All Forum Posts by: Wes Brand

3x your income is pretty local. 

In NYC it's annual salary = 40-50x monthly rent (or, if it costs 1k/mo to rent, you'll need to make 40k-50k/yr)

You'll want to look at the actual purpose behind it, which is: You, as the landlord, want to make sure your tenants can afford to continue paying their rent. That's why you raise the ratio for cheaper properties, and lower it for more expensive ones -- 300/mo rent making 900/mo leaves no/very little room for, say, car trouble causing them to be late to work causing them to get fired with no savings causing you to miss income / have to evict. At the same time, 1k/mo making 3k/mo leaves a lot of room to take a taxi that day and not run into problems. 

Be careful of Tahoe. 

It's hugely seasonal. Lots of people come in to work the resorts in the winter / lake in the summer, and they leave for fall/spring. Because (I think) of the seasonality long term rentals are somewhat rare (good for you owning) but the class of jobs the people coming get are basically minimum wage jobs, so they can't afford to pay prices in line with the demand for SFRs -- 500-700/bedroom is a typical "rule of thumb" for a long term rental in the area (a 2/1 would rent for ~1000-1400/mo long term, for example). If the property makes sense at those numbers, you'll be fine. That applies to most of Tahoe, except south lake. 

South lake is different, since there's a (real-ish) city there. Of course, because of that, you get bad areas and poorly maintained properties, as Carson said above so you'll need to actually go there and do more detailed investigation of the specific area.

One more thing: Property moves *slowly* in Tahoe. That property before going into contract was on the market for ~150 days according to Zillow. My understanding is that's not unusual. 

@Ryder Meehan if you have or plan to get mortgages be aware that it's going to be *much* harder to get the short term rental income to qualify for DTI calculations. Banks like to see steady income backed up with a lease. It can probably be done, but I'm not sure how long you'd have to have it on your taxes.

I believe you meant to tag @Wes Shaw

@Julie Rogers you're focused on renting it, but you have other outs here...namely, selling it again. If it's actually a 140k house you can get for 90k all in, and it doesn't perform as a rental the way you want, put it back on the market for 120k(still under market...) and take the 25k after-fees profit. Of course, this assumes you know the market well and it's actually 90k after you do any rehab needed.

Rent? No. Deposit? Check your state laws on that.

A lot of the reason you see separate accounts suggested around here is because it makes taxes/accounting/officialness easier if you're trying to claim it as a business, start an LLC, or allow direct deposit into the account.

You aren't, so it's a lot of work for little gain.

I've had pet birds. They can be noisy, but if it's a caged bird it'll be easier on the property than a dog or cat. If it's a free roaming bird...they poop when they want to poop, but don't typically cause much damage. Unless it's smart and bored.

If you don't have a reason to avoid birds I'd be inclined to allow them as pets. Not sure on the other stuff. A fire pit and painting -- you'll want to check with your insurance on a fire pit. Painting I'd say something to the effect of 'sure you can paint the interior whatever color you like but it needs to be restored to the original color and quality before you move out'. Then if they don't repaint to the original their security deposit pays for the restoration. You'll want to reword that to be legal.

What kind of flooring do other 110k properties in your market have?

Of course, you're in Oakland / SF -- 3k for a kitchen upgrade gets you 5 cabinets. Countertops before installation are going to run you another 3-5k minimum for a small kitchen. Hope you don't want to do any plumbing, gas, or electric. The permits for this will run you another thousand or so, so you're really looking at ~15k before labor for a small 10'x6' kitchen. And then your property taxes go up (if you change the quality of the fixtures or the sq footage of your kitchen).

You'll want to look up regulations on rooming houses and boarding houses (different names for the same thing). You'll also want to look up roommate laws. In certain areas you can rent out one room and it's a roommate / flatmate / housemate, while if you rent more than one you're shoved into rooming territory. Certain cities and towns have laws regarding how many unrelated people can live together. Many people ignore those laws, since you're usually only caught if a neighbor reports you, but if you're going to break them make sure you investigate what the penalty is (fine? something worse?)