All Forum Posts by: James Qiu

I just got approval for a short sale that I'm trying to buy in Temecula CA. The total purchase is only $150K but the escrow company wants both the seller (bank) and me to pay about $1000 each. The bank had only approved $750, so I need to pay $1250 ($250 to cover for the bank's side). I've bought many short sales in the last year or two, and normally paid around $600 to 700 each time. Am I getting ripped off? If so, can I have the file transferred to a different escrow co. by law? I'll try to negotiate but if I fail, what else can I do without walking away from the deal all together?

If you have a Chase business account, get a deposit only ATM card which can be used at any Chase ATMs to make the deposit. It's free. Remember the card number before giving it the tenant. If you need to evict, just take a call to Chase to cancel the ATM card. Just to be legal (in CA), you need write to the tenant that you're cancelling the card, and give them the new method of payment in advance.

In some situations, it's highly beneficial to work with the listing agent, eg. short sale, especially on rental worthy investments which are really hot in SoCal right now. More than often, a reasonably priced property gets multiple offers, the listing agent has a lot of leeway as whose offer to send to the Bank, and when to stop accepting offers.

As for regular sales or REOs, I think it's better to work with just one agent who worked the hardest for you in the past. With the personal relationship you've developed, she/he often would give you a more honest advice.

Ok, my understanding is that when you convert your primary residence into rental, you need to establish a cost basis on the portion you're converting. So it's easier just convert it to 100% rental at once. Ideally you need to "appraise" the property value WITHOUT the land which can't be depreciated. But that can be difficult without selling the place or spend $$$ to hire someone. You can estimate it, or just use your County assessor's values on your property tax bill (which is what I did). When you sell it, your cost basis is whatever you originally paid + improvements - total depreciation. The capital gain is your sold price - cost basis - commission/cost. How much you pay on the capital gain depends on the tax regulation at the time which changes all the time.

ATM deposit only card worked well for me. If I need to evict, I just cancel that particular card and let the tenant know that they need to start paying by check.

Angela, Dave is right. You need to send a 30-day termination notice (certified) to remind your tenant that the lease is up, otherwise the lease is automatically extended to month-to-month (according to the standard CAR rental agreement). But since it's the last month, you need to be careful. If you serve too early (on or before Sept 1), if the tenant doesn't pay Sept rent, you can't serve the 3-day notice with the 30-day outstanding. You need to wait until the tenant pays the Sept rent to serve the 30-day, otherwise 3-day if she doesn't pay.

I know you want to maximize your return by wanting to show early. Even though your lease grants you this right, do you real want to deal with liabilities issues (however small the chances, eg. personal property, dog bites etc.)? I would go with Rob's idea of some incentives first. If doesn't work, don't bother trying. If she makes the place messy, you are simply wasting your time showing and losing potential renters.

@Jhansi B

Glad to hear that you're finally getting rid of her. But at the same time, I have to agree with many comments here that it's a HUGE loss you're taking. Unfortunately sometimes it's just part of the learning process and pure luck (or the lack of). Hopefully you have learnt from this experience. I think you and your attorney made a wise choice by cutting your loss. By admitting (or realizing) that you have mishandled the situation from the start, it's not worth it to drag yourself through the mud with her. The moral of the story is that never let your tenant get any excuse not to pay your rent, if he/she dares to try, serve the 3-day notice right away, and evict if necessary. And don't let you ego/emotion get in the way. CA is tenant friendly but the law is clear. If you do everything right by the book, the judge will be on your side.

FYI, I've just finished an UD case against my tenant. I did all the leg work myself this time. So I have the complete UD package in fillable PDF along with instructions. If you PM me your email, I can email it to you.

BTW, in CA, plaintiff and/or defendant can request a jury trial for UD cases.

I also remember my loan broker told me that, for the first year, the value of the property is always valued at the purchase price. So you can't cash out more even if you bought it cheap, at least for the first year.

Jerry, I'm sure you're really good at what you do. So I don't think hosting is the problem, but rather the clearing of funds. You need someone or some other sites (Paypal, Google or any merchant services) to clear the funds and deposit into your account. If you don't have large volume, they are not cheap.

Have you considered some free or low cost services provided by your own bank. I use Chase bank, they have something called QuickPay which is free for small volume ($5K/day), or $25/mon if large. With my business account, I also got the deposit only ATM cards for free which I give to all my renters so they can deposit the rent at any Chase ATMs 24/7 without knowing my bank account info. You can terminate the card any time by a simple phone call to the bank, in case you need to evict.

Thanks Mitch, Jeff and Minh for your feedback.

I think that serializing the 3-day/UD and 30-day notice will most likely lengthen the eviction process allowing the tenant to freeload for a longer period. But in CA, it seems that you have to pick which one to proceed first before you start. Having 30-day as a backup to 3-day isn't an option here. Yes, in CA, the tenant has the upper hand in Court.