All Forum Posts by: Joaquin K.

Volume is down but pricing is stable. Nobody is desperate to sell (at least no yet), and so we’re not seeing any sellers willing to reduce prices yet. Investment property (small and medium size multifamily) looks unchanged. I think it’s subject to less volatility, and quite frankly I expect money to flow IN to these investments as money flows OUT of the stock market. 

Completely agree with Kyle's comments.  I'm in SoCal.  We are offering tenants rent deferral upon request but actually have not had any issues to date with a tenant base well into the double digits.  If the tenant is requesting to break their lease early, I think it would be crazy to not accept this offer.  Trying to convince them to stay will likely just lead to trouble down the road.  Put together a summary agreement indicating you are mutually terminating the lease contract, make it clear they are responsible for "make ready" costs (as is typical), and that they will need to bridge rent until a new qualified renter is identified.  Have both parties sign it and move on.  Consider yourself very lucky as you would not currently be able to evict a non-paying renter.  

Interesting post.  I follow all of these except for #7.  If I had a rental property for 3 years and never claimed depreciation, why could I not fix this mistake by filing amended tax returns for the last 3 years?  I don't have this issue but am curious to better understand.

Completely agree with Ned on this one.  We run a large number of rentals in LA and OC.  A tenant is never permitted to move in without at least a 1 month deposit (CA permits 2 months max for unfurnished rentals) and that must be provided in the form of a cashier's check (or directly deposited to our accounts via electronic transfer).  In addition, 1st month's rent needs to be paid prior to providing keys.  At time we have held units for move-in with just the deposit - for example prospective tenant provides 1 month deposit 1 week in advance of move in with agreement from the owner, and then provides 1st month rent in exchange for keys just prior to move in.

Have you tried https://www.calsubmeter.com?  These guys are based in San Diego, but I’m not sure if there have a restriction on minimum number of units. I have not used them. Please keep us informed of your search. 

My opinion (I'm not an insurance agent) and some information that I’ve gathered:

Insurance is useful to protect against catastrophic loss. You agree to pay a small certain fee today, in exchange for a guarantee of protection against a large but uncertain loss in the future. I agree with prior commenters – if you do not have a lot of equity than it likely does not make sense to carry a lot of insurance. My family schedules an annual review for insurance policies with our agents, and review coverage amounts to ensure they meet our current needs. If you have $1 million in assets, you should probably be sure that your policy covers at least $1 million in claims. If your insurance only covers $250,000, in my opinion you are underinsured.

As far as I understand, CEA is the only earthquake insurance provider in California. Most of the private insurers fund the CEA, sell their polies and service any claims. I believe CEA itself has <30 employees. CEA’s claim-paying capacity is established according to financially conservative actuarial standards, and I believe its established to pay for a Northridge (1994) sized quake. I think damages from Northridge were about $20 billion. CEA is not permitted to file for bankruptcy protection, and I believe if they get an excess of claims they prorate payments.

I also know that earthquake insurance prices vary widely even in Orange County and Los Angeles. My prices in Pasadena, Santa Ana, and Tustin are much higher than comparable polices in Dana Point and San Clemente. As a result, I have policies on some properties and not on others. We work with other investors and I know they also seem to be selective about where they have quake insurance - $200/year is not a big impact on cash flow, but $2000/year gives one second thoughts.

We have a number of Section 8 housing units in Garden Grove (Garden Grove Housing Authority) and Tustin California (OC Housing Authority).  We inquired earlier in the month about the impact of the shutdown.  This is the response that was communicated by the local office:

I understand your concern. What I know now is that we have money to pay our owners for February 2019. The problem will be in March 2019. If things continue the way they are now, we don't know where our funding will come from at that point. Our manager will most definitely mail letters to all our owners if we are not able to make payments for March 2019. Hopefully there can be an agreement made in Washington very soon. We hope that citizens are contacting their Congress Representatives, as so many people are being affected by this shut down. If you have any other questions please feel free to contact us.

I'm not sure how funding is managed, so this might not be applicable to all areas of the US or even all areas of California.  I am optimistic that this week's announcement to reopen will address the potential gap, and also hope this won't happen again in mid-February!  

We contacted our Congressman, Governor, and both California Senators, and recommend other investors in this space do the same.  Let's stick together and recognize that we have substantial influence as a community.

I actually agree with you and don’t believe these animals have a proper place in domestic homes.  We do not rent to bully breeds. I’m just providing options for discussion. 

You could also make it mandatory that the tenant carry a renter’s policy with no breed exclusion and name you as an “additional insured”. By being named as additional insured you get coverage along with them and you would get notice on any policy cancellation. We’ve done this in the past and the cost to the renter was something like $150 a year with $100,000 in coverage. Make sure any tenant insurance policy does not have a breed exclusion or pet liability “sub limit”.

Correct. The requirement is 90 days.