All Forum Posts by: Account Closed

If you just want to get them all off their butts, you can just go down to the clerk's office and file a small claims court action, name them all, notify them all that you've done so.  It is really cheap to file - usually less than $100 and closer to $50.  The court will send them all certified notices to appear on your court date. You also have to send them all a demand letter for the EM amount.  You are usually required to show the court that you asked for the money. So, what I've done is send the letter demanding your money and say you're also filing a small claims court action.  It just has to ask for the money.  Best not to say anything threatening.  Just facts - I'm demanding my money and I'm filing a small claims action today.

The thing is, there is zero consequences for doing this, other than losing the filing fees.  It doesn't matter if you are doing anything wrong or naming the wrong people.  Small claims court is for non-lawyers, and you're not expected to know anything.  I do this in situations like this.  I won an insurance battle with AARP The Hartford by doing this.  They know they can't send a lawyer to small claims court and don't want to try and prepare some manager to show up.  And, they know if they don't show up, you win by default.  So, what this does is it forces them to get off their butts and quit dinking you around.

Then, if they go ahead and get your EM to you before the court date, you go back to the clerk's office and file a dismissal.  Don't do it until the check actually clears - or you can dismiss it without prejudice (which means you can sue them again, if you need to).  There usually isn't any cost to dismiss a case.

The only thing I can think of that could be a problem, is if your EM was more than the maximum allowed to sue for in small claims court.

By the way, if you do this, also write on the form along with the EM amount "and court costs and any punitive damages that the court finds appropriate."  The judge usually can't give you more than you ask for, but can give you less.

Anyway, this works for me when necessary and is really effective and cheap. No lawyer required.

 What I mean by getting taxed more due to appreciation, I meant that if you buy the house for $100,000 and then it ends up worth $150,000 due to the market improving, then some states will say - yay!  Now, we will tax you on $150,000 value instead of $100,000 value.

So, it would have nothing to do with your heloc.  The assessor's office that taxes you on the assessed value of your property doesn't care how big your mortgages are.  All they care about is the value and they tax you on the value.  Some places might actually only say your $100,000 property is worth $80,000 and only tax you on that amount.  Some will be more on top of it and tax you the full market value according to them.  Some are really aggressive that way, and you can end up with a tax bill that doubles in a year.  So, just do your research on that for wherever you're looking at investing.

Somebody shared this recently and I bookmarked it.  It's a map of how the states rank for property taxes.  It's not conclusive, but it gives you an idea:  https://taxfoundation.org/rank...

California has been a great place to invest because we had Prop 13.  I'm not sure how the new tax measures are going to affect that, that were just passed.  I need to research them.  But, historically, it's been great to invest in CA because we usually have good appreciation and no giant surprises regarding property taxes.

Can you see the actual credit report, so you can see the name of the creditor that is delinquent?  I've never seen a Cozy report.  I used to get the actual reports.

As far as fair housing goes, you should stick to whatever your normal criteria is.  If you use a service like Cozy and they give you a thumbs up or down, then be consistent with who you approve.  It's a handy way to be able to turn down a tenant.  Just say they don't meet the criteria of the service you use.  That way it's easier to avoid an argument with them.  Hard for them to argue with the service as opposed to you.

At any rate, just use the same criteria for your applicants.  If you say they need a certain FICO score, etc., then stick to that.  If you start making exceptions, you can get into trouble.  The biggest benefit to this, is it makes it easier to say no.  Sometimes I'd really like the applicant - some can be so charming and/or are good con artists - that I'd start making excuses for their credit reports or references, and that's when I'd get into trouble ending up with a not so great tenant.

So, just stick to your guns and say no.  If you have other applicants that meet your criteria, move on, is my advice.

I would just chime in here on keeping reassessments and property taxes in mind.  Some cities/states can reassess your property when/if it appreciates and then up your taxes, which then cuts into your cash flow.  So, yes, maybe the property appreciated beautifully, but then you get taxed like crazy on the appreciation.  Just something to keep in mind when evaluating property.

I'm not the kind of person comfortable with leveraging a property to buy another property on and on.  That's just not comfortable for me.  Lots of people do it, so I'm not bashing it for other people.  But, for me, for a long-term buy and hold, I'd rather have the cash flow on a property that doesn't appreciate a lot - if - the property is in a state where I'm going to have to keep paying higher taxes every time it appreciates in value.  Whereas, if it doesn't appreciate, my taxes probably don't go up, but my rental income might actually increase.  At least my cash flow wouldn't be affected regularly by higher taxes based on the appreciation.  Hope that made sense.

I'm confused.  Is the current tenant moving out, and being replaced by Mom?  Or are they all going to live together?  

I have a bad feeling about this, based on my experience dealing with lots of tenants.  This just feels hinky - something seems off.  If their Mom is taking their place, why doesn't Mom have her own furniture?  Why don't they need their furniture if they're moving somewhere else?  When things seem vague and weird and people aren't on top of getting stuff to me - I learned the hard way to move on to another applicant, because this is how doing business with them will always be.  It just seems like Mom is being coerced for some reason.  Anyway, something is weird and as Oprah says - believe the first red flag.

Honestly, since you have a good applicant, I'd just tell Mom and your current tenants that you have rented to someone else.  Simple.  If they go - what? why? we thought we agreed!!!  Just say, "I was accepting applications and had to approve someone else who turned their application in first.  Because of fair housing laws, I have to accept the first applicant who qualifies in the order I receive applications."

Blame it on fair housing laws :-)

I'm really interesting in reading the responses to this question, too.  One think I learned while doing some research in CA, is that since the recession and all of the foreclosures, a lot of rules really tightened up regarding lending and there are restrictions on how many loans you can hold, etc.  I just bookmarked some sites with the regulations and don't know them all yet, but just a heads-up that you should find out the regulations, if you choose to do this.

I think it's always wise to first buy your primary residence, because you never get your rent money back.  My thinking about buying your own home, even if it's in an area where there is zero appreciation, is that worst case scenario, you should at least get your "rent" money back.  Like a rent savings account.  That's just money lost that could have been invested in your primary home "savings account," if you see what I mean.  Plus, you get a lot of tax write offs (or at least you used to, not sure if that's changed over time) as a homeowner.  

You can have more than one FHA loan at a time, without having to refinance it, unless the rules have changed over the past few years. My daughter did just this. In her case, FHA let her keep the first home she bought with FHA financing and buy a new one with FHA financing, because she'd gotten a job far enough away that it would be too far to commute to her new job. They even let her refinance it to a better rate with the streamline FHA refinance, knowing she was going to use it as a rental and was going to be buying her second home closer to her new job.

She'd lived in the first home for a few years, so I am not sure if you absolutely have to live in the first one for a certain amount of time, but I had heard that it was one year. The first lender she approached for the 2nd FHA home told her she couldn't do it. We (I was helping her) showed the lender a print out of the FHA rules that said she could do it, and the bank hemmed and hawed and then finally gave her the loan for the 2nd house. So, don't necessarily believe the first lender who tells you you can't do something.

I'd also say you don't have to buy properties that need major renovations.  Look for some that are just dirty and just need paint or new flooring - something that's not a major job to get done.

I know a great general contractor who is just getting started in the Oceanside area.  Not sure where you are, but a friend of mine has been using a guy who is just starting his business and is awesome.  If you need a reference for that area, let me know and I'll get his contact info for you.

There are poorer/cheaper areas in California that are affordable.  The trick is being able to afford to live while investing in those markets and understanding perhaps a different culture than you're used to - different types of tenants/buyers, etc.

I research a lot because I'm a researchaholic, and the thing I'd caution you about investing out of state is to really look at the property tax and how often your property can be reassessed and by how much.  Some places are crazy and can destroy your income.  Someone was just complaining about a city doing that to him, I want to say Cleveland, OH (might be wrong).  Anyway, be sure and check the taxes.  Sometimes the selling price is amazing and then you learn you can't afford the taxes.

Best of luck.  Dang, sometimes I just go on and on.... :-)

She's not in San Jose, but she knows a lot about renovating, flipping, buying, selling RE in the east bay.  She helped my daughter buy a few properties, too.  Great person: Cynthia Speers with The Grubb Co. https://www.grubbco.com/agent-...

She buys and flips herself, as well as selling as a realtor, and has a great network of contractors, etc., and she would be a great mentor, even if she's in the east bay as opposed to the south bay.

Best of luck and welcome to CA.

I don't know anything about buying a commercial property like this.  But, why on earth wouldn't the seller want to give you info that proves his numbers are what he says they are?  For me, in any kind of contract situation, this would be a deal killer.  Just talking generally about any contract negotiation here. 

I would expect any inspector who has a decent amount of years under their belt should know what to look for. It's still basic structural stuff, electrical, foundation, etc. They'll look to see if stuff is to code. Shouldn't be a big deal. I purchased a 1907 building in WA a long time ago - the inspector caught everything. I was intending to do a complete renovation with block grant money (HUD) back when there was funding for that. Anyway, I'd assume an older building isn't that rare where you are, so if the inspector has a decent amount of experience, he/she should catch everything.

Have fun.  I love old houses.  I know they can be money pits, but I just love them and the (normally) better materials used, woodwork, higher ceilings, etc.  Sometimes you just need to move a wall or take a wall out, to make it less functionally obsolete, but you can still keep the character.  Uh oh, you got me started.....LOL.  I have a weakness for old houses.  Wish I could afford to buy and renovate them all.