All Forum Posts by: Naseer Khan

That a shame that you've had such bad experiences. Those people ruin for the rest of us. I had an airbnb property in san diego and fortunately, I only had positive experiences. However, I did screen the tenants thoroughly before accepting them. It takes more time but it helps to have some interaction with the guests beforehand to get a sense of who they are and what they plan to do while they are there. 

There were many times that I declined guests based on: 1) poor communication on their end; 2) lack of complete profile/no reviews; 3) them flat out telling me that they are coming to party; and 4) just having a bad feeling. 

But I can sympathize with the picky guests -- you can never please everyone, even when you go way out of your way to make them comfortable. I also didn't know about the lack of help from airbnb for hosts -- they should take better care of the people that are providing the service, especially considering all the fees that they collect. 

@Meagan Barkley Thank you for that link! I was able to use that and connect it with the IRC sec. 121(b)(5). 

@Ken T. The first thing you should do is decide which area of REI you want to pursue: wholesaling, flipping, buy/hold, etc. This will be dependent on how much capital you have or can obtain, as well as your personal preferences. Then you can go about learning that particular area(s) to ensure you do it right. Bigger Pockets is a great resource for practical experiences from real investors vs. theoretical experiences that you get from gurus. Gurus can be useful and are a great starting point but they are trying to sell something to you so you have to be a little skeptical in your approach.

An LLC can offer liability protection with regard to something related to the property(res) that is owned by the LLC but it will not offer you protection from negligence or fraud in your transactions. An Umbrella policy may offer additional legal protections but nothing will protect you from criminal charges, which is a fairly rare occurrence in REI, unless you are a very shady character.

When you decide your route to REI, talk to other investors and talk to an attorney to ensure you are on the right path. Good Luck

@Steven Hamilton II I never heard of the distinction between renting before or after living in the property and having to prorate. I tried looking it up and I don't see anything stating such a distinction. Do you have any rulings or regulations that you could pass along? I went through the Sec. 121 regulations and I don't see anything there. 

https://www.law.cornell.edu/cfr/text/26/1.121-1 

Thanks 

@Jenifer Levini I recently discussed this in a thread and someone showed me just how far of a reach CA has when it comes to paying for the annual franchise tax in CA. It appears that merely being a resident of California and being a member of an out-of-state LLC will trigger the California franchise tax. And it also appears that CA treat each series in a series LLC as a separate LLC, meaning that each has to pay a separate franchise tax fee.

See Example 1 on page 4 of this document provided by the FTB https://www.ftb.ca.gov/forms/misc/3556.pdf

There is also information on the treatment on Series LLCs just below that example. 

@Andy Krzanowsky IRC sec 121 states that as long as you use the property as your primary residence for an aggregate period of 24 months in the past 5 years, you qualify for the capital gains exclusion. 

@Bhanu P. Question 1 - yes, you will have to pay 25% tax on the $15k in depreciation deductions. Keep in mind that depreciation deductions also reduce your property's basis.

Question 2 - No, as long as you live in the property for 2 of the past 5 years, you qualify for the entire $250,000 ($500,000 if you're married) capital gains exclusion. It will not be prorated. 

@Hannah Hammond I did short term renting in San Diego (airbnb) and it was great. There was great demand almost year round (November and December were the slowest months) and the rates are very favorable for the owners. HOWEVER, nearly every condo association in San Diego restricts short term renting, especially if its less than 30 days. In downtown, the HOAs will actively search for airbnb listings in their buildings and fine the owners that violate the rules. 

The SFR is a better way to go but, like others mentioned, you have to look out for some communities that are relentlessly trying to restrict short term renting or already have restricted it. Good luck

@Mike MoRo I noticed that I didn't really answer your question. In order for a landlord to use the 3 day notice to quit, there must be a serious violation of the lease agreement (subletting, assignment, nuisance waste). There is a very high burden of proof and it is not used that often. Alternatively, there is a "3 day notice to pay rent or quit" which gives the tenant the opportunity to pay the rent that is due or the eviction process will start. Again, there is specific language that must go in these notices, which you may be able to find online or an attorney can handle it for you. 

This response neither constitutes legal or tax advice nor establishes an attorney-client relationship. Inquirers must seek the advice of their own legal counsel prior to undertaking any course of action related to this inquiry.

@Mike MoRo Generally in California, if a new owner purchases a property from a foreclosure sale, the new will have to give the tenant 90 day notice to leave. If not a foreclosure and the lease was longer than 1 year, then the owner/landlord must give a 60 day notice. 

In California, the eviction process focuses heavily on the substance of the eviction paperwork. This means that you must have the correct language in your 60/90 day notice and you must fill out the unlawful detainer complaint correctly. The consequence of not following the guidelines is that you will have to start all over and issue a new 60 day notice and file a new unlawful detainer action. This is assuming that the tenant fights the eviction. 

I highly advise hiring an attorney for this because you need to have everything correct in order to be successful. And I think $20,000 is ridiculous, so talk to some other local attorneys. 

Disclaimer: This response neither constitutes legal or tax advice nor establishes an attorney-client relationship. Inquirers must seek the advice of their own legal counsel prior to undertaking any course of action related to this inquiry.