All Forum Posts by: Chad Green

Thanks again to everyone for your replies.

Thank you guys for your input.  I am moving forward with hiring professionals to take care of it.

Perhaps this isn't the best place to post this question.  If anyone has any suggestion of a better place, please let me know!

Bought an older house in Los Angeles (City), started doing some light demo, then thought it's best to stop and get things tested for asbestos before I really started tearing things out. Had a company collect and test a bunch of samples, found that some of the materials contain asbestos, including material I had already "damaged" (e.g., linoleum floor, of which I removed a few square inches). Company states the following:

" Due to the presence of damaged asbestos containing materials and debris, a Procedure 5 (P5) cleanup plan is required to be generated by a Certified Asbestos Consultant (CAC), such as JLM Environmental, and approved by the SCAQMD prior to asbestos abatement in accordance with SCAQMD Rule 1403."

A few questions:

Does the company report its findings to any government agency?

Am I obligated to hire professionals / certified people to submit a cleanup plan and then also to clean it up? The FAQ for SCAQMD Rule 1403 (http://www.aqmd.gov/docs/default-source/compliance/Asbestos-Demolition-/1403-frequently-asked-questions.pdf) states the following:

- Survey requirements do not apply to an owner-occupant of a residential single-unit dwelling who resides at the property and solely and personally conducts a renovation activity at that dwelling

- No Notifications are required for ... Renovations by owner-occupants of single-family residences.

So I understand those above two points to mean that I don't need to involve any further professionals and I can proceed to carefully take care of this on my own (I'm in the process of educating myself on proper abatement methodology).

Anything else I should know?

Thank you to all who replied.  I've definitely learned three valuable lessons: 

1) the importance of making sure the tenants change filters regularly (and understand the consequences if they don't); 

2) the importance of talking directly with the vendor prior to any visits, and specifically re: discussing pricing and preauthorization / do not exceed limits, etc.; 

3) and that I shouldn't waste my time and energy on worrying about an "issue" as small as this (that is to say, worrying and spending time after the fact, after the work has been done).

TL;DR is at the end of this post.

My tenant was having issues with the AC.  I told him to contact an HVAC company I had researched on a prior occasion.  I had previously scheduled for this same company to check on an AC at a different property, but the tenant never scheduled it.  This company had my contact info.  The exact wording in my email to my tenant:

"If you're unable to get it down to a more comfortable temp, I'll be happy to have someone come out to take a look at it, in which case I'd ask that you please try contacting [HVAC repair person] from [name of HVAC company]: [phone #]."

Tenant replied: "[HVAC repair person] is going to come out and take a look today so I'll keep you posted and have him give you a call if he expects to do anything that might cost more."

Next thing I know I get a call from the repair person saying he's got the AC system running cool again.  Said the main cause of the issue was a clogged up air filter (I know, my bad for not reminding my tenant about the importance of regularly changing filters (it's written in the lease that he must replace them every 3 months and that I'm not responsible for bills resulting in replacing filters)).  Coils were frozen so he had to defrost the coils.  That's understandable.  Then he said he took the liberty of also doing some "preventative maintenance"  Uh oh.  He said he would email me the bill.  So here's the bill:

1 Service call (July Special) 1.00 $100.00 $30.00
(30.00%)
No Tax $70.00
2 Labor (defrost and clean condenser coil) 2.00 $100.00 $20.00
(10.00%)
No Tax $180.00
3 Co2 Coil Cleaning 1.00 $25.00 $1.25
(5.00%)
$1.43
(6%)
$25.18
4 R-410a Refrigerant 2.00 $65.00 $0.00 $7.80
(6%)
$137.80
Subtotal (without tax) $403.75
Taxes $9.23
Grand Total ($) $412.98

As an aside, the fact that vendor added refrigerant is a red flag to me, as it's my understanding that cooling systems generally don't lose refrigerant unless there's a leak, in which case the leak needs to be addressed.

TL;DR: AC not cooling. I told tenant to contact vendor. Tenant said ok, said he'd have the vendor give me a call if he expects to do anything that "costs more." I don't hear anything until the vendor is done with the job, at which point the vendor calls me to say that the air filter was clogged, that the coils had been frozen over and so he defrosted them, and that he did some "preventative maintenance." He then sends me a bill for $412.98.

How do you all advise I handle this? Let him know that I didn't authorize the work and so offer to just pay him his service call fee? And if anyone knows anything about AC systems, do you think it's appropriate to charge $180 to defrost the condenser coil?

What do you all think of my idea of a family member loaning money from a HELOC to finance acquisition of investment property?

Background:

Mom owns two houses (primary residence and a second residence that is used by family) in CA free and clear. One is worth ~$2m and the other is worth ~$1.25m. Mom has good income and no debt. Mom wishes to provide financing to children who wish to invest in residential RE (children have experience managing residential investments). Children have some cash, equity in investment properties, no debt, but not much income.

All parties are on good terms and have the same goals, always have. I respectfully ask that you not post about how it’s not advisable to loan money to family, etc.

Idea:

Mom secures a $1m line of credit via HELOC(s) (I think two HELOCs would be necessary to achieve $1m because as far as I can tell most lenders limit HELOCs to $500k). When children come across a good investment opportunity, mom uses her HELOC to obtain cash which she lends to children who purchase the investment in their (children's) name. Children might augment borrowed money by putting their own $100k - $200k towards the purchase. The purchase would thus be made with cash.

To keep the IRS happy: Mom and children sign a promissory note documenting the terms of the loan, which would be interest-only and with monthly payments being equal to those that mom would be paying her lender. Children make monthly payments to mom according to the terms of the loan. Mom reports those interest payments she receives to the IRS.

Children refinance the investment property with a conventional loan at 70-80% LTV, thus paying off most or all of their loan with mom.

Reasons why the family wishes to go this route (compared to something more conventional):

Mom doesn't have any interest in managing investment properties but is happy to loan money to children for them to invest. In order to minimize the growth of her net worth (for estate tax purposes), mom does NOT want to be on title to any more RE. There is a preference for a LOC instead of a loan for the following reasons: don't have to pay anything while waiting / looking for a deal; then when the deal is found, money is available basically right away and can thus buy for cash.

Questions:

1. At a high level, does this idea make sense?

2. Should mom record a lien on the property the children acquire with money they’ve borrowed from her? (Only care to do this if the IRS cares.)

3. Considering mom pays interest to the bank and children pay the same amount in interest to mom, who gets to deduct their interest payments? Only the children on their Schedule E?

4. If mom records a lien on the investment property that the children purchase, does that pose any issues for the refinancing of that property?

5. Would the regular seasoning period (6-12 months) apply for the refinance of the rental property?

6. Instead of the children refinancing the purchased rental property, might it make more sense for mom to convert her HELOC to a fixed rate loan?

Any other input is also welcome.

(I'm choosing to post this post in the "Private Lending and Conventional Mortgage" forum category because I think that's mostly what I'm after. But as you see I'm also concerned about taxes and the IRS. Should I post my tax related questions separately?)

A deceased parent owned rental properties. From the time of the decedent's death through tax year 2019, the estate has been filing fiduciary returns, passing the income and the tax liability through to the beneficiaries. The beneficiaries receive K-1's and use them to file their own Schedule E's. In 2020 I paid a lawyer to transfer those properties into the names of the beneficiaries. Does anyone get to deduct that expense (the estate on it's 2020 fiduciary return? the beneficiaries on their 2020 Sched E's?)?