All Forum Posts by: Bill B.

1) Yiu REALLY need to know what CA will  allow you to do, I don’t know, but the state may say too bad landlord, you lose. 

2) Assuming your attorney (Or you if you’re able to decode the laws that relate to your situation and are willing to go to court in front of a judge against a “sick” kid.) think you have the right to collect the rent I’d give them two options. 

A) pay 1/2 the remaining rent. 
B) pay all the remaining rent but I’ll credit it against the kid’s rent next year.

How many of these fires are arson? I keep seeing videos of people starting fires. (Including the guy with the blowtorch neighbors detained who wasn’t charged with arson but instead jailed on a “separate parole violation”.)

Read two statistics today that seem insane. 

267,000 cases of arson in 2023 nationwide. 

13,900 fires in JUST LA in 2023. (It didn’t list causes)

Some of that ocean front destruction is really weird. 4-5 homes destroyed everything around it is fine, and then a few blocks down another 4-5 homes. They have 4+ lanes of traffic with no fire damage on the other side, and ocean behind them. 
. 
I hate to be “that guy”. But it sure seems like as long as the federal government keeps bailing them out no policies will ever change. 

You didn’t pull the plug when you found out it was 20% more than expected?

If he had quoted you 20% higher would you still have done the deal? 

The contract didn’t state it was 20% higher? Or did your SO make a $50-100k mistake by not seeing that it did?

Can you arrange for counters, floors, painting other “basics” without him tacking on his 20%? Seems like easy savings.  Can you borrow against your current home? Is it worth it? (Is there any “profit” left?) Was this a flip or a new primary? I truly hope this all works out for you. It sure seems like if this was a tv show those two had a secret relationship. Otherwise it’s time for a big/serious talk about making such a HUGE and basic mistake. 

Good luck and let us know how it turns out. As Red Green says “We’re pulling for you…”

You’re not using a PM, AND you’re assuming you can charge a service animal a deposit and pet rent?

PLEASE GET A PM. 

You could be facing a huge fine if you proceed. 

If they’re lying they probably chose your property because you didn’t have a PM. This is something their screening probably would have caught, or their system would have a legal procedure to deal with it. If they’re not lying and you let them stay without charging anything. No harm no foul. Try to charge them and suffer the consequences. Good luck. 

Yes. It sounds like your LLC is a disregarded entity. (It doesn't pay its own taxes. You pay all the taxes.). If that's the case you can buy in the LLC, in your name, or in a new disregarded LLC. All the IRS cares is that the taxpayer is the same.

@John Gillick. Yes. You can use it as a downpayment on a property over $450k and use leverage tax free. I “assume” they meant you wouldn’t defer all your taxes if you used leverage on a $450k purchase instead of “spending” all your cash.

I assume you would have to pay cash, because you have to spend all cash received to avoid taxes. Your cost basis would be ALMOST zero if you ever sold. So you wouldn’t get any depreciation on your new purchase assuming you only spent the $450k. You’d be better off spending $600-$900k+. That way you’d still really cash flow and you’d have some depreciation, but that’s your hypothetical call. 

@Christopher Morris

To add to what @James Hamling said, it also depends how much you need every last $ of income, how much more money you can make doing something else (W-2), or how much you value your time. 

I added a PM when I bought my 4th property. At the time I could make more money working (Even at only $60k/yr) than managing the properties. Plus, I’m not a “people person” and I know my weaknesses. When I retired 15+ years ago I valued my time more than the extra income. The $20k+ I pay a PM means with a dozen properties I literally spend less than an hour a month on a dozen properties. And 1/2 of that is accounting that I could farm out too, but I enjoy it. 

Some people look at PM fees as “wasted” or something they could do themselves. But using that mindset, so is landscaping, plumbing, or clean out during turnover. And the are people that are so poor they have to do that work, and some that enjoy it. Like I do the accounting. But there are some that just can’t see it’s a waste of their time. They’re buying themselves a job. (I used to own some franchises like James talked about. Computer Renaissance, also based out of MN.) You can’t believe how many franchises are started by people who need a job for themselves or their kids. 

Ps. Side benefits or PM besides free time. They keep you legal in regards to screening, notices, and so on. They have vendors that count on their business as a large portion of their business. So repairs are done at a fair price the same day/night. You don’t have to deal with the repair calls or the sob stories. They probably do a better job of screening than you would. They charge and collect the late fees you might let slide. They raise rents more often than you might/would. They have a better finger on the pulse of “market rent”. Tenants tend to expect to get away with stuff when dealing with an owner/manager they wouldn’t try with a property manager. To me, it’s money well spent. 

Pps. Because of special circumstances I have one property I self manage. It’s on MN (out of state to me.) and I had to get a pair of garage door springs replaced. A simple easier like that sucked. It took me 5 calls, 2 days, and 2 different vendors to go out before I paid at least market rates. When they’re done in Vegas I see a line item on my PM statement. It broke day 1, it was fixed day 1, here’s a bill for 75% of what I paid to handle it myself. 

@Dave Foster

Are development rights “real property”? Can he do a 1031? If so what are his loan requirements? I assume zero as he would have to reinvest all cash received to avoid all taxes, correct? Interesting question if nothing else. 

When you mentioned selling and other investors being involved. You asked about doing a 1031 of "your portion". I was suggesting that if you wanted to do a 1031 of a property held in a LLC, they would be forced to also do the 1031 exchange. You can't only 1031 your portion of the LLC's sale of the property. Whereas if you and the other investors held ownership as TICs (Tenants in common) then you could sell your portion and do a 1031 of your portion while others did something else.