All Forum Posts by: Matt Devincenzo

You first need to explore 'how' it was rezoned and what the means in a local sense. Some locals it is actually rezoned 100% and you can proceed with any allowed use in that zone. At most you just need to submit building permits to build/modify whatever is needed for a commercial tenant to use the site. Others treat these rezones as kind of 'placeholder' zones and you need to come in with your own application to implement the change, so figure out what yours is. 

The other consideration is within the zone there are allowed uses. Meaning commercial could be everything from junk yard to gas station or even retail storefront, but some of those, like junk yard, are usually prohibited or restricted to certain commercial zones or criteria. So what could yours be, and is that desirable to you? 

And finally, does it even matter? There is a popular idea that commercial is more valuable, but my experience is it is not, at least not for most existing developed sites. On a per acre basis residential is typically always the highest value use, commercial tends to be big $$$ because it is large properties and large budgets so it sounds more valuable.

Commercial tenants are focused on the income production of their business, meaning they aren't paying premium rents unless the location is premium allowing for increased revenue. For properties that are existing SFR that is usually not the case, and even if it is the commercial tenant wants to negotiate more because it impacts their profitability.

So get a better understand of the "how and what" elements of the zoning to know what you may really have, but I would caution that you shouldn't spend any money on this until you're very confident its worthwhile.

I'll counter that to say, it's somewhat irrelevant.

If the home is truly in a class A area, then the school district being an F won't change the area...all the residents who already live in that Class A area, and make it the high quality area it is have decided the school rating isn't relevant. Maybe they're young DINK, or all attend private schools, or are in the area for amenities like being waterfront etc. But the point is that the school district quality isn't what makes it an A or not. Typically Class A areas will also include high quality schools since that can be what is drawing people there, but it doesn't have to be. 

You said you purchased, but do you know how you purchased? It sounds like you may have purchased via a CFD/Land Contract meaning you were not deeded the property, which is a perfectly legitimate way to buy property in many areas. But that may be why the lender is now trying to execute a PSA...I don't know if that is the right way to accomplish the 'refi' or not, but that would explain part of what may be happening here.

I don't have a specific carrier solution, but I know here in SoCal an engineer I work with said he is doing several 'protection district' reports. I can't recall the specific name, but essentially a few adjacent properties form a small voluntary group that includes brush management and fire access obligations and the carriers offer something like a 30% discount. I just wanted to mention it as it could be worth asking your carrier if there is a way to lower premiums that way. 

You say refi, which implies you closed at some time in the past. And down payment/owner finance, implies there was an agreed sale price which is partially fulfilled via cash and partially via loan. 

I assume the original loan amount was stated, and there has been some series of payments which may have reduced that loan amount? So it seems like they may be asking for you to "obtain a lender payoff from the existing lien holder". In other words, how much do we need to fund on this refi to make sure that loan is paid in full and we are in first position. 

At least that's what I came up with...though agreed with the above posters that this is very vague an unclear what the request really is looking for. 

Happy Clause:

"Hey tenant, I won't be sharing the login info as requested. If you're unhappy with that decision I understand and would be willing to allow a one time penalty free lease breaking, and we could agree to mutually terminate the lease. I will accept the termination until 4/25 if you want to exercise this option, otherwise we will continue with the lease as planned."

You can always get a tenant out before their lease term, you just need them to agree...and often they're more willing to agree than you might expect. 

Quote from @Marcos De la Cruz:

I'll definitely consider it if I can get better insurance, which is ridiculously expensive.

Thanks for your input.

I'd do a search here on BP for LLCs, and you will likely find dozens who have suggested ditching the LLCs. I personally have never used one, and I know many other investors with substantial assets who do not either. My boss' in-laws owned several million in SD real estate and never had any LLCs that I am aware of, and he also owns several properties with no LLC. 

I can think of at least 5-10 regular posters here on BP who have suggested to others that they should just get insurance instead of the LLC route. 

The best option would be to obtain a copy of the funds/reserve study for the association. Especially give the last few years rapid increase in costs, anything that was estimated or done years ago is out of date and could be underfunded just based on inflation. A new study should assign unit costs and remaining service life to all the items and then determine the cashflow required to provide for everything when it's needed.

I would consider a low cost condo with a high special assessment due to a well done reserve study. Half the battle is knowing what the pain is going to be, once you do then you can really consider the costs and whether you'd like to move ahead. Once the funding crunch is past, the value should rebound to 'market' especially since that community is now a low risk purchase. 

@Michael Baum yes that's my perspective too, it seems like mostly subjective items. I lived there for two years and didn't notice sirens being a constant or regular thing...that may have changed, but I doubt it. The last several guests have expressed how much they loved the yard, and how nice their stay was etc. so it seems like more of just a poor fit.

This was one where I want to stick to my strict cancellation, but better judgement is to refund to maintain the reviews. I appreciate the perspectives.

Thanks John, I'll try to start asking that specifically. I did hear the day of check in that they got in, asked about the TV etc. so until now I thought all was well. But to your point I didn't ask specifically if everything was alright. 

I guess I have a couple weeks to get a few minor maintenance items scheduled while I'm between guests, so I'll use the time as best I can.