All Forum Posts by: Seth Borman

I'll send you a message with a guy's contact info in a minute, but expect to spend somewhere between $50,000 and $80,000 for a gut remodel depending on HVAC and moving walls. You will need a permit for this sort of work. You can pull the permit yourself and use an unlicensed contractor but that is a risky game. A licensed contractor with worker's comp, liability insurance and a $15,000 bond is a better bet.

Look, it's apparent to me that you don't understand what we are talking about here. A tenant on a gross lease doesn't pay the property taxes. They just don't.

Second, I don't think that we are going to see, simultaneously, massively increased rents and higher vacancies. You might see one or the other, but not both, because higher vacancy means lower rent.

Third, you don't get to price stuff based on what it cost you. That's just not how it works.

Fourth, the point of the counterfactual is that rents won't go down if taxes do. That's because rents aren't based on costs.

Fifth, I have faith that small business can weather the storm... but more to the point, I don't think it's fair or even desirable to give 50 year old firms a competitive advantage over new entrants. Why should one vineyard pay 1/20th the taxes of a new vineyard down the street?

 My point is that for every established business that gets a sizable Prop 13 tax break there is another that doesn't get it at all, and yet another whose landlord gets the tax break but considers the savings profit rather than something to be passed on.

There are only two types of tenants that will suffer from Prop 15. NNN tenants with multi year leases, and tenants under market rate who are about to see increases to market rate.

Keep in mind that market rates are set on the margins by new transactions that typically don't benefit from Prop 13.

Howard Jarvis promised 42 years ago that Prop 13 would keep rents down. That was a lie then and it is a lie now.

You can argue that there are a lot of mom and pop operations out there with over $3M in commercial properties. I don't think there are that many. 

Again, it won't increase costs for "all" small businesses, since outside of a NNN lease property taxes are paid by owners. You can examine the counterfactual. If property taxes were abolished, would you decrease your tenants rents?

Also, the increase in taxes on vacant and underutilized land should be good for housing production.

If you want to use electric for heat the best way is a heat pump. New models work in most climates. 

Not how it works. Obviously people are still building and renting buildings despite the fact that Prop 13 creates vastly different property tax rates depending on how long the current taxpayer has owned the building.

The biggest beneficiaries of Prop 13 aren't tiny landlords, they are large corporations like Disney.

But more to the point, if landlords thought that price stability for small business was their concern then they would support rent control for tenants and not for owners.

 Rents can't go above market rate. How could they?

The easier solution is for municipalities to upzone and build new buildings to code. This will be especially effective in places that don't allow gas for new construction.

Energy retrofits on rental housing is largely a waste of time, particularly in markets where more housing is desperately needed.

Off the top of my head, using Los Angeles prices, the cost to insulate and install new drywall is around $5/SF or $8,000 for a 1600 SF house. The savings on MEP is probably around 10-20% because it is much easier for them to do their work. In my market, that is $3,500 to $7,000 in savings. Door trim is like $150 per opening. Plus my main contractor refuses to patch drywall. He'd rather replace.

On my most recent project I bought a newer house that didn't need to be gutted, and I had to run some wire. The guys doing the drywall repair couldn't match the existing texture and now the house has a bunch of areas where you can see that the drywall was patched. 

For those of you suggesting 1/4" drywall, why not use 1/2" or 5/8" drywall and no lath and plaster? Same amount of taping, mudding and sanding.

If you've budgeted for replacing the electrical and plumbing then it is generally easier to gut the unit, do the MEP work, insulate and button it back up with drywall. The drywall actually isn't that expensive and most contractors prefer to replace the lath and plaster rather than try to patch it.

Having installed ICF I can tell you that there is a learning curve, and you don't want to have to pay for someone else's learning curve. Especially on your first project.

It is entirely possible to make a net zero building using lumber framing. You might need to go for 2x6 construction with advanced framing details and exterior insulation... but it can be done.

You need to give your unit mix some more thought. I've never seen a 2/2.5 in the wild for a rental. Only condos. Why? Bathrooms are the second most expensive rooms in the house, and you are talking about having a lot of them. I would recommend a more conventional 2/2 layout.



You'll need to focus on best practices to get your electrical consumption down. I would start by looking at ducted mini splits, heat pump water heaters and induction cooktops.