All Forum Posts by: Rob K.

I use quicken and enter all categorized data the beginning of each month. For separate entities I use separate files for each entity. Each property within same entity I use a separate tag for. Come tax time it becomes fairly easy to run separate reports for each entity or each property for schedule E. After entry, save receipts and back up in a file for that year. Still use paper method for mileage logs.

Tried QuickBooks several years ago but it was more complicated and I did not need the bells and whistles. Stuck with Quicken. I think by waiting to last minute to put things together you miss items and year end tax planning becomes problematic. Helps a lot to be thinking about tax categories as you enter data.

California like everywhere else has its cycles. During the great recession, It did not take much to find a property not to far from the coast that broke even or positive cash flowed with 20% down, but most folks didn't, so passed on buying. This negative psychology among other things resulted in a massive failure to build new inventory limiting supply while demand grew.  Lesson learned: anytime you can break even in California anywhere near the coast with 20% down, just do it and don't ask to many questions.

Now, there is a lot of capital looking for anything near the coast and things are a bit pricey. This too shall pass. Now is just one point in time and one can make permanent judgements based on the perceived current situation but that might be shortsighted.

As far as the politics and legal framework, yeah it can be a pain, but for those who understand it, it eventually becomes a competitive advantage. Proposition 13 fits well for a price volatile state like California and we don't have the ever moving out of state property tax situation to deal with in states like Texas. Tenant quality and demand is generally good and usually there are no issues with proper screening, at least for those with decent properties.

But for all of the naysayers on California, keep it up. There is more than enough click bait and one sided information out there for confirmation bias. 

This would be a very bad idea in California. Law is clear that you cannot circumvent a borrower's statutory rights via foreclosure process in advance. Not only would you effectively be giving up your right to proceed by way of non-judicial foreclosure, a very messy judicial foreclosure sale might not succeed and even if it did, ability to pass title would thereafter likely be subject to borrower's statutory redemption rights.

I believe in finding a local property property manager in close proximity to my properties. The larger the property, the more inclined I am to have a property manager. I have not been a fan of the larger property management companies who heavily market without a focus on the local markets they handle. I like smaller companies whose owners are not brand new but not old and burned out either. In the past when I am looking for a property manager I google to find all managers with physical offices in close proximity to my properties to narrow my search and ignore all sponsored adds that fake that they are local.

Since you have self managed, you will be better equipped to "manage the manager". You just need to accept a principle of delegation that there will always be things you would do differently then they do. If you are a control person, this can be a challenge but I have learned to let go over day to day issues that come up that I would do differently.

Handypersons are a tough one. The good ones always seem over time to move on or disappear. A great question for property mangers is the handymen they use. One of the potential advantages of property managers is access to the vendors they use. 

Sometimes looking at properties solely on the basis of current cash flow can be short sighted. Some of the properties I own were at one time not great cash flow properties. I have very rarely sold a property over the last 35 years and the income properties I hold now cash flow very well with not to much effort involved. Long term vision can trump current cash flow.

So I will proudly take the label of property hoarder.

Another good source of information and points opportunities is frequentmiler.com.

You do have a lot of leverage, and your comfort level is a personal decision for you based on your finances and ability to sleep at night. But taking the long view, those low fixed rate 30 year mortgages are some of the best hedges against inflation you can have. If you still have those properties and mortgages 10 years from now, rents will likely be much higher, and the value of the cash you are using to pay the mortgages will be much lower even assuming normal 2-3% a year inflation.

In the current environment, it might make sense to rent for a year or two before you commit to a purchase. The purchase decision might make itself clearer once you are here, have boots on the ground and are not pressured to make a decision from long distance. You will also know better if buying around 56 works for you and your wife after you have been here for a while.

Renting is not ideal, but it does give you more flexibility.

So here is my experience with Section 8 rentals:

1) Inspections result in me having to repair or fix issues which should be on the Tenant. The classic one was Tenant leaving huge amounts of grease in kitchen, inspector requires landlord to clean it up.

2) Tenant vacates the unit without notice early in the month. Local Housing Authority demands I reimburse them for rent paid for the month. When I refuse, I get collection notices for years.

This was a long time ago, but as one might surmise, it has been a long time since I had a section 8 tenant.

I agree with the op that for the most part the idea of privacy as an effective or meaningful concept in asset protection planning is a fallacy.

But the idea that folks are of different “camps” in asset protection planning is unfortunate as it is not a useful dialogue IMHO.

From my perspective, as a California litigation attorney for nearly 35 years, most folks completely focus on the wrong things, especially if they have never seen the inside of a courtroom.

The op has posted from the perspective of a property owner seeking protection from tort type liability claims. This is only one area of real estate that should be addressed, and it typically involves premises liability/property management type claims. Real estate involves far more than this activity depending on whether you are a developer, wholesaler, property manager, flipper, lender, broker/agent, etc. The issues regarding asset protection in real estate differs depending on, among other things, one’s activities. There is never a one size fits all asset protection planning strategy. Doing nothing may be correct for one person, and engaging in a complicated entity structure may also be correct for another person depending on the situation.

Each real estate investor/professional has different risk tolerances, different levels of savvy, different abilities in terms of bookkeeping, different estate plans, if one has an estate plan at all, and different relationships. From what I have seen, it is more common for a litigation claim to arise from a partnership relationship, employee relationship, or other business relationship than a claim by a tenant against a property owner. Privacy is of zero help in these situations. 

Litigation claims commonly arise from situations where resentment in a relationship builds or when individuals get into situations they don’t understand and don’t read and understand the documents they sign. Missing from the kind of back and forth typical of this thread is the importance of not letting resentment build and understanding the transactions and relationships folks get into. How many folks with complicated entity structures sign contracts containing broad obligations to indemnify and hold harmless don’t even read the language because “it is standard”.

So it is unfortunate that folks break out into camps in these kinds of discussions. So much is missing for anyone truly wanting to learn about asset protection planning IMHO.