All Forum Posts by: Jak Dadi

Hi,

I am still on the hunt for MFH in Stockton and Sacramento. Is there anyone out there active in Sacramento? What areas would you suggest I avoid?

Also, how does one see any success with short sales. I have made dozens of offers on short sales but never heard back...somebody has to be buyig those properties...what is the secret? Is there a short sale specialist in the BP family, for the Stockton/Sacramento/East Bay Area market

i would love to contribute but as a relatively new investor, i find myself vastly inexperienced to make a valuable comment, especially when we have so many seasoned investors....i am all for sharing my experiences with other new investors, and responding to questions, but then, someone else has already been there...done that...before i even recognised the vast opportunity we have in REI

Infusion- I would love to, but the rent does not justify the asking price, unless I compromise on my target returns.

Thanks Laura for the suggestion. I definitely would need to bring in an expert opinion on the condition. :-)

Scott, I am meeting a CPA next week. So far, I have not yet invested the funds in any properties and will hold off until I talk to this particular CPA, who apparently worked for the longest time with the IRS.
That said, what do you mean by shutting the C Corp down. Where did you roll off the funds from the C Corp- 401K? I am trying to find out what alternatives exist that would give returns similar or close to that of a rental property.

Tom, I understood that C-Corp would be the only way to do this real estate investments via the 401k.

Jon/Scott- I completely agree that tax benefits should not be the reason for any investment decisions. In fact, I do not even count on appreciation. All I really care about is consistently strong cash flows. I would love to get as much tax benefit as possible, but I am not holding my breath for the appreciation.

More next week, after my meeting with the CPA.

Thanks Jon and Scott.

Jon, we pay $2500 to rent the house, and hence it did not make sense to buy a house in Cupertino. I still do not buy into the CPA's argument that we need to reduce our MAGI by buying a house

I must confess I was extremely frustrated after meeting with that CPA, since I was all set to make some more offers. Now, I am holding off until I have some more clarity. He also suggested that I get an RE license, which I am looking into.

In addition, we had started a C Corp, with its own 401K, and rolled over IRA funds into it, for RE investing (not a self directed IRA). This was facilitated by Guidant. The first CPA ripped that idea about and made it sound like it was the most foolish thing he had seen anyone do it!! Arrgh!!!

So, we have hit a temp road block before we make further investments. The notion of financial freedom through cash flow is such an appealing thought, and a full time obsession now, but I need to ensure we are going about it the right way!!

So fellow BP members, I will post an update on what the other CPA's recommended!

The last week has been depressing as we went through a prelim exercise to understand our tax situation. We have a MAGI of over $150k through 2 W-2's, live in a rented house and own a few multi-families. We made a rental loss last year since the properties were purchased in second half of the year, but as we went through the tax exercise, we find out that we are not able to write off the losses because of our MAGI. Even though I easily spent more than 750 hours last year on real estate investing, it is still counted as passive activity because of our W-2's.

Does anyone else have this same experience? One CPA we talked to said we should buy a primary home first, which in our neighborhood would be over $1M. We wanted to build some assets before we took on such a liability. We are meeting with 2 other CPA's to get their inputs. For us, the thought of financial freedom and generating enough cash flow to replace our salaries is the primary driver, not to mention, real estate investing is now a full time passion/obsession etc.

Anyone in similar situation??????

Thanks all, for your inputs! I did visit the property. The seller has definitely done a lot of work. I would not need to do anything at all for a long time. I had a couple of concerns about the location- 1) there is a huge basement at the bottom with massive concrete pillars. Not sure of the implication of that on the property
2) There were a lot of vagrants at the corners of the street. Current occupancy is about 40% and current tenants are doing fine, but just overall I was concerned about the tenants. I checked with a property management co. on their inputs, and while they agreed to manage the property, they did not have too positive a feedback on the location. They did say that neighborhood was improving but it was still a questionable area i.t.o drugs. So, I have not made a move on the property. Housing Authority office was right around the corner too.

So I am still holding off on that one. Also,the listing price is outrageous. I would want the property at a discount because of the location.

I do agree that older homes definitely have a lot of character. I saw a couple other multifamilies there, and I liked those.

More to come!

I have 12 units in Bay Area and manage on my own. Managing means receiving calls from existing tenants, coordinating work with my handyman, and screening new tenants...I have a full time job and so do not think I can take on managing more than 12 units. Also, I have no clue on maintenance work. Being a female, I always worry that the handyman might take me for a ride. Not sure how to deal with that!

I am looking for some more units in Stockton/Sacramento/Fresno shortly. Again, the question stays that once I hire PM, how do I ensure that I am not been taken for a ride! They will never be as financially conscious as I would be, but then hopefully they are savvy about the work that needs to be truly done!

I am almost at a point of 100% occupancy for my existing multifamilies and itching to buy more. A property I am looking at is an 8 unit in CA, asking for $400K, rent roll of $4800 AND BUILT IN 1910.

Building Amenities and Improvements include a New Concrete Driveway, New Stucco and Exterior Paint, New Main Electrical Panel and New Roof on Rear Building and New Mailboxes.
All units have New Cabinets, New Counter Tops, New Windows, New Tiled Kitchen and Bathroom Floors, New Pergo/Laminate Bedroom Floors,New Electrical Wiring including New Sub Panels w/ Breakers and New
Plumbing. Other Improvements include 6 New Gas Water Heaters, 6 New Gas Wall Heaters, 4 New Stoves and All New Refurbished Refrigerators

The BIG question is would you buy a 100 year old property, despite all the changes above? It appears that maintenance would be relatively low due to the recent upgrades, but would I be able to sell this 10-15 years down the line?

Part 2 of this saga. I got a call from his girlfriend. She had paid the initial $500 to help him out move into the place. Apparently she did not know that everything was been called off, and so she is clamoring to get her $500 back. At most, she said I get to keep prorated rent from date that lease was signed until the day I got the keys back, i.e 4 days only. She is a paralegal and works at a real estate attorney's office for 10 years. She said any document signed by him would be invalid since it was signed under duress??????? I am speechless!! The content of the letter is as follows:

This is to confirm that following your inability to provide
1) a copy of an acceptable document that confirms your monthly income and
2) the balance security deposit towards leasing the apartment at address XXXXX, you are waiving your right for a refund of the holding deposit of $500 that was paid to hold the apartment for you. This deposit represents lost rent and additional marketing expenses that the property will incur to find a replacement tenant for the unit.
Your signature below indicates that you have read and agree with the above.
Thank you

Next steps??? I asked her to contact her friend and discuss this issue with him. He was the only one names on the lease. The $500 money order had both their names. But she is adamant that since she met me and gave me the money, I should be the one to return the money to her!! I am speechless! Any suggestions?