All Forum Posts by: Jonathan R McLaughlin

One thing I've enjoyed about Dan's original post and the subsequent discussion is the issue of mindset. It can sound fluffy--"believe it and you can do it" but it turns out to be almost literally true: most people when choosing between preventing loss and possibly gaining will choose to try and prevent losses instead of maximizing gains.

It is called "loss aversion" and the fascinating thing is that in live experiments with money, people will do this even when they know the odds of gaining are significantly in their favor!

Lots of speculation and different opinions about why--evolutionary preference for safety vs. plenty,  social pressure and peer cues, but the experiments repeat the same results all the time.

So, lots of people (well, at least some) can likely see opportunity but when the weigh risks of going ahead vs. not they unconsciously overemphasize the risk of loss. Now, sometimes passing on an opportunity is  rational and appropriate decision, but its more likely than not that they aren't doing it consciously. 

Evaluating risk without this negative bias is a tremendous advantage.

Before we go all John Galt here, I'd actually I'd like to offer one correction. As a percentage of income the poor lower income brackets give more than the wealthy. As someone pointed out above, its the middle class (w2 wage earners for the most part)  who  on the lower side.

The table below is from the Motley Fool and IRS.

Adjusted Gross Income (AGI)	Average charitable deduction	% of AGI
Under $25,000	$1,874	12.3%
$25,000-$50,000	$2,594	6.8%
$50,000-$75,000	$2,970	4.8%
$75,000-$100,000	$3,356	3.8%
$100,000-$200,000	$4,130	3%
$200,000-$500,000	$7,424	2.6%
$500,000-$1,000,000	$18,615	2.8%
$1,000,000-$2,000,000	$43,944	3.2%
$2,000,000 or more	$382,953	5.6%

SOURCE: IRS STATISTICS OF INCOME 2014.

Why are these averages important to you?

Echoing and expanding on Charlie's good points--the mass lead law is "strict liability" meaning you are responsible pretty much no matter what actions you take, fail to take etc. practically, there is litttle danger in a well maintained place but... One of the reasons the lead mitigation etc is so expensive is that the remediators are taking on some of that liability.

Just the one thought that "that's what everyone does" isn't a very effective defense if/when things go bad.  

Another post! 

Something was nagging at me when I read your remark about FAFSA and this is it: https://studentaid.ed.gov/sa/about/announcements/f...

I think you now have to report 2 years of income so this would affect your plan. Please, please, please check with someone other than strangers on the internet!

It still may be better to sell this year, as you would be able to explain why your income dropped to a new and lower level. You also may wish to consider putting gains into retirement accounts as they usually aren't counted for financial aid. And you or your daughters can always take the loans out if needed instead of delaying school, and pay them back with the proceeds.

This can be overwhelming stuff, but you have lots of possiblities and good options.

Me again: With the right buyer you might be able to extend the closing date as close to the end of the year as possible. Then even 60 days gets you to March and you have much less of a problem even if you can't go beyond that.

I might think of checking with Santa Clara and other colleges and hospitals in the area to see if they have professors or doctors moving on the semester or summer. If its a good school district and appealing they may wish to buy and wait for their own benefit. Prospective parents too. HR in hospitals and the campus housing office can be great sources for this, as can one of the "home exchange" web-sites dedicated to academics. Colleges/Universities/Hospitals often offer low interest loans or down payment help for senior folks they recruit, and they are pretty plugged in.

Hi Rosalie,

Have you considered a sale/leaseback? You sell to a buyer and agree to pay them rent at market and/or agreed upon value until an agreed upon date. If such things go beyond 60 days they may have to get approval from the bank to make sure its owner occupied or pay a slightly higher rate, for which you could reimburse if so inclined

In sellers markets its fairly common to see it, and for exactly this reason...kids in school etc.  Even if that plan resulted in a discount (and I'm not sure it would), it probably would not be as much as the 100K or more you might be hit with if you have to take that income on the FAFSA.

Hope this gives another possibility. Good luck!

Jon

Dear Joe,

I hope this starts going better for you and I hope my comments are taken as helpful. You need to step back and stop feeding your imagination with imaginary worst case scenarios. Everything you mention could happen, I guess, though it may very well not, and in the meantime you aren't moving on fixing the problem in front of you.

You are bashing the state based on an imaginary outcome to a process you haven't yet set in motion. Courts tend to try and do the right thing actually, but just remember, you aren't the only stakeholder here. 

For instance, its not the fault of the guys minor children he isn't paying rent, and the state has an obligation to protect them, just as it has an obligation to protect your property interests. A judge or magistrate weighing competing interests is likely to give them as much support as you, more in fact since they are helpless.

You, on the other hand, are assumed to be someone who has the means to protect himself, means very clearly laid out in state law. If you don't use those means, don't blame others for your own inaction.

Delay based on potential bad outcomes is almost certain to produce a worse outcome, so use the means at your disposal to get moving. Hire a lawyer, get the tenant out, look into a management company (agree with the above poster based on what I have read). Broaden your possibilities. What if you gave the guy cash to get out? Its a suggestion used a lot here that might work and might help all of you.

good luck!

some experience with this though running out the door. Please dm me for info but the short version:

You have both the practical and legal aspects and each town is different for both. Don't know Medford. 

For instance, there is nothing in the state code about a stove making an in-law into a (illegal) second apt. but the inspectors and appraisers consider that a marker in Boston, don't like it and will shut you down if they inspect

Generally, in Boston, you can't have a lease because you can't legally rent it as a separate apt. 

If the person in the in-law has access to the whole unit then its generally (i.e practically) fine. The inspectors will note locks on doors etc. 

True owner-occupant landlords who run decent appts very rarely get in trouble with in-laws, but....

Depending on egress etc. it could be an easy thing or you could be asking for trouble.

This is one of those things that is  "absolutely fine, until it absolutely isn't" so be very careful, especially if you are depending on the in-law rents as part of your financial analysis.

no legal advice given!

Justin, I would take a step back from the money here for a momentand look at both your and his needs then think about options.

your needs: to sell the house (due to unforseen circumstances)

                       get the highest possible price for the house

                       ensure flexibility and good condition

His needs:  a place to live 

                     residency for his daughter to go to school (?)

                     stay within a budget--he has not anticipated moving expenses, new rent or disruption

I'm working on the assumption that he has every right to stay given the lease--your language implied you think that might not be true. It almost certainly is and you will be starting on a very poor footing if you make that assumption.

You are asking him to give up his right to live in the appt. and putting those other needs at risk. Can you mitigate that? 

I might do a little research in the neighborhood at comparable rental rates. Find something and offer to move him into it.

If I was the tenant and I wanted to help you I would be much more likely to work with you if you came to me and said " boy this sucks for me, I'd like your help. I have to sell, I can do it with you in it but its worse for me. Look at this nice place I found right near by I thought might work for you and your daughter? I'd be happy to pay your first and transfer your last months rent as well as your security deposit so you are not out of pocket."  Sounds like you can vouch for him as a tenant so this might be your best bet at a quick and smooth solution. If it was me I'd expect you to pay moving expenses as well as a minimum.

By the way, he is not being a bad guy if he says "no I don't want to move" and to think of him that way will not help (not saying you are doing that, just warning). He has no obligation to adapt to your change in circumstances and every obligation not to disrupt his daughters life/time with him. And if you fight you lose, so you might as well keep it friendly. It might go a long way. 

Oh, and agreed that seeing if he wishes to buy it at a "favored" price--perhaps just a part of the commission--is good tactics and in some states the law that you have to make the offer.