All Forum Posts by: Weina Shi

i can tell you that my clients spent thousands of their own money to resolve an easement issue even though they had title insurance. The title company was not helpful and did not pay one cent of that.

Originally posted by @Peter Walther:

Originally posted by @Weina Shi:

Originally posted by @Peter Walther:

I think you might want to invest in a new attorney.

A lender's policy provides you as owner no protection whatsoever. In fact, in the case of a total failure of title, the insurer could pay the lender off in full, take an assignment of the mortgage and sue the Borrower (you if you signed individually) under the Note.

There may be a reduced rate for the premiums when you purchase a lender's policy simultaneously with an owner's policy so the incremental cost should be relatively low. Ask the title agent for a quote.

Why would title insurance sue me if they have no grounds? Property is in an LLC. I am a real estate broker and the only places that I have seen property owner use title insurance is to discharge a mortgage that has been already been paid off years ago. One client has an easement issue with problem with the survey and the title insurance could not even do much in a litigation situation. No owner policy would be equivalent as self insuring. The title insurance on my purchase is $16000 (half is lender policy and half owner policy). These are not insignificant.

If the insurer takes an assignment of the mortgage from the insured lender as part of the claims settlement process it can then sue the Note maker(s) and any guarantors based on the promise to repay the debt. They would do this as part of the recovery process.

You are correct, failing to get an owner's policy is the same as the LLC self insuring for its interest in the property. If you're comfortable doing that I assume you won't be getting casualty insurance either.

0 Votes

I don’t think it is fair to assume what I will get or not. You do not know my family situation whatsoever. I am comfortable taking certain risks. Same thing with life insurance some people get it some don’t. We used pay for life insurance but we are financially independent and no longer need it. Personal choice.

Originally posted by @Peter Walther:

Originally posted by @Weina Shi:

Originally posted by @Peter Walther:

I think you might want to invest in a new attorney.

0 Votes

Originally posted by @Peter Walther:

I think you might want to invest in a new attorney.

0 Votes

Hi fellow investors,

Are you getting owner title insurance for commercial properties you are buying? My attorney mentioned since we are required to get the lender title insurance we are already protected somewhat so purchasing a separate owner title insurance is not necessary. What do you think?

1 Vote

Here is my analysis, which assumes the business portion is not eligible for 1031. This also ignore time value of money to make the math simple. Also assumes lender will finance both the business value and real estate.

Based on this analysis, overall it seems that both options have similar financial impact but the real estate tax saving will make splitting the transaction into business vs real estate superior.

Option one: Purchase as one transaction (not splitting up business vs real estate)
Real Estate Value	$ 4,000,000
Land	$ 500,000
Improvements	$ 3,500,000
Depreciation	$ 89,744
Depreciation yrs	39
Total Depr in 10 years	$ 897,436





Total annual D&A	$ 89,744
Total 10 year D&A	$ 897,436

Tax Rate	42%
Annual tax saving	$ 37,692
Total 10 year tax saving	$ 376,923

Option two: split up business value vs real estate value
Real Estate Value	$ 3,000,000
Land	$ 500,000
Improvements	$ 2,500,000
Depreciation	$ 64,103
Depreciation yrs	39
Total Depr in 10 years	$ 641,026

Business Value (Good will)	$ 1,000,000
Amortization (15 year schedule)	$ 66,667
Total Amortz in 10 years	$ 666,667

Total annual D&A	$ 130,769
Total 10 year D&A	$ 1,307,692

Income Tax Rate	42%
Annual tax saving	$ 54,923
Total 10 year tax saving	$ 549,231

Depreciation recapture for good will upon a sale (assume 1031 exchange all real estate)
Total recap	$ 666,667
Tax at 25%	$ 166,666.67

Tax saving net of amortization recapture	$ 382,564.10

1 Vote

@Nick Frey

You might want to talk to a 1031 specialist at ipx1031.

0 Votes

@Lawrence P. Schnapf

Good point. Based on the list they sent to me it does not include HVAC which important. Thanks.

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@Ronald Rohde

Thanks

0 Votes

@Cason Acor

Yes the sale price will be on the deed. Attorney mentioned reason it is more involved than that and it involves accounting and not just an accountant, cash flow needs to be analyzed and consider 1031 as well with potential depreciate recapture

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My parents have already been managing my property. I am also a real estate broker owner and I do property management for my clients also.

I have seen plenty of bad third property managers. If I find a good manager, then great, and if not, I rather use family and if I pay people I might as well pay

Originally posted by @Ronald Rohde:

Originally posted by @Weina Shi:

Originally posted by @John Lenhart:

We have kiosks at 2 locations. One is remote, the other is a busy location. At the busy location, it helps with payments of after hours customers who do not like to use the internet and prefer to pay in person.

The other location is a remote location we installed a year ago.

Neither of these are a magic bullet and they do not take the place of physical visits or having a site manager at a larger facility or weekly visits to the remote facility. It definitely takes a while for people to become accustomed to the kiosk. You will have low implementation at the beginning but it will grow over time. The kiosk will never become more popular than those who pay via autopay or over the phone so remember to always have those options. I do feel that the kiosk provides value but the ROI is not a ton more than the monthly cost.

When deciding on if the kiosk is right for you I would ask:
1) how big is the facility? Do you want to run it remotely or is there a site manager. The kiosk can help during busy days and also times where the manager is disposed from the office.

2) What are the demographics ? Does your facility take a lot of cash? is the clientele older? Do most pay in person? - We have a couple of facilities where they were a bit heavier in cash payments and also had a population that liked to pay in person at the facility. The kiosk made sense in these cases. If you have a facility that is in a more affluent area, has a clientele that is pretty internet savvy and pays online or autopay, and pays via cc or ACH; I think there are less expensive options than the kiosk. Many of the management systems offer Apps to the customer to allow the customer to pay online and even waive their phone in front of a gate sensor for access. These options can be more cost effective than the kiosk. The downside, they cannot take cash if you have a lot of cash payers or if you have a crowd that is not internet savvy.

I would prefer some automation and run the facility remotely with a family member to help a few times per week. Perhaps I should try to run the facility and then decide to determine the needs. Thanks for your input.

A family member isn't part of your business plan. I guarantee you this will strain your relationship. You need professional responsive team members.

That sounds scary. Maybe skip the kiosk is the best bet. Thanks.

0 Votes

All Forum Posts by: Weina Shi

Weina Shi has started 28 posts and replied 83 times.

Post: Commercial Property Owner Title Insurance

Post: Commercial Property Owner Title Insurance

Post: Commercial Property Owner Title Insurance

Post: Commercial Property Owner Title Insurance

Post: Split Up Self Storage Facility Purchase: Business vs Real Estate

Post: 1031 in less than a year (short term capital gains)

Post: Self Storage Inspection & Environmental Site Assessment

Post: Self Storage Inspection & Environmental Site Assessment

Post: Split Up Self Storage Facility Purchase: Business vs Real Estate

Post: Self Storage Kiosks and Payment Processing (ACH & CC Options)