All Forum Posts by: Franklin Spees

If he is allowing you to essentially have exclusive control, liability and benefits maybe he should just deed you the property. Otherwise, you might consider setting up a management agreement between you and him (watch any state licensing requirements) and have him pay you a fee that can equal anywhere from 6 to 100% of the income. Then you can just record that as your ordinary income. Be sure to consult with your tax professional on that one. Good luck.

Hey Helio, I'm in the Fresno County area doing some management, brokerage and legal work.  Lots of opportunities.  Good luck to you in 2015.

While I have no experience in states outside of CA, I will say this is a very common strategy that I have both lived in and structured as a property manager.  In fact, renting out individual rooms can actually lead to a greater gross income, but be sure to structure your lease right (joint and several liability, sub-leasing provisions, move-in and move-outs, release and replenishing of security deposits, etc.).  Additionally, you have to consider the additional people will further add to and naturally accelerate the "wear and tear" of everything from carpet, to fixtures, doors, etc.  Best of luck.

Yes, I've been following the HSR discussion and progress for years now as well.  I own a property management company with rentals near the proposed ROW; also worked at the city in the Planning Dept. for about 6 years attempting to coordinate the prospective station with the Fulton Mall specific plan, the larger General Plan, and all of the layers of transit that could link up (light rail, bus rapid transit, busses, taxis, PRT, biking, walking, etc.)  I know there is a lot of criticism about starting the HSR here in Fresno with the first run to Madera, but honestly the land acquisition and entitlement issues probably had to occur in an area that is the flattest with the least amount of urbanization in order to get it off the ground.  It could have huge impacts on cities like Fresno, Madera, Merced, and Bakersfield by linking them to LA and the Bay.  But as you said, it is going to be late 2020's before the first ticket to ride is issued and it would take some deep pockets to implement a buy and hold strategy to go after high density multi-family, conference, or hotel development.

In those areas where you can transact or practice real estate without a license in CA, I would say they should be distinguished from agents/brokers who are licensed but hide or do not disclose the fact. Once you are licensed, the BRE is expecting that all of your related real estate activity will be under your license and therefore all of the standards of conduct, duties, and I would say disclosures would apply. When in doubt...disclose, disclose, disclose. (Not to be construed as legal advice)

I certainly agree that it is possible to structure it in a way that part of your compensation or income (in comparison to the other LLC members) would be offset by the amount of rent. But what I believe James Wise was pointing out, it must be disclosed and agreed to by all members. This is typically structured and fleshed out in the operating agreement.

Getting your license has a lot of benefits. It equips you to do your own deals, gets you access to the MLS, can manage other people's property, and although its never convenient, the continuing education is a great way to continue to refresh and follow all of the changing laws. I didn't take classes or practice under a broker because CA licensed attorneys can just take the test, but the continuing education material I use is also from Allied and it's great. Best of luck to you.

Sounds interesting. Are you still pursuing this matter?

I agree with many of these posts. As a Central Valley investor, real estate attorney, and owner of a management company myself, I think your $1100-$1200 average rental target for a 3/2+ built in 1990+ is generally accurate. Although, if you are going to just own one SFR, I would highly recommend you attempt to manage yourself or follow closely with your management company as you need to learn the details of the business, actual income v. expenses, etc. to protect yourself as you scale up. There were some awesome deals here in the Central Valley in 2011 and even into 2012, but those seem to be long gone. Now we seem to just be back to average returns, especially now that another small wave of new fringe low density single family homes are coming online. PM me if you're interested in brainstorming more as I always enjoy to lean about other's experience and observations. Good luck!

Attorneys are required to hold a license (pass the State Bar) in each state they practice law.

Franklin Spees, JD, CCRM, LEED AP
www.lawvex.com
www.managefresnoproperty.com
5592706776