All Forum Posts by: Elaine Hester

Although I didn't read through every one, it looks like you got some great advice to mull over. One suggestion for your wife I didn't see that takes no skill, other than driving and talking to people, is working for Uber or Lyft if you have a decent vehicle. Can the aunt drive with her disability? Maybe she could do that while your wife uses public transportation for her commute. 

Since all success begins with a dream, I do believe in getting the family on board with your dream. Does your wife like to read? Give her some success-inspiring books beginning with Think and Grow Rich and Rich Dad Poor Dad.

Best wishes!!

We are looking for an honest, skilled GC for a new residential construction project in unincorporated Vista, CA. GC must have multiple new home construction projects under their belt, great references from former clients, a long list of skilled and available subs, and experience working with San Diego county regs. Must be able to build high quality homes on a tight budget. Bilingual in Spanish a plus, English primary. Please PM me for further details.

@Liz C., thank you for your candid response regarding Anderson ... would you mind sharing a bit about what happened in your experience with them?

@Scott Smith, I had not heard of the Delaware Statutory Trust before. Thank you for offering to share more info, I will PM you.

Thank you all for your comments and willingness to share your opinions, this is very helpful.

I had a meeting with Anderson Tax and Legal Advisors on Wednesday, which prompted me to reach out for community advise. I actually asked them about using an umbrella policy on two occasions during our call and the advisor essentially rolled over my questions as if I hadn't asked. I supposed that was not surprising considering that is apparently not one of their products.

We actually have a 3-day Tax and Asset Protection "class" through Anderson that we paid for through an educational program we enrolled in that I'm sure is designed to sell the need for their products alone. So, although we may learn something, I don't expect that it may be the best advise for every individual attending.

I will look into the umbrella policy and also try to find an asset protection attorney to speak with. --If anyone has any recommendations, please PM me.

Thanks again!

Yep—another newbie here, wondering what I'm missing ... I have only recently learned that owning my properties free and clear puts me in a more vulnerable position for liability and know now that I need legal asset protection. As I'm beginning to educate myself in this area, I'm frustrated in discovering the costs that are involved. 

From setup, to maintenance, to tax return filing fees—the costs incurred are threatening to put a huge dent in my cashflow. Yet, when doing property evaluations and analysis, I've yet to see these fees being called out in the various formulas I've been shown (including the BP calculators). Is having an entity a necessary element of investing—or only in certain situations such as owning free and clear properties?

I understand that entity set up in NV or WY is more cost effective than in CA where I live, but the costs involved still appear to be significant. I would love to hear how other investors are managing this, and if there are any inside secrets you can share. Thanks in advance!

Hi Michael—welcome to BP!

My husband and I lived in the SF Bay Area for 13 years where we began investing back in 2003—more or less by accident you might say. Not knowing anything about what we were doing, we made many costly mistakes, but have still managed to come out on top so far. 

Like you, we were renting—first in the city, then in the East Bay. Determined to buy whatever we could afford in order to stop throwing away our hard-earned money on rent, we bought our first home—a 2BR condo in Walnut Creek. Four years later—at the very top of the market just before the crash, we ignorantly bought a single family home, also in the East Bay and rented out the condo. 

After the crash happened in 2008, many homeowners we knew at the time couldn't handle that their mortgage was higher than their home value on paper, so they purposely foreclosed. We were in it for the longterm though and, while everyone else was whining about their losses, we celebrated the fact that, due to the lower assessed values, our property taxes went down. ;D

We bought our third property in San Diego in 2011 while renting both the Bay Area properties. Yes—there were a few years of negative cash flow in there, but—against everything the likes of Robert Kiyosaki will tell you—we were banking on appreciation. We sold the single family home a couple of years ago for about $150K net profit, which allowed us to buy a couple of acres of land in San Diego County that we're now under development with for two new homes, and still own the condo which currently yields about $200/month cash flow and $200K in equity. 

This is NOT by any means meant to show you an example of a great SF investment, but just to offer you some hope. Personally, I still think there's nothing like the Bay Area for investing because of its strong growth potential that is backed by the highest salaries in the nation. I think no one can argue that, despite high prices and negative cash flow, investors WILL continue to make money there. 

My best advice for you right now would be to do what I wish we did when we were starting out and that is to find a duplex to house hack. Check out Brandon Turner's Top 20 best RE books ... a MUST READ for you is Scott Trench's Set For Life. Do everything he says and you'll be on your way in no time. :)

Please connect with me and let me know how it goes. Best of luck to you!!

I didn't read all the replies, but looks like you got some great advice. I've been a landlord for over 10 years and wouldn't think of giving the job away to a PM—until I have too many to manage anyway. ;D

As long as you've taken care of general maintenance, getting a new tenant is the hardest part of being a landlord. My tenants stay for years with little effort on my part, but I do pick them carefully by meeting all of them face-to-face. I would get rid of the prescreening process and have a couple of scheduled showings on the weekend. I don't like to do private showings because it takes too much of my time—and having prospective tenants all show up at once puts a bit of competition on their side to move forward or miss out.

I haven't done this yet myself, but I've heard of landlords insisting that they pick up the completed application from the prospective tenant at their current place of residence so that they can get an idea of how they live. This is perhaps the best screening you could do if you care about your property. ;)

I also do not charge an application fee, I only take money to run a credit check if I have it down to the one I would choose to be my tenant. If the credit check was bad, meaning they had a poor rental history or never paid their bills on time, I'd move on to the next one. I don't necessarily look at credit scores if all other checks pass. The key is you want to find a tenant that will stay a very long time and take care of your property like it's their own. Whenever a tenant leaves, you have to get the place cleaned up and painted and then start all over again, so you want to keep them as long as possible. 

One last piece of advice is to raise rents slowly and steadily with the market rate, so you don't find yourself having to raise it significantly to "catch up". I like to keep my rents just under market so they get rented easily and my tenants stay happy. Raising the rent a certain percentage every year will keep you up with the market, as well as train your tenants to expect the increase year after year.

Hope that helps—good luck and let us know how it goes!!!

Cash Flow rocks!! @Karen O.—so cool to know there's an online version, thanks! I'm looking now—apparently it is only for android currently....

Hi Nick--thank you for offering your time to answer tax questions--this is much appreciated and perfect timing for many of us!

Apologies if this has already been asked as I have not read through all the replies, what I am interested in getting clarity on is with regard to what qualifies as "real estate services" in order to write off expenses as a real estate professional.  

More specifically, I started focusing on RE full time in July of 2017. I have spent a significant amount of time in the learning process and wonder if, a) time spent in RE education can be included in the 750 hours of required RE services and, b) can tuition and related expenses be written off? 

Since I'm just getting started, I had very little actual RE income in 2017 (just minor cash flow from a rental), but am filing jointly with my husband and have a good $20K in educational expenses I would like to be able to write off. I do not have a CPA at this time. Thanks again for your advice.

Thanks Casey! I'm still learning about RE and curious about your statement, "one way to mitigate risk is to have an agent with leads for off market properties so you're not competing with multiple buyers" ... do only certain agents have off market leads? What is their strategy for finding these leads? and how would one find these agents?

Thanks once again!