Welcome to Chez Cliff!

Time for a review of the only HGTV for Investors:  Income Property: ”Do it right the first time.”

This week’s nail biting episode begins with our damsel in distress Heather.

This single librarian purchased her house under the guise that she could rent out the basement. Well, the sellers pulled a fast one and Heather got stuck with an unrentable basement.  A few major problems later drained Heather of $40,000.  Her $1,500/month mortgage payment consumes nearly 85% of her income.  But rather than toss her keys to the bank and apply for a government bailout, she decided to dig in.  Refusing to flip burgers, she exercises her grey matter and rents out two of her three bedrooms.

Upon seeing Heather in action, my mind immediately paints the picture of a small, awkward school girl with pimples, braces and pig-tails, crying in the corner because the other girls don’t want her around. Once shy and non-confrontational, Heather has matured into a passive-agressive librarian who would most definitely fine you for being 5 minutes late with your library book.

She’s out of money. She’s out of time.

But wait! Look up in the sky!

It’s a bird,

it’s a plane,

it’s Scott McGillivray and his pearly whites!

Whoosh!

Option Time:

Heather has asked her friend Melissa to help her decide between the options Scott is about to present.

Here are the options.

• Option 1: Create a 1 bedroom, 1 office apartment. Cost is $40,000 with rental potential of $750/month.
• Option 2: Create a 2 bedroom apartment. Cost is $43,000. Rental potential of $1,100/month.

While Heather is secretly hoping for a third Option which involves making out with Scott, he explains the current office can’t be considered a bedroom.  Why?  It has no window.  Apparently people like to escape burning houses either by door or by window.  No window, no escape.  Very bad.

Heather’s friend Melissa, who has selective hearing, advises her to take Option 1 but rent it out as a two bedroom and save $3,000. That whole “people could die” message was lost on Melissa.  Probably not a good thing for national television.

Scott advises Option 2 and Heather wisely follows his advice. And so she should. Afterall, her parents are paying the bill.

Not too long into the renovations and Scott discovers the city has issued a “Stop Work” order on the property. The shady sellers apparently got busted for doing shody work so they just sold the house. Scott explains the original inspector must come out and inspect the already inspected property. Heather nods her head sheepishly.  Her puppy-dog eyes make me wonder if she’d punt a small dog if Scott asked her to.

Let’s not find out.

In the end, Heather is happy.  And we know she’s happy.  She can’t stop stroking Scott’s arm.  Who can blame her?  Scott and his team performed a miracle.

Her basement apartment looks incredible. She gets it rented out for $1200/month thus reducing her mortgage payment to $300. Now if Heather was smart, she would move into the downstairs apartment and rent out the 3 bedroom house upstairs. Maybe $1800 or $2000 per month and that puts $500 in her pocket each month.

What did we learn?

1. For bedrooms to be legal, a window for egress must be present.
2. Heather’s friend Melissa will never be my landlord.

Heather's Money Machine