All Forum Posts by: Krystian Sosinski

I've got a residential lease agreement but I'm looking to incorporate a shared premises/roommate addendum for a house hack situation. Landlord will be occupying one room, and the other rooms will be individually leased out. A standardized form does not exist and looked through AAR.

Can anyone share some legal clauses or language that they have used or been provided by their attorneys specific to renting out by the room. Would give me a good starting point.

I would't hold any properties as you don't know what your future will hold after graduation. You might move to another state, as you won't have the luxury of job choice if you're planning on work sponsorship. And what if you decide down the line you want/have to work in another country. Too many variables that are up in the air. Figure out a way to get your green and you will have more flexibility. Focus on the greencard first. All those other visas will not provide with the employment authorization security and flexibility you will need. I hate to burst you motivation and spirit, and say it cant be done. But as a fellow member, I encourage you to think about this. Everything is easier with a greencard.

Your best bet if finding the floor plan for the home and marking it up with notes of what type of work you want done and then asking contractors for several bid proposals.

Not an expert on wholesale. So I will point that out. But here is some information I found as the answer will probably depend on how you run your business. I don't think an LLC is specifically required by law, but it would be probably a best practice.

An LLC is a limited liability company. It is very similar to a partnership or sole proprietorship in that it utilizes pass-through taxation. However, it also offers protection from personal liability for business debts and claims.

Advantages of LLC:

• Easy to set up. Small amount of paperwork and minimal fees for formation.
• Limited protection where owners stand to lose only the money that they've invested in the LLC personally.
• Creditors cannot legally come after an LLC member's house, car, or other personal possessions.
• Higher level of privacy.

Disadvantages of LLC:

• Protections not offered if you personally guarantee a bank loan or a business debt on which the LLC defaults.
• Does not protect against intentional torts. Does not protect against fraudulent, illegal, or reckless behavior that causes harm.
• No protection if you pierce the corporate veil. This is where the owner treats the LLC as an extension of his or her personal affairs, rather than as a separate legal entity. To prevent this, ensure that you:
  • Act fairly and legally. Do not conceal or misrepresent material facts or the state of your finances to vendors, creditors, or other outsiders.
  • Fund your LLC adequately. Invest enough cash in the business so that your LLC can meet foreseeable expenses and liabilities.
  • Keep LLC and personal business separate. Get a federal employer identification number, open up a business-only checking account, and keep your personal finances out of your LLC accounting books.
  • Create an operating agreement. Having a formal written operating agreement lends credibility to your LLC's separate existence.
• Transferring property from own name to LLC may trigger due on sale clause and make the loan balance immediately due.
• Loss of capital gains tax exemption. The capital gain tax exclusion allows you to exclude up to $250,000 (single) or $500,000 (married filing jointly) of capital gain when you sell your primary residence, so long as you’ve lived in and owned your home for at least two of five years. Mostly applies to buy and hold investors.
• Arizona's homestead exemption laws already protects up to $150,000 of a person's equity in real estate from attachment, execution or forced sale. Therefore for LLC protections are not as advantageous for first property. A person, or married couple, may only claim one homestead exemption and must reside in the dwelling for which the exemption is claimed. Mostly applies to buy and hold investors.

Per the Truth In Lending Act, these are the guidelines for finance charges that are considered for APR calculations.

Im referencing the equities market (stock market). Not real estate. Completely different animal. Stock market and home values don't generally coincide unless you go into a major recession with major underlying economic issues.

The stock market is no where near the entry points of 2008. Just take a look a few charts and you will see we had a pretty good run for the last 7 years. What I'm pointing out is a trend reversal as the market is generally still overly optimistic and overvalued. But it appears we are in a transisionary period and I'm anticipating a gradual decline from peak levels unless something dramatically changes.  

Stay out of equities right now. The S&P closed out negative for 2015 and has been downhill since November. Just yesterday the DOW had its biggest opening day loss since 2008. Global markets are slowing and earnings per shares for many companies are starting to stagnate. There's nothing positive going on in the market besides two things: a) unemployment is down (negated by decreasing participation rate) b) inflation close to fed target (skewed due to energy crashing). Best to wait it out.

I definitely expect appreciation to slow dramatically overall in the US market. But there is no reason for a crash due in the short run. At least nothing major yet. The environment is not the same as the last time around. House prices won't reverse trend unless the Fed raises rates to quickly or we go into a recession. Also note that the stock market doesn't trend with home prices for those who are bearish on the market since it might be entering a bearish phase soon. Any decline in housing would have to do with underlying economic indicators. The one thing that worries me that is evidence for a bubble inflating is the disparity between household income and home prices. Also it seems we have entered into these boom bust cycles in the last few decades. But again, don't know when it will pop. No alarms yet. Thing to watch for early indicators are commodities, s&p earnings per share, jobs added, and supply and demand for your local city. I don't look at unemployment rate numbers as I don't trust them.

Surprise is one of the least inexpensive cities in the Phoenix area. I live here so I'll give you my opinion of the area.

What I like about Surprise:

1. You get a lot of bang for your buck out here. Price per square foot is low. There is also some vacant undeveloped land still out here. Also check out the Happy Valley area as its quite similar and even newer than Surprise.

2. Wesgate is the go to place. It has the Cardinal stadium, lots of restaurants, and Tanger outlet mall near by for discount shopping. But this is the only place to go to have some real fun. 

3. Very few multi unit rental complexes out here. Not many options for renters to rent. Most the apartment complexes are catered towards luxury.

Drawbacks:

1. Surprise is mostly catered towards retirees. There's definitely an older population out here, something you will notice right away and on the road. For a millennial such as me, I do find the area quite boring with not much to do. It's not a city you go to really rent, work, or have fun. But for an older couple who's not working, it could be great. Also there are no jobs out here excluding some retail, service, and fast food. Therefore long commuting is required unless you work at Luke Air Force Base. 

2. Surprise is isolated. There is a lot of traffic congestion on Bell Road heading in and out of the city during high peak times. It takes about 20 to 40 minutes just to get to the 101 highway. Then you can start your journey to work.  That's pretty bad compared to the easy high way access other cities have. It will be getting worse in the short run as the Bell Road and 60 grand highway intersection will be getting shut down for several months as they will be building an over pass. Traffic connection should start to get better in 2017 as the 303 final improvements are finalized this year and that intersection overpass would be done. 

3. Supply is over saturated on Air Bnb. I see a lot of properties just sitting on the market on their app. Difficult to compete for tourists, but that may be because Surprise is so far away from the airport. Surprise does make me wonder if the low short term rental demand will translate to single family homes rentals.

Areas I suggest also checking out are Avondale, Goodyear, Peoria, and North Phoenix for consideration. Another location that you may like that is similar to Surprise in characteristics is Estrella Mountain Ranch and Verado. 

If you have any other questions let me know. I've lived in AZ for 11 years. 

Sounds pretty complicated. To be honest, I'm not sure how I would handle it. But here are some ideas and considerations:

1. Who currently holds legal title? Not equitable title.

I believe your state uses trust deeds instead of mortgages. It's how deeds are conveyed. So in this case, the trustee will hold legal title which will be a title/escrow company usually. They hold it for the beneficiary who is the lender who holds the lien. Lender can instruct the title company to foreclose, which it sounds like they haven't. Seems like it's easier to assign or sell the mortgage to someone else for some reason. Find out who the latest trustee is or find out through the latest owner of the note so that you can see who currently holds the deed and what going on with it.

If the property was seized directly by the court via attachment and the bankruptcy was not settled, the court might still might have direct custody possibly.

Keep in mind the county recorders office is just a constructive notice place where people can time stamp their claims of ownership. It does not guarantee it's records in themselves are accurate or current.

If there were unpaid property taxes, the tax lien could have been sold. Someone might have a certificate of purchase that might give them first dibs to foreclose for ownership eventually. If no one bought the lien, the state might be holding onto it. 

2. Are there liens on the property?

Obviously there will be the lien on there created by the trust deed. But since the original owner bankrupted, there could be a lot of unpaid parties that still exist. Unpaid property taxes, attachments, assessments, judgments, IRS liens, watch out for all of these. Do your homework so you don't inherit them. See, perhaps, the lender lien is yielding priority to a property tax lien (government). If thats the case, perhaps they are choosing not to foreclose because they know they will be last in line to collect as an example.

3. Title Insurance

Definitely buy owner's title insurance if you do get the property since it changed so many hands. Depending on how the deed will be conveyed to you, it wont have a the general warranty of clean title. So insure that risk.

4. Buying the deed, novation or assumption

If its as simple as the bank holding title, then they should be able to buy the property from them. If its assigned note like you said, maybe they could "novate" or "assume" with you in it's place.

I didn't really answer your question. But perhaps that gave you a better picture.