All Forum Posts by: Mary Cronin

Dave Lindahl teaches that a 5% acquisition fee is standard for commercial and multifamily purchases together with a recommended minimum of a 25% interest in the project. 

Don't know if this helps or even applies to your land-development project, but FWIW. 

You're better off trying to reach the owner. If they're not pay the HOA, they may not be paying the mortgage either.

There are ways to cure the foreclosure (bringing mortgage current, buying from owner and giving them something for their equity, if any) but you have to work with the owners as their lenders can't talk to you without permission or assistance from the owners. 

Bob Diamond of Diamond Law Center teaches some of this. 

Once the foreclosure is complete, you will have to deal with the lender - often a bank, but could be an individual - a whole new set of requirements. 

The problem with probate properties is that there may not be any real estate in the probate. So you have to plow through them to find real estate. Then in most cases, the sale has to be confirmed in the court with anyone allowed to overbid. Sometimes there's a bargain, but often there isn't unless the executor/administrator can sell without court confirmation. (Depends on the state and how and when the will was written.)

I've heard suggestions that you should ask probate attorneys for leads, but in my experience they won't tell you anything besides referring you to a realtor (and most don't even do that). 

People with any extensive real estate holdings hold them in a trust (or possibly an LLC) so you might go to list brokers and ask for properties in your target area that are held by a trust. If they're not listed on the MLS then they will be "off-market" and potential deals.

I think I have to mention unintended consequences (again). 

When congress changed the change in passive investing rules during the Reagan years, it caused a RE recession that lasted for years. High earners stopped using RE as investment depressing the market. 

If congress eliminated the mortgage deduction, then the sensible thing would be to pay cash (probably a lot less) and invest in something else that is tax advantaged (businesses?) That was part of Rich Dad books on investing - follow the tax laws when you invest. The tax laws are written to induce people to act in a way the government wants. If you want people to buy homes, then the mortgage deduction induced them to do so, since they couldn't afford them otherwise.

If congress eliminated the 1031 exchange, then the sensible thing would be to hold onto properties for your heirs (as long as they don't eliminate the step-up in basis for inherited property). 

Anyway you look at it, changes will affect how we invest (positively and/or negatively). 

It's worth watching carefully. 

Some guy on CNBC yesterday (Tuesday) said we're in a depression (and said definitely not a recession). 

Because of the low inventory, I still see prices rising. But a search on "Stockton, CA" on Zillow came up with 11 pages of houses for sale (actually houses, multi-family & apartments; other categories eliminated) with most of the last 4 pages (8-11) being pre-foreclosures and foreclosures. 

Not as bad as 2008 +/- yet, but ... ?

Commercial is problematic too. Way too much vacant/abandoned retail & restaurants; similar re offices? Are these permanent? You tell me; I don't know. I am hesitant re these. I'm watching mobile-home-parks, but marinas are out for moment - boats seem to be the height of discretionary spending. I'm looking at a MHP with an expired listing, but noted that there are >5 years back taxes owing so maybe should wait for it to go to tax sale.

People I know with online shops are slow if they sell anything other than necessities. I know that's all I'm spending on - anything that's discretionary can wait. 

You might look at tax sales (note that some are sales of the liens and not the property) for bargains. BUT often these are either trashed properties or deceased owners without heirs. If they're any good, there will be multiple bids almost up to retail. Due diligence mandatory or do you want a strip of land 2" wide (yes 2") by 1/2 mile? Check county tax sales on **************. Otherwise it may be county by county (though realauction does all/most of the CO and NJ counties; NJ being liens not deeds). 

Definitely buy during recessions & depressions. Fortunes can be made if you find the bargains. 

Where are you located? NV LLCs & corporations are touted to CA investors - until the Franchise Tax Board tracks them down and charge them with back taxes and penalties. 

If you're not in NV and do business with an NV entity in another state, you have to register it as a foreign corporation in the other state. So worst case scenario is now you have to comply with NV laws AND your local laws - it's rarely worth it. 

I'd recommend Mark Kohler too. He set up my CA corporation. Offices in UT and CA and attorneys licensed in multiple states (?). 

Is there a will or a trust? If so, who is named as executor or successor trustee? Did you provide bank (or ?) with death certificate? 

If executor of will, then file probate. She (or whomever) can only act after court makes appointment.

If Trust, record death of trustee and appointment of successor trustee. You >>can<< do this yourselves, but an estate attorney can do it more quickly and with less likelihood of problems. 

If no will or trust, then heir/daughter will probably have to file a probate action in local court and be appointed as Administrator or Personal Representative (depending on location) before banks or other asset holders or creditors will speak to her (or you). Here in CA that will take at least 30 days.

The deceased may have given someone a Power of Attorney. If so, the death certificate will show that the P/A no longer has any effect. (Death cancels Ps/A).

Hope this helps.

I forgot an unintended consequence of the electric car requirement - what happens when all the electric cars are charging? We already have rolling blackouts. How many more power plants will we need? 

And then there's the law of unintended consequences - 

- the businesses who no longer make money because of the tax will shut their doors and/or move to a low tax state (I hear much of Silicon Valley businesses are moving to Austin TX which might explain the RE appreciation there) and Puerto Rico has tax incentives for corporations for moving there

- the businesses (LLCs & Corporations) that leave (or go out of business) will no longer pay the minimum $800 franchise tax (or any other tax)

- the wealthy that might be subject to the "wealth tax" will just leave (Peter Schiff leaving NJ for - I forget - moved to FL and business in PR?)

- the CA ban on gas & diesel vehicles (2035) will put gas stations, oil refineries, etc out of business - so unemployed gas station employees, oil field workers & mechanics; closed gas stations, repair shops & car dealerships (a new blight of abandoned commercial RE? and the abandoned properties will lower the value of like property - thus making the higher taxes on $3m property a one-time thing?)

- the new work from home crowd will find working from HI, PR or some non-US location will find it equally or more pleasant than working from some CA suburban home. Since COVID restrictions are training us to forego frequent dining out, shopping and other excursions - if we're not going anywhere anyway, then a house or cabin in the outback starts to be very inviting. Bill Bonner of Rogue Economics has been stuck on his giant ranch in Argentina since maybe March, 2020, but has had no problem sending his daily dispatch to subscribers (and eating farm grown meat and vegetables and eating farm made cheese, wine and ???) while exploring the outback on horses.

So what's keeping us here? (Or so I keep asking myself.) 

FWIW

"I'm not a CPA but from experience the interest payments you make to them will be taxed, unless you give them ownership of the deal."

Unless it's a loan from their IRA (?). May have to restructure the IRA so it can loan money - no idea how but I know it's done (often?).