All Forum Posts by: Ray Martinez

 The nature of the question was really considering the circumstance of a job opportunity in AZ a couple years back. I see this thread has pass through much time. 

Paul, Thank you for following up. The ADU project was completed and was an excellent decision. I got my final inspection completed in late March 2021 and a tenant placed by late-April. I was able to realize the appreciation ($50,000) for a Cash-Out Refi and utilize the income to help fianance a 2nd property that I've been Airbnb-ing since June of this year.

Hello,

I'm filing taxes for the 1st time with an ADU rental income. When browsing through the questions around the rental property, I came across the expenses vs assets topic.

I spent the last quarter of 2020 starting the conversion(Rough plumbing, rough electrical, driveway redone, exterior re-stuccoed, etc). Start of 2021 was the finishing work (Kitchen installed, bathroom installed, etc). I furnished some appliances, added AC, as well.

Am I able to capture these items as an expense or asset? If not, how do I best capture tax incentives from a garage conversion?

Thank you,

Hey Lucas,

Its a cabin property in the greater Big Bear area. $40k lower than contract price.

However, $20k lower than listing price.

I'm surprised it appraised so low, I thought worse case scenario would be listing price. Historical sales haven't quite reflected current listings.

I know the greater opinion of everyone is the 2%($7,400) concessions seems excessive for the repairs found. 

Electrcal Work issues were provided above. The quote for the work involves upgrading the panel, to address the drip loop and receptacle as well as addressing 20 outlets that were found not grounded. 4 outlets that need to address the reverse polarity. Exchanging out a tapped breaker with a dual feed breaker and adding another breaker to appropriately feed the undersized gauged wire. Properly mount the electrical in the crawl space and addressing the labeling of the panel. 

There's a primary window that isn't operable, it won't open. Its also brand new as part of the kitchen remodel they performed. We may need to replace that window so it can properly egress. 

The other repairs listed above are 3 joists that were notched by the rehab plumbers.

Re-insulating the foundation as the rehabbers destroyed it when running electrical and plumbing.  

Dumping their residual work material that they left underneath the crawl space, which is quite a bit of material.

If I agree to the listing price and go above the $20k of the appraisal it would essentially put me in the same scenario if we agreed to the sale price and it appraised at listing. I gain a couple thousand from the down payment change, but not the $7k I'm seeing in concessions.

We will see how the sellers proceed with the appraisal. 

Appraisal was just completed and the house came back $40k under valued.

If you were the seller what would be your next move?

If you were the buyer, what would be your suggestion?

Thanks,

BP,

I have a vacation home that I'm in escrow for and looking for advice on what to expect with my scenario. I found some repairs that are im requesting the full 2% concession($7,400). The sellers are wanting the appraisal to be completed before they make a decision on the concession request.

How would the appraisal be beneficial or provide leverage for the sellers?

Thanks

 Hi Lucas,

From what I understand, they had multiple offers, but did not accept back-up offers. If I'm the seller and I know there are quite a bit of issues now surfaced, I have to inform the next buyer. I would think it would be in their best interest to move forward and work with me at some capacity rather than wait on the possibility for the same to occur with someone else.

The sense of ownership for the workmanship on a flip is more of whatI'm riding on and not the assumption that they have to address their work, or lack thereof.

 Whats that costing me? $4-5k more? 

Hi Michael, 

The $7,400 would be for the electrical work and other issues associated with the electrical work.

The plumbing issue, with the foundation notched seems like an automatic fix on the sellers end, yet the sellers stated they will not provide any fixes nor concessions. 

I'm paying $20k over listing and they can't address work they created...that seems greedy IMO.