All Forum Posts by: Shari Posey

I have a property in California held in my self-directed IRA. I'm in the process of selling and all proceeds will go back into my IRA account. Through escrow I have to complete tax form CA 593 for tax withholding. I've filled this form out a dozen times as a normal sale but the form doesn't have any options for self-directed IRA sales so I need to find a CPA who is familiar with this. I don't want this to get screwed up because I've owned the property quite a long time and I'm selling with a much higher value. Any anyone recommend a CPA familiar with this type of sale?

Our accountant recommended an S Corp rather than an LLC for our situation

We just put our rental properties in an S Corp. Our former insurance company doesn't handle properties owned by corporations. Our current homeowners' insurance is GEICO and they have one company that does but it requires a licensed contractor to inspect the house and fill out a form every year because the house is more than 60 years old. Everything was updated in 2000 and we had a new roof put on last year but because we are hitting the 20 year mark on the updates, next year other major systems like the heat and electrical system will need to be upgraded to continue with the insurer. Is that normal? Can you recommend other insurers?

I would not hesitate to take on a Section 8 tenant BUT I have recently learned that I would not want to purchase another unit where ALL I get is Section 8 applicants. My rule has always been only to buy a place where I wouldn't mind living in it myself. My last purchase broke that rule and my first Section 8 tenant was ok but left the unit in a mess and now I've got it up for rent and only Section 8 applicants are interested in renting it. During the recession there was a time the city stopped giving out vouchers. That time could come again and I would have a very difficult time renting my place out without Section 8. 

I went through this with tenants a couple of years ago. What I discovered was they were a much bigger problem than the neighboring tenants complained about. I asked the owners of other units and all of them told me my tenants were extremely noisy. In fact, cops had been called on numerous occasions. By the time you get complaints, I think the problem is big enough to warrant #1 a warning and tell the tenants more than one unit has complained, #2 a fine (my lease has a stipulation that any HOA fines get passed on to the tenant) and #3 get rid of them.

I have a vacant unit that I'm showing to prospective tenants. I've had several Section 8 tenants in the past so I'm familiar with that program but I have one applicant from Brilliant Corners. I spoke to his case manager and she described the program as similar to Section 8. It is funded by state funds. I'd like to know if any of you have heard of it and/or have experience with it. I want to give this tenant a fair chance because maybe it's a better program than Section 8, although I've never had a problem with Section 8.

The clients I mentioned in my previous post above have since sold 480-sq. ft house and moved into a larger home but they got multiple offers on the property when it sold. 

I WAS very excited about the prospect of ADUs in Long Beach but the city has placed it's own requirements and completely killed the prospect. In my city, as well as many others, an ADU must have one of the units owner occupied and the lot must be 4500 sq. ft. In fact, the requirement must be on title and run with the property forever! The whole purpose of ADUs was to add housing in urban settings, which isn't going to happen. I think only 2 have been built in the city so far. Long Beach is very restrictive in building--I believe the minimum SFR size is 1000 or 1200 sq. ft. with typical SFR setbacks. The tiny homes that already exist, which date from the early 1900s, are popular for resale because they are less expensive than large (1000+ sq. ft ) homes.

That Community First link above is interesting. I think something like this for all types of homeowners would be fantastic but I just don't see it happening anywhere near me. 

In my transactions 10% down is more common and almost all transactions require two-incomes to qualify. I think there is a saving grace of a large percentage (maybe 30%??) that put more than 20% down. I think we are in the beginning of a bubble but as you said, it might be a couple of years before we get a down turn. I hope that prices stop going up so fast and just level out.

Does the building look in good repair? How's the roof? Plumbing? At some point there will be a day when big-ticket items will need to be repaired and you may not have enough in reserves because people don't pay their dues. And if they don't pay dues, they sure as hell won't pay a special assessment.

Are most of those delinquencies only 60 days late or many months late? The longer an owner is delinquent, the less likely they are to pay it. I own a condo in a building where someone was 2-years behind ($20k) and there really is nothing you can do about it. If an owner doesn't pay the mortgage the bank will foreclose but there's little an HOA can do to force payment.

Think of how hard it will be to sell in the future if the HOA financials become worse!

If you are purchasing it as a rental, there is that to consider also because you are adding to the ratio of non-owner occupied vs. owner occupied so it might be hard to future  buyers to get a loan if/when you decide to sell. 

I would pass.

I was super excited about this new ADU law but I just got my city's adoption of the law and it is NOT friendly to ADUs. I live in Long Beach and the city requires either the primary dwelling or ADU be owner-occupied and it must be a recorded covenant attached to the property. The city requires a title report showing the covenant prior to issuing a building permit. The way I interpret this is the primary dwelling AND ADU can never both become rental units at the same time. Very restrictive and not good for future value of the property.