The American Dollar
OUR FAMILY. OUR MONEY. ONE PERSONAL FINANCE BLOG.
One industrious American family's focus on a financial goal of freedom. Through worldly personal finance education, here is our story.
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Our Story: Both my wife and I are 27 years old and have gone through financial hell and back. Now we are on track to financial freedom, however we are not financial advisors or professionals, just everyday people. Share our journey from a negative networth and email us if you have questions or comments! :)



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Sunday, August 05, 2007

Buying a New Home and Renting the other!

My wife and I have decided to jump into the real estate investment pool. Right now, our toes are touching the water and getting a feel of the temperature. We purchased our first home when we were 22 years old and it has appreciated quite a bit in the past 4 years, almost a $70,000 gain and since we got the home on such a great deal, the positive equity has been staggering. Now we want to rent it out. A coworker that I have gotten to know in the past couple years has shown a great interest in renting out our home... and they might get their wish.


In these past couple weeks, we found our dream home, wrote up an offer, had it accepted and we completed the home inspection on my 27th birthday. Seeing as the new home was only 2 years old, the home inspection went without a hitch. We basically paid the guy $300.00 for the peace of mind and also he showed me a few things that I probably wouldnt have known about the house(where this pipe goes, what does this particular valve turn off, how to work the dishwasher, etc).


Now that we have found a home, we are hoping to close by the end of the August, depending how quickly the lenders are going to be (a whole other blog post). Anyway I relayed the rental suggestion to my coworker as well as a couple family members. They all loved the idea, however my coworker is willing to pay a little bit more. Since this is strictly a business transaction, I had to tell my family members the bad news. Plus my wife pointed out the drama that would unfold if we had rented to close family. Nevertheless, my good friend and coworker, brought herself and her two children to visit the home and her and the kids loved it. She wanted to sign the rental agreement right then and there. But I didnt know even where to start...


I thought about it last night and was thinking wow, This is my first rental property and my first time being a real landlord. I have a residental lease agreement contract that I can write up and thats it. Perhaps I need to seek legal or tax advice. I have a reputable lawyer but no tax accountant. Im wondering also if I should put my rental in an LLC so I can take the tax deductions and other tax benefits. We may have to seperate business and personal assets too. I know I would need something to seperate the liability factor. I will have to call my lawyer and see what exactly he can answer and whom he can direct me to if he doesnt know. There is just a hundred different checks that I have to do and I want to make sure there is nothing that I'm missing or forgetting. Anyways, other sound advice is always welcome. Otherwise, I'm excited that things have been in motion to get into our new home. We have already gone and picked out mentally some furniture and items we want in the home. Things are just happening so fast, I have to stop and think to myself, 'Is this really happening? Are we really doing this?', and I get a nervous, scared, anxious, and excited feeling all at the same time.

1 Comments:

Anonymous Anonymous said...

Good for you for doing so much so young. My wife and I didn't really get our act together until we were in our 30's and we're still working on it. We me in the financial/insurance business it helps me stay on top of my game because I deal with it all the time. My wife has been on board as well but not as consistent as I'd like her to be. We're selling our house right now. We thought about renting but thought it would be too much of a hassle.

Great blog.

Jerry
www.leads4insurance.com

4:24 PM  

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