All Forum Posts by: Wenda Kennedy JD

I understand that you now own 10 units.  How are you going to convert that ownership into your profit goals?  Are you flipping or renting?  How are you handling the mortgage and the fix-up costs in the meantime? What's your back-up plan if there's a RE turndown? Buying RE is step one.  What now?

Wonderful.  Now figure out how to thrive.  Slow and steady win the race.   I personally like very low LTVs (loan to value ratios).  I keep my equities high and my loan balances low or paid off.  That way, no matter what happens, I can handle it.  I'm very careful about my renters.  It easy to make the right people happy. They are my honored customers who deserve my attention and my best work. 

Good luck!

Thanks for your comments. Taking care of the rentals is back to "RE 101" for me.

I started my real estate career in 1976 in the Greater Los Angeles area.  I have done, been involved in, and/or brokered thousands of transactions over those 42 years.  Before I retired, I was a broker, residential/commercial RE appraiser, expert witness in State and Federal Court, and a professional RE investor. I was doing flips when we called them equity purchases.

Now, I'm just taking care of my rentals, businesses and I'm dabbling in buying and selling trust deeds as a side business. I like the TDs-- they're a lot less hassle; but the yield is less than my residential rental business.

 And, I am educating myself to try to start an e-business based upon my years in RE.  That e-stuff is a brave new world for me. Although I taught college level RE classes in the past, putting it into the new formats and medias is pretty challenging for me. It's hard to teach an old dog new tricks!

Mom and I repossessed this mobile home park 19 years ago today. She had sold it during her divorce and carried the paper -- a terrible misstep.  The buyer had totally trashed the property and it was routinely loosing LOTS of money.  Since Mom's death 14 years ago, I've carried on with building the income and market value.  

Fast forward to today -- the income is 6 times where we started 19 years ago, and 5 times the cash flow of when Mom died.   The property is now a good cash cow.  That success wasn't instant.  A lot of the increases in market value and cash flow were earned through sweat equity and a lot of hands-on-work.

You "done good", Kid!  Don't stop.  Just keep going.  You're on the right road, and the rewards are yours for the taking. 

In the meantime, humor your dad and love him. He doesn't understand your path.  That's his failings -- not yours.  You're trying to teach an old dog new tricks.

I live off of my residential rentals -- and I've started writing about the ups and downs just for the fun, the blood and the guts of it all...

I totally agree.  There's no substitute for experience and hard work.  My tenants still occasionally surprise me with something new.  But, most of the time I can chant their words with them.  I know what they're going to say before they open their mouths.  My 40+ years in real estate have given me a leg up on them.

I hear all these stories about people who work 4 hours a week at their real estate business. They say they just sit around and collect their rents.  Uh????  Yes, it's "passive income", but it's still a lot of day by day work.  Maybe, someday, I'll the hang of that 4 hour work week!

Do you really want to own it?  Start with that and go from there.  

They don't sound like they need the money.  Can you manage it in the meantime for them, so they don't have to worry with it?  

Can they put it into a family trust for you and your brothers? You could then hold it within that framework. 

Selling with owner financing would limit the current tax liability.  You can have a long pay-back agreement to limit the income stream.

As far as capital gains & Federal taxes, have they been depreciating it?  Will there be recaptured gains?  Depreciation sounds minimal from their purchase price.

If they sell it to "John Doe" out there, what will that look like for them financially?

Thomas S. Investor from Canada, Ontario

"it is doubtful he will act on our advice either way"

Yes, he probably won't listen -- this time around. Next time he maybe wiser. Yes, I agree.  The aunt has to go.  The only questions is IF the wife and kids go with her.  Yes, the cards are going to fall no matter what.  They are breaking his back by him having to carry them.  

Personally, I'd find a way to get her to want to leave.  And she would leave sooner rather than later.  BUT, I'm an old lady who has fought many of these battles over the years and I'm not afraid of much these days.  

Thomas S. Investor from Canada, Ontario

"It is the only option that can work. His wife is the root cause of all his problems. Getting rid of the free loaders must be his first step. Avoidance is not a solution and he has to make it work one way or another for his life to improve."

I was saying direct confrontation won't work.  He's got to create a situation where his wife and/or the aunt get uncomfortable enough to make a change -- he can get the aunt to reject them; he can get his wife engaged in working themselves out of the situation; they can move to another setting; he can change jobs...  there are several solutions.  If he directly confronts his wife or the aunt, he's in for the fight of his life and he'll probably end up single.  The problem is not the freeloaders -- it is his wife's insecurity. A frontal assault will most likely exacerbate his wife's insecurities and she will cling  harder to her aunt -- whom I assume she feels really understands her -- like he can't. 

He has to change what he's doing, rather than try to change the other people in this love triangle.  He has 3 adults in his marriage rather than just the 2 of them.  Relationships are like a dance.  When he changes his steps and cadence, the other parties has to one of 3 things -- dance with him at his new pace, get him to go back to the old dance steps, or leave the situation.  That's the only 3 things that can happen here.  He has to be ready for  those results if he decides to take on his situation.

I accept rents in several different ways.  My favorite is an account where I debit the money directly out of their accounts.  I also take debit cards through my CC machine.  Those 2 ways can access any public assistance funds and/or bank accounts. When I do take cash, I make sure that my standard MO is to write them a paper receipt noting the source -- even if I leave their copy in my receipt book.  (standard business practices are usually an exception to hearsay rules if you have to go to court) I also can take PayPal, but that's a rare situation.  

That being said, cash scares me because I always worry about it being from an illegal source.  I don't want my income sources to be tainted and/or questionable.

I feel for this guy.  2 hours away from a rental property is just asking for problems.  Been there, done that.