All Forum Posts by: Brian Tremaine

I'm not an accountant and not giving legal advice about as an experienced rental owner I would take the full amount as an expense in the year incurred because the total cost is not that significant to be depreciated. 

@Jennifer Streamer

I like your method. I do something very similar. I use a Bay Area rental service and craigslist and I rank all the units by price to see where my unit fits in. I think this gives the most accurate picture. You end up getting a Bell curve and you can see if you are competitive or over priced. Also, for the pricer units you can see what features bring the higher rent.

@Mindy Jensen 

Did you act as your own contractor? When I compare what I see on TV with what I paid 5 years ago to a GC my cost seemed quite high.  Is a GC paid some typical % of the total  job cost?

Hi All,

You know the shows such as "income property" & "flip or flop"? Are the cost estimates they give on rehab jobs realistic? Such as re-doing a kitchen, moving a wall or replacing all floors? I'm trying to get an idea of what typical rehab costs are.

It is important to get a lien release when paying the GC, or pay the subs directly and get a lien release. My nightmare story from long ago was a remodel on my own home. We made progress payments when jobs were done such as cabinets  installed, tile laid, etc. We didn't know better to get a lien release. When the job was 90% complete the GC disappeared and guess what? The subs showed up filing liens for not getting paid. They hadn't seen a $$. Get a lien release from the subs.

On the other suggestions I agree if you don't know the material cost or where it was purchased you are likely getting scammed with lower quality material then you're paying for.

The pot possession is not a bigee. I'd be more interested in their prior history of renting. Have they rented before? What do the previous landlords say. Also, how stable is their income and do they both work? Being 21 they may be inclined to party a lot; that could be a problem.

My suggestion sent out in PM's to several people turns out to be doing business in CA only, sorry. 

This is a tough one! On one hand she is a friend and you want to help. I understand that completely. On the other hand what if something goes sour in the deal, how do you handle it? If for some reason she can't make the payment, job loss etc, what do you do? Are you prepared to evict her or take legal action?

I think I would not get financially involved but would act as a mentor & financial planner to lead her to what she should do.

Best of luck,

For what its worth I live in SJ CA where a SFH in a B-/C neighborhood rents for $2800 and the median cost is $700k. That's only 0.4% but the annualized appreciation over 30 years has been 6.5%. The home ownership affordability index is only 21% so there are a lot of renters. My point is the 1% rule is a test. If the long term appreciation of the neighborhood looks good and the cash flow is is positive I would consider it.

Is your current mortgage at a low interest rate? Maybe you could get one combined mortgage at an overall lower rate. Also, if one unit could command a higher rent I would choose to rent that one and live in the other. 

Bob,

What are comps going for in the neighborhood? Also, is the neighborhood on the upswing or declining? If you eventually move and rent out both sides for 2000-2200/mo the numbers might be better.

Brian