All Forum Posts by: James H.

Jeff, as far as cost, I am roughly estimating this:

Design $1,000

Permits $1,000

Slab Foundation $5,000

Framing and Roof $12,000

Siding & Windows $ 4,000

Upgrade electric service $6,000

Water and sewer connections $12,000

Finish out (totally guessing for now): $15,000

Appliances $2,000

Mini spit HVAC $2,500

TOTAL.............................................$60,000

My biggest unknowns right now are the plumbing, electric and finish out costs. I am not confident in my finish out estimate. I am including drywall, paint, texture, cabinets, flooring, trim, shower, sinks, pluming fixtures and light fixtures. These numbers assume me being involved in the framing and siding labor and most, if not all of the finish out. I might be able to shave a thousand dollars here and there, but I can easily spend extra since this would be the largest project I have yet to take on.

Thanks Jeff, for you insight. Thought there would be more input on new construction rental analysis and/or garage apartment analysis.

Matthew, I don't think zoning will allow for a separate meter. Anyway, while I would normally want utilities metered separately, I don't mind in this case since I would make the unit energy efficient enough that I would make a little extra on the "all bills paid" aspect.

I charge a flat rate fee equal to 5 percent of the rent. I don't charge a per diem after that.

I should add that there will be additional personal benefit of having an additional 500 to 600 SF of garage (depending on required stairwell space) for myself on the ground floor below the apartment.

I am contemplating the viability of building a garage apartment for rent. It would be about 600 SF, in a nice neighborhood and within walking distance to the local (very large) university. The tenant base would either be students or possibly single professionals.

Comps would be hard to pin down, but I think it would not be too difficult to rent the place for 650/month plus a surcharge for utilities (no separate meter). Apartments in complexes range from about 400/month to 800/month for 1 bedrooms around the university.

Based on a rent price of 650/month, I am trying to figure out what limits should be put on construction costs. I have made a conceptual estimate of about 70 to 80K to contract the entire project out.

Your statement: My situation is great.

Your question: What should I do.

Logical answer: Keep doing what you've been doing.

I think it is a no brainer. By renting it out, you have some cash flow, great long term upside AND get to move to a better house with a better location. That's a slam dunk IMO. Not sure what all the uber condescending advice about shaming you for looking up to better things is all about...

The real question is if you are cut out to be a landlord. I have found it to be pretty easy. Some think its a nightmare. It just depends on you and how you perceive things. I think most landlords tend to report a positive experience if their property cash flows. It is a pretty impressive thing to have a 300K house that cash flows. I'd jump on that train and not look back.

I have held on to some student loans in order to get a rental property. The return on the rental property, based on the dollar amount invested, is at least equivalent to the reduction in student loan monthly payments had I used that money to pay off debt.

I think I could do that again, but I am just tired of having the debt sitting over my head. I would recommend you don't consolidate you SL's if you haven't already. This way you can pay off the individual smaller loans instead of one great balance. This will allow you to

A) snowball the student loan debt which is psychologically beneficial and

B) reduce your DTI ratio as you go.

I would not forego the tremendous advantage of a yard sign on account of the neighbor.

As a landlord, this is not a logical concern for you to have.

I don't even use online listings. Stuff on CL gets buried by corporate apartment listings within an hour.

I would put up a yard sign if you haven't already. That is my sole advertising method and the best part is that whoever drives by and calls is not going to waste your time vetting the neighborhood because they already know where it is.