All Forum Posts by: Valerie Menke

Hi Friends, I'm an investor and a real estate agent and I have a seller client that would be the ideal candidate for seller finance. I would like to pitch that to him and try to connect him with a buyer client of mine. His house would sell for about 800k and is paid off. His main concern are taxes. I understand all the advantages and how it technically works- but to those of you who have done it: How did you actually do it?

 I think in our case it would make sense to do a regular downpayment that doesn't exceed his wife and his capital gains allowance since his main concern is taxes- which shouldn't be a problem. 

1. Lets say we did a 3% interest rate and a balloon after 10 years (with the option of an extension if the buyers can't qualify for the loan or the interest rate exceeds for example 6%). Would we still do an amortization schedule for 30 years to calculate the monthly payments? Who comes up with that amortization schedule?

2. Who keeps track of the loan balance/ interest paid? How do buyers and sellers best keep track of those numbers?

3. Did you have the contract put together by an attorney? Or did you feel having escrow involved was sufficient?

Thank you for your help!

 Thanks John! I'm talking to an independent agent today, hopefully that will bring some clarity.

 Thanks Caroline! It's a duplex with pone unit rented to tenants on a one year lease and the second unit is the one I would like to rent as a rented as a mid- term (monthly) furnished rental.

Hi all!

I'm having trouble finding landlord insurance in Santa Barbara, California. My main issue is, that I would like to rent a unit as a furnished monthly rental meaning a minimum of 30 nights- most guests are looking to stay 3-6 months. Now I have been talking to insurances and they told me any rental activity under 12 months would be considered "short term rental". I'm pretty confused because I know plenty of people here that sign 6 months leases (it's a college town) or rent month to month. So do they just don't know that their insurance technically wouldn't cover that? Or am I talking to the wrong people? I understand that a policy for actual short term rentals (with nightly turnover) would be more expensive. But the city of Santa Barbara considers anything under 30 days short term rental so I just assumed insurance companies would do the same. Did anyone run into this issue and find a satisfying solution?

I've been super immersed in Real Estate and Investing for the past two years and things have worked out very well for my husband and I. For our first property we added and ADU to a SFR and we just closed on a duplex (another house hack). I've decided to get my license to be a agent (my test is scheduled in 2 weeks) and I feel like I can provide a lot of value to first time homebuyers here in Santa Barbara where real estate prices have gone through the roof and with rising interest rates now its really difficult for "normal" buyers to afford a home. I personally think house hacking is the way to go and a lot of my friends and family are seeing how well that is working out for us. I'm pretty sure however that in the end, few are going to be willing to put that much time and effort into it, i.e. finding the deal, managing and living through the rehab, and so on. Realistically, they will have to buy a property from the mls that needs a bit of updating. I still think that makes a lot of sense for them and I'd love to help them find that but of course they won't come close to seeing the numbers I'm seeing- the duplex I'm rehabbing right now is a deal I found off- market through door knocking, that I took over with long term tenants and that I have to put quite a bit of time and money in.

I love the analytics of investing and I love talking to people about it but at the same time as an agent, you carry so much responsibility towards the people you advice. We all don't know where exactly the market is going and if you show properties to house hack or to add value to, there is more at stake than if you show pretty homes to people with money and help them decide which kitchen layout they like better. 

Do you have any advise on how to navigate that?

That definitely depends on the age as well. A puppy needs a ton of exercise, most 10yo dogs only want to chill :-) Also depends on the type of people- I've lived in a small apartment with my super active Border Collie but took her for a run every morning and was able to take her to work every day. It can be super challenging to find housing with a large dog so if they are "good dog owners" they should happily answer all your questions and be able to give you good reasons why they think this house would be a good fit for them and their dog. If they can't do that- then they might not be a good fit. 

Thanks everyone for the input! Here is how it ended up playing out: After texting back and forth, I realized that she keot only talking about wanting the security deposit in cash, she never talked about the 'cash for keys' money (which was the way larger sum). And she really didn't want to meet me at the property, she wanted me to come to her work. I started to think she got overwhelmed with moving all the stuff out (the cash for keys agreement demanded 'broom clean') and was embarrassed or worried about the state of the house. Like you said @Nathan Gesner, in California you'd do everything to get them out so I met her at her work, with the deposit in cash($700 from 20 years ago) and had her sign a receipt. She never mentioned the cash for keys money. So I went straight to the house expecting the worst and yes, she did leave a ton of clothes, some furniture and a lot of random stuff but you could tell they really tried. She was propably worried I wouldn't even give her the deposit if I we had met at the house and I had confronted her about all the stuff. But we are doing a full remodel anyways so that can all go in the big dump container. I'm still thinking I will give her a check for part of the 'cash for keys' money because it really helped that she moved so quick, even if she didn't leave the house 'broom clean'. Def a good learning experience in communication and figuring out what's actually going on.

I bought a property with long term tenants in place and offered them 'cash for keys'. The security deposit they paid 20 years ago was transferred to us during escrow so I was planning on giving them two different checks, one for the 'cash for keys' amount and one for the security deposit. Now the tenant keeps saying she really wants cash because she works a lot and needs to pay the moving company right away. My thinking was that for book keeping it's just more messy to do cash and checks are a better way to record the transaction. I was going to have them sign a security deposit refund letter and type up a different letter for her to sign that she received the cash for keys amount. Is there a good reason not to give her actual cash as long as I get both those documents signed by her? I would have preferred a check bc I really don't want to drive around with that much money in cash but I also want to be reasonable  considering their situation, they agreed to be completely moved out 7 days after we closed escrow which was pretty stressful to them and very nice for us. With a different tenant that could have lead to a lengthy and costly eviction. 

My husband and I are wondering if a tax reassessment is triggered if we purchase a property in our LLC and then transfer it into our name. We are the owners of the LLC and we would be holding title together after transferring it into our name. Does this count as a of ownership?

We are looking at a property that needs a lot of work and the easiest way to get everything done as fast as possible is a hard money loan. However many lot of the hard money lenders I talked to, only lend to LLCs. We would like to hold this property long term and since it is a duplex we would get the best interest rate if we would do an owner occupied loan. At a purchase price of 675k and an ARV of 975k the difference in property taxes would be substantial and my understanding is that a reassessment os not triggered if we purchase owner occupied and just refinance.

Has anyone done this and can share their experience? Thank you!

What a bummer! There is already so much good advice, adding to that: we make sure to take detailed videos and pictures on the move in day to have as much documentation as possible when problems arise. As a dog owner my self I have experienced how hard it can be to find a place with a dog. We take dogs but charge a pretty high (refundable) pet deposit. That keeps up the motivation to keep wear and tare to a minimum (there is no carpet however, all laminate flooring). And we communicate that we will charge for any damages by the pet. There was one time when we had an issue with a dog of a tenant digging through the backyard and ripping up gopher wire and wheat barrier. We let the tenant decide to fix it herself or to have us hire landscapers and charge her for it. Don't let a few bad owners ruin it for everyone else!