All Forum Posts by: Al D.

I am not clear on which took place first, the eviction or the bankruptcy filing. In any case, this is to give you guidance on your latest question: http://www.cacb.uscourts.gov/faq/relief-automatic-stay-how-do-creditors-file I had the seller do all that for me before I would go through with the purchase of a property under contract, so I do not know the details. But it took a short time from the time I said that I would not buy until the seller’s PM firm had the stay lifted. I think that the Bankruptcy Court clerk can answer everything you need to know specific to Georgia.

Kristy Fard , First of all, I promise that I will not blame you for your situation - it is not your fault for being human and expecting fairness from others. And I know that you will learn some lessons from this situation. However, the commenters above are generally correct in their assessment of the situation. I’ve been “soft” with tenants also. But when I give them “an inch,” in my case it’s of a rope. Some of them “hang” themselves with it; but those are very few. I still believe that there are ethical tenants. You need to get out of your predicament now. These tenants are not going anywhere, and you cannot just block their emails from getting through to you - there may be an emergency situation. There is a potential for being able to evict them for nuisance/harassment - if you can clearly show this (even under the SF laws) - but that’s a very thin chance; you’ll likely be paying lots of money for your attorney, while they may get free/very cheap legal advice. I don’t know you, but am sensing that you won’t be able to “switch” yourself in your approach with these tenants in a meaningful way. In my opinion, you need to remove yourself from the situation, ASAP - you should hire a property manager, one with lots of SF rent control experience. During the interview process, disclose the whole situation and ask them how they would proceed. Again, I don’t think that these tenants are going anywhere, and the sooner you have someone start saying “no” to them with unequivocal authority tone, the better for you. If hiring a PM should not be appropriate for you, I suggest you at least speak with a local attorney about any unfulfilled promises you have made to the tenants to date - you don’t want them dragging you into any litigation just because they could. You’ll still need to draw the line in the sand somehow.

Syed Firoz , I am presuming that the tenant is behind on rent and you are ready to file for an eviction. I am also presuming that the tenant in bankruptcy is the one on the lease agreement with you. It’s typical for all “creditors” to be told to freeze their claims in a bankruptcy - don’t take this personally, in case you may. Lucky for you, your property does not constitute an asset in the tenant’s estate. It’s just a procedural thing to request the bankruptcy judge to lift the stay (freeze.) You may be able to avoid having to hire an attorney for this. I’d try to go to the clerk’s office at the bankruptcy court and ask for advice on how to do that first. If your time is more valuable, then hire an attorney. Once the tenant “understands” that he can’t avoid paying you, he may resume full rent payments.

I am not an attorney. But I studied this topic for my own benefit. To me, you are correct. And you are also not correct, as I see some benefits of having an LLC: First of all, having personal vehicles and primary residence in an LLC is useless - unless you can prove doing business activities with them. But there is still a good chance that this type of LLC would be “pierced.” With that, no matter how many LLCs you may have in your life, should you personally be responsible for a tort, like a vehicle collision with personal injuries, if your primary/umbrella insurance and your non-LLC assets should not be enough to cover a judgement, assets of your LLCs may be pursued - but not necessarily obtained. (I am not inclined to believe that having an attorney be the “face” of your LLC gives you anonymity in case of a judgement: while I have no experience with the legal declaration forms, it is my belief that one has to truthfully list all assets anyway. If that is the case, then somehow omitting an LLC or ten you may own, may constitute fraud, a crime. However, having an attorney be the face of your LLC may still be beneficial for general anonymity before - and potentially to avoid - a lawsuit.) If your LLCs are based in a state other than the state of the tort jurisdiction, the plaintiff’s attorney - unless also licensed in the LLC state - will have to hire another attorney there. If that state happens to be Wyoming, for example - where the ONLY thing that can be won against an LLC is a charging order - then the attorney may have a long time to wait for his payday. Now, that is a theoretical benefit of a Wyoming LLC. The problem for someone who is not a Wyoming resident (or those other states that specifically provide only a charging order) is that I am not aware of a court case that has decided the potential problem of your “domicile state” being the “end jurisdiction” state - thus a Wyoming LLC may be useless for anyone not living/doing actual business in Wyoming in the end... So, that’s for a tort in your personal life. The actual benefit I see in having an LLC hold rental real estate is that an LLC is the first thing a potential plaintiff’s attorney sees about you, the property owner. If it happens to be a WY LLC (just be sure to register it in the state where you perform your business activities - and since you are not a California resident, I am not saying anything specific to California,) then it may be all the “protection” you could ever need: injury attorneys work on “commission” - if they can’t collect on the judgement, they don’t get paid. Even if they stand to collect eventually - but it would take more steps than if there were no LLC protection - that alone may be enough to have them not take the case. And this is also where it makes sense to have one LLC per rental property. To quote/paraphrase Anderson Advisors, “An LLC is ‘Lawyer-B-Gone’ (spray.)” I tend to agree with this statement. Keep in mind that in criminal cases, the veil of the LLC can easily be pierced by the court. And, in any case, any LLC has to be run as an entity clearly separate from its member(s) in all aspects. Always carry insurance. An LLC is just another level of potential protection. Again, I am not a lawyer. The above is based on my own research. No legal advice given. I welcome disagreements.

Once heard a lawyer say this: (paraphrasing) “If you are gonna hand out your business cards in this business, make sure to have your LLC name listed along with your own name.” Now, you don’t need an LLC, but depending on what type of business you intend to be doing, you may want an LLC - there is a difference between doing business with you, and doing business with your LLC if something goes down; the sooner you set the record straight that someone is dealing with your LLC - and keep it the same during that relationship - the better. Of course, what are the chances of things going to sh*t in this business?

I don’t know if you can do it successfully from Sonoma County. You need to be a lot closer than that to Ohio, like Napa. Welcome. As a CPA, should especially appreciate local tax laws in your target market. Since you mentioned Cleveland, here is an important site for you (perhaps you were already aware of it): http://ritaohio.com/Municipalities I do not know whether the other Ohio markets may have something similar. I have seen the list of jurisdictions under RITA expand. Also, look out for Ohio jurisdictions that have laws that mandate city oversight of your potential rehab, as well as ongoing registration and inspection of your rentals with the city - specifically ask agents you work with whether any of this may be the case with any property you are looking at when you work on your numbers. None of this is a big problem - just extra layers of government you need to deal with - as long as you know all the facts ahead of time. Good luck.

I have to take any one source of information with a grain of salt. Reporting live from my own little California bubble - a burb in the SF Bay Area. I work in Silicon Valley. I don’t know about the rest of the state. But: I work with numerous people who are from somewhere else (Alabama, Ontario, State of Washington, Sweden, Italy, China, Southern California, etc.) They all moved to where they are today for the job. And it’s not your average-paying jobs. I have seen our freeways get wider over the decades, yet traffic get worse (one can argue that it’s just same amount of people who are now commuting longer distances because they cannot afford to live close to their jobs. This argument is correct, but there are also so many new developments that sell out quickly in the Bay Area proper that I wouldn’t make this argument myself.) I have a neighbor who bought their house “sight-unseen” from China before moving here permanently. People are clearly moving into my little bubble. I’ve also lost friends to Texas. Some moved to the (cheaper) Sacramento (still California) area. Some moved from there closer to their (better-paying) jobs in the Bay Area. The overall state population is still growing, according to government figures. Remember the Rules: location, location, location. (All real estate is local.)

I did not listen to this webinar, or (still) read David’s book (though, I got it from Amazon, and even met David last week and now have his autograph.) I don’t know why David may not invest in Cleveland. I know why I do not (any longer) look at the Cleveland area: I do not want to waste my time on any project that will have added layers (multiple) of government oversight and taxation. Depending on the municipality, you may have one or a combination of: 1. POS - point of sale. This particular one may require additional funds set aside (escrow) for mandatory repairs. While some may see this as a bonus inspection to make sure the repairs are done correctly, I see this as a level of bureaucracy that will delay your project and your cash-out refi. (I have no first-hand experience with this one, but: special warning to flippers.) 2. Certificate of occupancy (may go with Point 1 or Point 3.) 3. Rental permit. These may need annual renewals. (After I told an investor friend who had already bought two properties in a city with this one before she was aware of it and already had the place tenanted, she contacted that city, whose name I won’t mention. She bought there just months earlier in that same calendar year. This was a city official’s response to her coming clean on her own, actual quote: “It is the responsibility of the property owner to research and comply with all local regulations. The applications must include the penalties or they will not be processed. Failure to do so will result in court action and search warrants issued for the rental properties.”) I’ll let this one linger... A little more... 4. RITA (an ever-growing list of cities that require anyone with any income from them to not only file and pay the state income tax, but to also pay this Regional Income Tax Authority.) I have properties outside of the Cleveland metro which are under RITA, but they don’t have the other layers of government oversight (at least as far as I know. And I learned about RITA for the first time by accident, luckily in time.) It is not that I dislike Cleveland and its satellites. I am sure that there are amazing deals to be had - with the right team in place. I like Cleveland. It has good numbers. It may have a bright future. I just have easier opportunities elsewhere. If your strategy is BR+ then why have your money tied up in layers of bureaucracy? (And this is a Californian talking with one property still left in a CA city that not only has rent control, but also mandatory rental inspections. I’ve had to take time off from work, and line up my tenants’ schedules with the inspectors’. No apologies were given to me when one inspector did not even bother to get back to me for not showing up twice for a re-inspection - but I paid my fine for having failed the first inspection. Trust me, nothing major was found. Jeez, I guess I’m still not over it.) I’ve heard David mention that he “fell into” (I am paraphrasing) some of the markets he invests in. Perhaps Cleveland may also grow on him if he finds the right people there. If you are just starting out, and Cleveland is calling your name, just make sure you do your due diligence on potential government oversight, along with the other due diligence. Not every local agent knows everything - I speak from experience.

Yes, you can. However, unlike with owner-occupied properties, it is more difficult to find lenders willing to do either a HEL or a HELOC on a rental property. And, of course, you should have equity in that property to speak of. If you can find a lender, your total combined loan-to-value percentage between your existing (if you have one) first mortgage and the new HEL likely should not amount to more than 75%. Maybe you’ll even be lucky to find one that can go up to 80% LTV/CLTV. Check with your local credit unions and regional banks. If you cannot find anything along HEL/HELOC, then consider doing a cash-out refi. This, again, assumes that you have equity to take out.

On Monday, a buddy of mine sent me a link to a story in the most credible news source I know of in our modern world, The Onion. And because my mother taught me to share: (I am pasting, since a link would likely get removed soon.) “WASHINGTON—Fooling themselves into believing things were going to be turning around, delusional sources reported Friday that 2018 will be the year it’s all going to fall into place. “No ifs, ands, or buts about it, everything is finally going to come together in 2018,” said Liam Thomas of Margate, FL, echoing the sentiments of others nationwide who had also completely lost touch with reality and had absolutely no evidence whatsoever to support their optimistic claims. “I just know that things are going to start happening for me. I laid the groundwork in 2017, but 2018 is when my career’s gonna take off, I’ll start eating right, and I might even meet that special someone. Yeah, it’s going to be great.” At press time, sources had already reportedly decided not to make the same mistakes in 2019.” Happy investing, people, whatever your vehicle! I am off to the gym; they have Seinfeld reruns all day, and I can hook up my earphones to the massage chair I work out in, so other machines won’t bother me.