All Forum Posts by: Dan H.

Congrats on the purchase.   It will take many years for you to get Cap expense numbers because some of the items will have lifespans in excess of 30 years (windows, roof, tile work, etc).  I have been doing this 13 years and have yet to do a roof, water heater (I have a tanked water heater that is 25 years old and has not started to leak), or furnace (but I did obsolete one wall furnace with a split HVAC).

In the absence of numbers I believe that the numbers I put forth above are the best available for San Diego.  By duplex I am assuming you have attached units.  For a 2/1.5, 800' I would use $300 Cap expense.  if your units are larger then raise the estimate a little and if smaller lower it a little.  You are probably 5 to 7 years from having your first cap expenditure if the rehab was done well.  If you have carpet flooring that has a good chance to be your first cap expense.  Hopefully you have banked enough cap expense when the carpet is to be replaced to pay for the carpeting and have some reserves built up for larger items like roof, furnace, water heater, structural, etc.

BTW when I rehab I have been removing carpet for longer lasting floor options.  It is more of an investment up front but it likely will balance out and it is nice to replace the flooring less often (saves time).

BTW2: I recently had a severe slab leak on a unit rehabbed 1.5 years ago.  The place of the water manifold was in the worse place on earth (no way to get to it without ripping out a tiled bath/shower unit) resulting in a complete cold water plumbing replacement (Rerunning all new cold water lines was cheaper than ripping out the shower or jack hammering the foundation to repair).  I chose to do the hot water at the same time - not covered by insurance.  The leak affected 2 units.  Because the damage was so significant I made a claim with the insurance and they are covering significantly more of the cost than I had expected (the total cost will likely exceed $10K but it appears insurance is covering over 50%).  I previously had a more normal type of slab leak on a different unit with more normal costs to fix (I think it was ~$3k total cost including water loss) and had not declared it against the insurance (but now wonder if I should have).  So some cap expenses may be able to be claimed against insurance to defray some of the costs.  If this was not so extensive I would not even have looked into insurance coverage for old plumbing leaking as I never knew that plumbing that had lived its life could be covered by insurance (or at least the damage and repair could be covered by insurance). 

First I am not a lawyer, so realize that this is definitely not coming from an expert in this area of property law.

I agree with the other posts.  If you received nothing for granting the use of this parking space then it can be revoked at any time but likely the most amicable way to do this is by explaining that your tenants have a need/desire for the parking space and therefore you want to allow your tenants to use the space.  Do it nice but realize the neighbor may be  disappointed as you did tell him in writing that he could use the space.  He would not have requested the space if he did not desire it.  So try to keep things amiable but you do have the right to change your mind if you received nothing for the use of the parking spot.

If you received something for the use of the parking space you are in a different situation.  You could try to "purchase" the parking spot back or get lawyers involved.  From your description it does not sound like this is the situation.

@Rafael Alcaraz I am a small investor mostly in Escondido which is quite far from San ysidro but still San Diego county. My family is a long time REI in San Diego county (since the 70s).

Not that I have been good at doing this but I suggest you look at local meetups (meetup.com) for real estate meetups that could be of interest to you.  

Also read quite a bit about your areas of interest on this site but realize there are significant market differences in San Diego county than many other areas.  Also not everyone that post is an expert or successful. 

Some advice:

• Do not forget capital expenses when determining cash flow.   Search for cap expense and you will find some good info but in San Diego costs are higher. 
• Property management takes some time.  
• Do not get discouraged if my first advice makes it difficult to find a cash flow property. Be patient and do not give up. They pop on MLS occasionally but most are found off MLS and this can take some effort.

Also I recommend a blog entry title something like you cannot make money on a pig.  I desire you read this blog before you decide on investing in San Ysidro (I do not know if that is your intent).  There is a San Diego region forum.  In that forum I posted my Cap expense estimate numbers and they add up to a lot per unit.  They may not be perfectly accurate but my family has been doing rentals a long time and typically things cost more here.   Also sun wreaks certain wear.   Good luck

I did it on a SFH in so Cal maybe 5 years ago. The plumber used ABS. I used cheap labor to dig out about 25' for $200 (it took 2 days to dig out). The cast iron pipe was 4' deep until it exited the property and joined the city line at maybe 8' deep. The plumber was $800 including placing a y for easier clean out of other clogs, making the transition to the city line less abrupt, and backfill. It was less than 3 sections of ABS. The plumber's quote including for him to dig out with backhoe was $2500 so using a cheap laborer was worth the extra effort. I do not believe the plumber got a permit.

The book Landlording on Auto Pilot or something close to that has both the trick of rebating for early payment and the trick about being the "Property Manager".

We do not use the early payment rebate because we do not have an issue.  If they are late without discussing it with us we come down hard.  I have only had one tenant late twice without discussing an issue with us and they were served their notice on the first day allowed.  We have never had someone late 3 times in 12.5 years of having rental properties.  We have only once been unable to collect all rent and that is unlikely to happen again (lesson learned).

We do use the trick of being the "Property Manager". I could easily take the responsibility associated with not letting the tenant get away with stuff or doing tenant requests but I desire to have a friendly relationship. If I say no to a tenant request and the tenant is not happy it is easier to blame it on the owner rather than have any resentment towards me. It is not that I cannot handle the resentment, it is just easier to not have to handle it. In the last month a tenant requested exterior venting for a dryer. Note we supplied a dryer vent box. He did not desire the humidity in the garage (laundry hookups are in the garage in this SFH). "Sorry owner does not want it venting to the front of the unit and it is too costly to vent to the back of the unit." Of course the owner is H3 Properties which is the wife, child, and me.

I am interested why you chose Detroit.  The economy there has declined considerably and I am unaware of anything that I would think likely to significantly improve the economy. 

Poor economy often results in reduced population which increases vacancy.  Poor economy often leads to placing more people in each unit which increases vacancy.  

Detroit would not be high on my location to invest in RE.  

I do not know what they use to derive their numbers but Zillow has a 1 year forecast for price and rent.  

There are numerous resources for general economic predictions.  

The UT about a week ago had an article that indicated what rents had increase in the past year in San Diego county and implied that they were expected to continue to rise. The article mostly was about REI buying property and raising the rent and the hardship on the tenants.

I agree that often using people that either have side businesses or do the work on the side (paying less than retail) is more time consuming than paying full retail.  The savings have to be weighed against the additional time required.

I believe my electrician would not be worth using as he requires too much of my time but he is family.  Using laborers and managing them also takes time.  I find that my handyman sometimes does not do the work as good as I would if I could do all the work (ha!) so I have had to try to be more accepting of other people's work (either that or find more than 24 hours in a day so that I could do the work myself and still have a life).

Your widow AS is virtually the same as my wall AC especially because the unit being replaced was not the exact same size so it needed some work to the walls (exterior and interior) for ~$300.

Your price is a little less than what I am paying for my current smaller 1 interior location Split but it was by far my lowest quote.  I had used Thompson HVAC before but their quote had gone up a lot since I last used them for a Split (but was still far cheaper than Carini HVAC and they have done good work for me quite a few times).  I got a quote from Carini HVAC based on recommendations from Bigger Pockets and Angies List and their price was outrageous.

Here is my current quote for 2 units (so divide by 2, but does not include electrical to the exterior units) and it is similar to who you used (i.e. it is a side business):

(2) Daikin 18,000 BTU Mini split Heatpumps.  Includes all necessary piping and place into service.  Equipment, materials and labor $5850.

It does not include electrical but was my lowest quote.  So it is a little higher than what you paid especially if yours included the electrical (which is costing a fortune for these units because the units are currently on 30 Amp subpanels so I am replacing subpanels, getting a new drop from SDG&E, running new feed to the subpanels, and the feed from subpanels to the exterior units) all without any attic or raised foundation. 

What size was your split?  Also seeing your price is better than mine I would be interested in who you used (for next time).

The AC cost that I indicated in initial post is an average and meant to be all inclusive of all work. Some of the units were not splits but traditional AC. One of the splits was a much larger unit (I believe 36000 BTU) that required a panel swap) to accommodate a 4BR/2 Ba SFH.

For example the current quote is $2925 per unit but there will be maybe $2500 (2 new subpanels, runs from the drop to the subpanels, run from the subpanels to the exterior units) in electrical work bringing the cost for this to $4,175/unit and these are smaller size Splits with only one interior unit.  Of course I am getting a better electrical solution to each unit (newer everything, more power) also but the only reason the electrical is being upgraded is to accommodate the Split HVAC.

I use laborers/handymen for most of the smaller items (demolition or maintenance more than capital expense items). I pay my labor $15/hour for less than full day work (3-6 hours)and $14/hour when the work is full day (>6 hours). My handyman gets $18 hour and is only OK but the price is right and I trust him (I used to have a great handyman but now he does REI himself). My GC is reasonable (I think he and a helper are $60/hour (for both of them total)). I currently do not have a cheap plumber but I use my handyman for most plumbing issues. I think my plumber is $81/hour when I do need to use him. So I would also be interested if you have a cheap, good plumber. I have a cheap electrician but he is real slow, not very reliable, can get overwhelmed but he is family (so I would not recommend my electrician but I use him because he is family).

I have not been at it long enough to have real data.  In addition our record keeping (especially early) is not sufficient.  So far I have not needed to do a roof, hot water heater, or furnace (but have done multiple ACs).

However I have had a major foundation issue (~$27K), replaced all windows in 5 units (we use good windows (Low E**2) and cost has been ~$5K average including lowering any window sills that are too high for current code), and the non-bedroom windows in 1 unit, replaced/installed whole house Air conditioning in 4 units (~$5K unit), replaced room AC (wall mounted) in one unit (~$300), replaced/remodeled 6 kitchens, 8 bathrooms, and replaced entire flooring in 4 units.  Needless to say this adds up to a lot of money.

But for my basis I did not use the above costs because 1) Some of the units were purchased near the end of the life on the items replaced 2) I have not seen the actual life due to virtually nothing being new when purchased.

 I used the numbers from the original article referenced and looked at his price point and lifespan versus what I am experiencing (many of his prices are too low for San Diego).  The only area that I seem to be exceeding his expected life span is in water heaters.  I have one unit that has a water heater from 1990 (25 years old).  I think I will replace it when empty regardless but that unit has not been empty in ~8 years.  So my numbers have only a partial basis (original numbers tweaked to reflect more accurate cost and my witnessed lifespan) and are not based on my actual total cap expenses because I do not have enough numbers.  It is also real difficult unless you start with new properties or at least know exactly when items were replaced in the units purchased (was that roof in good shape put on 3 years ago or 10 years ago?).