Welcome to Chez Cliff!

Lately, HGTV has been spending more time on my television set.  I must be getting an itch to do another renovation or something.

Anyway, this new show caught my eye:  Income Property.

Income Property is a television show where an experienced real estate investor helps couples turn part of their property into a rental.  Those rentals become the staple to help these new owners make their mortgage payment.

I’ve watched a few of these shows and I’m on the fence.

The mentality of the host is that the owners should not skimp when they do the renovations necessary.  He also knows the proper building codes, so the people don’t get stung if an inspector wanders around.  Of course as usual with HGTV, the finished product rivals any multi-million dollar pentehouse in Manhattan.

What I don’t care for: the show isn’t realistic.

It’s television.  Of course they have to show it having a happy ending.

In a recent episode, the budget was $8,500 to redo the small kitchen, bathroom, all the floors and ceilings.  Fifteen days.  During the bathroom renovation, the wife discovered mold.  Everyone’s worst nightmare.

“All this insulation and wood has to be replaced,” the host stated.  “You can’t have your tenant living in this.”

So they replaced all the wood and the insulation.  An added expense of labor and materials.  How much did the budget go up?  Zero.  Nada.

The husband discovers, much to his chagrin, that someone stole his ATM card thus draining their last $1,200 to finish the renovation.

Host to save the day!  He convinces the contractors to put in some over time in order to save a day of labor costs, thereby finishing the project for $1200 less than they originally quoted.

But wait, there’s more!  Host also convinces the contractors to donate money to help the young couple make their mortgage payment.  $1200.  More good news: the value of the house increased $20,000.  The wife cries with joy.

I don’t know who these contractors are but I would gladly give them all free rent if their generosity could be displayed on any of my projects.  Finishing on time, $1200 under budget, and then giving $1200?

The show’s efforts to help people realize there are other methods of producing income should be applauded.  But the show needs to be more realistic in the problems that people may face.

Flip this House seems to be the more realistic show, regarding the interactions between customers and contractors.

Is it worth watching?  Forget the Hollywood ending.  The education value is still there.  He does discuss the ROI on their project and the best way to extend value of the purchase.  His discussion of tile versus carpet mirrored my own.  For newbies, these types of items can be indispensible.  At least they know terms when speaking with contractors in the future.

I’ve been preparing my paperwork for that singular event which I normally greet with enthousiasm:  Tax Season.

After playing this successfully for a number of years, I got the whole thing dialled in.  I know what I can/can’t deduct; what is considered a capital expense and what is classified as maintenance; approximately how many losses will carry over into the following year; etc etc etc.

Of course the best part about tax season is the refund.  I’m a big believer in having to pay a little more now rather than owe the G-man.

This year, I’m rethinking that theory.

The Governator announced that California is $40 billion in the hole.  His right hand man has announced that refund checks to tax payers are going to be delayed.  Will I eventually get a refund?  Eventually.  But this problem isn’t going to go away.   California’s overhead is going to go ballistic.

While the state legislature (Democrat) sends the budget to the Governator (Republican), and these programs continue to get funded, how can one side accuse the other about not being fiscally responsible?  Well with the second trillion dollar bailout approaching, being fiscally responsible is no longer “cool”.

So what can I do about it?  Nothing.  Sure, I can cast my vote.  But I have zero confidence in our government to be fiscally responsible.

Part of my strategy this year will be to tweak my deductions to ensure I get my money.  After all, I would rather reach 2010 and tell the government “Oops, looks like I owe you $1,000” rather than the government tell me “Well Cliff, we owe you $2,500 and we can’t pay you.“

During those absolutely beautiful rain showers last month, my house sprung a leak.  Water fell.  The problem was fixed quickly enough.  But not without some collateral damage.

As a result of the leak, the tenant fell.  She told me she was fine and no more mention of it was made.

With her last rent check, she included a letter.  She detailed how she had seen a doctor five times.  For those doctor visits, I could reimburse her for the medical bills or she could deduct it from her rent.

I was not happy to say the least.  Getting treatment for a medical condition is one thing.  Where this falls apart is (1) she failed to tell me she needed medical treatment (2) she decided which doctor to see and how many times to see them (3) stuck me with the medical bill.  Trying to offer some small measure of consolation, she assured me the doctors rates were reasonable.

Doctor:  What seems to be the problem?
Tenant:  Yes I slipped and fell and now I hurt.  Can you treat me?  Oh and my landlord will be paying all the medical expenses.
Doctor:  Your landlord is paying?  In that case, I’ll deduct 50% from my normal rates.

Yeah.   Right.

If responsibility for this accident rested on my shoulders, I would be the first one to belly up to the bar and pay.  But I certainly didn’t punch a hole in my own roof.  Within two hours of getting the phone call, plastic covered

The neighborhood cat poops on the front porch.  The tenant comes out one morning, slips and falls.  Now I’m stuck paying the medical bills because I didn’t provide a non-slip, anti-poop porch?

My real estate agent said,  “That’s why we have insurance.  Give them a call.”

My insurance agent said, “That’s why you have insurance.  We’ll investigate the matter and handle it accordingly.  You have nothing to worry about.”

Much better.

KERTHUMP!

It’s 2 a.m. and I bolt upright in bed.

Something loud had crashed onto the roof.

Jingle Jingle Jingle.

Mr. Nichols has found a way to penetrate the Coyote Pee security system.  Leaping off the roof of the adjacent apartment building, he soars through the air and lands on my roof.  From there, he walks the top of the fence to my tenants yard.

As it stands, enough Coyote Pee has been sprinkled around my yard to declare it a wild life preserve.  But now my roof has to be coated in it as well?  With those black shingles it certainly won’t last long.  It is still in the mid-80’s during the day which translates to 240 degrees on the roof.  And we all just love the smell of hot pee, don’t we?

He is really beginning to annoy me.

The longer the year drags on, the more I believe the house won’t be sold this year. As stated before, it is difficult to compete with all the REO’s on the market.

Since life can be so tough in southern California, it was necessary to bring in some heavy equipment.

After all, I have to have some place to drink my lemonade.