All Forum Posts by: Nick Foster

@Shawn Couch Lloyd’s Pest Control has been around for 70 years in SD. Check them out.

There is case law on this. A property owner in a HOA rented out his unit for STR, the HOA said no, a law suit came about, and the ruling was City law trumps HOA rules. Below is the link: https://www.google.com/amp/s/amp.vcstar.com/amp/90311826 I have yet to test this case law. In theory, I believe you should be able to rent out STR in any complex in California, regarding of HOA rules, so long as it is permitted with the City. Your best bet is to seek legal counsel and run the Oxnard case by them to seek their opinion.

I think yesterday’s ruling is a setback for SD. Real estate 101, property should be utilized for its highest and best use. Coastal properties highest and best use is often STR. Restricting that use to accommodate the LTR housing market (1) negatively impacts property values and (2) only benefits the hotel industry. As an investor in STR in SD County, I have no interest in investing in SD city limits. The sharing economy is here to stay. Most people enjoy the services of Uber, AirBnB, etc. It’s a shame SD is moving backwards, not forwards.

AirBnB in SD is controversial, however, I do not believe it is “off limits” as stated above. Tourism is one of the pillars of the SD economy. While many non-Beach residents don’t like AirBnB in their neighborhoods, I find it unlikely the city will ban AirBnB altogether. Instead it would make sense to map out where in the city Properties can be listed as vacation rentals (IB, MB, PB, OB, La Jolla, etc) and where they can’t (North Park, Balboa, Hillcrest, etc). Only time will tell as this has been an ongoing debate for years. Google is your friend.

A friend recently sold their house in Carlsbad and rented a place on a monthly basis in Oceanside until they got settled. Now is the busy season for AirBnB and VRBO. Explore it, but you may be better off finding someone on Craigslist who will rent you their condo for a month at a time. It won’t be cheap, but it should work.

Managing a single STR in my opinion is not time intensive - all you need is a reliable cleaning person. I would not pay any company 13% of my fees to answer messages. Setting up on AirBnB and VRBO is easy. Hire a professional photog for a few hundred bucks to photo your property, post photos, and off to the races. Once your RE empire is large consider a management company. Early on I think it’s best to be hands-on, learn the biz, pocket that 13%.

Chase Bleke , what is the demand for vacation rentals in Vista? I have a STR one block from the beach in Carlsbad. The driver is obviously the Beach, Village, and 10 mins to Legoland. It is rented out year around and does great. Personally, I wouldn’t look east of the 5 for a STR unless some substantial data suggested otherwise.

Originally posted by @Michael Le:

Originally posted by @Nick Foster:

With your 401K you are 100% in control and historically, the stock market has produced great returns if you just invest in a S&P 500 index fund and let it ride.

Bottom line, I don’t think your retirement money is something to take risk with as a passive investor with no control on your investment, however, it’s up to you on how much risk you want to take.

 I think the above two statements are pretty hilarious. Investing in Wall Street is the ultimate 'no control on your investment'.

Please enlighten me on how investing in one of your syndications provides the investor more control over their investment, than a 401K account in the investor's name where they can buy/sell equities at anytime at their sole discretion. 

I wouldn’t do the deal. With your 401K you are 100% in control and historically, the stock market has produced great returns if you just invest in a S&P 500 index fund and let it ride. With the LLC idea there are many cons: 1) You are a passive investor and have no say on the operations of your investment. 2) 8% return for passive investments are easy to find if you search hard enough. Syndicators are always looking for capital. Have you explored all your options (other 8%+ opportunities) in the event you want to go down this path? 3) Do you trust the operators enough to give them your retirement money? 4) When can you withdraw your money? 5) What if the LLC faces litigation and your investment goes down to little to nothing, would you be ok? I know a guy who invested $2M in a syndicate. Years later he sold his equity for $20K to get out of it. The syndicate got into such bad litigation it destroyed his investment. Bottom line, I don’t think your retirement money is something to take risk with as a passive investor with no control on your investment, however, it’s up to you on how much risk you want to take.

The professional response of course is consult with your CPA and Attorney. The off-the-cuff response is I would have the parents setup a trust and transfer the deed to the trust. The parents can control the trust and set the rules for how the kids can access the trust. I’m not aware of any tax advantages by structuring a SFR ownership as an LLC. I have a few LLC’s and rental property (not in a LLC). When I think LLC I think legal protection and the State of California’s $800 annual LLC fee that you will pay (that eats into your rental). Is a LLC worth it? Not for a SFR IMO, but I am no expert. Consult with the pros!