All Forum Posts by: Gary F.

OMG. It really is gorgeous. Take that exact house and put it in Cupertino near the Apple campus and it’ll sell for $3.5+. But we are experiencing a softening of the market, increasing inventory, increasing DOM. As well as what you already mentioned about the slower buying season.

You folks that have student rentals or roommate situations, how do you manage? For a SFR. There’s no one on a master lease so their each only responsible for their rooms but no one responsible for the rest of the house. No PMs want to deal with multiple tenant situation. But I don’t want to rent out whole house because then I don’t have regular access and rental income is much less. What do you folks do?

Unbelievable these prices vs the Bay Area in Northern California. Heck. Even the materials alone would cost way more. I’m sorry you’re experiencing this market turn. Maybe Lease with Option to Purchase could work? Or Airbnb? Long term rental?

I'm offering my primary residence as a LO. I'm in San Jose CA.

My questions for CA LO transactions:

1) Where can I obtain the required documents?

2) What exact documents are required? (Lease, Option to Purchase, Purchase Agreement?)

3) Is there a usual or standard amount/percentage for the Option Fee, rent credits, and any other fees/charges?

4) Should I involve a RE attorney or are the CA Realtor Assoc Board forms sufficient?

5) Is it ok to have a minimum purchase price with a right to reappraisal at lease expiration to adjust price to current market price?

6) What is the standard period between the lease expiration and the Option to Purchase commitment, if they decide to buy?

7) I'm receiving many emails from my ad. Is there a tutorial/explanatory video available somewhere and a standard letter I can send to explain how LOs work?

This will be my first transaction, so Any other advice appreciated. Thank you.

Gary 

Great thread. I'm need something that really is easily learned.  My CPA suggested Tiller. That one is way to advanced for me. I just see a bunch of rows and have no idea of all the hundreds of tabs and buttons.  Im thinking QuickBooks or Quicken.  Probably Quicken.

Originally posted by @Chris Lopez:

@Brad Sicoli It's pretty black and white to me. You're not supposed to Airbnb unless it's your primary residence. You no longer live there. You had a really get run at it, now it's time to pivot or move to plan B.

1) Do a long term rental.

2) Turn it into corporate housing / traveling nurse rental.

3) Sell it.

4) I don't think ignoring the letter is a great idea. Now, you've posted this to a public forum that is searchable on Google by your name. There is no way to play dumb. You've admitted that you know it's against the rules. 

I know people that had to sell their property in Denver because they got busted running airbnbs.

 This is excellent and exactly what I was going to suggest.  Traveling medical professional rental is very good. They're typically on 13 week assignments and need fully furnished utility-paid housing. If you're set up for Airbnb, you're already furnished.  Med professionals are good also because the have background checks, have guaranteed income.  Since they're usually only 13 weeks, if you dont like them, they move on. Some have their assignments extended, so you can renew too. And at 13 weeks, you're beyond the less than 30 days short term rental definition. Short term rental fully furnished is higher than longer term also.  While you wont make as much as Airbnb, its a good compromise for cash flow. The other benefit is easier PM, since you're not washing sheets every time a guest leaves.  

Originally posted by @Frank Wong:

Hi Gary,

If your true goal is to sell the property.  I suggest you just sell the property the traditional way.  You will have a larger pool of buyers and get the best market price for your home.  Trying to do a lease option to buy will require you to find a buyer very specific to your terms.  You may not get the price you want.  You may also get into a lease option and the buyer cancels down the road.   The big thing is tying up your house to an unknown when you want to sell.

Imagine if you signed a lease option in 2007 for 3yrs.  Would you keep it and continue to purchase the house?  I am not saying that this market is like the other.  They are actually very different.  The market is currently softening and no one knows where prices will be.  Everyone is just guessing.

Comps may show $1.1m but those are just comps.  Markets change and if there are no buyers for that specific price range then you have to lower the price.   At each price point there are buyers and through this run-up, some buyers aggressively bid on the house thinking they have to get it.  Some buyers drop off because it's not worth it to them anymore.  Now the market is finding a base of new buyers for a specific price range.    

 Good points to consider, Frank. Im doing this because I'm not ready to sell and would like to have the cash flow and investment tax benefits while it's leased.  Then after two years, my lease period, I'll be more ready to sell. And if they dont buy the home, I get it back and can offer it to the next Leasee/Optionee, or extend the lease period. 

Ever wonder why they have those cute Thai ladies in the malls with the short skirts?  Yep, to attract new investors to those fancy new luxury developments.  And it seems to work. 

@Thomas Rutkowski Good to know how it works. I could see it really is for large cap gains amounts.

Followup to my Thailand visit. Unless you''re able to buy early in the first release stages of a new development, the equity is difficult to capture. Of course the first releases have the lowest prices to attract buyers.  You can make some equity if you sell around the time just before the last units are sold out.  But once the unit is a few years old, it loses much equity because the selling hype and interest have disappated and the next new development is getting attention.  Even RE agents rarely show resale units.  The developers give 15%-18% commission on their new units, while the REA may only get 5% on a privately owned resale unit.  So older units depreciate and sit on the market much longer because REA simply dont want to waste their time showing buyers.