All Forum Posts by: Jamie S.

I'm a lady engineer and I have also been fixing and renting houses for quite a while now.  It's appealing mainly because if I am smart I can make money and put in very little effort (unlike my day job). I can also write off power tools and my candy-apple red 'lady-truck'.  Engineers like 'optimizing' things in general and real estate investing is just a complex equation with lots of variables.  In contrast to the stock market; which has way more unknowns than knowns and is basically run by computers so not very satisfying.  

Houses are also interesting systems that in some ways are like living, breathing, things. Engineers enjoy learning how all the systems of a house work .... this makes it easy to buy houses since you can quickly see what problems are easy to fix and what are not.   As an engineer I can fix (or believe I can fix, eventually) almost everything in a house which means I'm pocketing extra cash not calling the repair guy.  My neighbor won't pay me for popping over to fix a washing machine.   I took the tests at city hall so I can pull permits myself.  I learned how to do basic financial analysis and compare investments over a number of years so financial decisions are pretty easy.

mostly it just doesn't seem like 'work', rather an interesting hobby. Some engineers have a hard time relaxing... probably due to surviving engineering school.   

It's highly dependent on who you hire I have discovered, I have rehabbed  with 'side-job' workers for a fraction of the price. Accurate prices are hard to come by because it depends on time of year and local factors. Give your investors a range depending on these factors and you'll be more believable.

 I've had an entire house rewired for $1500 on a good day and $5000 on a bad day.  You can make a spreadsheet with 'rule of thumb' costs for most things and use it to ballpark the figures.  Contractors have these in their head already so you can find a local general contractor/builder to give you these numbers.  Most contractors when they look at your job already know the ballpark per amount of material or room or whatever and are just deciding how much to tack on for degree of difficulty and how fancy your house looks.   They know they'll lose money if they go below that so that is your 'bottom end'. If you need a permit that will be extra. if they have to fetch materials that is extra.

For example this is kind of my 'max I'll pay' for various things based on past experience. (and yes I'm sure others have gotten better deals).  

Concrete:  $75 a yard installed

Brick:  $.50 per brick installed

painting:  $100-150 a room with trim

exterior painting: $1800-$2500

new hvac : $2300

new window:  $100-$150 for standard sizes x 2 for install

drywall : $12-$18 a sheet finished (depends on finish level and size of sheets)

tile: $5 a square foot installed (add material cost of between $2 and $10)

basic stainless appliance package : $2500

hardwood $2 a sq. foot installed $1 a sq foot to refinish (add material cost of $2 to $10)

plumbing:  $100 per fixture to install and $100 per fixture rough-in

electrical: priced per outlet and per fixture for both rough-in and install

Total rewire of house:  $3K-$6K

upgrade electrical service:  $800

Total replumb of house with pex (no slab): $2K - $5K

10x10 set of cabinets no frills:  $2500, about 1 day for a capenter to install

countertops: $1500-2000

new roof:  $5K (metal including materials)

deck:  $2K-$5K

bulldozer/bocat:  $80 an hour

dumptruck:  $1.50 per mile

Carpenter:  $35 an hour low end + $10-$15 an hour for helpers. 2 carpenters can frame an entire house in less than a week.  Trim  1-2 rooms per day.

I need help figuring out how to determine the basis for a rental property. I purchased and lived in the property for a number of years and did a lot of renovations. I also built a garage apartment that I am now renting in addition to the main residence so there are actually 2 rental units. From reading it looks like I can use the FMV at the time of conversion OR the purchase price plus the cost of improvements. I had an appraisal done a couple of years ago to refinance the place which was reasonably high but it was on the entire place.

It might take me days to go through the giant stack of receipts for all the improvements but I believe that I would get a higher basis this way even with my unpaid labor.  But it's alot of receipts (probably over 500) and a bit 'messy' with a chance I might mix some non-improvement purchases in.  Some contractors weren't great about writing detailed invoices so in some cases all I have is a large check written to 'roof guy'.

So.... question: is there alot of scrutiny from the IRS as to how you determine the basis? Would an appraisal from 2 years ago be ok or not considered accurate enough?  Is it better to have the highest basis possible to increase depreciation and decrease the amount of taxable gain at sale? Or is it better to use the lower value from the appraisal and minimize audit risk.  

I have receipts for most of the appliances and other fixtures (some of which are higher end so it's a substantial amount) and the roof and hvac. Is it better to separate out those fixtures and give a 10 year depreciation cycle?