All Forum Posts by: Bryan Zuetel

@Jim Witten, do not sign any form of a listing agreement with this real estate agent.  First, yes, this is a very common form of agent marketing.  Any agent can say that they have an all-cash buyer for your property, but at what price?  I personally have $100 cash ready to buy your property right now.

Second, no, the open ended listing agreement suggested by some on here is not appropriate because that would mean that you think that the agent is actually representing you - dual representation - which is not beneficial to you and should not be legal, in my opinion.  

Tell the agent to provide you with the all-cash written offer for your consideration.  The customary California purchase agreement includes a contingency for the physical inspection of the property, so you will grant the buyer and agent access to inspect the property during the contingency period.  You can also tell the agent to write into the contract that you will pay him 2-3% of the sales price, upon a successful closing.  The only reason that he wants to list the property is to try and double-end the transaction, allegedly represent both sides (not possible), and get 5-6% as commission.  And, if it doesn't sell in 7 days, the agent will tell you that it's the fault of the property or your unrealistic price expectations.

@Steve VanKast, usually you would do better to issue separate notices to correct or quit and notice to pay rent or quit.  Your course of action will depend on whether the tenant is under a lease or month to month.  However, California still recognizes non-payment of rent as a valid and fairly quick reason to evict.  Also, if the tenant is only on a month to month, you should issue a notice of non-renewal/cancellation of tenancy.  You can find more information on the California Court website here: http://www.courts.ca.gov/selfhelp-eviction.htm.

@Kimberly Ashley, Orange County is a beautiful, wonderful place to live.  However, making any decent cash flow on a financed property is pretty hard.  If you can break even, you can play the appreciation game (likely appreciation in OC), but that is risky.

@Account Closed, you have several issues here.  Just generally, you've estimated that you potentially have $150k in taxable gain.  Assuming a 30% tax (federal and state), you would pay $45,000 in taxes and pocket $105,000.  You would need to separate out the percentage of your home used for investment purposes (rental or home office), since only that portion would be exchangeable.  Assuming that you could do all this and that the investment portion of your property makes up 20%, you have to weigh whether these contortions on tax returns and the fees that you'll pay revising taxes and retaining professionals is worth the $9,000 in tax savings (20% of $45,000).

The short answers to your questions are yes, you can combine the 1031 exchange and the Section 121 exclusion.  Yes, you can use a 1031 exchange for a portion of your personal residence that is used for investment purposes.  Yes, you can use a 1031 exchange for a home office portion of a home.  All of these situations require a detailed analysis for answers by a tax professional.

@Nathan Rea, yes, there is an obligation in the Realtor Code of Ethics, Article 1, for all Realtors to submit all offers received to the seller.  Not all agents are Realtors.  The seller can set certain provisions for when the seller wants and doesn't want to see any further offers.  Here, it sounds like the seller-bank has set certain provisions for how the bank wants to see offers.

@Prabhjot Khinda, there are some common commercial purchase agreements in California, but they are not personalized or specific to your situation.  For instance, you wrote that you are buying a commercial building which is a Chinese restaurant.  You will have different contractual provisions depending on whether you're only buying the commercial property and leasing/continuing to lease to the Chinese restaurant or you're buying the property and the Chinese restaurant.  There will also be differences on how you structure the operations of the Chinese restaurant and hopefully, separate that from the entity holding the property.  There are a lot of issues here.

@Horacio Gutierrez, leases run with the land, so there is no need for a law.  Leases continue until the expiration of the lease, or until both parties agree to end the lease, or until one party breaks the lease.  If the tenants are month to month (and if the property is not in a rent controlled city/jurisdiction), you can request that the landlord issue notices of termination of leases before you purchase the property.  If you have concerns about the tenants, you should request credits or an escrow fund from seller until the problem tenants are out, since it might be well after your purchase.

@Noam Ofan, given your description of the situation and the amount of time that the tenants lived there, the charges deducted by the landlord from the security deposit seem unreasonable and excessive and seem to relate to repairs for wear and tear.  Your friend should first make a demand for return of all the security deposit and should threaten a small claim lawsuit against the landlord.  The California court system has a few helpful pages on security deposits and the tenant's options.  Start here: http://www.courts.ca.gov/1049.htm.

@Jason Wu, if the property is located in California, be aware that you may unintentionally cause a re-assessment of the property if you transfer/add yourself to title.

If your partner is trustworthy, one option is to form an LLC with your partner (again probably California LLC if the property is in California), put this property and subsequent properties into the LLC, do proper accounting for each property in the LLC, obtain sufficient insurance, and operate your properties prudently and reasonably. Yes, you will still have to pay the $800 tax plus other franchise fees, but the structuring can be sound and sure.

@Yong Park, the only ways to "keep the business out of California for tax purposes" would be to move to Nevada or have no active role in managing the LLC (same with any other California residents). Otherwise, California interprets the LLC "doing business" in California broadly and will deem your LLC doing business in California and subject to California's taxes.