Maria asks…
Is it worth renting out a property at a net loss so that in the future it can reach a profit?
If the rent the landlord receives is about 65% of the cost of maintaining the property (mortgage, taxes, insurance, maintenance, and so on), is it worth holding on if it’s projected to let’s say in 5 to 10 years break even and after that be at a profit until the mortgage gets paid off? Or do most landlords break even or make a profit from the beginning?
answers:
The following assumes that you have a “legal” apartment
(i.e., zoned and taxed by your local community, city, and/or State),
as opposed to an “illegal” apartment
(i.e., typically, in a home that is not so zoned
and for which no taxes are paid):
Very few landlords break even or earn a profit in the first year, unless your expenses are so high that you are able to make substantial deductions in that year’s tax returns, though you might go broke long before then!
Generally speaking, it will take 3-5 years before your business will see a profit, as is the case with most businesses. Of course, if you bought a distressed or otherwise inexpensive property, then you might see a profit sooner. On the other hand, any zoning violations, complaints, utility or appliance failures, and other expenses may bankrupt you.
In conclusion, without significantly more details, there is no way to give you a definitive answer. Check with your lawyer, zoning board, tax authority, insurer, property inspector, better business bureau, small business association, and . . . Well, you get the idea! Fortunately, most of them won’t charge you anything for basic information and assistance (do not rely on web-based info, as it may be out of date).
Good luck!
Lisa asks…
Landlords, what insurance company do you use for rental properties?
I use Farmers and it seems a little expensive. What are some good quality, less expensive insurance companies for landlords?
answers:
I use State Farm
Betty asks…
In Colorado do you have to have renters insurance?
My lease says this
INSURANCE: Landlord and Tenant shall each be responsible to maintain appropriate insurance
for their respective interests in the Premises and property located on the Premises. Tenant
understands that Landlord will not provide any insurance coverage for Tenant’s property.
Landlord will not be responsible for any loss of Tenant’s property, whether by theft, fire, riots,
strikes, acts of God, or otherwise. Landlord encourages Tenant to obtain renter’s insurance or
other similar coverage to protect against risk of loss.
I mean doesn’t this mean if I want to protect my stuff I can but not mandatory? It says to insure your ” respective interests” Like if I had a expensive piece of art work on my wall I should insure it but I don’t have to insure the whole house do I? My property managers are trying to tack it on to my rent. I wouldn’t mind paying the monthly renters insurance payment. It’s the down payment that is a little high for me right now.
answers:
Yuh.
Donna asks…
Why would a landlord or property manager need the following information?
The property manager asked for a credit check/background check which we authorized. We also showed him pay stubs and gave him the references he requested. He called and said he needed additional information. He asked for a bank statement, tax information for this past year, marriage license, birth certs., proof of social sec. #s for everyone in our family, proof of insurance for our car, health insurance card, copy of my current lease. I can kind of see tax info to see if we make enough money, but why would he need the other information? This is kind of creeping me out. Then he said he would be setting a curfew for our kids(7pm bedtime) & our dog would need a shock collar. Our dog doesn’t bark a lot – he is older and well trained. He will bark at noses & the door bell, but other than that he is mellow. We will not let someone else set our kids bedtime. For the record the younger ones are in bed by 8, older ones 9 or 10, but they aren’t running around. We won’t be taking the place, but why did he need all that? Only had 3 landlords in my life – don’t move around a lot, so just curious.
answers:
I’ve lived in many apartment complexes and never was so much information requested of me. He shouldn’t need the tax information. The check stubs should give him all the information regarding your income that he needs. The proof of insurance on your car and health insurance is absolutely none of his business and I don’t see how that relates to the apartment/house at all. The social security I can understand, as that has always been required of me. The marriage license I have seen requested of couples who claim they are married because they are usually allowed to fill out one application together and pay one fee, instead of two application fees. Sounds like this guy is extra nosy and controlling. I think you guys made a good call by not taking the place. He gives me the creeps just like he does everyone else here!
Richard asks…
how long should it take for a broken ankle to heal? And a sprained one?
my sister did this to both ankles…just wondering. If she fell off of some small steps at the trailer she was renting, should the landlord use thir property insurance for her bills?
answers:
Not really sure about the broken ankle, i think it depends on which bones are broken.
I sprained my ankle last summer on a hike and it still bothers me. It took about two months to stop the extreme pain. I have done tons of research and some experts say you never completely heal from a sprain. Sprain is a full or partial tear of your ligaments.
There are things you can do to help ankle ligaments heal. One being using your big toe as a pointer, write the full alphabet in the air, this is supposed to encourage the ligaments to heal correctly without scar tissue.
Good luck with your sister, I think the only way that the landlord would be responsible, is if the property does not conform with ADA. Meaning in this case, no hand rails. ADA-Americans with Disabilities Act- requires that there be handrails for public access. A lawyer can give you free advise on this, you should look into it.
Linda asks…
Questions on fire insurance: do I have to pay for the house damage?
My apartment unit just caught on fire yesterday, and only the entire kitchen burned down, everything else is covered with soot, and there are couple smoke damages on the wall. I don’t think my family bought the renter’s insurance. But the landlord, who owns my apartment unit and many other, has insurance. My main concern is that will I have to pay for the house damage (the burned kitchen, cabinets, carpets, appliances) that originally belong to the house? Will this matter whether the fire was caused by negligence or simply pure accident? I am willing to pay for my own property loss. It’s just the cost of restoring everything will be a major impact.
answers:
The answer from Tim E is very incorrect. The main reason to buy renters insurance is to cover the damages you cause to the house or building you are renting in. Coverage for your stuff is a minor consideration.
Now on to your situation. If you are found to be at-fault for the fire starting you are in serious trouble if you don’t have renters insurance. The landlords policy will pay to repair the building and then his insurance company is going to come back to you for reimbursement of whatever they pay for repairs. You may be looking at $7500+.
The company will give you a chance to settle voluntarily, possibly with a monthly payment plan. If you don’t settle voluntarily they will sue you and anybody else named on the lease. The court will grant them a judgment against you. Then they can add interest to the claim and in some states have your drivers license revoked.
I have seen hundreds of cases like yours where people didn’t buy the renters insurance for approx $12 per month and then end up making payments to an insurance company for 5 to 10 years.
Good Luck
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