First-Time Home Buying Guide

Buying a home is a big deal.

Too often, I think people rush into home ownership because it’s seen as a sign of adulthood and financial responsibility.

But owning a home is a big commitment, it’s not a guaranteed good investment, and it’s a truckload of work. (I’ve been a homeowner for only two years and I already have a growing list of things to do and contractors to call…it’s not always the creative paradise remodeling shows make it out to be).

And last but not least, believe me, lots of people own homes and yet their finances are a mess! Home ownership can be a smart long-term move, but you want to know what you’re getting into.

With that said, I know that if you’re reading this, you’re probably going to buy a house anyway. That’s fine; I did too. So here I’ve  put together a first time home buying guide to wrap up our best advice over the last few years in once place. Enjoy!

How to buy your first home

Ask yourself: ‘Is it really time for me to buy a home?’

Don’t buy a home just because everybody’s doing it (they’re not) or because your Uncle Joe told you that it’s stupid to “throw money away” on rent (he’s wrong, too).

Don’t buy a home because it’s a buyer’s market or just because of low mortgage rates. Buy a home because you want to be a homeowner. Buy a home because you’re settling down and need a place for live for at least five years. And only buy a home if you’re financially ready.

Determine how you will afford your home

For most of us, our home is the most expensive thing we’ll ever buy. And for most of us, we need one big loan to do it—a mortgage.

If you remember all the foreclosures that happened during the recession, a mortgage is not something to be taken lightly.

To pay for your first home, you’ll need good credit, a steady job, and a sizable chunk of cash for a down payment. Navigating the waters of home financing isn’t always easy, but these articles can help guide you.

Go shopping for your first home

Avoid creating a financial disaster by preparing your finances before going house hunting!

In a perfect world, you would commit to buying a home and get mortgage pre-approval before stepping foot into your first open house. Obviously, it may be you didn’t realize you wanted to own a home until you see your dream home. Either way, shopping for a home can be a long and taxing experience.

Seal the deal at closing

As if getting a mortgage and finding the perfect house wasn’t enough, you’ll soon learn that it’s only half of the home-buying process.

Startling Facts That Blindside Homebuyers

Buying a home is an exciting venture, but it also comes with risk and expense. Often times, new homeowners underestimate the extra cost of maintenance and repairs, along with the labor required to keep a home in prime condition.

Next is a list of some common expectations first-time homebuyers have, and why you might never want to own a home yourself.

Expectation: Your Costs Will Always Be Lower Than Renting

One age-old question that seems to always spark debate is whether you should rent or buy. Depending on the housing market you’re living in, this answer can vary greatly.

Many new homebuyers, however, get caught up in the idea that a mortgage payment is like a rental payment — static. And sometimes they don’t factor in maintenance costs or other expenses that can eat into their monthly budget.

Reality: Maintenance and Repairs Can Cause Monthly Costs to Spike

“The buyer should never stretch themselves so thin that the maintenance costs are more than they can handle,” said Emily Restifo, a New Canaan, Conn.-based realtor with Houlihan Lawrence. “Better to buy a more modest property and maintain it to the highest standard.”

Keeping up a house to a high standard is a long-term investment. “At every price range, when it comes time to sell, it is the well-maintained property that sells first,” Restifo said. “Ultimately, the repairs will have to be done at some point, anyway.”

Homeowners always end up paying for maintenance, Restifo said. Sometimes it’s while they’re living there and enjoying the home, and sometimes it’s through a lower sale price and costly repairs when it’s time to sell.

Expectation: You’ll Save Money If You Use the Listing Agent

“Many buyers have come to me and said ‘I will get a better deal if I use the listing agent,’ and this is 100 percent false,” said David Feldberg, Newport Beach, Calif.-based broker-owner of Coastal Real Estate Group. According to Feldberg, it is legal in California for an agent to represent both sides — buyer and seller — of a transaction. However, “double-ending,” as it is commonly called — this real estate myth often leads to lawsuits.

Reality: The Seller’s Agent Will Not Necessarily Be Your Advocate

When buying a house, you should have your own representation. Using the seller’s agent is not recommended.

“A buyer’s agent should be trying to get the best deal for their client, and the seller’s agent the highest price for their client,” Feldberg said. “It’s near impossible to accomplish both.”

Avoid the temptation to cut corners in an attempt to save money. Remember, when buying a home, keep your eyes wide open so you don’t fall for tricks that could cost you in the long run.

10 Things You Absolutely Need To Know About Buying A Home

Ready to buy a home? Buying a home is one of the most significant financial decisions you’ll make in your lifetime. From figuring out pricing to why you should consider a realtor, here are 10 Things You Absolutely Need To Know About Buying A Home:

1. Use a trusted realtor. We all know that realtors get a cut of the sales price of a home which makes some buyers hesitant to use a realtor: they believe it drives up the overall cost. Keep in mind that the seller, not the buyer, pays the commission. Brooke Willmes, real estate agent at SPACE & COMPANY in Philadelphia, says that potential buyers should keep in mind that a listing agent (the agent representing the seller) doesn’t protect your interests and “that agent would simply pocket both sides of the commission.” That means that you’re not saving money. A savvy realtor who works for you can protect your interests and guide you through the buying process – from negotiating a price to navigating home inspections.

2. Remember that a house purchase involves a contract. When you’re buying a house, there are papers to sign. And more papers to sign. Many of those papers – which are actually contracts – look like “standard” home buying contracts with no room for negotiation. That isn’t true. Contracts are meant to be negotiated. You don’t have to sign a standard agreement. If you want more time to review your inspection, wish to waive a radon test or want to make a purchase subject to a mortgage approval, you can make that part of the deal. That’s where a savvy realtor can help. See again #1.

3. Don’t necessarily buy for the life you have today. Chances are that buying a house will be one of the bigger financial commitments you’ll make in your lifetime. Before you agree to buy what you think might be your dream house, consider your long-term plans. Are you planning on staying at your current job? Getting married? Having kids? Depending on the market and the terms of your mortgage, you may not actually pay down any real equity for between five and seven years: if you aren’t sure that your house will be the house for you in a few years, you may want to keep looking.

4. Think about commitment. I’m not talking just about your mortgage. When you get married, the laws of your state generally determine how your assets are treated – and ultimately how they’re distributed at divorce. The same rules don’t necessarily apply when you’re not married. That means you need to think long term. When you buy a house with your significant other who is not your spouse, make sure you have an exit plan if things don’t go the way you hope. It’s a good idea to have an agreement in place with respect to titling, mortgage payments and liability, repairs and the like: it’s best to get it in writing (and yes, I’d recommend getting a lawyer).

5. Look beyond paint. It’s often the case that your dream house has that one room that you’re already fantasizing about changing. Willmes says to remember that it’s fairly inexpensive to fix cosmetic issues (a bit of paint or some wallpaper) but making changes to kitchens and baths can be expensive. She says, “People tend to focus on the cost of cabinets, appliances and counters but sometimes forget about the cost of labor which can double to triple the cost.” That doesn’t mean that you should give up on a house in need of a significant fix but you should factor in those costs when determining whether you can afford to buy.

6. Buy the house you know that you can afford. This can be different from the price that your mortgage company believes that you can afford. When my husband and I bought our first house, we were approved for a mortgage of about three times more than we ultimately ended up spending. Fresh out of law school and working for established firms, our finances looked good on paper. But we dialed back our expectations because we weren’t convinced that our income and expenses would remain at those levels. We were right: two years later, we started our own business just as the economy turned south. The less expensive house meant that we could still make our payments even with less income in pocket. So what’s the best ratio to use? Some lenders suggest that you can afford mortgage payments totaling about 1/3 of your gross income but others suggest closer to 28% for housing related costs including mortgage, insurance and taxes. There are a number of factors including your projected income, interest rates, type of mortgage and the market. Ask your mortgage broker to help you understand what’s in play.

7. Don’t fixate on the purchase price. The purchase price is just one piece of owning a house: be sure to consider all of the costs associated with your potential new home. That includes the cost of insurance, homeowner association fees and real estate taxes – depending on where you live, those can quickly add up. And it’s not just home improvements that can cost money: maintenance costs dollars, too. It’s a good idea to ask questions about upkeep for extras like swimming pools, fancy heating and cooling systems and out buildings. Finally, Willmes suggests that you make sure you’re comparing apples to apples: a condo with a large fee that’s priced low may be more costly than a higher priced one with lower fees while a cheap home with high taxes may cost you more a month than a more expensive one with lower taxes.

8. Consider your student loan debt. Following the housing crisis, lending laws tightened. Student debt isn’t merely an annoyance: it’s treated like real debt. Jason Griesser, a licensed Prospect Mortgage Branch Manager in PA, explains that a major revision to FHA guidelines in 2015 negatively affects many first-time homebuyers with student loan debt. Prior to this change, a borrower with student loans deferred for more than 12 months could discount that debt from their liabilities: now, for purposes of determining purchasing power, a borrower is charged with 2% of the outstanding balance of the student loan regardless of deferment status (in a non-FHA, or conventional loan, it’s just 1%). If your student loan is in deferment and you’re planning on buying a home, Griesser suggests enrolling in a properly documented income-based repayment plan so you have the documents your lender will need to properly assess your ongoing liability.

9. Don’t get carried away by the home mortgage interest deduction. Many taxpayers are tempted to buy more house than they can afford by figuring that they’ll save enough with the home mortgage interest deduction to make up for it. The mortgage interest deduction is only deductible if you itemize on your Schedule A: only about 1/3 of taxpayers claim the itemized deduction. You itemize if your deductions exceed the standard deduction: for 2015, the standard deduction rates are $12,600 for married taxpayers filing jointly and $6,300 for individual taxpayers (those rates stay put for 2016). Assuming that you do itemize, remember that your out of pocket will still be more than your tax savings (if you’re in a 28% bracket, paying $5,000 more in interest will only “save” you $1,400 in taxes). And you can’t count on the same level of savings forever: mathematically, the longer you own your house, the less you will owe in interest. That’s good for building your equity but it means a smaller deduction come tax time.

10. You don’t have to buy a house. There’s no rule that says you have to buy a house by the time you’re 35 – or ever. Buying a home is a big decision and while it can be a sound financial investment, it’s not for everyone. There is a lot to consider, including the housing market, interest rates, timing and your future plans. You might want more flexibility or mobility, or your career and family plans may be in flux. If you’re not sure about a neighborhood, consider renting as a test drive: a realtor can help you with that, too (see again #1). Even then, you don’t have to pull the switch: there are healthy rental markets throughout the country and in some areas, young professionals are choosing rentals over homebuying to preserve cash and remain mobile. That’s showing in the stats: last year, the U.S. Census Bureau reported that the home ownership rate was 64.9%, not counting borrowers in risk of default. In contrast, ownership in 2010 was nearly 69% (downloads as a pdf): for purposes of context, a one-percent change in the ownership represents well over a million homeowners. 

First time home buyers: The ultimate guide to buying your first home

Buying your first home is an exciting time, but it can also be challenging if you don’t know where to start.

Understanding the home buying process and real estate terminology can be difficult and, with property prices high in many parts of the country, buying a home can be very expensive so it’s important to get it right.

Domain has compiled this guide to answer the most common questions you might have about buying your first home. It’s designed to provide you with general advice to navigate the home-buying process from start to finish so you can make informed decisions when it comes to your first property purchase.

How to set a budget for buying your first home

It’s tempting to base your budget on properties available for sale in your favourite suburb but, ultimately, if you’re a first-home buyer, your budget will be based on how much money you can borrow.

It’s wise to speak to a bank, lender or mortgage broker at the very beginning of your home-buying journey. Even if you don’t have a big deposit saved, they will be able to advise on how much you will need for a deposit for the kind of properties you are interested in, which gives you a goal to aim towards.

They may also help you realign your expectations, as your ideal suburb or property type may be more expensive than you can afford as a first-home buyer.

How much can I borrow?

To find out how much you can borrow, you will need to speak to a lender such as a bank or building society, or a mortgage broker. The lender calculates a maximum loan amount based on your income, savings, assets, expenses and credit history.

Although lenders will tell you the maximum amount you can borrow, this doesn’t necessarily mean you should borrow up to your limit. Ongoing mortgage repayments are higher for bigger loans, and other costs of owning a home, such as council rates, strata fees and insurance can add up.

Compare your after-tax income with your estimated ownership costs, as well as general household expenses such as groceries, bills, transport, schooling and leisure. If you feel there is only a small amount left over for non-essential purchases like dining out or holidays, you might want to consider a smaller loan. Alternatively, consider whether you can cut back on expenses and live more frugally as a home owner until your income rises.

Put yourself through a “pressure test” before determining your financial limits. Can you handle a 2 per cent interest rate rise? Do you have enough money set aside to make your mortgage payments for a few months if you lose your job? No matter how secure your job seems today, something could happen in the future. Being ready for the worst will ensure you land safely on your feet if or when it does happen.

Eight Things You Need To Know Before Buying Your First Investment Property

Although there are numerous examples of people who have earned themselves a fortune with real estate investment, real estate, like every other business, has many risks associated with it. Moreover, regardless of the type of property you are purchasing or whether you plan to rent or resell it afterward, investing in real estate requires a good amount of cash — which makes it critical to take extra measures to ensure profit on your investment or at least save yourself from a huge loss.

I’ve observed a shortage of property in good areas over the past few months. This lack of property creates an excellent opportunity for investment. However, it doesn’t mean that anybody can earn a fortunate by investing in real estate. You need to know a lot of things before buying your first investment property.

1. Don’t let your emotions play with you.

Most of the time when buying a home, people listen to their heart more than actually thinking about it logically, which is perfectly fine when it is the place where you will be living for many years of your life. But don’t let your emotions affect your decision when buying your first investment property. Think of it as purely a business investment and logically negotiate to get the best possible price.

Remember, the lower the price you get for a property, the better the odds that you will earn a higher profit from it.

2. Do your research.

Depending on the clients you are targeting, you need to do proper research before buying your first investment property. Make sure that the property is situated in a location that will attract the type of clients you hope to sell or rent to, that it will reach to the returns you are expecting and that it will appeal to the market.

Doing the proper researching and using an analytical approach logically based on the financial factors, rather than considering your personal likes and dislikes, will surely help you in purchasing the best property. After all, investment isn’t about emotions; it’s about economics.

3. Secure a down payment.

Unlike the 3% down payment on the house you are currently living in, you are going to require at least 20% down payment for buying your first investment property. This is because mortgage insurance is not applicable for investment properties. Moreover, investment properties require greater down payments than your regular building and have strict approval requirements. Keep in mind the expenses needed for the renovation before you pay your down payment.

4. Calculate expenses and profits beforehand.

As the expression goes, only the paranoid survive. OK, not always, but there is no harm in being a little paranoid and considering every detail beforehand. Start with calculating the money that you already have and what you can borrow before buying your first investment property. Next, calculate how much it would cost to purchase and renovate the house. Also, keep in mind the operation costs. Finally, estimate the price you are going to list your property for and cut out the expenses to get a rough estimate of the profit you stand to make. Honestly speaking, you may not even hit half of the estimated profit, but this calculation is necessary to keep yourself in the safe zone.

5. Select a low-cost home as your first investment property.

Even if you are ready to invest up to a million dollars in your first investment property, it is always a good idea to go for properties that lie in the lower- to mid-range price brackets. Some experts suggest the house that doesn’t cost you more than $150,000. Don’t forget, you will need to spend more money on the renovation of the house before renting or selling it.

Furthermore, since it is your first investment property, keeping your investment as low as possible will help you stay in the safe zone. Even if you don’t hit the expected profits, you won’t risk losing too much on it.

6. Pay your debts.

As a new investor buying their first investment property, you might need to consider the investment loan options — one shouldn’t be carrying debts as their investment portfolio. You must clear all of your debts, student loans, medical bills, etc., before starting out in real estate.

7. Consider investment loan options.

There are a large number of options available when it comes to collecting funds to purchase your first investment property. Choosing the right option that could make a positive difference to your financial situation requires a lot of research.

Different investment loan options come with different benefits, and the best possible option depends on your situation. However, you need to consider features such as which loan option is giving you the freedom to split the credit or if it provides you with the line-of-credit facility.

8. Choose your partners carefully.

Many people consider partnering up with their friends instead of talking an investment loan to start in the real estate business. First-time investors need to carefully consider many factors while choosing partners, such as how comfortable you are with them and the implications of a partnership agreement.

Like every other business, investing in real estate can go either way: You could earn a good chunk of money, or it might turn into a disastrous experience. If you follow smart tips and play it safe from the start, you will surely be on the winning side.

7 First home buyer mistakes

The first time out of the gate you can’t be expected to know all the rules. But there are some common missteps first-time home buyers make that are easy to avoid.

1. Not managing emotions

No matter how many people caution you to take the emotion out of the process, if you’re going to buy your first home, you’re going to have emotions. Lots of them. It’s naive to expect us to disconnect from a decision so personal.

But you can keep your emotions under control, and you have to if you want to make sure you’re not taken advantage of and so you’re able to spot issues and risks before you buy.

Try leaning on a friend or third party to help you stay objective and sound out your thought processes. And if you fall in love with a house on first sight (it happens), don’t ignore that little voice in your head reminding you to do your due diligence if you want to spend the rest of your life with it.

Read the fine print, even if you’re dazzled by the packaging.

Remember: this is a huge purchase. Read all the fine print, even if you’re dazzled by the packaging.

2. Stretching the budget too far

When you’re doing the numbers on buying your first home, build in some buffer but have a clear idea of your actual, immovable limits. When you’re staring down other buyers at an auction and the adrenalin is pumping, it’s far too easy for even the most rational of us to shoot up the hand for an extra $5,000 we simply don’t have.

Exercise financial discipline and don’t over-extend yourself. The perfect home won’t be consolation if you can’t afford to furnish it – or, worse still, can’t cover your mortgage payments and living costs because you got carried away.

3. Not budgeting for hidden costs

The price tag on the property is just the beginning. Before you’ve bought you’ll need to factor in the cost of building and pest inspections. Then there’s stamp duty and legal fees to cover conveyancing and title searches.

There may be fees imposed by your mortgage broker, such as application, valuation and settlement fees.

And then you’ll need to consider moving costs, insurance, council rates and the cost of ongoing maintenance – many things you didn’t have to worry about when you were renting.

There may be fees imposed by your mortgage broker, such as application, valuation and settlement fees.

Make sure you’re aware of the costs you’ll be facing and budget for them so there are no nasty surprises and you have plenty of income to enjoy your new lifestyle.

4. Not getting your finance sorted

If you’re ready to buy you’ll need to get pre-approved finances from a lender. That way you’re ready to pounce when you find your dream property. Failing to have your paperwork in order can mean you might miss out when you can least afford it.

Failing to have your paperwork in order can mean you might miss out.

You’ll need documentation of your loan and be ready to pay the deposit immediately.

While some vendors and agents do accept offers on their property subject to financing, an unconditional offer will always be preferable.

5. Getting impatient

If you’ve been house hunting a while (and for most people it takes a while), you can get search fatigue. You’re tired of  getting everything ready, and getting pipped at the post at the last minute by somebody who came in with a higher offer.

If you’re exhausted and frustrated, it becomes very tempting to buy the next property that comes along, whether it ticks all your boxes or not. It might not have to tick all of them, but it still should tick the most important ones, or you’ll be unhappy in the home and want to move on.

Remind yourself what your top priorities in a home are – take a break from house hunting if you need to – then start again with renewed vigour. Plenty of buyers have jumped in because they were impatient and suffered from remorse when the right property came along a month later.

6. Getting a building inspection

It’s one of those things than can not only save you money, but possibly save your life. Faulty wiring, shaky foundations, pest infestations … there are a range of things that might be wrong with a property that you won’t catch with the naked eye.

Always get a trained professional to give a property you’re considering buying the once-over. For only a few hundred dollars they can catch the stuff you won’t see – but that might cost you a fortune in renovations or repair if you charge ahead unaware.

7. Going it alone

A good real estate agent. A lawyer, building inspector, mortgage broker. A trusted open-for-inspection buddy. Even if you’re buying on your own, you shouldn’t face the process alone. There are specialists whose job it is to cover those areas you didn’t even know you didn’t know.

Surround yourself with a good team of people you trust and everything about the process will become easier.

Surround yourself with a good team of people you trust and everything about the process will become easier. Best of all, you’ll have that network for your next property move – whether it’s buying an investment property, renting out of selling the home you’ve just purchased, or just undertaking renovations.

5 Reasons an Income Property Is a Great Investment

There are endless ways to invest your money. One investment option to consider is an income property. This can be a great option for a number of reasons. Here are five benefits to consider.

What Is an Income Property?

An income property is just what it sounds like. It is a property bought or developed with the intention of earning income on it.

Income properties can be residential properties, such as single family homes or multi-family properties, or they can be commercial properties, such as a strip mall. Money is generally made through holding the property and renting it out or selling the property after the value of the property has appreciated.

1. You Make the Decisions

When you decide to invest in an income property, you become your own boss. You choose what property to invest in, what tenant you will rent to, how much you will charge in rent and how you will manage and maintain the property.

In the average 9 to 5 job, you are subject to the wishes of your boss and the company infrastructure in general. While investing in a stock or mutual fund gives you some freedom, in that you are able to choose the stock or mutual fund to invest in, you are still allowing someone else to manage and control your money.

2. Property Appreciation

One of the most unique things about investing in real estate is that you can buy it using a small amount of your own money, while borrowing the rest, often four to twenty times more, from a lender. This is called leverage. If you purchase a property using significantly more debt than equity, the investment is said to be “highly leveraged.”

 An Example of the Benefit of Using Leverage:

You invest $10,000 of your own money to buy a property and borrow $90,000 from a bank. By combining your money with the bank loaned money, you are now able to buy a $100,000 asset.

  • We will assume that each year, for 10 years, your investment property will appreciate by 5%. Here is where the ability to leverage benefits you. The appreciation is on the entire $100,000 asset, not only the $10,000 of your own money.
  • Example:
    Year 0: $100,000
    *1.05 (appreciation)
    Year 1: $105,000
    Year 2: $110,250
    …Year 10: $162,889

So, after 10 years, your property value would have increased by almost $63,000 dollars. Thus, you would have turned your $10,000 investment into over a $60,000 appreciation profit simply by using leverage.

3. Rental Income Is Real Money

If you intend to place tenants in your investment property, you will be able to receive rental income. Any money left after paying your expenses will be money in your pocket.

Suppose you have one tenant whose rent $1,100 a month and your PITI mortgage payment is $700 a month. Thus, subtracting $700 from $1100 will leave you with $400 to go into your pocket each month, right? Not exactly.

From this $1,100, you will want to assume about 5% in monthly maintenance costs and 5% in vacancy costs. Therefore, you will put $110 into a designated bank account each month to deal with maintenance issues and potential vacancy costs. When all is said and done, you will have about $290 each month going directly into your pocket!


 $1,100 (monthly rent)
-$700 (monthly PITI mortgage payment)
-$110 (for maintenance and vacancy issues
=$290 (your monthly passive income from the rental property)

4. Tenants Will Pay Down Your Mortgage for You

The most popular type of loan is a 30-year fixed rate mortgage. It has an interest rate that will remain the same for the entire 30 year term of the loan. In the beginning of the loan, significantly more money is paid to interest than to principal, but by year 15, it is close to a 50/50 split. Therefore, the longer you hold the property, the more of the loan principal your tenants are paying down and the more wealth you are creating for yourself.

Say you have a $90,000 bank loan with a monthly mortgage payment of $500. In year one, approximately $385 of this payment will go towards paying the interest, while $115 will go towards paying down the principal on the loan.


$115 (monthly principal payment) * 12 (months) = $1,380 (principal reduction for the year)
$90,000 (original loan)
– $1,380 (principal payments after 1 year)
= $88,620 (loan balance after 1 year)

By year 15, approximately $270 of the monthly mortgage payment will go towards interest, while the remaining $230 towards the principal.

$230 (monthly principal payment) *12 (months) = $2,760 (principal reduction for the year)

Every year that you own this property, you are using the tenant’s money to pay off your debt. By reducing the amount of your loan, you will be building wealth as you will eventually be able to access this money either by refinancing your loan or by selling the property.

5. Numerous Tax Write-Offs

As a rental property owner, you are entitled to huge tax deductions. You can write-off:

  • Interest on your mortgage.
  • Interest on credit cards used to make purchases for the property
  • Insurance
  • Maintenance repairs
  • Travel expenses.
  • Legal and professional fees.
  • Property taxes.
  • Extensive list at


On top of all of these deductions, the government also allows you to depreciate the purchase price of your property based on a set depreciation schedule, even if your property is actually appreciating in value.

Using our above example, you receive $3,480 in rental income for the year ($290 each month * 12 months). If you made this money at a regular job or in the stock market, you would lose a significant portion of it to pay income taxes. However, by owning a rental property, you can offset the $3,480 income with the depreciationexpense for your property, thus being able to reduce or completely eliminate the amount of taxes you have to pay on this rental income.