All Forum Posts by: Kelly O'Quinn

@Justin Jarboe & @Brian H. I'm sorry for seriously lagging in my response to you guys! I need to get permission from my broker to share our addenda (signed an NDA and all that). If he gives me permission, I will probably need to water mark everything, so it may take me a bit to get it all to you. 

@Drew Kessler Yes, we have language in our lease regarding lease renewal. This is what we have (it's the very first section of their lease agreement):

1. TERM: This agreement commencing on «Lease_Start_Date», [ X ] One:

[  ]  A. Month-to-Month: and continues as a month-to-month tenancy. Resident may terminate the tenancy by giving written notice at least 30 days prior to the intended termination date. Landlord may terminate the tenancy by giving written notice as provided by law. Such notices may be given on any date.

[  ]  B. Lease Fixed Term: and shall terminate on «For_Fixed_Term__Only_Expiration_Date» at 11:59 PM. Said tenancy shall automatically convert to a month-to-month tenancy upon the expiration date if Landlord accepts Rent from Resident (other than past due Rent). Resident may terminate the fixed term lease on or after the expiration date by giving the other thirty (30) days written notice pursuant to California Civil Code 1946. Landlord may terminate the tenancy by giving written notice as provided by law. Such notices may be given on any date.

[end quote]

For apartments, all new residents start on a one year lease, then automatically roll over into a MTM agreement. We do not contact them ahead of time for renewal. It's their responsibility to give us 30 days' notice if they want to terminate tenancy. We do scheduled yearly inspections at the apartments to see how well they're keeping the place up. If they aren't keeping it clean, or there are repairs they aren't reporting to us, we send them notice to tell them what they need to do to stay in good standing and remind them of the terms of our agreement. If they don't comply, they get a 60 day notice to vacate.

For SFR, we do our annual inspection 90 days before the end of their current lease term. If they're keeping the house in good shape, we offer them competitive renewal options for one year, six months, or MTM, with higher rent amounts for the shorter lease terms. If they aren't keeping it in good shape, but it's an acute problem we can work with them on, we'll offer them renewal at higher rent rates. If they aren't keeping it up at all, are hoarding, or there are other issues going on that are not acceptable, we will not offer renewal and will send a 60 day notice to vacate 60 days prior to the scheduled end of their lease term.

We're following CA laws here, but your state may have different regulations. Check with your state association of realtors to make sure you stay in compliance with all regulations. Another good option for starting out is to take the standard Realtor forms for your state and add sections as you see fit, then have an attorney look over it all.

Bummer!! 

I don't own any vacation rentals in the LA area, but you may be able to find good ROI in the Coachella Valley (Coachella, Indio, Desert Hot Springs.) Stagecoach and Coachella music festivals bring a ton of people to the area and I've heard it's also popular among snowbirds. I haven't run any numbers on it, though. Just conjecture at this point :) Would be interested to hear from anyone who has vacation rentals there to verify whether it's working out well.

Also, have you been checking the Fannie Mae Homepath properties in Big Bear? I've seen a good number popping up lately for under $300k, and some of them don't need much work. 

We use the following addenda with all leases:

• Asbestos Disclosure
• Bed Bugs
• Lead-Based Paint Disclosure
• Mold and Ventilation
• Smoke Alarm & CO Detector
• Plumbing (how not to clog up your plumbing, resident will be charged if we come to snake a clog and the clog was caused by anything other than toilet paper or organic material)
• Estimate of costs of certain items they'd get charged for out of their deposit at turnover
• Pest Control
• Appliances

The following addenda are included with leases on a case-by-case basis:

• Refinished Surfaces Care & Maintenance Instructions
• Condominium/PUD (who the HOA is, whether resident has been provided with a copy of CC&Rs & Rules & Regulations)
• Fireplace Addendum (decoration-only, clean-burning logs only, gas, etc.)
• Landscaping (resident responsible to water, owner pays for gardener)
• Parking (only used if resident pays for an additional parking spot/storage/garage)
• Pet
• Pool/Spa
• Satellite/Dish
• Hardwood Floor Care & Maintenance

Lastly, due to the recent legalization of marijuana in CA, we are sending out a Smoking Addendum to all residents specifying that smoking both medical and recreational marijuana are prohibited by the no-smoking clause in our lease agreement, as well as e-cigarettes and vaping devices.

Hey Robin! I'm living in Corona right now (closer to the Norco side of town, though, north of the 91 & east of the 15) and working out of the Whittier/605/60 corridor & North OC areas (but always open to working out here in the IE!) Will keep an ear out for anyone who might be interested in your office building. 

We have just a regular, 3 bedroom, 1.5 bath house, built in the mid-1900s, with original kitchen and bathrooms. Nothing fancy, but it's on a 14,000 sf lot (unusual here, most are around 6,000-7,000) with covered RV parking, new carpet, new paint, new appliances. Listed at $2550, $1500 security deposit on approved credit. Pretty fair, I'd say. Whenever someone sends an email inquiry, we send them a canned response letting them know they can download the screening policy (4 pages, goes over qualifications to rent, documents to present with your application [ID, social security card, 2 most recent paystubs, most recent utility bill, and $35 application fee], and house rules [keep the house clean, don't be loud at night, etc.]) and the application form (2 pages.) To qualify, we look for 2.5 times the rent in gross income, run credit, and all people over 18 have to see the house in person before applying. Typical stuff. We received this response to our canned email last night, verbatim:

"Lol really i was intrested on renting ur property but i just read all the rules are u serious actually its like paying to rent a prison like alcatraz its too much not even a barbe Q lol ur way too much and too much b******t good luck finding someone like that nobody likes living in a gold gorgeous prison house good bye"

You can't make this stuff up! Thanks for filtering yourself out, PT =] 

Hi All,

I apologize if this has been covered in another thread and, if so, appreciate if you could link to applicable existing threads (I did a search on here but was having trouble getting properly filtered results.) The property management company I work for manages a SFR in Buena Park, CA that had a garage fire back in January. Thankfully, the residents are all OK, since the smoke detectors went off in time for them to get out and call the fire dept. (just one of the many reasons yearly inspections are vital!) and it wasn't caused by negligence/poor wiring/etc., just one of those freak things. Unfortunately, the garage was attached to the home and there is significant damage to the home itself, causing it to be uninhabitable. I'm helping the owner fill out the Application for Property Tax Reassessment of Property Damaged by Misfortune or Calamity and have some questions regarding the values to put on the form.

On the form, we need to put down the value of the land, building/structure, and personal property before and after the loss, as well as the cost to cure. The assessor's office advised us to use the land value as stated on the property tax bill for the land value on the form before and after the fire, since there was no contamination of soil or anything else that would affect the land value. Where I'm having issues is on building/structure and value of personal property.

• Building/Structure
  • Should the value of the building/structure before the loss be the FMV of the property, less land value, or should it be the building/structure value from the property tax bill? The building/structure value from the property tax bill is significantly lower (approx. $700k lower) than the FMV of the property prior to the loss.
• Personal Property
  • The Assessor's Office said the owner can claim the value of the renter's personal property that was in the home prior to the fire as a loss, even though it's not technically the owner's property. This seems fishy to me and I'm concerned that by including the resident's personal property, we could end up in trouble down the road for claiming something we didn't have the right to. What do you think?

Has anyone been through this? What is the best course of action to take to protect the owner's best interest? I don't want to blindly follow the advice of the assessor's office and appreciate any help you can provide.

Hi Jason,

Ok, if I don't pick up it means I'm tied up with something at the office momentarily. Will call you back within a few minutes. 

We manage some SFRs in Burbank and Baldwin Hills, so I'm familiar with those areas. My broker may be more knowledgeable than I am in the other areas; I'll see if he can hop on our call today. What time is your lunch break?

Hi @Jason Malabute! The property management company I work for manages ~100 properties in the LA area, mostly in neighborhoods bordering the 605 freeway (Whittier, Downey, Commerce, South Gate, Bell Gardens, Pico Rivera, etc.) I'm happy to answer your questions to the best of my ability. If you want to PM me, you're welcome to, or just post here so everyone can learn from it. 

Hi @Akash Sky. Congratulations on getting started on your investing journey! I've been trying to do the same as you - purchase a 3-4 unit property in the North OC or Inland Empire area. What I'm finding in the OC market is there is a lot of competition among investors here who are willing to purchase at a high price that doesn't cash flow by BP standards, either because they are betting on appreciation, tax benefits, or are able to afford to pay cash (among other reasons, these are just my guesses). 3-4 unit properties in the area are routinely selling for $700k-$1 million+, with multiple competing offers after only sitting on the market for a few weeks to a month. When running my analysis of these properties, which assumes purchasing with an FHA loan, 5% down, 3.25% interest, and maintenance/repair expenses (including CapEx, property tax, vacancy, insurance, and management) of approximately 40% of rental income, they simply don't cash flow at that price.

What makes California different from most of the country is that our market is very cyclical. We're at or nearing the top of our market right now (in my opinion), so prices will hopefully come back down in the next few years. Once prices recover again, they'll likely rise above the price they're at now, so although we go through cycles, we almost always cycle upward in the end. Therefore, people feel more comfortable buying for appreciation here than in other parts of the country. I still don't recommend it, though, because appreciation is never a guarantee, even in Southern California. 

All this said, I haven't expanded my search past the MLS yet (that is my next step). You may be able to find a good deal on the MLS here or there, but they have been few and far between in my experience. The real deals will be off-market, so you'll need to get creative in how you find them.

Best of luck to you! You're on the right path. Don't let our challenging market discourage you =] There are deals to be had every where, at every point in the market cycle. You just gotta look in the right place.