All Forum Posts by: Jamie S.

The schools aren't really bad, it's just a perception issue.  Durham has a great gifted and talented program and some of the best high school programs in the state.  Your child might actually get more resources going to Durham schools.

So to answer your question... yes, it would be expensive and risky to buy a mansion in hope valley central but you can get something a couple of blocks over in North Hope Valley.  Most of the houses are quite large 4+ bedrooms which makes them more expensive on paper but if you look at price/sq/ft in 27707 there are plenty that are < $150.  Valley Run just north of Hope Valley on the other side of MLK is where I would look.  I've noticed that area is really perking up.  Fixing up a tract home is not probably going to pay off but some of these houses have million dollar houses right behind them.    

As for cash flow there are a lot of doctors/lawyers/visiting faculty/medical residents associated with duke that are looking for higher end rentals.   If I pull up rental listings in the popular areas south and west of Duke there are actually only a handful of homes available for rent.  And not very many large ones.  Maybe indicates a supply/demand opportunity?  

http://www.zillow.com/homes/for_rent/house,mobile_type/3-_beds/zest_sort/35.996098,-78.918529,35.949905,-79.003501_rect/13_zm/

You really can't go wrong close to Duke where there are a stable supply of renters.   The older neighborhoods mentioned above have lots of historic homes that could potentially need upgrades or be in less than desirable school districts.  Schools districts are incredibly important to property values in Durham.    Personally I think prices are over-inflated in the historic home areas and there is higher risk of getting a house needing major work.  

I am a fan of the Hope Valley (not Hope Valley Farms) area due to location and the lovely homes in the core part.   Appreciation potential would be high on an older home.  The area surrounding Forest hills is pretty reasonable though as long as you don't want one of the big mansions on the core streets.     Try American Village just west of campus for large 80's-90s era family homes and the area south of campus bordering MLK but before you get to Hope Valley for affordable 2-3 bedroom houses on big lots.  There is in-fill building happening all around American village.   The lakewood area south-east of campus has gotten expensive but 2 blocks east are some bargains (still sketchy on some blocks but only a matter of time).    Woodcroft is always a safe bet but many of the houses are a dark/rustic style that is hard to update. There are also some cool houses going up in the neighborhood just west of the ball-park on the other side of highway 147 around roxboro/mangum, I see that as an up and coming area due to proximity to downtown.  Still a little rough on some streets though. 

Losing a bedroom is bad... plus you aren't gaining any square feet so will never recoup the investment.   Two options:

-consider a bump-out addition off a bathroom or kitchen where there is already plumbing.  Maybe on top of a deck? Put the stack unit in the bump-out.   Even better if the bump-out had a powder room too. At least you are gaining sq. footage at $100+ value + a half-bath.

-Look into the european style washer/dryer combo units.  Put one in a master closet or linen closet.  Some are ventless and run off 120V.  In some jurisdictions you can drain the gray-water into a flower bed.

It can be easy or it can be really hard depending on the web-page.    There are software packages you can buy but they generally don't work the way you would want.  You can actually do quite a bit with excel if it is a small project.  Personally I use python.

 Sometimes you can figure out how to get the info you want directly without scraping by reverse engineering the query!  Watch in the chrome developer tools to see what network calls are made and see if a webpage has something like a /?q="search string" or somesuch.  Then mess around with different fields to see what the options are.

You would want to become familiar with Chrome developer tools and xpath expressions.  

Take a look at a Durham property page:

http://property.spatialest.com/nc/durham/property/...

If you change the number 123989 to 123990 you get the next house on the block!  Now you have a way to cycle through all the houses one by one.  So a good strategy would be to figure out the first parcel id and then cycle through all of them.

looking at the source of the webpage I see that I can get tax info and also whether the owner has paid the tax bill by scraping this different page using the same parcel id.  The same goes for permits, land value, the owner's address, etc.  In this way you can figure out if a house has an owner that lives elsewhere, is behind on their taxes, and how many cars they have.  Scary eh?

http://www.ustaxdata.com/nc/durham/durhamtaxlist.c...

on the original page I look at the source and find this bit of html that tells me the appraised value.  I would scrape it by figuring out the xpath expression that takes me to that section and then pulling the number after the dollar sign.  I can also scrape other info like the owners name, any permits pulled on the property, etc.

<div style="text-align:center;">

<span style="font-size:30px;">$312,300</span>

<p>Appraised Value as of January 1, 2016</p>

</div>

Slabs are just not great things to put wood, laminate, or anything that can absorb moisture on.   Carpet isn't as cheap as you would think once you factor in steam-cleaning costs and replacement.  Hardwood or other solid surface is a selling feature at least around here...  I've had potential tenants tell me they were specifically looking for places without carpet.

I recently bought a huge crate of 42" long wood-look porcelain tile at $2 a square foot to put throughout an entire house.  It's really difficult to tell that it's not actual wood if you use a really small (or none if using rectified tile) grout lines.  Over a slab you should be able to find someone to install it for $3-$5 a square foot.   You can get a roll on crack-supression/waterproofing membrane if the slab has issues.  Factor in the possibility of needing to add quarter-round if it's higher/lower than the trim.   

This is what the tile I selected looks like... going for a beachy theme in the rentals recently.  There are a huge variety of options now.  Might be a fad but a tile installer told me half of his calls are for wood-look tile installs.  

Good luck!

Durham is a great place... rents are nearly as high as raleigh but housing prices are significantly lower.   Durham kind of gets a bad rap but once they run out forest to plow under in the outlying areas I predict proximity will trump negative opinion.   I've started buying land in the area instead of houses.

 I don't usually rent to undergrads, too much wear and tear with the extra occupants.  Plus they tend to be clueless about air filters and basic maintenance.   I usually sign a 1 year but I will let them out of their lease generally... I just nicely ask that they try to move out in either may or august (when university programs start).  I ask for a $200 cleaning fee on moveout if they go early and that they accommodate showings while they are home to get back their deposit.   Most folks have stayed 2+ years.   I haven't had any of the properties near Duke vacant for more than a week or two in the last 6 years or so. 

I haven't had any issues switching from a primary residence to a rental... the mortgage company doesn't seem to care as long as they get their check.  Your mortgage has been sold 3 times by this point anyway.   Local mortgage broker told me as long as you intended it to be your primary residence on the date of move-in it's ok to have a change of plans.  The insurance company does care so call them right away.  

I have been renting out houses in Durham, NC for awhile now.   Something to consider is the large number of universities in the area.   Choosing something close to Duke, for example will greatly increase the demand for your property and the pool of available tenants.   Buying something outside of this area will drastically decrease demand.  Durham is also 'spotty'.... there are some great deals but they might be one block too far from a higher renting area.  You have to drive around to check out the neighborhood carefully.  

I would ignore the median income listings... Durham has a huge number of medical residents, business school people, law school, etc that are staying here for short terms.  These are often the best tenants because they are here for 2-3 years and would normally not be renting.  These folks want nice, clean, low maintenance houses with some perks like stainless in the kitchen.   They tend to be concerned about safety of the neighborhood and access to recreation.  Decks are popular since these folks are more likely to have parties than kids.  I look for bright, sunny, homes with simple exteriors to appeal to a younger audience. 

  Typically when trying to determine potential future rent what I do is look on craigslist at similar properties that are listed for rent (bedrooms, sq. footage) to the one you are thinking of buying.  This is what you will be competing with when you try to rent it.  I also look on Airbnb at properties that are fully booked and see what sort of rates they are getting (long term would be lower but you can weed out overpriced rental listings this way).

You can also look at what an apartment is going for in the area and take an average... you can typically get a bit more for a single family home.

In durham I would look at houses in American Village, Forest Hills, Woodcroft in that order if you want a sure bet. 

good luck!

Elliott,

I'm not really the expert on this since since construction it is not my day job.  Builders negotiate for shipping containers full of flooring, etc. which is hard to beat.  There is quite a bit of negotiating that can be done on supplies but your best deals won't come from the big-box. I guarantee your hvac guy doesn't shop at lowes.   You can ask for the 'contractor discount' pretty much everywhere though.  The Tile Shop took 10% the other day without batting an eye

Lowes has a contracting desk, these folks are actually pretty helpful and sometimes knowledgeable about construction (depends on who you get).  Most things in lowes are marked up for homeowners ($5 bag of screws).   Take your list in and have them run it through their "quote support system" QSP.  Not as much discount on lumber but other stuff can be a decent deal.  I ask them to beat other stores on certain things (for example a 6x6 is almost half as much at Home Depot).  The order is supposed to be over $2500 but the hint here is that you don't have to actually buy everything in the quote... you can reserve 10 spools of wire but only pick one up.     You can then have them deliver batches of stuff  (to limit theft) to the jobsite.   If you have the business credit card you get $20 delivery which is a great deal.  I ask for free delivery though and usually get it.   Why pay the carpenter $80 an hour to drive to the store... sometimes I have to make them haul back the split/wet boards if they aren't careful choosing though.

Some of the other smaller hardware suppliers (Talbert is an example) give you a rebate at the end of the year or other prizes like airplane tickets, etc.  So when your GC gives you your material bill ask if he is passing on his contractor rebate :-)

Often you can get better deals by going to the source... and cut out the middle man.    You can actually go to a mill here and request oak flooring with any dimension you want.  There are lumber suppliers (that supply lowes) where you can call in an order of lumber. An example here is Tarheel Wood Treating, a local company that gets wood from the local mills and treats it.  My cabinet guy told me a place called Bullock lumber (no website of course) where the cabinet company buys their supplies.    There is a siding factory that will sell you siding out the side bay door.  I go to the brick making plant here and the sod farm.   Just start asking your contractors where they get your stuff.  Don't be afraid to drive up to some random warehouse that says HVAC supply on it.  Clues are words like 'wholesale', 'warehouse', 'supply', 'distributor', 'importer'.  These places also sometimes have scratch and dent or mistake items they don't know what to do with sometimes.   

Good luck!

I should perhaps clarify... these prices are just to convey a point.   This method can be used for 'cosmetic' types of projects (not building a skyscraper) which I assumed the poster was asking about.  There is software that the professionals use for pricing big jobs, I like chief architect for material take-offs and renderings.  Elliott was asking about how to write better business plans.  I write alot of business proposals and engineering cost estimates as part of my job.  You absolutely don't need a degree in accounting or an MBA to write a great one.  What I was trying to convey was:

-The goal is to quantify "RISK" and how your plan mitigates that risk.  The person reading your plan primarily wants to know what is the best and worst case.  It's important to have enough data to convey this.  

-There are some items that are commodities and priced by unit of material (drywall, bricks, roofs) and some that aren't (foundations, design, landscaping, excavators, carpentry)

-Prices vary considerably across regions, times of year, skill level, local demand, unionization, licensing restrictions, independent contractor, etc.  You aren't going to find a reference with these numbers.

It made construction much less mysterious once I understood how people were pricing their work.... also kind of eye opening. It doesn't matter what tile I pick, install cost is about the same.  If I buy the materials I can comparison shop the labor on price/skill. I learned that the building supply stores have two sets of prices for contractors and homeowners and I have to negotiate.

The professionals in your area know these ranges and by talking with a builder or GC you can probably get the right numbers for your area.

I just turned both units into a rental Dec 1st so I haven't done taxes on it yet.    And yes I need a CPA,  I find that I wind up having to add up all the receipts anyway and at that point I might as well type it into the tax form anyway.  I do depreciation schedules for all my other rental properties, equipment, etc.   I track each asset in a spreadsheet and update yearly.  I keep a document describing how I arrived at the basis, the value of the land, for timber I have a forester give me a basis letter.  I run shorter depreciation schedules for non-integral assets like sheds, fences, appliances, window treatments, etc.     

In the past I have determined the basis by pulling 5-6 comps within a 2 mile radius and documenting my 'math' that arrived at that basis (similar to an appraiser's table.  I'm not worried about those because I don't think anyone would disagree with the guesstimate on a standard track-home that looks like all the others.

This house is much different though and there are few comps due to being multi-family.  It also sits on 2 acres.  I believe the basis to be higher and want to make sure I am getting the maximal depreciation.  I also have the option of selling in the next 3 years (tenants signed a 3 year lease) and excluding gain that since it was owner occupied 2 of last 5 years.  I'm a little worried that I will be hit with a giant tax bill at sale given this area (Durham, NC) is rapidly increasing in popularity and thus cost.   I might still exceed the exclusion however so I might be better off adding up that giant stack of receipts?

So when you say 'evaluate comps, speak with realtors, and document your findings".  What does the IRS expect in the form of documentation? Is it fine to just save all the details of the comps in a binder, etc? Are MLS listings fine? Do I need to have a realtor/appraiser write me a letter justifying the basis?

I'm hoping a CPA or tax lawyer can tell me what the IRS has considered 'sufficient' in the past or if the basis is ever called into question?