1st snowbird winter in AZ--Renting home furnished

Grit dog wrote:
DTA has some good points, but "gigantic legal trouble" is a stretch.

The role of an attorney is to offer advise and solutions. I can tell you that turning your home and personal property together into a part time rental that you live in some and rent some is a recipe for legal problems, especially if a major problem develops, or the tenants know how to game the processes.

Here is an actual case: The tenant falls down the basement steps because the light bulb was burned out. The landlord knew or should have known the bub was old and subject to failure. The landlord knew or should have known that a fixture with more than one bulb would prevent dangers until repairs could be made (replacing the bulb). The tenant can no longer work because of injuries. The landlord was found negligent and had to pay the tenant his projected earnings for the rest of estimated life plus medical bills and an amount for pain and suffering. The settlement was in the tens of millions of dollars and was above the landlord's policy limits, but since he was a real estate investor, his net worth was substantial so he had to dissolve his holdings to pay.

I call that a gigantic legal problem. Extreme, yes, but it illustrates the potentials.

More realistically, the tenant refuses to leave the premises after the term is up and/or does not pay. Eviction is the only process to remove them from the premises. That process can be quick and easy or frustratingly long and expensive, depending on the state. The tenant claims your personal property is actually his, and the landlord failed to inventory accurately and legally the personal property in the home. It will take a Court Order to make the determination who owns what. Most attorneys get about $250 an hour. Believe me, you can eat up a lot of money quickly.

None of these are "gigantic legal problems?" I will let the readers of this forum decide. The potentials are great, if the rose colored glasses are removed.

DTA has some good points, but "gigantic legal trouble" is a stretch.
Insurance, call your company. You can change between landlord and homeowner policy at will. Can also get a rider for contents if you're on a landlord plan.
Taxes, either deduct mortgage interest if you have any for the portion of the year you're occupying and deduct everything else by law when you're renting, or rent it under the table. Both ways work. One is more legal than the other.
Know that rental deductions are limited and not allowable at certain income levels. Take a look at that if you're diving into the financials of it.

DownTheAvenue wrote:

lizzie wrote:
It is always interesting to see how the nay-sayers love to get into bursting somebody's bubble. This is an RV forum. Look for legal advice, information about rental insurance and liability elsewhere. If all of this stuff were true, nobody would ever rent anything, anywhere. Since 1962 we have had rental property of all kinds; apartments, townhouses, single-family dwellings, beach cottages, and seasonals. We consult our CPA, our insurance agent, our attorney, and we are up-to-date on the tax codes that apply to us. We deal with the "emotional" aspects ourselves. This is not rocket science. The OP sounds like a thoughtful person who has sense enough to work through whether or not he wants to rent his home.lizzie

You, my friend, have missed the whole point. The OP posted about renting his personal home where he has and will continue to live. Not an investment property. Actually he will be, in essence, time sharing his personal home with a tenant.

Since this is a RV forum, like you remind us, why are you posting about rental property you have owned?

The OP needs to make an informed decision. It is a viable concept and many successfully do it. But the issues need to be addressed.

X2

A fellow RV'er asked a question.

Preparing for our first winter in AZ......Renting home fully furnished for 6 to 9 months...
Any advice welcome.

Rv'ers who have rented answered and shared their knowledge,experience, and offered their advice.

I for one went into rentals without having anyone advise me of the pitfalls.

All I can say is renting out your home and/or rental property is not for the faint at heart. And especially if it is short term personal home and you plan to return to live in it.

lizzie wrote:
It is always interesting to see how the nay-sayers love to get into bursting somebody's bubble. This is an RV forum. Look for legal advice, information about rental insurance and liability elsewhere. If all of this stuff were true, nobody would ever rent anything, anywhere. Since 1962 we have had rental property of all kinds; apartments, townhouses, single-family dwellings, beach cottages, and seasonals. We consult our CPA, our insurance agent, our attorney, and we are up-to-date on the tax codes that apply to us. We deal with the "emotional" aspects ourselves. This is not rocket science. The OP sounds like a thoughtful person who has sense enough to work through whether or not he wants to rent his home.lizzie

You, my friend, have missed the whole point. The OP posted about renting his personal home where he has and will continue to live. Not an investment property. Actually he will be, in essence, time sharing his personal home with a tenant.

Since this is a RV forum, like you remind us, why are you posting about rental property you have owned?

The OP needs to make an informed decision. It is a viable concept and many successfully do it. But the issues need to be addressed.

It is always interesting to see how the nay-sayers love to get into bursting somebody's bubble. This is an RV forum. Look for legal advice, information about rental insurance and liability elsewhere. If all of this stuff were true, nobody would ever rent anything, anywhere. Since 1962 we have had rental property of all kinds; apartments, townhouses, single-family dwellings, beach cottages, and seasonals. We consult our CPA, our insurance agent, our attorney, and we are up-to-date on the tax codes that apply to us. We deal with the "emotional" aspects ourselves. This is not rocket science. The OP sounds like a thoughtful person who has sense enough to work through whether or not he wants to rent his home.lizzie

Three issues not discussed. One is the emotional aspect. Do you want to come HOME to where someone has been sleeping and you know what else in your own bed in your own bedroom? Eating out of your dishes and spilling food and drinks on your personal chair? Finding your favorite cooking utensil missing? You have essentially transformed your personal space into a part time residence you share with others. Do you really want that?

Another issue, speaking as an attorney, is the potential for gigantic legal problems. Check with your insurer. Your home insurance will have to change, and it may not include personal property (household furnishings) when you convert to rental property. You will need at least a 2 million dollar umbrella policy to protect you from liabilities that you now do not have. Another point is if the renters declare bankruptcy while renting from you, you may not be able to evict them and they may not have to pay rent. The process could take two years before you could have YOUR house back. Do you want that risk?

The third issue is taxes. By renting out your primary residence, you have instituted significant tax consequences including paying capital gains tax on an asset that was exempt from that tax. Any gains from the rental (the rental income minus actual expenses) is taxed, and could increase the tax you also now pay on other income.

My recommendation is to buy a rental house if you want to be a landlord, but keep your primary residence out of a rental arrangement. The risks and tax consequences do not make it as lucrative as it seems on the surface.

fj12ryder wrote:
^^^^^^^I can't imagine a call to "to their boss or corporate somebody" is going to give you any kind of access to their financial records of any kind. Seems very unlikely.

Yup. All you'll get from most employers is confirmation that the person works/worked there, and hasn't killed anyone or burned the building down. Privacy laws are a thing.

Most employers, current or former, aren't going to stick their necks out to give a prospective landlord a heads up about ANY possible negatives, because it is of no benefit to them to do so. Giving someone a bad reference can lead to unwanted trouble for the giver.

fj12ryder wrote:
^^^^^^^I can't imagine a call to "to their boss or corporate somebody" is going to give you any kind of access to their financial records of any kind. Seems very unlikely.

No, it's perfectly normal. I've been in the business all my life. Only once that I can remember has the employer even asked their employee to give (verbal) permission first.

Employers do this all the time for work references. Rentals are just the same. You call and say, 'I am a landlord and X has applied to rent a place from me. I'm calling to verify employment.' Then you can ask if they work full or part time, how long they have been there, how much they make, if the employer plans to keep them on, etc. Depending on the job you can ask if they are tidy,responsible, etc.

^^^^^^^I can't imagine a call to "to their boss or corporate somebody" is going to give you any kind of access to their financial records of any kind. Seems very unlikely.

rockhillmanor wrote:
I'd think real long and hard before you rent your house to someone you don't know especially if you are not in the area to watch over it.

I'm an ex-landlord and I have seen the horrific damage that even the best dressed, wealthy renters can do to a home they are renting. :(

While the damage thing from seemingly rich people is possible and true, I've noticed a pattern. Only tenants who have messed stuff up were families with little kids. Also my experience may be jaded because 2 of the bad tenants were also deadbeat tenants during the recession, they didn't give a f..... And were just playing the system to keep a roof over their heads and we got played!
The thing you need to sort out, is if you're doing a seasonal rental in a college town, it will need to be available based on the school schedule. 6 months won't cut it, and since you'll need to rent it out for 9 months basically, why not dump it and buy a house in AZ where you will be living for 9 months? Also, your tax deductions for, if you qualify for those, will only be 75% (9mo) of whatever you're deducting. Just things to think about based on your situation.
Another piece of advice, I don't mess around with credit checks. You can assume whoever is renting has shatty credit or they'd buy a house and if they have good credit it just a bonus. Do a quick public records search to make sure your not renting to an axe murderer or meth head and REQUIrE proof of income. If I can't see the previous year's 1040 and current pay stubs with a call to their boss or corporate somebody they don't get the keys. Period.
Maybe learned from our deadbeat tenant phase...