All Forum Posts by: Bruce M.

I have encountered my first cash for keys scenario. I bought a condo at the trustee sale and the owner won't leave without cash. He obvioulsy knows how to play the system and is playing it well. I'm sure he did not make a mortgage payment for two years before he was foreclosed upon. It goes against my grain to offer this, but he won't leave without some money. It will be cheaper and take less time than going through the eviction process. What do some of you do in this scenario and do you have any tips or suggstions for me?

I don't visit them as often as I should but I do travel to the areas. I rely on my property managers and I am sure there is some leakage, but that is the way it goes when you are out of the area. I have hired a group of people that I have to trust. I have let some go that have not worked out. They know i am on top of things as I do keep actively involved, as much as I can in this situation. It is working for me. I am used to buying properties far away now and don't really think twice if I like the deal. Im probably a little crazy but that's me!

I bought in TX starting in 05 when CA was just too crazy. I sold out of CA as I knew it was not sustainable. However I never thought it would correct to the level it has. Right now I am invested in NV, AZ, FL and TX. Those markets have been creamed and I believe they have over corrected (NV, AZ and FL that is), just my opinion though. I think there are lots of other good markets out there to look at. I like some of the midwestern states like OH, MO, IN, etc. I think you wlll see less appreciation in those markets, but I do think they offer some nice cash flowing properties. Each area has its pluses and minuses. You have to go to whatever market you have an interest in and see what you think. Don't rely on anyone else until you check it out for yourself. We all are looking for different things.

If you want to stay closer to home, the returns may be less, but I think you have some appreciation that may happen quicker. In So Cal, I like Bakersfield, Palmdale, and the Inland Empire (parts of Riverside County). These areas offer lower prices (and better ratios) than Orange, Most of LA area, etc. These areas have been hit very hard. For a variety of reasons, I think people want to live in CA and prices will go up again.

Hope this helps.

Nicholas, You have gotten excellent responses on your post question here. I am also replying because I too live in the same state as you, and you cannot get the multipliers and cash flow in CA like you can in other areas. Currently I own no rentals in CA whatsoever. I have them in four other states. There are parts of CA that are starting to look attractive again so you may want to consider some of those closer to home if you have never bought rental property before. That being said, there are areas with much better cash flow out of state. I have found the key to be the same thing everywhere, and that is buying right and getting the right property manager. There are differences in managers, I have six I use right now and each is very different in how they operate, their personalities, etc. States have different laws when it comes to evictions, tenants rights, etc. It really is not that complicated but there are regional differences.

If you have identifed some areas, you need to go there and check them out. Drive and walk the areas, both at day and night, make sure you are comfortable having rental properties there. I have many rentals I personally would never want to live in, but that does not make them bad rentals. I look at everything as a business investment. Others in here have examples of a business plan. I never wrote one but I am thinking I need to. I have learned a lot from many in here, and i have made many mistakes in this business along my way. You have made a good step my joining this forum as people in here have a wealth of knowledge. Good Luck.

Jon, When you say contract with Realtor.com, what you do mean? I use MLS in CA because I am also a broker so I pay for the access for the data it provides. For rentals though, I find craigslist to be just as good as an indication but now I will also use the rent site you mentioned. I have used realtor.com and have not found it that great, but maybe I don't know all the tools that they offer. I have just used it to look at out of state listings and now there are several sites doing the same thing. They need to add my to that VIP event too, they may have a new customer......

@jon I never knew that website existed. I just checked a bunch of my rentals on it and it is pretty accurate. Thanks for mentioning it....as usual, I have become amazed at the new information I find out from all you guys in here.

Greg,

Ditto on the "thanks" for doing this contact list for the conference, I know it takes time and effort. When/if I see you at the bar, your next drink is on me.

Sorry Matt, I thought you had already signed the contract and were in escrow. You are on the right track with what Joe M said. Always have an "out" on these things, especially now a days with how difficult loans are to get. Having the loan contingency in effect until the designated loans are funded is the way to go. I would be afraid to buy anything financed these days without something like it.

As others, I have to start by saying I am not giving any type of legal advice here.

I assume you used the California CAR (California Association of Realtors) Purchase Agreement and Joint Escrow Instructions form, right? I think it is form RPA-CA which is what is commonly used in CA for purchases of residental property. If so, there is a Loan Contingency Removal on the first page, and I assume it was checked, right? And there was an amount of days on the first page under Loan Contingecy Removal. If you are over that amount of days than it usually states something that the seller may be entitled to the buyer's deposit. In additon many times we in CA are asked to sign a contigency removal document in escrow after all dates have expired. Did you sign anything after a few weeks removing all contingencies?

This would be something to talk to a lawyer about. No matter what, you can always ask for the deposit back and see what happens. Are you represented by an agent on the deal? Have you discussed with him/her?

This is really a contract issue and something you would want legal counsel for if you cannot get the deposit back. These contracts often have all kinds of things written into them as addendums, etc. and its very hard to answer a question like this with limited information.

I hope this was helpful in some way. Good Luck on it.

I cannot remember why, but I was told by two CPAs never to hold my rental properties in a C corp. I was told to either have the entity taxed as an S corp, partnership or disregarded entity. Only an LLC can be taxed as everything. A corporation can only be taxed as a C or an S. Maybe someone else can say if they were told the same thing.