With the acquisition of a [house], I will have a 1 bedroom 625sf apartment above the garage of the property. This isn’t much of an apartment, and I will have to maximize the available space in a 25’×25′ space. This will mean a bathroom, bedroom, kitchen, and living room. As much as I would have wanted one, I can’t fit an office into this space. With that said, there will be a safe installed in the bedroom closet for the tenant. Verizon which is the POTS? provider will not be providing POTS phone service to new customers. This will mean that the tenant will have to rely on SIP?, or VOIP? if they want a home telephone line for any reason.
Rent will include everything except telephone, and premium television. Electricity will be included, but I will feel the bill will be rather low with the solar panels on the flat roof of the garage. This will feed the battery bank which will feed the apartment. If there is a power outage for any reason, the tenant’s battery bank will keep the apartment running hopefully until the electricity provider resolves the issue. There will be no gas line. With that said, the tenant will have to adjust to the electric stove. The hot water system is tankless and located in the utility closet which is in the back end of the garage. This will mean heat will be provided through underfloor radiant heating. It would take some adjustment to no gas line, but eventually, there will be no thought as everything will just work. Trash is included into the city’s budget. No residential tenant is required to pay for garbage unless there is a dumpster in use. With the limited trash, this will not make sense. Water will be pretty expensive as PWSA (Pittsburgh Water and Sewage Authority) charges a lot of money for their services. The property will need a 1″ line for the sprinkler system, and of course that would mean a higher rate than most other personal homes. I will have to hope that I and the tenant can keep the water usage within the confines of included water pool.
The tenant lives in an island as far as utilities goes. There will be no reasonable way to allow the tenant to share my direct connection. With that said, there will be a dedicated ISP? that will provide for 100MBPS connection, and that connection will be just for the tenant. This will cost me extra money, but considering the option will be to run more lines that might have a limit in length will only make things worse.
Rent will be $1,500. This is actually very reasonable for a 1B apartment. However, fair market rent hasn’t kept up with the pace of apartment rentals. My rent will need to be fair market rent in order to make the rent affordable for someone receiving Section-8. There is no point in accepting Section-8 if their portion of the rent will still be unaffordable. The rent will be $1,500 + telephone, and premium television. If the tenant is on SSI?, they might only pay about $300 – $350 for their rent. This is obviously much more affordable than the $1,500. The remainder of the rent will come from Section-8. This will mean I will have two payments for the rental apartment.
To determine income, there will be a need to account for capital gains taxes. For $1,500 in rent, capital gains tax is 25% which is $375 in taxes. The following can be identified
Taxes: $1,500 (rent)×.25 (tax) = $375
Income: $1,500 (rent) – $375 (tax) = $1,125.