All Forum Posts by: Dave Ketcham

Hi Roland, we live in Temecula, and also have two investment properties in the area. Prices have surged just like everywhere else in Southern California, so be aware of that. But we are very high on Temecula in general. It is a great place to live, and is highly desirable. There is a big new apartment complex on Temecula Parkway that is going to open this fall, so that may impact the number of available tenants.

Tom, I agree that ultimately, you are correct -- we will have to do more research with an attorney.

Thanks everyone, I appreciate the comments. We live in California so managing it ourselves is not an option. I will be negotiating some changes to this with the PM based on this input.

I would appreciate some BP wisdom on this. We just bought our first property in Missouri and the PM agreement includes the following two sections that are troubling -- we haven't seen this language before. It seems to say, "you have to pay me all the fees for property management, but if we make a mistake or get sued, you (the Owner) have to protect me (the Property Manager) from all of my mistakes!".

Is this standard language in property management agreements?

Thanks!

Dave

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"5.2. Carry at Owner’s own expense public liability insurance that names the Owner and the Agent, that is adequate to protect their interests and that is in form, substance and amounts reasonably satisfactory to the Agent. Owner shall furnish to the Agent certificates evidencing the existence of such insurance. Unless the Owner shall provide such insurance and furnish such certificate within ten days from the date of this agreement, the Agent may, but shall not be obligated to, place said insurance and charge the cost thereof plus an administrative fee, to the account of the Owner. All such insurance policies shall provide that the Agent shall receive thirty (30) day’s written notice prior to cancellation of the policy.

5.3. Pay, except as provided elsewhere in this Agreement, all expenses incurred by the Agent, including, but not limited to, reasonable attorney’s fees and Agent’s costs and time in connection with any claim, proceeding, or suit involving an alleged violation by the Agent or Owner, or both, of any law pertaining to fair employment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited to, any law prohibiting, or making illegal, discrimination on the basis of race, sex, creed, color, religion, national origin, age, marital status, or mental or physical handicap, provided, however, that the Owner shall not be responsible to the Agent for any expenses in the event that Agent is finally adjudicated to have personally, and not in a representative capacity, violated any such law, unless such acts and or omissions are outside the course and scope of Agent’s duties hereunder. Nothing contained herein shall obligate the Agent to employ counsel to represent the Owner in any such proceeding or suit. The Owner also agrees to pay reasonable expenses (or an apportioned amount of such expenses where other employers of Agent also benefit) incurred by the Agent in obtaining legal advice regarding compliance with any law affecting the Premises or activities related thereto."

This is a great topic. We have a couple of properties in SoCal, but just bought a property in the KC area for the specific purpose of diversification. We are buy-and-hold investors and there simply aren't many good opportunities for positive cash flow in our area of SoCal right now. So, we see the KC area as a separate economic region that will be profitable, but separate from the crazy ups and downs in CA. I will say though that it has taken many, many hours of time and travel to learn a new market, identify a property manager, and look for properties!

Rick,

That's great that you are so close by! Thanks for the feedback. Your suggestion makes sense, but we will definitely rely on the title officer in MO to guide us on this. Now that you mention it my parents already have a living trust, so their 50% will need to be in the name of the trust I suppose.

Shelby, we did think about an LLC, but I was told by our CPA that as a Californian we would have to pay an annual LLC fee of $800 to the state, so it ruins our profitability on the property. We are carrying an umbrella insurance policy though. When we add more properties down the road, we will probably go with an LLC.

We have friends that have purchased a rental property near the college their child is attending, and the child lives there while attending college along with friends that help pay rent. Our daughter starts college in two years and I am planning on doing this if feasible, since you save on housing costs, have an income producing property, and hopefully a long-term investment for years to come. Seems like a win-win-win.

Looking a for a little help -- my wife and I are purchasing a property 50% / 50% with my parents, and we have also have a joint loan on the property. On title, what is the best way to reflect this? Should we do it as follows?

"John Doe and Jane Doe 50%, and Jack Smith and Jane Smith 50%, Tenants in Common"?

The property is in Missouri.

Thanks!

The BP podcasts are great too -- I've learned a great deal from them. "Rich Dad, Poor Dad" and the "4-Hour Work Week" are often recommended by the folks that are interviewed on the podcasts.

Best wishes to you!