All Forum Posts by: Jonathan Vince

IF you were in my shoes, what would you do to keep growing your wealth?

We currently have:

*Cash flowing SFR in Bakersfield receiving $1300/mo (good tenants but paying lower than market rate. I've been increasing it by $100 every year). No mortgage, but we are paying off a $100K investment loan at $700/mo that we took out against the property to help us purchase the following property:

*SFR in Prescott AZ that we are house hacking (we live in the larger portion). Mortgage is $2900/mo (at . . . ouch . . . 8.75%!!!). We partitioned a section of the home for longer term rentals like travel nurses, plus the occasional AirBnB stay. The unit brings in about $1800/mo. The property has good potential for another ADU (or two), but the cost to build might be prohibitive.

One thing that helped us get the (special) loan to buy the AZ property was the fact that I have a W-2 job AND my wife and I have excellent credit, AND our Bakersfield property is a valuable asset that could probably fetch $200K or more. Those were all factors that the lender found favorable. Other than that, our income is not great. My job situation may change soon, so that could affect our future loan and/or refi options.

Hope these are enough details for now. We have no other mortgages or car payments or other big liabilities. Happy to share more where it might be helpful.

Again, in the spirit of iron sharpening iron, I will be grateful for your thoughtful responses.

Here are some additional details to round out my original post:

The properties in question are two vacant lots,

side by side, both of which once had homes on them (they burned down within the last several years). They are in California.

The heir is an only child, unmarried, in her late sixties. She is mentally competent. She lives out of state, closer to the east coast.

The tax delinquencies on both properties together add up to more than $40,000. Similar vacant lots in the area are selling for ~$70k each. All that to say, the total value of the estate is almost certainly low enough to qualify the heir to do a summary proceeding rather than full on probate.

@Drew Sygit isn't POA something you can only get while the person is still alive?

Thank you for that thorough reply, Randy! Your experience and knowledge are very helpful indeed. I still wonder if I have a chance at an off-market purchase, though. Take a look at the attorney's words below, and let me know if I am justified in feeling that way:

"Basically, if the value of the whole estate is less than $166,000, it can be transferred to the heir by a summary proceeding that takes about 3 months and costs about $2500 . . . If you want to sell the property, then you can wait for the transfer in a summary proceeding or sell once a probate is opened, i.e. in about 1 to 2 months. The money isn’t released until the end of the probate. Alternatively, sometimes people purchase a person’s share of an estate. Then the buyer becomes the heir. My only caution with this approach is that by statute the court can inquire into the terms and reject the sale terms."

I want to submit an official, legally legit offer to a person whose deceased parent left a property with heavy tax liens, and who never wrote a will. This person is the only child, and is apparently daunted by the probate process in spite of the fact that they’ll most likely be able to do a much faster, cheaper “summary proceeding”. I am ready to go immediately with an all-cash offer, and I will also pay off all of the tax delinquency. I’m even willing to pay the probate attorney fees. I already found an attorney, and put the two in touch with each other. That was a year ago. However, the would-be seller still hasn’t taken any steps, meanwhile the tax delinquencies are accruing, and the property will officially come under “power of sale” status in a few months from now. My offer is a good one, and it’s infinitely better than getting zero dollars because you were too scared or lazy or uninformed to take a few easy steps. What makes this more challenging is the current legal limbo. In my perfect world, would-be seller would accept my offer of $X plus all probate attorney fees, and would be eager to move forward since they won’t have to pay a thing and all they’ll have to do is give their thumbs-up to the attorney. Seller would sign an agreement binding them to sell the property to me once the summary proceeding clears them to do so. Once seller agrees to this, I will pay the attorney to get it started. That’s the best scenario as far as I see it. But probate stuff is foreign territory to me, and I don’t really know how much protection some sort of pre-signed agreement between me and the would-be seller would give me. This is where I’d love for BP folks to chime in on the legal/business/etc aspects of this situation, or to suggest other creative ways to possibly structure this transaction. With that in mind, I’d also appreciate any input on how I might structure my offer so that the would-be seller

1. can see the situation clearly

2. be finally motivated to take the next steps

3. won’t feel coerced in any way, but will see and feel how it’s a fair deal

Thanks as always!

Thanks Nathan. By "offer it to them first," do you mean offer them the use of the ADU for a mother-in-law/etc. that they may have?

I wouldn't say it exactly like that, but that's the gist. So, if you were in my shoes, how would YOU go about orchestrating things? (details below):

*2bd/1ba home in Bakersfield, CA. Detached garage in back. Backyard is big. Tenant's rent currently means the entire property is his to live on and use (i.e. the typical SFR rental agreement). The lease will be up in Jan 2023, at which point tenant can choose to sign a new lease or go month to month for a higher rent fee. Tenant is currently using the garage for storage and laundry (washing machine and dryer are his). They are good tenants

*I learned late (and painfully) that I should have been raising the rent every year. In 2019, when my tenants first moved in, the rent I charged was higher than surrounding areas by about $200. The market zoomed past me, though, and now my tenant is paying roughly $200-$300 less per month than what I could be charging. I did raise the rent by an extra $100/mo at the beginning of this year, upon their lease renewal. All of this to say: It seems that the relatively low rent that I charge can be a bargaining chip in my favor in case tenant protests the "demotion" of his own living situation that an ADU would bring (noisy/disruptive construction, the loss of the use of the garage, and ultimately another tenant sharing the property).

So, considering the above info, how would you go about 1. Telling the tenant your plans, 2. Revising the lease agreement to remove tenant's "right" to the garage and to sole user-ship of the property, 3. "Compensating" him for the reduction in his living quality that an ADU would bring, knowing that he already has a pretty sweet deal on rent (maybe "compensation" could simply be something like saying: "I know this will change how things were. Knowing that market rent, even without garage access, would be $X, and knowing that you are still paying less than (or equal to) that, I won't be raising your rent this year" ... or something to that effect). All input much appreciated!

My tenant in East Bakersfield (family with 2 kids) is asking for a fence around the front yard, due to recent thefts as well as unwanted pitbull incursions. Most houses in that neighborhood have front fences, the majority of which are simple chain link. Here are my questions (for Bakersfield realtors especially, and even MORE especially, for those who are familiar with the 93307 zip code):

*Does installing a fence in the front increase the home's value such that it at least offsets the cost?

*What is the ideal type of fence for this area, and for maximizing the return on the investment of money into that fence when it comes time to sell (which I may do soon)?

*Do I need any kind of permits to install a fence?

What are some ways things could be structured so as to motivate my seller to act more quickly on what needs to be done before she can legally sell?

Here’s the rundown (I try to be detailed here because I’m hoping one of you savvy investors might pick up on something I hadn’t seen or thought of):

C- neighborhood in less expensive part of CA (median home value ~$185K). Two adjacent properties, same owner. Each is delinquent by about $10,000 in property taxes and nuisance abatement fees (so, total owed is almost $20,000). Those fees keep growing and in a year or so, the county will have the right to sell the properties at auction. One is a vacant home and the other is a vacant lot (burned down). Seller has agreed on a price for both (like a package deal—which also includes me paying the delinquent taxes/fees and closing costs). At the time the seller and I established a price last fall, the county had the properties listed as owing just under $5,000 each. However, at the start of 2020, records have been updated, as it now shows one owing $9000 and the other owing more than $11000 (turns out that other liens can be ultimately attached to property taxes if not paid in time—in this case the county wants to recoup expenses incurred in nuisance abatement and demolition). So, if things continue to move forward, I may have to adjust my original offer to account for the extra ~$5,000 that it turns out each property owes, or I may have to restructure the deal altogether. Anyway, that seems more of a side issue to me (important, but not a deal breaker).

The hangup: Seller has to get legal conservatorship before she can sell the properties to me (the properties belong to her mom, who has been declared legally incapacitated, but who never wrote a will or created a trust). “Incapacitated” means that getting Power of Attorney is now out of the question. Seller is the only child, and lives in a far away state (the mom, a widow, is at a rest home not far from the properties I want to buy). Getting a conservatorship can be a lengthy and expensive process, and though I have a good relationship with the seller (having become well acquainted through many phone conversations and through doing little things like cleaning off old photos I found at the trashed property and mailing them to her), she has been slow to get the ball rolling on her end.

Other important info:

*my plan is to buy, rehab, get tenants, and hold for a few years

*I’m pretty sure there aren’t other liens on the properties, but is there an inexpensive way to find out ahead of opening escrow?

*Est. ARV for the property with the vacant home: $140,000

*Having recently learned that the vacant LOT owes much more than I thought it did, I would probably attempt to wholesale it instead of buy it as part of the original “package deal.” (Perhaps I could even offer the seller a certain portion of the profit, as a way to further motivate her?). I don’t think I’d want to personally purchase the vacant lot since my contractor advises me that doing a new build would likely result in little to no profit (so, I’d aim to sell it to an established builder or local flipper who stands a better chance of making a profit on it).

So, all that to ask this question:

If you were me, and considering the various factors I mentioned, what might you do to get things moving along faster?

@Sanjeev Advani I’m looking for licensed contractor