One more regulation for landlords to deal with.

As of April 22, 2010, those of us who are landlords and contractors will have to have another class in regards for dealing with lead paint in houses. This will further depress the value of older buildings along with the new energy codes that are coming up.

For more information, here is the link courtesy of the Apartment Owners Association.

How to use a power sewer snake.

I figure you're reading this because you want to know how to use a rooter. If you're afraid of things that typically go down the toilet or have a sensitive sense of smell, don't read anymore.
One of the things you might find yourself doing as a landlord (and maybe as a homeowner) is snaking out your sewer drain. It might be because of roots, papertowels, kid's toys, tennis balls, rags, feminine hygiene products--ok you get the picture. I've found all of the preceding items. Pity me.
Both Home Depot, Lowe's, and Harbor Freight Tools carry plumbing snakes. I bought the one by Ridgid for around $400. Harbor Freight's runs around $250-300, but doesn't look as sturdy or as safe, as it has an open cage design as opposed to the plastic shell that surrounds both the Ridgid at HD or the model that Lowe's carries. Also, buy the PVC gloves that are nearby.
In any case, it generally costs around $200+ for a drain cleaning service to come out and snake the main line. I've heard that Mike Diamond charges $99 for any drain, so that would be a good deal, depending on when his guys are available. Most inexpensive rooter services take at least 8 hours to get to your job, in my experience. So if you've ever had a rooter guy out 2-4 times, you could've bought the tool.
Now that I've blabbed your ears off (eyes off as you're probably reading this) I guess I should stick with the HOW TO in the title:
1. Take off the cap to the cleanout (you might want to be wearing those gloves, eye protection, and shoes you don't care about--I wore my Tevas today, but I knew I could just wash off my feet.)
2. Let water flow out while you go plug in your snake and determine where the best place to put the machine is--that's why you take off the cap BEFORE you bring your snake over.
3. If you haven't put on the PVC gloves yet, now's the time.
4. Place the snake 2-3 feet from the cleanout.
5. Put one of the attachments on the tip--I use the root cutter for most jobs. It's U-shaped. The spade bit is also good, but as this is on a rental I want to see if my tenant is to blame, because then I charge them for my time. There is also a corkscrew/spring attachment, but I don't like this one.
6. Start feeding the metal spring down the clean out by hand. Don't use the motor yet. When you have pushed the spring as far as you can by hand, stop pushing.
7. Adjust the spring so that there's a little slack, but not too much as the spring can form a loop and catch your hands, fingers, or just smack you. The spring can also catch skin, cloth, or your gloves in the grooves, so treat the machine with respect. Then step on the foot switch and hold the spring loosely while the motor turns the snake. Do this for about 15 seconds to one minute. After some practice you'll be able to notice differences in the sound of the motor.
****Safety Warning**** If the snake loops up, you take your foot off the switch. Then put the machine in reverse. Tap the foot switch to unwind the snake.
8. Repeat steps 6 and 7 until the water has drained out of the pipe or you've reach the end of the snake.
9. Put the snake in reverse, but don't push the switch unless you need to.
10. Start pulling the snake back and load it back into the drum.
****Warning**** The snake is a spring that can fling the effluent on you and the end has a tend to whip if you pull it out too quickly. Anything stuck on the end of your snake might get flung at you. Use your imagination.
11. I like to run a hose down the drain AFTER it's been unblocked.

If you're on a septic system and the clog won't come out, your septic tank may be full.
Hope this helps. If you're afraid to do this yourself, my buddy or I will do it for a couple hundred dollars if you're in the High Desert. :-)

Tips for investing in Income Properties

Rismedia has a great article about investing in property in today's market. After you read the article, come back and read my comments.

1. Location is the number one rule of investing in real estate. Because the market for rentals in the suburbs of declining areas is contracting, it might be better to invest in cities that don't have much appreciation, but do have positive cashflow.

2. It's good to not go overboard, but as you're buying for the long term, buy long lasting components like ceramic tile, tiled baths and showers, and go with low cost granite countertops. If you are handy, these are fairly easy to install yourself and save a ton of money, plus the saws that you use for large tiles can be used on granite backsplashes. Here is a True Value project site.
If you use drop-in stainless steel sinks (get deep ones if your units are older and don't have dishwashers) you can use a 4" wet saw or grinder to make cuts in the granite. Bullnosed 8' granite slabs can be bought for around $100 and will last longer and look better than a $50 formica countertop. As an added bonus, it won't be hurt by cigarettes. If you start early in the morning, this is only a one or two day project; you can do it on the weekend.

3. Appreciation really depends on your market. California is always cyclical. Southern states, and the Northeast have cashflow without much appreciation. Flipping at this point can be done if you have a lot of cash and can find a really ugly fixer that noone else wants.

4. Historically properties have been appreciating faster than inflation. These days, much of the difference is eaten up in new fees and regulations by the local jurisdictions (Rental license, Code enforcement inspections and tickets, proposed Fire Marshall Inspections for smoke detectors) and public utility rates have been rising with public employee union wages, which rise even when the private economy is contracting. If you have lower income rentals you won't be able to pass these fees on, so avoid low income rentals. The government also competes directly against you with low income housing projects. (Remember #1)

5. Cash is best. While leverage is great, less debt is better. Just protect your assets with corporate structures and insurance. A dollar in your pocket is better than a $0.37 tax credit on your interest write-off.

6. Cost of ownership is a big one. See #4. What are the utility costs? If the utilities are not paid by the renter, can the utility company recoup from the owner ? In California, water bills go against the property. Are there MelloRoos or other bonds that increase the tax rate? Ask your agent.

7. It's amazing what can be done by ripping out nasty carpet (I'm a huge fan of laminate flooring, ceramic tile), scrubbing the walls, replacing the countertops (cabinets if necessary, but refinishing is cheaper and usually works), and upgrading some of the lighting fixtures (adding ceiling fans and outdoor lighting) for comfort and security.

8. Hiring of professionals is great if you can afford it. A lot of minor plumbing and electrical jobs would be prohibitively expensive if done by a professional. There are a lot of great how-to and DIY sites online, as well as books in the library for free advice. (Don't take a library book to a plumbing job). I don't like to kneel, so I hire some help for my flooring. If you're paying $40-80 per hour, you have to calculate how many hours you'll have to work to pay the professionals. If you have renters that want to move in, then you have to determine whether you or the professionals can get the job done on time. I've had it go both ways: professionals could do it faster, or pros didn't show up and the renter went elsewhere.

9. Always. Read some of my posts. I like background checks in addition to credit checks. I don't rent to anyone that I can't do checks on. All adults must be checked. All teens must go on the rental agreement once they turn 18. I just had a lady call and tell me that her husband has no papers and ask if that was a problem. Yes it is--do you want someone selling drugs or pimping out of your house? I had it happen once because I accepted a personal reference.

10. For about $350 you can do your own eviction in San Bernardino. For about $550 you can have a lawyer do it. Go with the lawyer. This could take 2-6 months in California.Or depending on your rent offer the person money to move out (as long as the place is clean and undamaged) as you just want to start earning money. Do not offer to give a good reference. Lying to other landlords will eventually ruin your reputation, maybe faster with new technology.

11. Lower densities tend to have better behaved populations. Once you get 5 units, you need a commercial loan (higher rates and less money could be taken out of a property) and you usually get an added inspection by the health department.

12. Absolutely. If you buy a rental in a resort location you can even right off trips to the area. Vegas market is down, so it's a good place to buy right now. I like Reno a bit better; it's close to the snow and is not entirely entertainment driven.

Some thoughts on housing, both buying and renting

Two articles from RISMedia this week have highlighted the fact that prices are at some of the lowest prices in nearly 20 years, and that the affordability index is 67%. This comes as no surprise. Here in the High Desert, in California, it is still possible to buy a house for less than the construction costs.

The good news, is there is continuing commercial and industrial development here, despite some problems caused by local government overextending themselves financially (like most levels of government during the tech and real estate bubbles). The City of Hesperia has just been named an enterprise zone.

Due to Governor Schwarzenneggar's moratorium on foreclosures, I've seen a slight upward trend in the prices in the Victor Valley, as supply of houses on the market is causing an increase in bidding on the houses. I think prices are likely to drop again as there is another wave of foreclosures on the horizon in California. This is going to be exacerbated by small business people deciding to leave this highly regulated and taxed state, even if they have to walk away from their homes.

The affordability of houses has caused quite a bit of competition. First time buyers are competing for houses, with small and large investors. My wife and I had a small house in escrow, but the house wouldn't appraise, so I'm sure an investor with cash will buy it. I could go look up the sales price at the county recorder or online, but I don't want to aggravate myself.

I have seen a trend toward lower rents. Many rental owners are advertising move-in specials. I see family members moving in with each other. I have seen people leaving the area, some to be nearer the larger metropolitan areas, some to leave the state, a few to leave the country.

There is a push for more government subsidized, low-income housing (projects), which will lower rents as landlords compete with the government subsidized landlords.

Some of these landlords are likely to find the competition too fierce and add more units to the market place through sale or foreclosure, which will reduce rents further. It is a question of where the market will bottom out on the government induced spiral. Look to the subsidized unit costs, and the features to set your prices. It may be more important to keep a good renter than make a profit. This is a typical of what happens when the government starts competing in the private sector.