All Forum Posts by: John Montgomery

I wish you all the luck. You're on the right track for sure. Make sure that you figure out ahead of time how you would deal with a friend that for whatever reason becomes a less than ideal tenant. Mixing business and friends can be convenient, but gets tricky when you have to lay down the law. I highly recommend reading a book on land lording and treating it like a business from the start. It will serve you well in the future. 

If you're both in for the same $$$, then you just need to determine how much a fair price to do the work is and that amount would go to you. Then you split what's leftover. Seems simple. You just need to be careful neither one of you feels that the other is taking advantage. Make sure you have a plan for dealing with any changes, overruns and unforeseen events that happen during the rehab. Good luck and keep us informed about how it goes.

What is your interest in them? Are you looking to market them, build them, or add them to your property? 

I went to the West Sac meet-up last month. The topic was the new ADU laws. They had a speaker named Kurt Sandhoff who's been working with the prefabs. He showed us a pretty nice 700sf model that fits all the requirements of the new laws and can be completed in a very short time. Personally I'm looking at finding another property for my primary that lends itself comfortably to adding an ADU and as a contractor, I think I would just build it myself. The total cost for everything with the prefab, he said, was around $120k.

 Very good point. I've seen a lot of things done in bad taste that are hiding things that are even worse.

2030 - "Where do you think the new ocean front property will be in five years?"

I don't think it looks bad. I do think it would look better if the white wasn't so contrasted with the other colors of the house.

Just in case. Keep track of all your expenses from your remodel and that will adjust your cost basis, reducing your capital gains, if you don't qualify for the exemption.

I'd say start now. If a good deal pops up, take it. Manage it till September with all units rented, and then move in when your lease is up. If you happen to have a vacant unit, you could possibly use it as a short term rental to get some extra revenue until you are ready to move in. I think that FHA only requires that you "intend" to use the property as your primary residence. That seems to be your intent, so it shouldn't be a problem. I'm not sure though if they require you to move in immediately. You should get pre-qualified and let them know your intentions so you will be ready to pull the trigger when you find an opportunity. Otherwise your current landlord will probably be wanting you to sign another lease.

Nice job! What do you plan to do with the high water table?

You could make an offer at a price you are willing to pay with the repair requests and a simultaneous offer without the requests for a price that you would be willing to pay (less), without the repairs. You just need to be comfortable with both scenarios.