I'm in a similar situation. I have another house which is rented out... it has tenants and a management company.

I don't have an LLC.

My experience so far has been a huge loss. The tenants have called the management company for just about everything under the sun. Keep in my that the house was built in 1959, so it needed a lot of repairs.

However, I went to considerable expense to get it rent ready BEFORE the tenants moved in.

Now... three years later... They have called about the Air conditioning at least 2x a year. Water came in during a major thunderstorm, so the carpet got wet. They needed stairs to the back yard, a shower bar in the shower, and a whole bunch of other little things that I wasn't "Required" to pay for by law - but the management company is going to accommodate them, and charge that on your dime.

Many months.. I have received no rent check because repairs took it all. In those months I had to cover the mortgage myself, because I'm counting on their RENT to cover the mortgage.

This puts me in a very vulnerable spot.

Having an LLC might do well to separate your personal finances with your rental finances, but if this is your one and only rental and you don't plan on buying more rental properties, then you can do taxes on your rental just as easily without an LLC.

For me personally.. I don't want my rental house jeopardizing my primary home.. So if I have to decide which mortgage I'm going to pay... it will be my primary home.

Hope this helps..

I was a little misleading in my last post. I said that I had recently moved out when in fact we moved out in December due to a house fire. The insurance has covered the repairs and it is nearly ready for renting. Everything that I had spent the time to repair or upgrade in the time I had been living there has been replaced again and then some. All of the electrical has been redone as the fire was in the utility room where the wiring all comes to the breaker box. We replaced the A/C last summer and the heater and inside parts of the A/C were replaced again as a result of the fire. All of the plumbing has been replaced as well. Due to all this I do not expect there to be any issues with a tenant needing repairs. The contractor is required to have a 2 year warranty on all repairs by the insurance. If anything does come up it will be covered by the contractor for the next 2 years. I have been paying the mortgage as well as the rent where I am now and have just been getting by. I have burnt up most of my savings and have had to use my credit more then I wanted to. I don't know if I will be buying anymore rental property's it just depends how my experience with this one goes. Now that I am going to be renting this out I will be able to payoff my credit and rebuild my savings.

I have 3 rental properties in another state and here's my suggestions...

You asked what else you can do - consider getting "Landlord insurance". This help protect you from lawsuits by tenants.

This is why you see many people putting their investment properties in LLCs. However, in your case, since you only have one home, I'd suggest the Landlord insurance rather than an LLC.

I'm not considering LLCs until I have at least 5 homes.

To save you the hassle like David experienced, which the property management company chalking up expenses and sending you the bill, make sure you write into your contract with them that they must contact you for permission for expenses above a certain dollar amount.

Lastly, I also agree with David in saying that landlording is tough, even with a property management company. Things break, trees fall, roof leak, tenants don't pay, etc.

Good call on the Landlord Insurance, Alton!

I do have it written in my contract that they must contact me if there is an expense estimated more than $250.00

But... they've been able to get me for multiple amounts which total more than $250 when added all together.

However... I'm not really worried about the situation all that much. I do think that if I hold onto the property long enough it will eventually break even one day.

However.. if my tenants move out... I might just short-sale the thing.

I won't be a landlord again unless I can buy properties for CASH.

Thanks.

Good luck Gsmith!

require your tenants have insurance as well to cover any damages (AAA offers that cheap) and have the house status etc well documented (like have an appraiser going through with lots of pictures and all the bills and from the city all the code and approvals).

Friends of mine have rentals in the US and they are generally happy with them, but they have no mortgages to pay and usually put 2 monthly lease payments away per year for repair. I know only one who has trouble, really depends.

By the way you do not need a management company if you have a good relation to the tenant and a good local handyman, it may cost you more time but a good relation often heads of lawsuits.

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Great hub and very helpful! In the past I've considered both renting a room and renting out a room. I'll be much more careful in the future about any such possibilities.bayut.com