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I have an improved lot in a golf resort. I need to know what…

Customer Question
I have an improved...

I have an improved lot in a golf resort. I need to know what are the federal guidelines for setting rents

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

The resort rents its owned lots for $850./mo, $250./wk, $45./day 4 day min. in season. It's nearly impossible to get a renter Apr 16 to Sept 30 (off season) even with the help of a realtor and using internet tools like Craigslist, and signs. Off season rents are $495./mo,, $196./wk, $28. daily. In the resort, private lot owners are renting RV lots at unknown prices and most do not report their income. It's a competitive environment. I do not know what is my competition. When entering data into TurboTax 2016, I learned that the mean rent for property of similar type is $700/mo for my locality. I need to show my renter why I need to raise his rent to meet federal guidelines. I just want to make sure that I have written federal guidance to present to my Canadian tenants, so that they know that I am being a fair landlord.

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I pay POA dues, water, sewer, garbage, and provide a gardener. Tenant pays electric. Tenant has not had a lease and has been renting month to month. I have hired a realtor today, who will collect rent only at a commission of 10%. I intend to purchase landlord insurance immediately to protect myself against claims from tenants and repairmen. There is a shed on the property, privacy fence, very large Texas port, the property is level and fully cement padded except for the foliage that includes drip irrigation, organic fruit trees and ornamental trees and shrubs. This is a premium lot that far exceeds the resort owned lots that are on an L-shaped pad with no shed, port or foliage.

Submitted: 4 months ago.Category: Finance
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12/15/2017
Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 4 months ago
Chad EA, CFP ®
Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Finance
Satisfied Customers: 2,180
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified

Welcome to JustAnswer!

My name is***** will be able to assist you today.

Hiring a realtor should really help you in determining a fair market rental value for the property. The realtor will have access to the Multiple Listing Service which will provide you with what comparable property rent for. Then you are able to increase or decrease the rental price based on the amenities you mentioned above.

___

The realtor generally charges a monthly fee when the property is rented. This provides the realtor with an incentive to price the rental appropriately. An experience realtor will also take into account the additional luxuries you noted above.

____

The IRS defines fair market value as the following

Fair market value.

"The price at which the property would change hands between a willing buyer (in your case a renter) and a willing seller (renter), neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property.

You may find this definition at the IRS.Gov link below.

https://www.irs.gov/publications/p527#en_US_2016_publink1000219164

____

With the knowledge of how the IRS defines fair market value and the assistance of your realtor you should be able to arrive at a market rental rate which should be easily verifiable by your realtor.

From your description you have an outstanding property and given the features should be able to charge a premium. In my experience renting property on a month to month basis, tenants will pay a premium to enjoy their vacation.

I am happy to answer any follow up questions or clarify my answer above.

Thank you!

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Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 4 months ago

Hello!

May I assist you with any follow up questions?

A positive rating of five stars is always appreciated.

Thank you

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Customer reply replied 4 months ago
Unfortunately my realtor didn't do any research as she stated she would. I looked up 2 local properties. Went on cozy.com and watched a video on pricing rentals, then ended up going with my gut. I cannot do much about my self inflicted damage this season, but it won't happen again.
Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 4 months ago

I understand. Unfortunately, I have never had very much luck using a realtor or rental management company to manage any property

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Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 4 months ago

If you give me the proximity, I could check a few sites.

Zillow.com will generally have an estimate. Also, local papers work well.

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Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 4 months ago

Hello!

Was I able to answer your question?

A positive rating of five stars is always appreciated.

Thank you

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Financial Professional: Chad EA, CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 4 months ago

Hello,

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If you are satisfied with the Answer, please accept the Answer and rate my service. Accepting the Answer and Rating my service cost you nothing extra, but does notify JustAnswer that I have completed my assigned work.

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I look forward to working with you in the future and I hope you feel that I provided you with 5 Star services

Regards,

Chad CFP ® professional

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