Soon-to-be multi-family owners from Orange County, CA

[Jeremy Sicarro]

Greetings all,

My wife and I will soon be newbie rental property owners. My father-in-law owns approximately 60 units in the Salem, OR area. Unfortunately he was recently diagnosed with advanced colon and liver cancer and given a very short time to live which means we will be co-inheriting the properties along with my sister-in-law. Consequently I've been devouring everything I can get my hands on and tearing through all the podcasts I can in order to educate myself as quickly as possible. Bigger Pockets was one of the first resources recommended to me, and it's been a gigantic help.

By way of background, we reside in Orange County, CA, and just within the last several months finally emerged from the smoking ruin of the Great Recession. In 2005 we bought our first property, a tiny 1-bedroom condo (no garage, no yard) for the same price that my parents paid for their brand-new two-story 3475 sq. ft home complete with swimming pool/spa in the same county only 10 years earlier. I FSBO'd our place myself 1.5 years later and turned a 30k profit as we moved up to a "spacious" 2BR condo. We were upwardly mobile and easily made the mortgage payment...but then the Great Recession happened. My wife and I both lost our long-time jobs within six months of our first child being born. After receiving approval to short sale the property and receiving an offer the first day it was on the market, the bank stonewalled for 11 months until the buyers finally pulled their money out and walked. Within two weeks, the home was sold at auction. I was so angry at the time that to this day I still haven't checked the records to see how much less the bank got for it than what our buyers had offered. Thankfully we had seen which way the wind was blowing and had already moved into a new home as renters. After living in survival mode for the last 5 years, we're finally back on track and able to save/invest more than a pittance each month.

It feels like we're being thrown into the deep end with no training, going from budgeting down to the last dollar every month, occasionally forced to rely on the generosity of friends and family, to being responsible for dozens of units within such a short time. Luckily I learn extremely quickly and my father-in-law employs a local property manager, so I suppose the important thing really is to learn how to manage the property manager, but there's still quite a bit of whiplash.

Anyway, I'm glad to find Bigger Pockets. I know I'll be relying on the information and community found here to help me manage (and grow) these assets responsibly. Thanks for taking the time to read! 

[Brandon Battle]

Jeremy,first let me say how sorry I am for you and your family about your impeding loss.My went through it myself with my Dad two years ago and know how it feels.Now down to business before it gets to late.First,get a lawyer and help your father in law and his family get ready for the transition.Doing it now will save a ton of heartaches and misery later.He needs a will and living trust to spell out exactly who gets what and how much.It will save time and trouble getting the assets transferred to the heirs with minimal hassle and costs and help ease your father in laws mind.Second,get a Power Of Attorney set up now before his mind is declared by his doctor and lawyers to be legally incompetent(I wish I had done this!).Your wife and sister in law need to decide who will quarterback the transition team (family,lawyers,doctors,property managers,accounting,funeral arrangements,etc).Whomever is the emotionally strongest and most well organized person should be taking the lead in all legal decisions when their father is unable to in the future.After he passes there is going to be a ton of work to do so get good professionals to help you.Your going to need to evaluate the current situation of the rental properties and the quality of the property management and tenants.Is your father in law using an LLC (limited liability corporation) to run his rental business and to protect his assets? If yes,ask him to make you and his children legal partners so you can sign and speak for the LLC to his management company now and in the future.You will need to inspect and evaluate the current physical state of the units (termites,dry wall damage,paint,etc.)to determine what needs to be fixed for asset improvement.Are the rents too low for the market? Need to do search on what other similar units are renting for now.Are the tenants good quality or are they ready to be kicked to the curb? Need to look at their payment history and any complaints made by or against them.Is your property management doing a good job or just pocketing the money without fixing what is broken and letting bugs infestate the home?One step at a time.Good luck and God watch over you all.