All Forum Posts by: Chris B.

In Tucson, I got 3 quotes that seemed high for a mini-split install; all over $5k for mid-grade systems. It seems mini split installs cost about the same a full size installs. I ended up ordering a $2k nicer Mitsubishi heat pump / AC system online and they delivered it to my door. (5 years ago) I installed it myself and then paid an AC guy $400 to connect the wires to it and vacuum the system and connect the hoses. If I, an untrained home owner can do it, a decent handyman can do the install also and then pay an AC guy for the final hookup.  This isn't a Licensed / insured install, so keep that in mind.

Derek, Its ben a while since I've been involved with any substantial work in Tucson and am now focused in the SE Phoenix area. Maybe it’s been 6 years. These are some examples of the jobs I had at the time. This was related to redoing a guest house near UofA. The place was completely demolished down to the brick walls and foundation and everything was replaced including much of the roof. The framer we found at the time charged $20 an hour and helped out on weekends. With his help, we reframed the entire place, and he re-did a lot of the roofing framing also, and he hung the drywall. I was hands on helping and brought all materials to the site. We both had our own tools. I installed a mini-split AC at the same time. I poured the small pad, bolted the outside unit down, ran all pipes and wire and mounted the inside unit A licensed AC guy came over and vacuumed and hooked the pipes and electrical up and was there for maybe 2+ hours and charged $400. I had the breaker box replaced and new wire run from the main house to it. I had the trench dug, and bought all materials and had them on hand. We had a licensed electrician spec everything out before hand and then hook it up for around $250 for his labor. At the time of the remodel, we didn't have much cash on hands so we broke all of the projects down into their components and found the cheapest reasonable labor we could find to do each task. For example demolition and trench digging was about $12 an hour at the time. Unfortunately, I don't have any current references in Tucson other than a yard and tree guy.

With my recent rental turnover in Tucson, we repainted the interior ourselves and looked for a guy to help with taping and masking. We found one guy advertising on CL. His post made him seem motivated even though he pretty much only had yardwork experience. I gave him a call and his rate (unskilled labor) was at first $18 per hour, then he wanted $20 to drive to my place, then he wanted to get paid for a full day's work and only work 7 hours. At that point it was thanks but no thanks. I then put my own post on CL looking for someone to help mask for $18 an hour and I got 5 calls within 5 minutes once the post went active. The guy I got was OK, but didn’t have much experience doing this even though he claimed he had a lot of experience painting. None the less, he put in a good effort and I gave him $150 a day. So, it appears CL isn't dead when going there looking for labor. They charge $5 now to post, but that’s nothing. I'd suggest you try putting a post on CL and be very detailed and specific on the requirements and qualifications you are looking for otherwise everyone will call and say they can do it. Maybe require some past company references and call to verify. Make sure these are legitimate businesses you can find on Google. Ask them what tools they own and can bring to the job. (If they know the names of the correct tools and can tell you the details of what they have like nail guns and their gauges, and can bring them, they might actually know what they are doing somewhat) BTW, our framer used mostly nails ad a hammer; old school but he had a nice variety of different saws. Don't lead them, let them sell themselves describing their skills. Ask how many years of experience they have. Know they will embellish, but if one guy said "I did one job in the past doing that" and another guy said "that's what I've done for the past 12 years", you get the idea. Also hire by the day at least at first and give them a trial.

In all, this is a very micromanagement style to squeeze the buck when you don't have much. You are sacrificing the skills of a good contractor / manager who can get the job done well and on time. My project spanned a verrrrry long time and there was a lot of missed opportunity in lost rent. But you do what you can. As you mentioned a lot of quotes you got weren’t even from contractors. At those rates, in Tucson, I recommend keep looking. Oh, and hanging out at Home Depot in the early morning interviewing people coming in isn’t a bad idea either. These guys at least have current work and someone thinks they are doing good work as they have a job. It depends what you have the time for. More time spent = more savings. Very little time available = offloading the details and paying for it.

Lots of variables there. In my experience, tenant quality will be the single most significant factor. Problem tenants break a lot, are careless, and in general damage the property a lot more and cause excessive wear and tear. Your tenant screening is not insignificant. Requiring a firm minimum credit score will be a good start. It's not everything, but it's my starting point. It helps sort responsible people from those who aren't. Not everything is clear cut including this baseline, I know, but I don't know these applicants and this rule has worked very well for me and many others. In my experience with a SFH, best tenants call me zero to two times a year. OK tenants call me one to four times a year. Tenants I wish I didn't have might call me zero to twice a year, but break things weekly. For these, I end up doing a monthly inspection as I change the air filters that tenants, once again with low credit scores, don't seem to be capable to change. These are also the ones that occasionally pay rent ontime.

I don't have any hours specifically to be available.  They can call me or text me and I'll answer if I'm available.  Even if I'm not available instantly, I'll check in as I have an oppertunity.  If I'm out of town on a vacation, I give a trusted friend some cash to cover for me.

It sounds like more of an LLC question rather than cash out refinance question. A cash out refinance is a simple process. I just completed one. You are asking how you can move assets between LLCs and I don't have an answer to that. Maybe, re-state the title differently?

I've had rentals for about 15 years now; mainly banking on appreciation and not rental income. Recently, I've started looking into ways to maximize my assets and better plan additional acquisitions. Maximize equity gain and maximize rental income and its starting to pay off. Thanks BP for the great advise!

What questions do you want to ask a Certified Financial Planner (CFP)?

I'm intrigued by the $57,000 yearly maximum that can be contributed to a 401k (ROTH). Total from self investments and company contributions combined. How can I leverage my real-estate assets, present, and future, to help me contribute to a 401k and especially a ROTH 401k. Should I move my properties into an LLC to do this? Are there better alternatives? Will an LLC allow me to contribute "company" contributions to get me up to 57k? It sounds like the contributions can't be more than 50% of income. If my income isn't that high, how can I maximize what I do get from it?

Thanks!

I have worked with rentals in Tucson also. For being a lower income, labor oriented town, I've seen prices go up significantly over the past few years which I don't understand myself either. Last time I had the carpets cleaned in a SFR about maybe 4 years ago, it cost $225 and they did a great job. I had it done again last month and it cost $340. I called around and all of the reputable places I called all had prices in the $300 - $400 range. I guess I need to keep looking, but with a rental turnover, you don't always have the luxury of time.

I also looked into getting the flooring tiled as the carpet is old and I don't want to be paying this much every time to clean them and the referrals I got for flooring were all booked out a few months.

I see two things to consider on your list.

A) A contractor off the street doubles their costs. They subcontract and whatever it costs them, they'll double for you. Maye if you had an ongoing business relationship, you might be able to get a better offer. You are hiring them to be a manager and get the changes completed correctly and on time and they charge you manager rates. So, directly hiring the labor, and skipping the contractor will cost you about half of that.

B) Some of the items you listed can be labor intensive. Replacing all plumbing and (including some sewage) takes a lot of time. The walls need to be opened up, new pipes installed, and then dryall cleaned up after that. In some cases the foundation may need to be cracked open and repoured. Consider removing all the easy things from the list and get a handyman to come in and do them before / after the rest of the more substantial work. Then get new quotes. If you are looking for a better rate, don't have a contractor do things like lights, outlets, and other easy items. A good handyman will have no problem with a basic toilet replacement or removing a wall mounted heater also.

Also consider going directly to trade professionals. Get a plumber to do the plumbing and get a framer to move the door and sometimes framers do drywall also. You can find a lot of this labor directly for less than half or maybe a third of the hourly price you worked out. I've decided to skip contractors also for the same reasons. I got some quotes to finish up a remodel and the quotes were $15k to $20k and it ended up going directly to tradesmen, the cost was about $5k for labor in Tucson.

With unlicensed work, you assume the liability if problems arise.

You have a declared rate increase that was put in place before the virus was an issue.  You have every right to stick by the declared rate.  I give my tenants 2 -3 months notice also.  This provides them plenty of time to find a new place if they don't like it, but as I charge market or below rent, tenants haven't objected to me.

With that said, the virus has changed things somewhat.  The tenants are still obliged to pay and do owe you the current rent in full legally.  Some tenants may have lost jobs and can't afford any rent right now.  Others are playing games and refuse to pay because they for the moment can get away with it.  Because most states have an eviction moritorium, your options are restricted.  You can accept less rent and call it good if you like and accept the perminant loss.  You can accept less rent for the moment and create a repayment plan with tenants that is reasonable for everyone.  I think this is likely the best option.  You may be able to encourage them to pay a best effort now and collect the rest later.

Once the eviction moritorium is over, take a look at how each tenant worked with you / is working with you and decide who needs to go and enforce it.

I just did the Zillow 360 thing and it helped me rent the place quickly I feel.  I borrowed an iPhone 7 and used a tripod I own with a cell phone mount adapter.  Maybe a friend or family member may have an Apple device you can borrow.  You WILL want a tripod or something similar with a panning handel or the results won't be satisfactory.  

Coming from AZ here, so maybe not a good comparison, but I looked into installing a mini split system into a guest house about 5 years ago.  I got 3 quotes.  All ranged from $6k to $7k for a single blower heat pump / ac mini split.   No deal.  I went online to one of the larger online retail sellers and bought a nice Mitsubishi Seer 22.5 system.  With all of the accessories and elecrical, it cost me about $2500 delivered.  I poured a small slab and installed the unit outside.  Ran the wires and pipes through the wall and installed the lower unit.  I paid a licensed AC guy $400 to come out and vaccume out the lines and connect the pipes and to hook up my pre-installed electrical on both the inside and outside parts.  Its worked great since installed and with this seer, super cheap to operate.  A minisplit can be done for a lot cheaper if you can do some basic labor yourself.

Doesn't heurt to try.  Make sure you ask politely.  I had a tenant ask once and I offered a $50 a month discount.  What about this:  Would you move out if you didn't get a 10% discount into a new place for the cheaper rate? Is it worth the hassle? Can you find a place for 10% cheaper that is equally nice or better?  Are you a fantastic tenant who laways pays your rent on time and causes zero problems?  Are you easily replacable?  Your landlord will consider these questions also and make a decision with their opinion of this in mind.