All Forum Posts by: James Qiu

I had a tenant told me someone tried to break into his house and broke the window. I inspected it and found no obvious signs of forced entry so I suspected it's either vandalism or one of the boys did it. So I told him that in order for me to claim insurance they need to file a police report for the attempted theft (so to give me sometime to think). Even if he gets the report, with my $500 deductible, I won't bother with insurance. But my questions are:

1. Am I legally allowed to request a police report? Note, there's no other property damage or stolen.

2. Do I need to fix it right away to prevent personal injury (sharp glasses) or property lose, since it's the front window? And try to recover the cost later?

3. Who should be paying, if it's in fact theft or vandalism? I assume that would be me, since the lease (the standard C.A.R. lease) doesn't state it explicitly.

4. What if he insists that it's attempted theft but for some reason don't want to get the police involved?

Anything else am I missing?

@Don Jackson those charges seem high to me, eg. filter costs $10 each and takes 5 mins to replace and also gutter cleaning should be landlord's responsibility unless specified otherwise in your lease, and you can't charge for changing locks if they're not broken. In CA, you're required to send the tenant the actual receipts justifying the expenses, not just estimates. If you perform the repair personally, you have to be reasonable in charging fair market rate. eg. if it takes 1 hr of your labor for some handyman's work, $20-30/hr is reasonable, even you're probably paid much more in your own line of work.

My suggestion is to first fire the PM who obviously wanted to skim some profit by inflating the repair cost while exposing you to lawsuits (remember you're in CA - a blue state and San Jose - a city with rent control). Second get a handyman/contractor to do the repair and send the actual costs to the tenant. If you can't finish it within 21 days after vacancy, send the tenant an written estimate from the contractor with some padding along with the remaining deposit, and send the rest when the repair is done. More importantly, read the rental guidelines of your city for what you can and can't charge a tenant. Some repairs are considered normal wear and tear, eg. depending the length of the tenancy you might not be able to charge for painting the interior of the house, cleaning (or even replacing) the carpet.

@Laura Smith LLC is not designed for tax purposes. It's for limiting liability, eg. you can't loose more than the total equity in your LLC. In fact, in most cases, you pay more (taxes and fees) for having a LLC, eg. in CA it's $800+/year. If you are the sole owner of the LLC, income/lose is considered pass through to your personal tax. To get tax benefit, you need a C-corp where corporate tax rate might be lower than your personal as well as being able to move revenue around from one calendar year to another, but for small number of rental properties, it's not worth it.

For me, to feel safer, I'd spend the money to increase the liability coverage and get an umbrella insurance.

Even if you have multiple properties, putting them all in one LLC still expose you to the risk of loosing them all, unless you have individual LLC/property. So getting an umbrella ($1M-2M) to cover all of them is more economical.

For your PR, it's definitely a bad idea to put it into a LLC. Why do you want to pay yourself and incur the cost of maintaining the LLC? Also you can't get owner occupied mortgage and home insurance rates. And since you won't sue yourself, personal liability is not a problem anyhow. And most importantly, you also loose the personal capital gain tax exemption ($250K/ind) when you sell. However, you're correct that you can't deduct the home improvement cost from your income easily for owner occupied PR, but, you are not supposed to anyway.

@Account Closed Not sure about your local law, but here, the landlord needs to provide an itemized deduction report for repairs and damages with actual RECEIPTS. If the repair is done by the landlord himself, he needs to charge you based on fair market rate, eg. $800 for a toilet installed seems $600 over priced. Unfortunately to recover your deposit, you will have to take him to Small Claims court.

@Brent Behoriam what does your 30-day notice say? I assume it terminated the lease on 8/15. If so, you need to return the partial rent after 8/15, even if you allow him to stay pass 8/15. If your city's law is pro-tenant, this may become a technical issue to void your 30-day notice. It's better to be safe, when you're the "evil" landlord.

@Derek Bonanni if you really HAVE to terminate the lease, and you're using the standard CA Association of Realtor's lease, it has a clause says "if .... that render Premises totally or partially uninhabitable, either Landlord or Tenant may terminate this Agreement by giving the other written notice." eg. if the place is uninhabitable (flooding, pest, mold etc) before moving in, you can terminate the lease and return the deposit (plus some good faith money). You might have to "create" some proof/evidence to backup your excuse and keep it off market for a while.

@Nathan Ku forget about suing. Let it be a lesson learned. You can't obtain a summary judgement by eviction, because she never occupied your property. The only venue is Small Claims. You will probably spend many hours preparing your case, filing, finding and serving her. There's no guarantee the judge will award you anything even if you win the case.  Not to mention you have to collect the judgement if you do get anything. BTW, check the backlog of Small Claims, in some places, it's more than a year.

@Account Closed so true. I bet some people walking on that trail 10-15 years from now would kick themselves for not buying one of those houses for $1.2M when they had the chance. Affordability is a relative term. Most people who left expensive but desirable areas looking for affordability could never go back, unless they buy and sell at the exact right time. When I first started working, an old guy in my office told me to buy the most expensive house I can afford. So my wife and I put down only 10% to buy our first house, and we didn't see half of our salary for a couple of years. That was 1999, almost 9 years after San Diego's RE hit the bottom in the early 90's and most places have appreciated >50% since. I remember telling ourselves that we would take a hit when the market turns. And it did after 9-11 and the internet bubble, but only briefly, and then it just took off like a rocket. Fast forward to 2010, we were ready to upgrade to our 2nd house in the midst of RE down turn. This time we were extremely careful, so we put down 40% and made sure we can afford it even if one of us was unemployed. Fast forward to today, every time we go to the beach, I thought to myself "I wish I got one of those houses when I had the chance".

In the Bay area, it's very easy to find a fresh grad in the high tech industry making $150k+ a year. So a couple making $250k+ is quite common. With high taxes in CA, would you rather give 40% of that to the governments or use mortgage and property tax deductions to bring that down to say 25-30%? Besides housing, the cost of living in the Bay area is not that much different from the rest of the country, eg. high ticket items like cars, electronics are about the same, food and gas are probably 25% higher. So paying 50% of $250k income towards mortgage is still more "affordable" than paying 20% of $150k.

@Richard Kolostian @Cat R. any licensed plumber should be able to install a water meter for you as long as the supply lines to each unit are separate and easily accessible. You can search on Amazon for "Lead Free Potable Water Meter" or "NSF61 Water Meter".  For electric, if each unit has a separate sub-panel, you can get a TED monitor (eg. https://www.amazon.com/TED-Pro-Home-Electricity-Monitor/dp/B00XTU9RF2) for each one of them by monitoring the supply line usage via your computer or phone. You might want to put a lock on the panel doors, so the tenant don't "accidentally" disconnect the sensor.