All Forum Posts by: Greg Scott

Interesting point. I agree with your assessment.

Another factor keeping older folks in much larger houses are property taxes.  In certain states, such as California and Michigan, property tax increases are capped by law.  It creates a perverse disincentive to move. 

My mom downsized from a $1M house, one her late husband had owned for decades, to a $350,000 condo.  Because of Michigan's property tax scheme, her property taxes went up after she moved.

If rent is late, you follow the same process you always would as specified in your lease.  Just because you non-renewed them does not mean they will move out at the end of their lease, so you need to protect yourself. 

FWIW, we never non-renew for late payment. As long as they pay rent and pay the late fees, we don't care at all.  Now, if we have to start eviction proceedings, that creates a lot of workload.  Even if they pay-and-stay, we tell residents they get one warning.  If we have to start eviction proceedings a second time, we will complete the eviction process and they will have to move.

Rules vary from state to state and lease to lease, but on my properties, if the rent was not received, on the 6th they would get a letter stating that late charges have been applied to their account and if they do not pay within 10 days we would start eviction proceedings and all court costs would be applied to their account.  

No mater what happens, after they move out, we would inspect the unit and assess  any damages.  The security deposit would be applied to any monies owed and a letter would be sent within 30 days to the tenant.  If they get a refund, the letter would include a check. If they still owe money, our letter would indicate that we will seek a legal judgement unless they pay what is owed. If they don't pay, we get a legal judgement.

Does your contract have a defined completion date with penalties for being late?  I presume not.  Having a clause like that usually resolves delays.  Unless there is some extenuating circumstance, we enforce that clause.  Last summer a contractor that was building us two pergolas and grilling stations had to take $3K off his bill because he passed the deadline he agreed was easily achievable.

As for how to deal with your current situation, prodding is about all you've got.

My 2 cents.

Kids need to be taught how to manage money and wealth.  Sometimes that involves letting them make mistakes, allowing them to be uncomfortable, and deal with the consequences of their own actions.  If they haven't learned the skills by the time they are 18, they probably won't.

Here is a story about one of my children.  Our family went to a restaurant that had a "claw machine" with colorful prices.  My 7-year old was fascinated by it and wanted to play.  I explained that it was a scam.  He informed me that he KNEW he could win a prize and asked me for money.  I said I would not give him my money, but he could use his own if he wanted.  (At the time he got $1 per week for doing some chores.)  I agreed to give him his allowance a couple days early. 

Then I upped the ante.  I told him I would give him $2 if he didn't play the game, and if he wanted to play the game, he got just the normal $1.  He chose to play the game.  He put in his $1 and in about 10 seconds learned he was not going to get a prize.  He was shocked it was over and when it was clear I was not going to give him more money and he lost his allowance, he burst into tears.  He cried and cried.  While we were empathetic, we let him feel the sting of his decision.  Of course, the crying stopped when our food came, but I don't think he ever forgot that lesson.  At 28, he is very good at managing his money.

You seem to be leaving a lot out of the post.  The fact that a property has a mortgage doesn't change its appraised value. Why are you even considering the options you mentioned?

Based on the question, I'm guessing you are trying to get out of a deal and you would have to come to closing with cash because the property isn't worth what you paid for it.

Yes, you can probably get a higher price by selling the property subject to. On the other hand, you are still financially on the hook for the mortgage AND the people that are attracted to seller financing are more likely to be ones with challenged credit and likely to default.  Either way, you haven't really solved your problem.

Yes, you can sell FSBO. I tried it once and got flooded with phone calls, both from unqualified buyers and from unqualified newbie agents who wanted my listing. After a couple of weeks, I gave up and hired a prominent local Realtor.

If this is your situation, I'd look at one of two options:  1) Figuring out how to make it work as an owner 2) Sell and take the loss.

With this amount of cash and a mall that has a movie theater, you must be a minor LP in a much larger project.

Usually there is a round of investing just to acquire the land. That is the riskiest portion of the investment. It usually results in a great return or a large loss, with not much in between.  Is that what you invested in?

I wish you luck.

@Brian Bisdorf  @Richard Misdom

With all the chaos going on in Washington DC, here is something else to consider before jumping into or continuing with Section 8.

https://www.biggerpockets.com/forums/52/topics/1233196-will-...

Bloomberg just published this article which should be concerning for any landlords accepting Section 8 vouchers.

If you don't have access through the paywall, here is an excerpt:

-----------------------

For Americans who rely on so-called Section 8 housing choice vouchers, the first weeks of the second Trump administration have brought a whirlwind of uncertainty.

The 50-year-old Housing Choice Voucher program is the federal government’s largest form of assistance for low-income families. Administered by the US Department of Housing and Urban Development, it provides rental assistance for some 2.3 million qualified households annually. The program is not an entitlement: Only about a quarter of the households who qualify can access the vouchers. Many spend significant time on waitlists, and the program has struggled to keep up with skyrocketing rents.

Now voucher users and their housing providers are facing fresh challenges, in the form of proposed workforce cuts at HUD and important discussions on Capitol Hill that stand to slash the number of people who can receive Section 8 assistance....

“If you receive federal assistance, that’s really scary,” said Deborah Thrope, deputy director of the legal advocacy organization National Housing Law Project. “There’s a lot of fear right now among federally assisted residents and HUD tenants that the rent is not going to get paid.”

Yesterday, FinCen announced it will not be enforcing compliance of the Beneficial Ownership Information (BOI) until court challenges have been worked out.  Personally, I hope the courts dismantle this law.

Filing your FinCen BOI is easy, right? 

Most of the articles I read talked about how it takes 15-30 minutes and you only have to do it one time.  It is easy.  Just do it now. (Side note:  I filed all of mine last year.) 

In contrast to the articles, I attended a conference in November where a lawyer explained that your BOI filing actually has an expiration.  It was NEVER a one-and-done filing.  When filing the BOI, you have to upload a passport or drivers license.  When that ID expires, you have 30 days to provide a new one or are in violation of this law, and face massive penalties of the size that would put most small companies out of business.  To make matters worse, if you have multiple people in your BOI filing, you are supposed to update that BOI filing every time the ID expires.  So, now you need a spreadsheet and calendar reminders to know when to update your BOI.

It will stop crime, right?

I read a pro-BOI article written by a journalist supporting this law.  His opinion was that this law was going to stop money laundering because the Federal Government could more easily find the culprits. 

I have a hard time believing that an international crime ring would not be able to obtain a fake ID. Or, more likely, they will steal a legitimate ID to file a fake BOI.  How does a fake BOI filing help fight crime?  Meanwhile, tens of thousands of honest businesses have filing requirements and massive fines held over their heads.

IMO, this is bad legislation that needs to be killed.

I've owned rental real estate in ten different states.  Either of those areas are fine.  Neither has a huge advantage over the other.  

More critical to your success will be putting together a team and finding good deals.