All Forum Posts by: Johnny Rhee

Hi. I am interested. Could you send me over the info [email protected]

@Andrew Boettcher is right. If the deal is good, I try to make a win win for everybody. Charge more for the rent back and have escrow withhold some money as @Andrew Boettcher suggested. I've done rent backs before and charged a premium rent for it and it worked out fine. 

I do the same thing. I have $150 deductible on repairs unless it's something big. My rentals are much nicer than the average rental and they are priced slightly under market which means I typically get 50+ calls in the first 5 days whenever I list a property for rent. I explain to the prospective tenants that in exchange for lower rents I expect tenants to adhere to maintenance rules such as yearly carpet cleaning, monthly house cleaning, AC filter changes etc. I do yearly inspections to make sure things are up to date. All of this is my rental agreement including house rules. When I place a renter, I look for tenants that are handy and really look for people that will care for the place as their own. Service calls in California are expensive. Changing a flapper on a leaky toilet is a 10 minute job and less than $10 in parts. But just to get a handyman to show will cost $75 just for the service call. Having a renter that cares and has the skills to do minor upkeep makes a ton a sense for me. The typically rents on my units range here from $2200-3600 in California so I've never tested this system on less than $1500 rentals but it works in my market. Also, my average tenant turnover is around 5 years.

QuickBooks online or Xero. I use both but Xero to be easier for someone without an accounting background. QuickBooks is used universally and can do more but I think for what you are trying to do Xero would be more than enough.

Not sure if you have a crazy low rate on your current mortgage now. But if not, is there a reason why you wouldn't just re-fi the condo and cash out the equity? HELOCs are variable interest loans and have higher rates than a owner occupied mortgage. As long as the market rents covers the expenses, it shouldn't affect your DTI when you go buy your new house down the line.

If it's a rental property, you can do a 1031 but I believe it must be used on the purchase of the property not on the repairs. You need to hire on a 1031 exchange accommodator to properly execute the exchange.  

Agree with everyone so far. Fire that management company. If it's three units, self-manage it. Nobody will care as much as you about the tenants you put into your property.

Go to the city building and planning department and get a record of all permits ever pulled. County/assessor records should show the correct bed and bath counts without a trip to the city though. It can be a good thing if you are planning on doing some renovation regardless. If it wasn't disclosed upfront in the listing and there is unpermitted bedrooms or bathrooms, I end up asking for big concessions or price reductions. I can bring it up to code and permit the additions myself and reap the additional value.

Refi cash out is what I would do.

A few friends and I run analysis on the tax default lists in the 5 major SoCal counties. If you're are talking about improved properties, it's quite difficult to get them in LA and especially OC market. The way the market is appreciating, if they are in a bind they end up listing the property or coming up with the money somehow. Because even crap houses are worth 400k in LA, even if they owe 30-75k in back taxes, they figure it out or end up listing it traditionally. The ones that make it to auction have a story behind them. Most of the time, the owners have simply vanished or gone to jail or some weird circumstance. On the other hand, we've had some luck with vacant properties and getting people to sell significantly below market value before auction. However, it's much harder to wholesale land. If you do decide to try, I would look at people right at the 5 year mark. 3 or 4 years is too early. Also, you'll have better luck in San Bernardino and Riverside county.