All Forum Posts by: J Adams

I have looked into the subject of interest-bearing security deposits and I have a few questions about the setup. So in California there is no law that requires this. I am asking because I view it as a benefit to the tenant and therefore a way to attract high-quality tenants. 

The chief among them is the definition of "separate". Yes, I do understand that you want to separate business checking from personal checking. This is the whole reason for limited liability. However, when talking about these security deposits does separate mean each unit, each door, has it's own account or does separate mean an account that only security deposits dump into and paid out from? Depending on this answer raises the complexity. If the former and you are an apartment complex owner you could be looking at managing hundreds of accounts. If the latter how do you keep track of the interest? Continuing on, how are these accounts held? Be that a separate individual escrow account in their name, in the company's name under a For Benefit Of (FBO), or a bank account "in trust" of the tenant. These affect the taxation of the account as well I believe. Take for example the company holds the money and is issued a 1099-INT for the interest. Does the company pay the tax or can that be passed through to the tenant. 

I do understand that YMMV, that only a lawyer can answer these, but this could also be a jumping off point for anybody else interested in this topic as the rest of the Internet is pretty lacking. Thank you!

I do not agree with the sentiment here. Though it may not be legally required to have interest-bearing security deposits it also does not legally bar you from giving it. The story is short, but the tenant could have came from a state that did require interest or the landlord was pretty awesome.

@Chris Mason,

I assume you got the 1.6% using Piedmont's high property tax ad valorem plus their fixed rate as a percentage of the home values in the area? Say the neighborhood is all million dollar homes and a fixed rate of X, taken as a percentage is Y% which you add to the ad valorem to get the 1.6%.  Pick the high end neighborhood and take an average. 

I am all read up on how to calculate a deal, but what I cannot nail down is where to find operating cost numbers. I tried to called SDG&E, my local gas and electric company, to see if they have a map on the varying usages across the county. I reasoned that if on my statements they show me how my usage compares to that of my neighbors I could get the same information for all the neighbors! Sadly after much phone tag I cannot find this information. They said I could ask for each individual neighborhood, but that would take forever. Went to the county clerks office to inquire, but again to no avail. I tried the same thing with water just shy of calling. I found the rates online and an average for the county as a whole, but it isn't broken down into the different usage types--industrial vs. SFR.

The next step would where to find property tax numbers. I know I have seen them on Zillow, but all the books and investors say this isn't a reliable source so I am reluctant to use anything from these sites. However I am having a tough go of real estate agents responding back to me because of my age so MLS access is looking dim unless I finish my license work.

How do I find these numbers?

That is amazing! You must've been one hell of a salesman to close six figures in your first year. Keep it up! 

I am reading IRS Publication 925, "Passive Activity and At-Risk Rules". In Real property trades or businesses paragraph it lists development and construction as two separate trades. Scanning the forums, I do not see anybody touching this topic and I feel it would get a great response with all the potential in the forum space. 

Q: What is the difference between development and construction?

I really liked the Cashflow game. Accounting classes don't show you how to ledger a mortgage into a balance sheet or Income statement! 

What really inspired me was everybody talking about how they used BP to connect and find deals. Once I realized that people actually use it and saw people from whom they recognized posts from, it opened my eyes. Then your wife suggested the podcast so that's what I did. On that note, I didn't receive a card but I am on your wife's buyers list. She convinced me that if I like a property great, send a reply; otherwise it's no harm to me. 

As for the next time I'm in LA? It's typically when the college semester is up. If I create and business and then a business need in LA (deduct the gas and club dues as business expenses), I probably could go more often ;). Is a little hard when I go to school during the week and work on weekends. Might have to get a second job. 

I've actually read the UBG, just making my way through all the links now! Felt it was light on how things are done, but it definitely gave me enough information to refine my Google searches. 

I listened to the BP Podcast all the way down from LA. The trip felt surprisingly quick... Guess that's what happens when you take your mind off traffic! 

How do I control something I don't own? I've looked into being a property manager, but I'd have to be a real estate broker which is a little further than I'd like to go and a number of years away. 

Thanks for all the book tips! Seems I have a lot to read. 

Hello BiggerPockets! My name is Jay. I'm currently 21 going to school for entrepreneurship, but I'm really interested in real estate investing for the cash flow (buy and hold). I'm interested in the cash flow because I don't want to work 40-, 50-, 60hrs a week and have little time for the things I truly enjoy; entertaining my friends and family (no kids yet!).

I heard about BP after attending an "REI for Beginners" seminar at one of the community colleges down here in San Diego. After telling my friends about the seminar, turns out a few were trying to get into real estate as well so I start my own Facebook group for us to share ideas and documents (mostly BP articles haha). After attending "Real Estate Club in Action" in LA this past week, I felt a real push to not only read the articles, but to connect with everybody I met there who were real supportive.

Since  I'm young and just starting out, so my idea of what I want is just like the BP article here http://www.biggerpockets.com/renewsblog/2014/08/02/passive-real-estate-investing/. Just have to find out how to get here with no cosigner and no credit!