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Help with transition personal home into first rental

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  • Help with transition personal home into first rental

    Wanting to keep townhouse near hospital and transition it into a rental unit and looking for some help with that process...

    Unsure on the timeline of this occurring but wanted to get prepared as best as possible to pull the trigger if a good house in area I'm looking becomes available to purchase.

    Townhouse which would be rented was built in 2005 so starting to appear a little dated and could use some updating (floors, cabinets, counters, etc).

    Recommend creating LLC for property? Should that be done immediately before renting it out or any reason to go ahead and complete that process ahead of time while still living there?

    Any benefit to performing renovation/updating now vs later? Could the expenses incurred in updating property help from a tax standpoint one way or another?

    Any other recommendations which I may be overlooking that would be helpful in this new process?

    Thanks for the help

  • #2
    I decided to get an umbrella policy rather than doing a LLC. If the property is in a desirable area and the rental market is robust it might not be necessary to do upgrades other than paint and floors. Hardwood floors or a prefinished wood type has been a must in all my rentals. Carpet doesn't last and personally I think it is dirty so that is where I would spend my money. Unless the cabinets, appliances etc. aren't functional I prefer to wait until I'm ready to sell to do a major rehab. Best wishes.

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    • #3
      If it is clean and not broken and looks decent - keep it. Renters are haaard on properties so you will have plenty of chances to upgrade later.

      If you create an LLC you probably can’t keep existing mortgage so will create issues. We got a $3M umbrella policy instead.

      if you paint - don’t do flat paint.

      I prefer to not raise rent on tenants if they renew one year leases. It saves me a bunch of work and time. We raise rent when tenants move out.

      make sure you follow state or local landlord rules for your location - sometimes certain disclosures are required (led, etc).

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      • #4
        Originally posted by Budgetmaestra View Post
        I prefer to not raise rent on tenants if they renew one year leases. It saves me a bunch of work and time. We raise rent when tenants move out.
        This has been my approach also. If I have good tenants I'm happy to keep them without rocking the boat.

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