous whining and moping). We decided that a rental house business was the best way to go. We were excited to find the rental business was an easy business to learn and to start. This business required no special license, degree, or training. And the results tempered the most important source of Terry’s whining. The rental business offered the potential to make money.

We Jump In and Hope the Net Appears

We essentially just jumped in with good intentions and very little practical knowledge. After we made up our minds that this is what we wanted to do, we simply bought an inexpensive fixer-upper house, one that had foreclosed and been repossessed by a bank. We moved into and lived in the fixer-upper house while we did the necessary repairs.

But most importantly, we did not sell our original home. We rented it out.

Angy Puts Her Foot Down – On Top of Terry’s Foot

It took a little adjustment to move into that first fixer-upper house. The first thing we did was to get one of the bathrooms back into working condition. Angy’s negotiating stance on that topic was, “I’m not living in that house unless at least one bathroom is fully operational!” At that, who could argue? Marveled by a mother’s logic, together Terry and the boys nodded their heads and dropped the labeled empty plastic bottles they held in their hand into the Recycle Box.

As we went forward with the repairs, we changed bedrooms frequently. Moving from room to room, we cleared out of one bedroom to install tile and then moved again out of the next to make room to install carpet. Huffing and puffing, we moved furniture from one side to the next as we worked through the house painting all the walls. We replaced the cabinets in the kitchen, the fixtures in the bath, the leaky plumbing and the outdated lighting.

Group Hugs

Preparing meals required serious creativity. Entertainment and rest required the same. But the support and flexibility from all family members, and a few timely “group hugs” (some through gritted teeth), got us through.

 

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Recommended reading:

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, fixer upper houses, fixer uppers, fixer-upper business, fixing rental houses, house repair, house repairs, how I got started in fixer uppers, how to make money renting housing, purchase second home and turn current home into rental, real estat investing, rehab, rental, rental house improvements, rental houses, rental properties, rental property, repair, repairing properties, repairing rental houses, repairs, 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 | 23 Comments »

“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.

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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 »

Turn Your House into a Rental Property

Saturday, March 29th, 2008

‘
An easy way to start out in real estate investing is the time when you are ready to upgrade and buy a new house, as most people do every six years. Instead of selling your present house and buy a new, keep your old house as rental. For more details see my video on the topic “Turn Your Home Into a Rental Property” and my Ezinearticle.com piece Don’t Sell Your Home, Turn it Into a Rental!.

Another good article I came across is Should I Buy a Home in 2008? by Darin Sewell. Dreadful information about the slumping American housing market is all over TV news and in almost every paper. During this housing slump many potential first time home buyers often wonder, should I buy a house in 2008? While every persons situation is different this article presents a useful perspective on whether or not to buy a house in 2008.

Info on Terry’s Book

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A small grouting job in the bathroom

Sunday, November 18th, 2007

Sunday, work continued on the fixer-upper house that we live in, and plan to sell (for more info on this investing strategy, see “How to Turn Your Home into a Rental Property, Instead of Selling It!” coming in Sept. 2012.) There was a little grouting left to do in one of the
bathrooms, around the tiles that made a baseboard-type border abound the bathroom floor.

Here are the tools I used – small bucket, white grout, a trowel, and a small “mud” (or joint compound) spatula (not pictured)

I mixed up a small amount of grout. Add water to the powder until you have grout the consistency of peanut butter.

When I mix grout, I wear a mask or kerchief to cover my mouth and nose. The grout mix contains cement, so if you breath in the powder it can scar your lungs.

I apply the grout with the small spatula.

Afterwards, I clean up tools with water.

After the grout has cured for three days, I apply grout sealer.

There are two pretty good books on floors and tiling published by Home Depot, “Tiling 1-2-3” and “Flooring 1-2-3“. I recommend “Flooring 1-2-3”, if you just want to buy one book. It cover tiles about as well as the other book, and also addresses how toinstall several other types of flooring. I used it as a guide to install both laminate flooring, and vinyl flooring.

As always, to make money in the fixer-upper business its best to do everything yourself. You learn by doing. Start small but work up to bigger projects.

Our first tiling project was in a small bathroom, a good place to learn the process. But since then, my wife and I have worked our way up to doing large bedrooms. We feel comfortable tackling any tiling project now.

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Posted in do it yourself, fixer upper houses, fixer uppers, fixer-upper business, fixing rental houses, grout, house repair, house repairs, how to turn your home into a rental property, making repairs, rental house improvements, rental houses, rental properties, rental property, rentals, repair, repair books, repairing properties, repairing rental houses, repairs, small investor, start small, Uncategorized | 2 Comments »

Fixer upper ceiling repair update

Tuesday, October 23rd, 2007

Sunday was a day to continue work on our present fixer upper house.

The house had a leaky cooler on the roof when we bought it. I repaired the roof with E-LAS-TEK rubberized roof coating (for flat roofs like we have in Tucson), but I had not repaired the ceiling until Sunday It had been stained by the water from the roof.

(The picture dates are wrong. I didn’t update the camera last time I changed batteries.)

I scraped the old paint away above the bathtub. I used joint compound (“mud”) to patch the spot. After the mud dried, I brushed on “Kilz” to cover the stains and to prevent any future leaks from the roof to stain the ceiling. Later, I will paint it again with the white latex paint we are using for the bathroom.

Another project I worked on Saturday was to continue painting the house roof overhang. It could easily have been 50 years since some sections of the overhang were painted, other sections never had paint. The wood absorbs the paint like a sponge. The wood is so old that, in places, a it has a hair-like covering. Before painting, I scape off the hair (I give it a shave) with one of my “mud” spatulas. You could probably use a wire brush too, but it comes off pretty easy with the spatula.

I started off using the cheap $1.00 “throw-away” brushes that you can buy at Home Depot. They didn’t hold the paint too well, so now I am using a more expensive brush which is working a little better. The paint spreads a little easier.

Most people wouldn’t notice whether or not the overhang was painted. However, we want this house to last a long time, so the paint goes on.

As I mentioned in an earlier blog, my wife & I do the repairs on this house in fits and starts. Since we live in the house, we don’t have the the pressures to do it rapidly, like we did for our last fixer-upper house. (For more info, see my latest book “How to Turn Your Home into a Rental House, Instead of Selling It).

For that one, the “Planeta” house, we worked late into the evenings and we would take turns getting up early the next morning, to put a few hours in before going to work. One of us would stay home with the sleeping kids. Making the monthly mortgage payments and all the repair costs that we were racking up, gave us real motivation to finish and get a renter in there ASAP.

In the present situation, it works best for me when I set easy short-range goals. Right now my goal is simply to get up early & paint for one hour before I eat breakfast and get ready for work. On weekends I can do more, but just an hour a day keeps the ball rolling.

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Posted in do it yourself, fix up houses, fixer upper houses, fixer uppers, fixing rental houses, house repair, house repairs, how to turn your home into a rental property, learn repair skills, learn to make repairs, making repairs, painting, repairing properties, repairing rental houses, repairs, turning my home into rental property, turning your home into a rental property | No Comments »