All Forum Posts by: Greg Scott

Quote from @Tom R.:

A month ago I got a letter that my insurance company Farmers is discontinuing the cover I have but their partner Foremost will pick up my policy and I will be getting a letter from them with the new policy.

To no surprise the new policy is more expensive. What was a surprise is it is more than double the cost with a higher deductible and lower personal property coverage. I'm pretty sure what they did is illegal in California.

So now I'm shopping a new insurance company.

California's law has held insurance rates artificially low in that state.  This cap on insurance rates is why so many insurers have been leaving over the past decade.  As insurers leave, supply is reduced.  At some point, the pot boils over.  

Yes, I believe you are likely creating a double-tax situation for yourself. Effectively, you are taking post-tax money, running it through your LLC. Yes, you will have some offsetting expenses, like interest, but any cashflow generated is taxable income that would be taxed again. Overall, not a good idea.

Talk to your CPA and lawyer, but I would think this strategy is better. Don't pay fair market rent. Pay minimal rent, perhaps something equivalent to the mortgage payment, so there is no cashflow. A lawyer might argue you are piercing the corporate veil, but let me ask you this. How likely are you to sue yourself for a slip & fall? Now, if you have other properties in this LLC, it becomes a tougher decision.

This is a bit older, a 2022 podcast, but it tells our story, at least the initial launch out of the corporate world.

I did something very similar to what your friends did.

We always expect our hosts to get the river cleaned before we arrive.  How hard is that, really?

Wow.  I just read through this thread.  Seems like ODC has repeatedly set up their businesses in ways that increase risk rather than mitigate it. The biggest red flag for me now is that they continue to raise money, while projecting outsized returns.  

I agree with @Chris Seveney's assessment.  If you are giving investors 15% on a debt fund, they would need to be lending at something much more than that.  Companies and people that borrow at over 15% interest will also have a higher risk profile.  Did they say what portion of their loans they expect to go into default?

If you are buying at an extreme discount, it means the prior investors probably would lose all their equity.

I had not heard of troubles at Open Door.  Are you an investor there?

Properties suitable for flipping often do not make good rentals, but you did not provide any details.  Realistically, your property is not selling due to one of three problems:

1) The price is not right

2) The property is not right

3) The marketing is not right

Since it is on the MLS, #3 is probably not the answer. See if there are any major defects with the property that can be easily fixed. Otherwise, lower the price.

On another note, why are you asking, "How do I convince my agent?"  Who cares? Own your business!

I wouldn't touch a SF rental for anything less than 10% CoC.

But, I don't think you are asking the right question. People that chase the highest CoC returns often end up in D-class neighborhoods because (at least on paper) the CoC looks high. They soon learn that it is nearly impossible to get good returns in D-class areas. A better question is "In a B-class neighborhood, how can I achieve high CoC returns?" Of course, that is a long, complicated answer, but that is where the money is.

Probably the easiest solution would be to attach an acoustic underlayment to the ceiling and then cover that over with a second layer of drywall.