Anonymous
10/17/2016 12:10
Subject: Re:Expenses when renting out a house [DC]
DCRA is a disaster. We used RentJiffy. Best money we ever spent. I think it was $400 all in (so a $210 premium over the DCRA fees.) They have an online application, walk it through DCRA and get you a permit. They also walk you through (for free) what you need to concentrate on for the inspection. (I'm not a Rent Jiffy agent, but the experience was so great I'm happy to shill for them).
The DCRA inspector may flag all kinds of stuff. Water heater expansion valve in your house? It's required now. Hand rail on deck stairs? DCRA also has strict rules on locks (no double deadbolts on exterior doors). New locks can run you $30-$50 per lock. Have bars on your windows? If they are the only egress then they need to be able to open. Unless you are handy with a blowtorch now you're hiring someone to redo your window bars. Your fire alarms need to be within 10 feet of each bedroom (bit not inside). If you needed to have those rewired you are going to be out more money. We spent between $3-5k getting the house ready and then making DCRA happy.
Deep clean from housekeepers was more than $200.
Our tenants have a young kid. Little known reg in DC that requires you to have a lead test before you rent to young kids or pregnant women. That was another $400-$600 (per swab fee, and required to do a swab in each room on window and floor).
Our insurance went up but only by about $150 a year.
Background checks on tenants are @$75 per person. If you are eating that then it's an additional cost to consider.
We found our own tenants so we didn't pay an agent's fee. And we are self managing so we saved another month's rent fee (8%). But you could easily lose two months (one for finding tenant and one for managing).
We already had a service contract on mechanical stuff that included labor. That was @$400 year. I will probably keep it next year since it means if there are heat/AC issues the tenant can call for service and I don't have to be bothered.
Loss of homestead deduction isn't where you will feel pain (that's only about $600/year.) What will get you is the fact that the property tax cap won't apply. You will pay full freight. This year, next year, every year. Depending on how long you have owned your house and how dramatically assessments in your area have increase, you could be paying on more than 6 figures less than actual assessed value. And that # will catch up as soon as you eliminate homestead deduction.
The DCRA inspector may flag all kinds of stuff. Water heater expansion valve in your house? It's required now. Hand rail on deck stairs? DCRA also has strict rules on locks (no double deadbolts on exterior doors). New locks can run you $30-$50 per lock. Have bars on your windows? If they are the only egress then they need to be able to open. Unless you are handy with a blowtorch now you're hiring someone to redo your window bars. Your fire alarms need to be within 10 feet of each bedroom (bit not inside). If you needed to have those rewired you are going to be out more money. We spent between $3-5k getting the house ready and then making DCRA happy.
Deep clean from housekeepers was more than $200.
Our tenants have a young kid. Little known reg in DC that requires you to have a lead test before you rent to young kids or pregnant women. That was another $400-$600 (per swab fee, and required to do a swab in each room on window and floor).
Our insurance went up but only by about $150 a year.
Background checks on tenants are @$75 per person. If you are eating that then it's an additional cost to consider.
We found our own tenants so we didn't pay an agent's fee. And we are self managing so we saved another month's rent fee (8%). But you could easily lose two months (one for finding tenant and one for managing).
We already had a service contract on mechanical stuff that included labor. That was @$400 year. I will probably keep it next year since it means if there are heat/AC issues the tenant can call for service and I don't have to be bothered.
Loss of homestead deduction isn't where you will feel pain (that's only about $600/year.) What will get you is the fact that the property tax cap won't apply. You will pay full freight. This year, next year, every year. Depending on how long you have owned your house and how dramatically assessments in your area have increase, you could be paying on more than 6 figures less than actual assessed value. And that # will catch up as soon as you eliminate homestead deduction.
Anonymous
09/28/2016 20:03
Subject: Expenses when renting out a house [DC]
BE SURE to talk to an accountant. If you are renting, you will need to claim depreciation when you're doing your schedule of rental income. You'll have to pay the recapture on that whenever you sell, regardless of whether you actually took the depreciation. (I learned this directly from my accountant).
If you're using a property manager, be prepared to pay a half-month to a full month rent every time you get a new tenant, and 8-10 percent of each month's rent to manage it.
Insurance shouldn't go up too much.
Get an excellent handyman, electrician, plumber and HVAC whom you trust and can count on to make visits on short notice.
Be sure to get your Basic Business License. D.C. does audit properties without them and will probably track you down sooner or later.
Be sure to void your homestead exemption (sounds like you're already doing that).
If you're using a property manager, be prepared to pay a half-month to a full month rent every time you get a new tenant, and 8-10 percent of each month's rent to manage it.
Insurance shouldn't go up too much.
Get an excellent handyman, electrician, plumber and HVAC whom you trust and can count on to make visits on short notice.
Be sure to get your Basic Business License. D.C. does audit properties without them and will probably track you down sooner or later.
Be sure to void your homestead exemption (sounds like you're already doing that).
Anonymous
09/26/2016 14:10
Subject: Re:Expenses when renting out a house [DC]
Our insurance did not go up. It's essentially the same premium but for far less coverage (a landlord/fire policy, no posessions).
Anonymous
09/26/2016 13:55
Subject: Expenses when renting out a house [DC]
Also, you should re-paint the walls and do a very deep cleaning prior to handing over the keys to your renters. And fix any maintenance items that have been deferred.
Anonymous
09/26/2016 13:54
Subject: Expenses when renting out a house [DC]
Insurance will go up.
Your house is probably not compliant as a rental in its current condition. Some safety issues will need to be addressed - be prepared to spend $1.5-$3K to make any necessary changes.
Loss of homestead deduction and taxes on the rental income will need to be paid.
My guess is that you will not be cash flow positive in your first year, if you bought in the previous 5 years. Have a few months of reserves in your savings account.
Your house is probably not compliant as a rental in its current condition. Some safety issues will need to be addressed - be prepared to spend $1.5-$3K to make any necessary changes.
Loss of homestead deduction and taxes on the rental income will need to be paid.
My guess is that you will not be cash flow positive in your first year, if you bought in the previous 5 years. Have a few months of reserves in your savings account.
Anonymous
09/26/2016 13:40
Subject: Expenses when renting out a house [DC]
We are thinking of renting our house and moving elsewhere (not far away).
Other than losing the homestead deduction on our property taxes, can folks who rented DC properties share how things like homeowner's insurance changed when going from owner-occupied to tenant occupied? I'd assume we'd want more liability insurance but would need less coverage for replacement since our possessions won't be there.
Did you notify your mortgage lender, and were there any problems or costs?
How much did you spend on licenses? It looks like about $190 at DCRA, and that filing the rent control exemption at DHCD is free.
Were there other expenses you didn't foresee? We are aware there will probably be more wear and tear. The tenants will be responsible for utilities. And we do not plan to hire a property manager, as we have prospective tenants, the ability to make or supervise repairs if needed, and a good knowledge of DC landlord-tenant law.
Other than losing the homestead deduction on our property taxes, can folks who rented DC properties share how things like homeowner's insurance changed when going from owner-occupied to tenant occupied? I'd assume we'd want more liability insurance but would need less coverage for replacement since our possessions won't be there.
Did you notify your mortgage lender, and were there any problems or costs?
How much did you spend on licenses? It looks like about $190 at DCRA, and that filing the rent control exemption at DHCD is free.
Were there other expenses you didn't foresee? We are aware there will probably be more wear and tear. The tenants will be responsible for utilities. And we do not plan to hire a property manager, as we have prospective tenants, the ability to make or supervise repairs if needed, and a good knowledge of DC landlord-tenant law.