All Forum Posts by: Al D.

Not clickbait. And I tried to see if there is another post on this already, but didn’t find one.

The link speaks for itself:

https://www.ktnv.com/13-investigates/las-vegas-landlord-who-made-section-8-tenant-sign-sex-contract-says-he-did-it-to-protect-himself

This is a property with a remote owner. The defendant was a licensed broker/PM. It appears that whatever lawsuit there initially was against the owner has been dropped. As an OOS owner, I don’t know how to (100%) prevent such things from happening.

The City of Hayward has made certain information public regarding the July 4, 2022, fireworks enforcement campaign. Highlights:

“… Over July 4 and the morning of July 5, the Hayward Police Department and Code Enforcement Division received 359 fireworks complaints… (tying) some of this illegal fireworks activity to 94 separate addresses in the City. Since then, the City’s Code Enforcement Division thus far has issued notifications of violation with penalties to owners of 59 different properties and counting—with fines of $1,200, $3,000 and $5,000 for a first, second and third offense…”

Did any of these cited property owners have a better chance of preventing - not to be confused with responding to a complaint of - someone (tenant, visitor or a trespasser) from using their property to illegally set off fireworks than the municipal government had in preventing a person from setting off illegal fireworks in a city park or any public right of way? I’d like to see the stats on those calls. Is the city bearing responsibility in the form of monetary fines in any of those cases? (Rhetorical.)

“Property owners who wish to appeal a fireworks related citation can do so by completing the Administrative Hearing Request Form and submitting the form to the appropriate City Division based on the hearing type.”

https://www.hayward-ca.gov/fire-department/office-fire-marshal/all-fireworks-are-illegal-city-hayward-and-fairview-fire-protection-districts?mc_cid=d93ededb41&mc_eid=19b64c5478

From the Request for Administrative Hearing form: “A deposit in the amount of the hearing fee is due when this form is submitted.” (Administrative citation fee is $761.)

https://www.hayward-ca.gov/sites/default/files/form/2017-08-09_COMBINED%20HEARING%20REQUEST.PDF

I understand that illegal fireworks cause problems. But I cannot see this approach as a (fair, to say the least) solution. Are property owners now to hire security guards for each July 4th - expecting that to cost less than $1,200? What about July 3rd?… Does having a security guard prevent all crimes?

I do not know what legal education - understanding of evidence, chain of evidence, constitutional/procedural rights - the hearing officer(s) may have. But by not making it a criminal matter, the city is more likely to prevail than not. If I were facing one of these citations, I’d have to consider the cost of an attorney over simply asking the city to lower the fine for a “no contest” - ahem - “plea.” However, with the understanding that this may just be the start of the city’s overreach, an attorney would be worth every penny, so is banding together.

@Jenna Joan Singleton Since you already have a lawyer, I have to trust that you got the best legal advice money can buy. I don’t know the specifics of your contract, besides “laws of California.” I don’t know what loan amount is in play.

I am not a lawyer, so from experience: (a) The parties come from/are in different states; (b) if the damages should be more than $75,000, you may have the option of going thru federal court under such circumstances. Whether there is a case-beneficial reason to do so depends on the specific case - your attorney should (hopefully) know. But if the amount in question is under $75,000, it’s not an option anyway.

@Mark W Twarog You may want to mention the state the subject property is in - there may be good regional lenders in certain locations.

While this is not the main concern of your post, but from your stated goals, I’d like to remind you of some changes in effect from a few years ago for a few more years that some people I come across are not aware of regarding HE interest tax deduction: using primary HE for improvements on the subject property may be tax-deductible for you, so may be using it to invest (absolutely speak with your tax professional - don’t count on my advice,) depending on nature of that investment. However, using it to pay off other debt is no longer a tax-deductible use of HE, while may still be a better option regardless of any tax benefit because the original debt may have higher interest rates.

@Harish Verma You make a fair point about interest rates of late for comparing one investment against another based on the sellers’ stated cap rates. Since any potential mortgage is not calculated into the cap rate, I rarely even care to count on the advertised cap rate. It’s more just for comparison to me. Tho, when one really stands out from a typical local norm at a given time in that market, it may help me to gauge the overall truthiness of the seller/syndicator when it comes to their other claims.

@Kate Jones Majority of my properties are professionally managed. I expect my PMs to have a 24-hour emergency line. They better check them, too.

But I still self-manage where there are no good PMs:

Especially if it comes to things like a water leak, I would want to be contacted immediately. My spouse (co-owner) does not deal with tenants, PMs, lenders, etc. I do it all (and keep her in the loop.) But I make sure that both our names are on the lease, with both cell numbers, landlines, emails - all in case of emergency. And I stipulate that my cell (text) is to be attempted first. In close to a decade (I’m thinking 12 tenants) since doing it together, my spouse is yet to get contacted once.

At times when both of us may go out of the country/enter prolonged dead zones, I notify each tenant by email that there may be delays in getting back to them, and to only use my email during those specified dates.

Whether you may want to set up a separate Google voice line is up to you. Just make sure you answer whichever means you provide your tenant to contact you if an emergency should strike, including your front door. I only use a Google voice line when I advertise for rent - once an applicant becomes my tenant, I make sure they become aware of my regular cell number.

My leases also stipulate that any non-emergency communication should be done via email first. I never house-hacked, but would hope that this type of language - along with stating clear expectations/directions - would also set official boundaries between the “neighbors.”

Good luck with your plans.

@Marvin Michel I don’t know the local market, and did not spend much time trying to find current rental comps. But here is what I did find:

You are asking $850/mo. When the duplex was listed for sale last October, it mentioned “Market rate $600+ per side.” (This may not be news to you.) That is still what Zillow shows today - there is nothing on Zillow to say that the property is currently for rent, btw. Ask your agent why.

When googling the address, I do see that it is listed for rent on a number of other sites, and appears to be in the MLS.

Looking at your agent’s Facebook profile, I did not find any rental listings (most importantly, yours) going back a few months - he appears to be looking for buyers and sellers with his posts. Perhaps rentals is not his bread and butter; perhaps he does not know that rental market well.

Besides the property not being listed on Zillow, you may want to open your own account with apartments.com - it’s free - where you can list it yourself, but with your agent’s contact info (or your own.) Let your agent know if you do that (and see my concern below.) I’ve had success with apartments.com in NE Ohio, where I self-manage. If applicants may already have a profile there - and paid for their credit and background check - they may be reluctant to pay more money for that to an agent who doesn’t have access to their apartments.com profile. (Ask your/any PM how much they charge to process rental applications - better not be a turn-off for applicants.) (Because applicant’s credit report would be accessible to you through the site, I would ask your agent to open his own account there, advertise your property, and deal with everything from A-Z - for liability purposes - like he would anywhere else. In my opinion, there is just no excuse not to use tools that are free to you and friendly to your applicants.)

Apartments.com does have this other listing two blocks away (I don't know the area, so it may be less desirable than yours) becoming available on June 10: https://www.apartments.com/2-br-1-bath-house-2024-hill-avenue-middletown-oh/0wj61x3/ Unfortunately, it is bad competition: it's a 2/1 SFR for $825/mo, allegedly "fully updated" inside.

Incidental to the above apartments.com listing, I would contact the management company behind it to see if they could opine on your property, as @Bill Brandt suggested. While I have not done any business with them - I invest elsewhere in Ohio - if this is the Dix I’m thinking about (I don’t know how many PM companies may be working in Butler County whose name starts with that word,) they’ve been recommended to me and are a large player in the area.

Assuming that free Internet is available in your area for free to customers below certain income level, that perk may not be a big deal - hopefully, it does not cost you much.

This is all to say that to me - from far away - it looks like you/your agent may be asking too much. But follow Bill’s advice.

@Daniel Miller First of all, I am not a tax adviser, and don’t know anything about you beyond what you posted in this thread. Based on the little I know about taxes in situations like you described, my answer depends on what your long-terms goals are:

-If you want cash flow, then do a 1031x (which needs to be started before any proceeds may hit your bank account/check issued to you) - especially if you can leverage your purchase(s) at 4:1 or better. You would not need to deal with recapturing depreciation. However, in this case, the full amount of your sale (including your sizable stepped-up basis) is “forever” (if you choose to never sell those new properties, or 1031x them - thus avoiding a taxable event) tied in to whatever you buy. But even that may not be bad if you should also want a chunk of cash to use elsewhere:

With a 1031 option, as I described above, you can be getting cash flow, as well as take out equity that there may be in the purchased property(ies) - tax-free - as a loan. (You can even purchase with 100% cash, and do “delayed financing” within 6 months: https://selling-guide.fanniemae.com/Eligibility/Mortgage-Eligibility/Loan-Purpose-/COR/1033001981/What-are-the-requirements-for-a-delayed-financing-exception.htm) And upon your own passing, your heirs get to “enjoy” that day’s (presumably-) stepped up value, which is what it sounds like happened to you.

-Alternatively; although, I presume this may not be your case: “… In general, to qualify for the Section 121 exclusion, you must meet both the ownership test and the use test. You're eligible for the exclusion if you have owned and used your home as your main home for a period aggregating at least two years out of the five years prior to its date of sale. You can meet the ownership and use tests during different 2-year periods. However, you must meet both tests during the 5-year period ending on the date of the sale.”

https://www.irs.gov/taxtopics/tc701

If you are married and file jointly, “Section 121 sale” would get you exactly $500k tax-free, but you’ll need to recapture any depreciation, which, I imagine, would not be much.

@Brian Garlington I love the suspicion. Lol… Apparently, it is typical for this city’s ordinances to become effective 30 days after the Council’s approval. And they meet on the first, third, and fourth Tuesday of each month. Cinco de Abril happened to be this April’s first Tuesday, and April has 30 days… Of course, these facts do not exactly disprove the suspicion, but…

@George Munoz I invest in Florida. For the benefit of my education, please advise whether a licensed RE agent in Florida is also allowed to be a wholesaler - and whether their brokers should be OK with that.

As far as I know, the FL agent/broker I have been doing business with for years does not do wholesaling - and I would think there’d be a conflict of interest if he did, certainly in my mind if I ever heard him say, “Now may be a good time to sell,” for one example.