All Forum Posts by: Ryan Tam

I would skip adding the bathroom and lower the selling price. The sooner you get it on the market and sold the less your holding cost. This is especially since the gain isn't much (if any) higher than the difference in reno cost. Save the time and headache and put it on the quicker.

The last I heard, the Section 8 program has been close, i.e. no need applicants are being accepted, but the existing program participants are 'grandfathered' in.

In other word, once a Section 8 participant loses their status, they basically lose it forever. I personally have not rented to any Section 8 renter since the program has been discontinued, but I know of other landlords who are and they all say that since the program has been discontinued, Section 8 renters are on much better behavior than even normal renter. The Section 8 renter I had from before they program discontinued were nightmares.

But it makes sense to me. If I were getting 60% of my rent subsidized, there is no way I would do something stupid to jeopardize losing that extra income.

On the other hand, you are dealing with a prior eviction case, albeit from 7 years ago. I would do my due diligence and call the prior landlords and current employer if you were going to consider the applicant.

I second Jeff S's advice on the rain gutters. Given an average of a few inches of rain hitting the ground even in a pretty big rainstorm, it is unlikely that the moisture in the basement is from the rain water that hit within the couple of feet next to your foundation.

Typically what happens is the roof collects over a 1000 sq ft of rain and collects it into a very large pool of water. If you do not have a good gutter system that directs the water away from the house, that very large amount of water will likely sit on the ground next to your foundation and eventually finds its way in.

Make sure you:
1. Have rain gutters
2. They are not blocked with debris
3. They have down sprouts that direct the water at least 3-4 feet away from the house
4. The ground within 4-6 ft of the foundation slopes away from the house.

Unless you like in Washington state with the obscene amount of rain, those items will likely fix your problem. Painting the concrete will likely be a poor temporary fix, much like a bandage on a broken arm, imo.

It depends on how close you two are. My dad helped me out on remodeling my home for free and I gave him a nice gift at the end of it. You are allowed to give family gifts tax free. No need to involve the IRS if it's only family members giving each other gifts.

But if you want a business trail, then yea, just give him a 1099 and let his accountant/TurboTax deal with it. No need for you to have a separate tax entity for this. You probably would need that LLC if only you want to do quick flips and avoid the capital gain tax. If you hold it for a period, there is no big problem there either. Taxes for long term investments are about same as regular income tax (depending on your bracket). Check with your account for details.

Get an alarm system with a reputable company. You can usually sell it with the property. Put lights and a cheap radio on few timer power strips. If you have a spare car, you can consider parking that in the driveway. Keep the grass mowed and garage cans off the streets. Keep blinds/curtains drawn. Install motion sensing security light. I got the 500W halogen one from home depot for $30 and that things shone like the sun. Scared me when I walk by. Cut 2x2s to size to deter windows and sliding doors from getting jimmied.

Nothing will make your place completely proof against vandal, but all you really need is to make your place less attractive a target then another property down the street.

Good luck!

Don't know how comfortable you are with serious structure work, but personally I would make that rear garage into an extra 400 sq ft of living space. Bringing heat and insulation in shouldn't be too difficult.

Of course, it all depends on the $/ sq ft value of the property. If real estate is only worth $30/sq ft in the area, then I'd say leave it. If it's worth $200/sq ft, then you are looking at a potential equity increase of $80,000, so even if you put in $50,000, you would still come out $30,000 on top.

Factor in your time cost, upkeep, $ lost in rent during construction, etc. Crunch the number and see what you get. All part of the fun!

Really? That's surprising. Good to know. Thanks for the tip.

Where do everyone buy their solid hardwood flooring? Just want to compare notes for where is the good deals.

Does anyone have experience with BuildDirect.com or Fastfloors.com?

If the coldness does not bother you, I would go with a ceramic tile for durability and ease of installation. You can get decent quality tiles for about a dollar/sq foot and will last you at least 25 years or more without service. You won't need backer boards to install over concrete (providing the surface is relatively level), so all you need is thinset and you are good to go at about $1.20 per sq feet in material cost.

You can also get very nice travertine tile from Home Depot for about $1.66 per sq ft. and a small radiance heating system will take the chill out of the flooring. Of course, I'm assuming that you have some cheap (yourself) labor to go with the install.

If you want just cheap and easy, go with floating laminates. Looks great, tough to wear, but you gotta watch the moisture levels. If you are in like Nevada, don't worry about it, but I'd be careful installing that stuff over concrete in Florida. Get a nice vapor barrier, or better yet, seal the concrete before you do the install. Will save your floor in the long run and time and $$ too.

With solid hardwood and bamboo flooring, you will need a nailing substrate. That usually means OSB or plywood. I'd recommend OSB for cleats nailing b/c they are cheaper and since you will get a thicker board for the nails anyhow, it would negate the fact that OSB does not hold nails as well at the same board thickness.

Engineered hardwood and engineered bamboo are more dimensionally stable than solid hardwood, especially when exposed to moisture. Some engineered products can be floated or glued down, so that would probably be your best bet without sinking down another $18 per 32 feet in OSB boards.

Good luck with your install!

In summary, the rule regarding non-qualifying use only apply to rental properties that were converted into primary residences, not vice versa. The scenario that best fit this is first occupying a property as a primary residence for 2+ years, converting it into a rental for 1-2 years, then sold within 5 years from start of the 2 years of primary residence for the full exemption under 121.

Now, the example given by IRS pub 523 clearly states that the 2 years within 5 does not have to be consecutive.

Now, then the question is whether or not a home has to be used as a primary residence for 2 full years before its conversion into a rental to take advantage of the exception under the new non-qualifying use rule.

Take this example: John buys a property to be used as his primary residence in January 2012 and live the for 6 month. He then moves out and use it as a rental for 18 months, during which time he does not claim any depreciation. He then converts it back to a primary residence and lives there for another 20 months before selling it for a total capital gain of $200,000.

John has within the 5 years period:
1. Used the property as a primary residence for 26 month (over 730 days required for the used test)
2. Owned the property for over 2 years (passed owned test)
3. Used the property as a rental AFTER first using it as a primary residence.

Does John qualify for the full exemption under 121?