rental property book recommendation

liz_hMay 14, 2006

We are building a new house, and plan to use our current home as a rental property. We may or may not add additional rent houses in the future. Can someone recommend a book that discusses the tax consequences and other aspects of being a landlord?

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joyfulguy

Liz H,

Your profile lists you as being resident in the United States - rather a large area.

If you might choose to be somewhat more specific, you may find that someone here who has experience in that game may live near you and would be interested to share knowledge.

I think that it would be well for you to become familiar not only with various issues that relate to rental real estate in general, but some situations in your area which are specific to it.

Most librarians possess a great deal of useful knowledge. Quite likely they may have some relevant information to offer, as well as advice about books on the subject. Almost certainly they'll have a number of them ...

... and, guess what ... they're free. To use for a limited period - and you may be able to renew them for an extra period or two online - during which time you might be able to choose which one(s) you'd like to add to your library.

If they're a small system, they may have inter-library connections which would allow you to borrow books from other libraries in the system.

Around here, the library system gets out an information piece every month or so that lists educational sessions, interest groups, book clubs, fun days for kids and a variety of subjects - maybe there's one for (potential) landlords. Or they might sponsor one, next season.

Do the people who deal with what's going on in your area know whether there may be gatherings of landlords? Or an association?

Do you know some real estate people? Quite likely some of them know of a few people who buy homes and rent them out. Homebuilders? Or their association.

If you ask around in groups to which you belong, you may find some people who are landlords.

Sometimes leaders in such groups, e.g. clergy, know a good deal about the interests of their members.

Maybe some would even be so fed up with the problems which some tenants provide without charge that they might be willing to sell their home(s) ... to you!

Good wishes for success in your quest.

ole joyful

    Bookmark   May 16, 2006 at 11:24PM
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joyfulguy

How about accountants? No doubt a number of them have clients who operate rental homes ... and wouldn't be offending confidentiality rules if they gave their name, possibly after asking their client's permission.

o j

    Bookmark   May 16, 2006 at 11:37PM
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liz_h

joyful,

Thanks for a couple of excellent suggestions. I will be speaking with my sister who is an accountant for general information, but I know that experiences in Southern California bear little relation to this part of the world!

Liz

    Bookmark   May 21, 2006 at 11:00AM
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brickeyee

What you will find in the books are a lot of 'get rich quick' and 'no money down' type publications. Some of these strategies work in a rapidly rising market. Most of them fail if the market slows or stalls even for a brief period.
The old saying of 'It takes money to make money' is still true in RE investing. If you put 20% down in most markets you can then rent to cover the mortgage. Not always, so you need to run the numbers and decide. The return is still leveraged, so a 1% increase in value is a 5% return on the investment.
The tax benefits have been significantly limited in the past few years (do mostly to abusive tax shelters). There are limits on deducting passive losses (and these include real estate) against earned income, and even against other Ânon-like kind losses (like stocks). The losses can be carried over from year to year, but loose value as they are carried forward (inflation at work).
If you can survive the first few years of rental ownership, the mortgage stays steady and rents mostly increase, so the cash flow improves and short term profits occur. These are a nice bonus to accompany the long term returns.
No mater what, you need enough cash or credit reserves to cover lapses in renting and repairs. If you are in a neutral cash flow, cash reserves are best. If you are in a net positive flow you can afford to repair on credit.

    Bookmark   May 21, 2006 at 8:08PM
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jorasmom

An excellent book is Investing in Real Estate, by Andrew McClean and Gary Eldred. Good luck!

    Bookmark   May 27, 2006 at 6:30PM
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vikki083

your town probably has a real estate investors club. There are quite a few online. You can get good answers there. Our local group has a couple RE attorneys and brokers.

    Bookmark   May 29, 2006 at 12:21PM
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liz_h

brickeyee - thanks for a lot of good points. 20% makes sense for me.

jorasmom - thanks for the title. I just checked and it's available at my local library, en electronic form. I've been meaning to ask about those e-titles that come up in their searches.

vicki083 - I hadn't heard of real estate investors clubs. Thanks for a totally new (to me) idea. Are they primarily discussion groups, or do they pool funds for investment, much like a stock investment club?

    Bookmark   June 2, 2006 at 8:52PM
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