All Forum Posts by: Brandon Yuan

Hi all:

I just got a 30 units apt offer accepted. Now here comes the fun (hard work) part. I have a few questions regards to physical inspection during due diligence that I'd appreciate some input

• should I just walk each unit myself (and possibly bring one of contractors who worked with me before), or is it worth to hire professional inspectors to inspect all units (or a selection of units)? what's the common practice for 30 units complex?
• besides the general walk through of each unit, I'm thinking i'll need to bring on specialists to check out big items including roof, ACs, water heater (one centralized gas unit for whole complex). This needs to be done, right? any other items that need specialist?
• any other suggestion on the physical condition due diligence?

I have several fourplex properties and I manage them myself. But they are all individually purchased, and I did use residential inspectors during purchase (just like inspection for single family houses but times 4). So I'm fairly equipped with knowledge what to look for during inspection and what are risks for future maintenance/repair. But this is a new level to me and I'd like to understand what's normally needed vs. practiced vs. just nice to have if I have budget for spending extra to reduce risk

 I haven't heard any input from other folks, but I did concur to what my CPA suggested after I read more related articles online, which is that this is not tax deductible. 

Alternatively, he suggested that if I donate those units to a paying customer and then donate those rent income to the charity, then that would be deductible against the income...

 Thanks Tom for your clarification! that's very simple yet helpful! that was one of my main concern because I guess I didn't understand how title policy works in such case. now it makes sense. 

I actually just got a response from the title company that worked on my previous commercial deal as below and that clarified and echoed what you just said:

"Yes, it is common practice to convey by Special Warranty Deed with commercial properties. Title insurance is still the same and we cover you fully. The only type of Deed we do not recognize in Texas is a Quit Claim Deed."

 Thanks @Joel Owens. now it's coming back to me. I did review schedule B exception of title  with my attorney in my last commercial deal (although it was general warranty deed). there were like almost 3 pages listed in schedule B on that one. although I don't quite remember what were the rationales my attorney explained, I do remember the conversation went fairly smooth basically being told those were all fairly standard and common exceptions he expected and nothing to concern with...

the broker did say I can ask for general, but I'll get countered 100% with special by seller. I'm in a potentially multi offers situation (duh), so it'll put me disadvantage among other offers if I insisted.

 yes seller will pay for title insurance. But wouldn't title company make exclusions in their title insurance policy if there is indeed any issue prior to current owner? I'm not quite sure how title policy works in a special warranty deed scenario, or is it the same regardless special or general deed and that'd mitigate the special warranty deed's risk? thanks 

 yes I should've mentioned specifically for Texas. i read the article now thanks for sharing

Is Special Warranty Deed a common practice for multi family apartment deals? That's what the listing broker told me and said I can ask for General Warranty Deed instead but that would put me at disadvantage against other buyers' offer. 

Is it really common/acceptable for apartment or commercial deals? I understand the difference between the Special vs General, so obviously general is preferred. but in order to get the deal, is that an acceptable risk? How does the title insurance work in this case then? Would they still do overall title search to identify any issue before current owner even though the owner don't warrant it? And would it increase financing difficulty as lender would probably prefer general deed instead as well

TIA for sharing your knowledge/experience on this

hmm I'll try the google chrome remote desktop see if that works on my computer. thanks Mark!

as for the auto update, I don't see option to choose "a metered connection"..I'll look again. I've exhausted my effort there.. I ended up set active hour to be when the office is closed so that any windows update won't be auto executed during "active hour".. but windows only allow a certain length as active hour and I think I still have an hour or two of gap there ugh....

Sorry Wendy I haven't been on here for a while. for the ESS's gate control hardware, I'd assume it'd primarily (if not exclusively) work with ESS software as that's their product specifically, but you need to confirm with them if you do go that route. I have Alltec and it's fine with ESS software. Only thing to consider again is the price/value. Alltec is cheaper options out there, works fine with basic functions but certainly has limitation compared to other fancier ones. For example (I may have already mentioned before), Alltec software doesn't have remote access function so you will have to go to the office to log on to computer if there's any issue occurred after hour (you can get around this by doing remote access to your office computer but the new Windows 10 system makes it not so easy and I still haven't done it successfully...). Alltec also rely on actually computer in office to run (you leave the computer on 24/7) and not cloud/internet based, so you have certain issue if say office loses power or the tedeous Windows 10 automatic update (whatever scenario that shuts down computer after office hour).... You'll need to get creative to have some process in place and it can address those issues, and it may still be a good price/value option.

Hi all

I got a question here. I acquired a self storage facility last year. Previous owner donated 9 storage unit for free to a national charity organization for their use. They issued a donation confirmation letter each year with estimated rental value (let’s say $50/month times 9 units times 12 months) as donation value, and the previous owner use it as charitable donation tax deduction. Always! However, now my CPA told me that we can’t claim such donation as deduction because of the so called “partial interest rule”. From what I read online, basically the rule says we can only claim tax deduction if we donate the whole ownership/interest of the property instead of partial (like my entire self storage facility?!) The article used an example of owning a 10 story office building but only donating 1 floor to charity organization's use, and that is not tax deductible. I understand what the rule says, but it doesn’t make any logical sense to me. Is it a correct interpretation of the rule that the entirety has to be donated? And donating units/space as free rent to use is not donating the interest (ownership) of those 9 units, so this is not even applicable rule in this scenario?

Anyone has experience/knowledge on this topic?