All Forum Posts by: Rob K.

I'm in for the call. Thanks!

I have used Knudsen Roofing for my Escondido properties. They have been very fair in our dealings.

Perhaps the best approach in tax sale auctions is not to prepare to bid at the auction, but to contact owners of tax defaulted properties from the list and try to buy property you are interested in at a substantial discount before it goes to sale. If successful, you then redeem the delinquent taxes yourself and remove it from the auction.

I use quicken (some use quickbooks)and set up tags for each property. That way at the end of the year, I can easily prepare a P & L for each property to give to my accountant for preparing my schedule E.

With credit cards, I like to focus on the cards that give me the best rewards or cash back for my spending categories (This assumes you pay FULL BALANCE each and every month!). For instance, if you pay utilities, US Bank cash+ card allows you to choose categories that includes 5% cash back on utilities spending, $2,000 in spending max per quarter. Then I pay the credit card from the bank account associated with my rental. If I use a card for multiple rentals, I just pay pro-rata from each bank account and id the property for each payment within quicken.

As Donald Rumsfeld famously said:  

"...there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don't know we don't know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones..."

With a competent lawyer, there should be fewer "unknown unknowns".

As someone who bought a property in my Roth IRA back in 2011, here are some of my cost/benefit observations:

1) You need to run the numbers on taxes for both inside and outside the IRA before purchasing. You can't get the benefit of depreciation for a property inside the IRA. If you are not cash flowing positive significantly, then the benefit of tax free net income inside the IRA is not going to be realized.

2) While it is possible to get financing on a property inside an IRA, you are generally looking at larger down payments and higher interest rates then you would get with FHA or other conventional financing. Special rules apply to financing an IRA property such as potentially paying what is called UBT tax and a requirement that the financing be non-recourse.

3) There are custodial costs and fees associated with setting up and maintaining a self-directed IRA account and/or adding checkbook control which need to be factored into your analysis.

4) Properties that have potential to appreciate substantially are better suited for a Roth IRA then those that don't have the potential as the gain is tax free if and when you sell or distribute.

5) The tax free nature of a Roth IRA is far better for real estate then the tax deferred nature of a traditional IRA as eventually, any income and gain in a traditional IRA comes out under ordinary tax rates without the benefit of depreciating the property. For this reason, I don't believe real estate is well suited for a traditional IRA. I would only consider it for a Roth IRA.

I think I see your point. A San Diego property you still own you paid $100k for 25 years ago that you might have gotten for 90K...

Chump change in the grand scheme of things.

This is the exact language in the bill and is required to be included in leases executed after 7/1/2020 to preserve the exemption. For pre-existing leases, I think you can do it by written notice or by lease:

“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to
the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of
Sections 1947.12 (c)(5) and 1946.2 (e)(7) of the Civil Code and the owner is not any of the following: (1) a real
estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a
limited liability company in which at least one member is a corporation.”

@Jay Hinrichs

Hey it worked! Thanks!

While in theory, a lender can go judicial instead of the trustee route to preserve a deficiency against a borrower who does not otherwise have a deficiency defense it does not happen very often. First, it involves a fairly expensive two step lawsuit that will take a few years to resolve and gives the borrower a right to a fair value hearing. perhaps more importantly, the borrower gains an equity of redemption for a year or more after judicial sale that as a practical matter creates a title problem for the lender after sale. There is no equity of redemption in non-judicial foreclosure sales. Where I have seen a lender most often go judicial is when they need to appoint a receiver to enforce their assignment of rents on a property. These rarely actually go to judicial sale and at some point the lender will switch to non-judicial resulting in a waiver to seek a deficiency against the borrower. 

My knowledge of anti-deficiency issues is based in California and I worked in this area quite a bit after the great recession. These issues can get very complicated depending on the nature of the transaction. Sometimes when you apply for a commercial loan as a borrower on an individual basis and the lender insists that you form an entity so that they can get a personal guarantee, the validity of the guarantee can be attacked on the basis it is not a"true" guarantee. Sometimes the defense works.

(a) Except as provided in subdivision (b), no deficiency shall be owed or collected, and no deficiency judgment shall be rendered for a deficiency on a note secured by a deed of trust or mortgage on real property or an estate for years therein executed in any case in which the real property or estate for years therein has been sold by the mortgagee or trustee under power of sale contained in the mortgage or deed of trust.

(b) The fact that no deficiency shall be owed or collected under the circumstances set forth in subdivision (a) does not affect the liability that a guarantor, pledgor, or other surety might otherwise have with respect to the deficiency, or that might otherwise be satisfied in whole or in part from other collateral pledged to secure the obligation that is the subject of the deficiency.