All Forum Posts by: Senthil N.

Don't hold yourself back even if it appears you should, such as asking questions.  The worst thing that can happen is not get an answer.  If this is new endeavour, I would suggest you start with something that does not require a whole lot of work in my opinion.  Make allowances for additional cost and time as it is likely to happen.  As far as home inspection goes, yes you may take a contractor with you.   There are home inspection check lists on the internet you can work off of as well.  It is not feasible to look at everything in the house in a short time.   So if you plan to do a through check you will have to plan it out with the owner.   However they key items are things like obvious water damages, condition of the roof, appliances, foundation (look for angled cracks on the walls), etc.  And then there are obvious items like carpet, walls, bathroom, window condition, etc.   Eventually a full inspection will do you good as you can fix everything in one sweep and don't have to worry finding new repairs along the way.  Price out all repairs when negotiating. Hope that helps.

Congratulations on your first lead!  You have to get less excited about this stuff - otherwise you will pay more on emotion.  You have to go into an investment making money.  And if you are lucky you will also make money selling your investment.  With that said, you will have to bring the price down by 15-20%.  Then you will have to evalute everything it will take to set this property straight.  Reduce the purchase price by that amount.  If you are going in without a realtor, reduce another 3%.  

Make the bid and sit back.

Forget everything that has happened up to now.  Treat this as a new investment and work the numbers out between fixing and selling or just selling.  Everyone gets tired of a property after a while and are willing to dump it so they can move on.  While that helps your move forward it may not be the best financial decision. So re-evaluate and the direction will be obvious.

As everyone had stated, yes to garbage disposal as they run maintenance free for several years.  On the ice maker, you can add in your contract that this will not be maintained if broken.  I do that for fridge, washer and dryer.  This puts the onus on the renter to handle these applicanes with care as they tend to break if they are not handled properly.  However I do fix these IF I find that the item legitimately broke and was not due to rough handling.

My home insurance will only offer Actual cash value and not Replacement cost value.  I can perhaps shop around. Before I go down that path, wanted to get a feel for what other investors have on their coverage. 

My questions are

• Is the premium significantly higher for ACV vs RCV?
• Is ACV generally not offered for rentals/investments?
• What type of coverage (ACV vs. RCV) do investors generally have?

Rob, I realize new roof is capital improvement.  The costs are broken down as outlined in the original post.  The roof replacement cost that I incur is only the cost of depreciation which may require a different tax handling.  Or it may not. Then there is the insurance deductible expense.  All these are outlined in the original question.

I am getting my roof replaced on a rental property.  The cost is divided as follows: 

• Insurance is covering portion of it
• I am covering portion of it (as my insurance does not cover full replacement cost).  I only get the non-depreciated cost of replacement
• I am also paying insurance deductible

Are all or some of my out of pocket spending, tax considered as repair expenses or capital improvement?