All Forum Posts by: Steven Warner

Yup.. Call the former landlord.  Then verify they are the real owner of the property by research - some people just lie and then conspire with a friend to be the LL... 

I(f your gut says not to rent to them, then maybe you should not.. 

Tom: 

I would suggest you review the California Court website: 

https://www.courts.ca.gov/1049.htm

This deals with security deposit disputes and their suggested path of dispute resolution.   

The sweet part is the improper withholding of the security deposit you can sue for  

• The amount of the deposit, plus
• Twice the amount of the security deposit in damages. The judge may give the tenant these additional damages if the landlord retained the deposit in bad faith.

Its a small claims action and is a cheap way to get your money back. 

Good Luck

Steve

Hi Madeline

Wow!... I don't usually answer the "where do I start" posts but yours is pretty complete and besides you sound like can do person which I applaud! 

OK, so here I go...

1) If you have great credit, is it better to finance your first rental purchase or pay with cash?

I would say leverage is always good - I prefer the other people's money position, but there are times when cash is king.

Here is an example - I refinanced some of my rentals and along comes a deal for a rental at 66% of the appraised value - my friend who was looking to sell it needed cash and was willing to let it go for $100K but the sale had to be completed in days. So cash is king and we picked it up at the end of last year and now are going to refi it to get our cash back out..

Others may disagree but I still prefer leverage with a fat wallet to back it up... make sense?

2) Is the $10-$20k I currently have saved enough to get me started, or should I be looking to save more money before diving in, to purchase a higher-priced property?

The answer to this is the age old - "If the numbers make sense- what are you waiting for?" I understand the apprehension but for me if the cash is flowing and all the other factors work- then why would you not?

3) Should my first buy be turn-key ready for renters, or should I be looking into fixer-uppers if I have a knack for design?

I personally am not afraid of cosmetic work if the bones of the place are good. Having a knack for design does not replace the work or effort required to gut and rebuild a kitchen. Again, you tell me the numbers and then we can decide which is the best route. - if one exists at all.

4) Are there higher maintenance costs associated with buying the midwest or south than, for example, Arizona due to the damage caused by snow and heavy rainfall/storms?

Simply put -yes. I own in AZ and Vegas as well as a some Midwest homes. I have lost a home to a tornado and had a roof torn off due to Katrina, FYI, the insurance for the NV homes is a third of the Gulf homes. I prefer the sunshine states but again, if the numbers are right, I will buy where it makes me the cash$$$.

5) Should I form an LLC just for real estate buys prior to purchasing my first rental?

I say no but there again you might consider speaking with an attorney considering you have another business to protect. An LLC in California costs you $800 every year, even if you do not make any money so I am not in favor of it personally. Further, California does not care if the LLC is out of state, the fact that you live here and are benefiting from it is enough for them to tax you the $800 out of the gate.

6) I was originally thinking of purchasing an apartment to rent for my first buy, since I imagine there are lower maintenance fees associated with that than a whole building (even taking into account the HOA fees). Is it better to buy a single apartment, or something like a duplex that is a whole building on its own?

Personally I like straight SFRs or the whole apartment building. I am not sure where in LA you are but if you ever go to the valley there are a bunch of duplex set ups, usually a home with an added legal unit.  That would be a great start up for someone to get their feet wet. 

7) Any other advice anyone out there has? I don't know what I don't know at this point.

I would suggest that you look to attend meetings, read this board as well as others and just keep learning. I have been doing this a while and I still learn stuff from others all the time.

Good luck to you.. Steve

Personally, I would always want to go with the tub instead of the shower because even though the tenant may never use it, they will notice it is not there.  Also, if they have a child then they will want one as well.

The other side is that if the area is more of a single/dating area and little to no families then the shower might be better.  

Bottom line for me is what is going on in the area?  If you were to NOT have a tub, would that stand out against 4-5 other listing that have a tub?  I personally would rather use the fact it is a "New Tub" and stay conforming on this issue withing a given area.  

But these are just my thoughts. 

Steve

Ok Josh: 

I will try to help you get in front of this and understand what is happening.    

Yes, the daughter did not have the power to sale the property to anyone until such time as the Court issues an order allowing her to sell it.  Before the court will give such an order it will want to know about all heirs of the estate and all liabilities of the estate. So, are you sure there are no other heirs?  A brother or sister of the decedent?  children?   and what else is owed out of the estate?  Even is there is no money from the sale of the property, what about personal possessions/ account to pay those liabilities?  You will need to be very clear about this prior to offering any monies for a probate attorney.  

But keep this in mind as well, if the deed did not have a right of survivorship or some sort of community property implication, there is a good chance the bank will have to start a probate to take it to sale.   The bank will show the total amount owed and will show an estimated value and then a auction will probably take place right there in the courtroom.   The bank is only do what is legal with regards to its security interest.  If the house is clearly upside down and the security is in jeopardy then chance are they will at a minimum go to probate court for the limited issue of the banks security in jeopardy and the estate have no equity.  Once they have the order resolving title, they will take it to sale- either via the court or non-judicially. 

The key is that you need to get the daughter to assume the role of Administrator/Executrix of the Estate.  Once she has an order in this role, she then can contact the bank to begin the short sale process.  Keep in mind that it is again be all about the value of the home vs. what is owed on the home.  A short sale can be tough but if she is willing to work with you then it can be worth it. 

As for the tenants, once again if she has the order of the probate court allowing he to act as administrator and the tenant as not paying her then she should file for a UD immediately after the probate order. 

So the next question is how bad do you want this place? I had a friend that use to say if it is a mess getting into the deal it will be a mess getting out of the deal.  But that was her saying which was usually right. 

Before I would do anything I would make sure that I had the daughter on board 100% - this is no overnight thing so it is going to take take time and commitment from her and you to follow it through to the end. 

Not sure if this helped... 

Steve

PS.  Do not get too emotional about the deal - somethings are just not meant to be and then something better will come along... Been there done that - just and additional thought. 

I had a girlfriend in Ventura, CA that had a basement- but upon closer inspection it was a "bomb shelter".  

"10 Cloverfield Lane" anyone?  

LOL... 

Yup, all depends on the area and when it was built. 

Steve

Lori:

Zillow is just another tool to use when you formulating your valuation.  In some areas it is ok but in others they suck.  I use at least 4-5 different AVMs to even begin to look at "value".  

I also look at the assessor's cite as well.  In some areas they do a real good job (i.e. Salt Lake, & OKC assessor site are good.).

Even then I might have a BPO done - it all depends. 

If you are relying on one AVM and not looking at others- you are tying your hands behind your back at a boxing match!

Just my thoughts.. 

Steve 

Robert

I do not mean to be flippant about this but I would NEVER bid at an auction when I can go find the owner(s) prior to the sale, shot for a deed of transfer (Quit Claim, Warranty Deed) , reinstate the the lien and then flip the house or rent it out and then eventually refinance the property. 

Even in your case, I would still go after first that property which offers the most leverage - then after I could go no further with that owner, I would go to the other owner and see what we can do for him.

An Auction just does not work for me.

Just my thoughts... 

Steve

Hi Jared!

Personally, I too own a rental in Las Vegas and decided to go with the "build the kingdom" move- I did a cash out refi.  Then bought another rental.  

But each person is different so I can only offer what I did.  

No sure if that helped but my goals may not be your goals - I simply want more cash flowing properties - paid off is good but for me leverage has always been the key to real estate. 

Good Luck!

Steve

Just rent it- the lender only really cares that they are getting paid...