All Forum Posts by: Charles Perkins

I initially setup the ADU on a separate electric sub meter when the ADU was being remodeled. The water and gas sub meters where done later on the lines going to the unit. The easiest way is to plan it from the start of a project.

Our ADU is separately metered for gas, electricity and water. We then take the utility bills determine base rate split and usage rate. Multiply monthly usage by rate. The garbage bill is split is allocated by number of weeks and split in half.

You have given us part of the picture.  It looks like you are an experienced investor that has a good source of income, but numbers by themselves don't answer the primary considerations.

Are you looking to grow income, grow appreciation or perhaps grow tax benefits?  Where are you at in your investment life (a young investor or perhaps an investor reaching retirement age)?  Your investment approach also makes a difference.  

If your goal is to pay down mortgages,  then tackling high interest loans often is best.  It also makes sense to consider the loan balances.  Can you pay off a higher interest/lower balance note first eliminating a payment.

If growth is your goal then it doesn't make sense to pay down any mortgage that is cash flowing unless the local market suggests this might change.

National and local economic factors can definitely impact real estate.  While people will always need homes people can consolidate, move and unfortunately become homeless.

There are risks in all business.  Most events cause short term effects, but long term events can happen.  I believe AI may effect the economy, but people will adjust, so I don't think it will have a long term impact.  We can only watch and see.

Additional thoughts.  

First if you keep your existing home, you will probably have to use a property manager because of the distance.  So not only will you be a landlord, you will be a long distance landlord.  Do you have anyone you use for repairs, this will be a consideration done the road.

Second, you will want to factor in reserves for the unexpected.  There will be vacancies,  there maybe those who don't pay timely, tenants generally don't take care of your property as you do, evictions are necessary at times.  A reserve can help you get by during these times.

As a first rental this maybe challenging, but could be doable.  You know your financial situation the best.  Make sure you can handle the unexpected aspects of doing business as a landlord financially and with good business sense.

This is new to me.  I just checked online with department of health and found this article.

https://doh.wa.gov/community-and-environment/wastewater-management/septic-system/caring-your-system#:~:text=If%20your%20system%20is%20only,a%20more%20stringent%20inspection%20requirement.

I would agree with @Simon W. for the cash draw on the construction loan.  When you use the cash draw for expenses related to WIP then you would post them to WIP.  

You may also face tenant conflicts. If one family uses way more hot water than another.  Also if families have similar schedules the hot water may not meet the immediate demand creating conflict and potential complaints.

I don't know the California market, but I have seen a lot in the greater Puget Sound WA.  Very high interest rates, Easy times to find deals with conventional loans and hard times and recently the housing bubble / crash.  

I have learned to mitigate risk with smarter purchases, reserves, reasonable down payments, built-in gains, solid income stream, and not biting off to much at any time.

There is risk in everything, but these are large investments of time and money.  Well worth it when managed well. I personally like to manage the risk and take it slow and true.  Currently I live off my investments and can easily retire.