Created pull request #61 for the solution to be merged into master code:
sample output and expected behavior:
$ suricata-update --local ~/suricata_test/jsamaroo-custom.rules --disable-conf ~/suricata_test/disable o ~/suricata_test/ -r jsamaroo-custom.rules
7/11/2018 - 03:46:44 - <Warning> -- No suricata application binary found on path.
7/11/2018 -- 03:46:44 - <Info> -- Using default Suricata version of 4.0.0
7/11/2018 -- 03:46:44 - <Info> -- Loading /home/jsamaroo/suricata_test/disable.
* 7/11/2018 -- 03:46:44 - <Info> -- Setting output rule filename to jsamaroo-custom.rules*
7/11/2018 -- 03:46:44 - <Warning> -- Cache directory does not exist and could not be created. /var/tmp will be used instead.
7/11/2018 -- 03:46:44 - <Info> -- No sources configured, will use Emerging Threats Open
7/11/2018 -- 03:46:44 - <Info> -- Checking https://rules.emergingthreats.net/open/suricata-4.0.0/emerging.rules.tar.gz.md5.
7/11/2018 -- 03:46:44 - <Info> -- Remote checksum has not changed. Not fetching.
7/11/2018 -- 03:46:44 - <Info> -- Loading local file /home/jsamaroo/suricata_test/jsamaroo-custom.rules
7/11/2018 -- 03:46:44 - <Warning> -- No distribution rule directory found.
7/11/2018 -- 03:46:44 - <Info> -- Ignoring file rules/emerging-deleted.rules
7/11/2018 -- 03:46:52 - <Info> -- Loaded 47514 rules.
7/11/2018 -- 03:46:52 - <Info> -- Disabled 1 rules.
7/11/2018 -- 03:46:52 - <Info> -- Enabled 0 rules.
7/11/2018 -- 03:46:52 - <Info> -- Modified 0 rules.
7/11/2018 -- 03:46:52 - <Info> -- Dropped 0 rules.
7/11/2018 -- 03:46:52 - <Info> -- Enabled 0 rules for flowbit dependencies.
7/11/2018 -- 03:46:52 - <Info> -- Backing up current rules.
* 7/11/2018 -- 03:46:57 - <Info> -- Writing rules to /home/jsamaroo/suricata_test/jsamaroo-custom.rules: total: 23757; enabled: 18856; added: 0; removed 0; modified: 1*
7/11/2018 -- 03:46:58 - <Info> -- No suricata application binary found, skipping test.
7/11/2018 -- 03:46:58 - <Info> -- Done.