All Forum Posts by: Matt Pich-Maxon

@Ashish Acharya

Thanks 👍

Hello,

Question for CPAs and Attorneys. I have a lead who is interested in selling an investment property that has been owned since 2001. Property was purchased for around $500,000 and they are looking to sell at around $1.2M. Property has been remodeled.

Seller is interested in how carrying the note may impact depreciation recapture and potential capital gains. They are not interested in a 1031 as age of seller makes them want to step back. Also seller is not interested in Delaware Statutory Trusts at this time.

Additionally, cost of structuring and servicing the note are of interest.

Since I am not able to give advice on taxes and legal matters, I thought I would reach out here.

Thanks in advance

Matt

DRE 02100289

@DongHui Patel

I can recommend some, feel free to reach out.

One caveat, I learned that dissatisfaction with management is fairly common among tenants and owners. I learned this when working with a firm that had over 2,000 units under management (Not in Big Bear). They received consistently low yelp reviews. So I looked up the other big management firms in that city, same caliber of yelp reviews.

However, with that said, I have seen properties in Big Bear that were "cleaned" and making the management company large returns, plus cleaning fees that had floors sticky with beer, missing fire extinguishers, missing table clothes, etc and trash on the doorstep in the form of broken kitchen chairs. This property was in one of the most desirable locations nonetheless....go figure?

One challenge contributing to this is the dearth of long term rentals here. There is very little for rent long term. So people helping to maintain and clean STR's are often forced to move out of the community when the home they rent is sold and converted to an STR/Vacation home. Seems to be a challenge in many tourist towns as I just read an article on this today regarding Vail (which is the same company that operates the hills in Big Bear btw).

PS I am in favor of owners having the right to utilize their properties as they see fit.

I saw a news blurb recently that was attributed to Zillow which said their metrics had Big Bear:

...As the “most popular vacation town.” The city, which has one of the highest numbers of homes classified as secondary or vacation homes, boasts plenty of outdoor amenities such as lakes and mountain trails.

https://www.rgj.com/story/news...

So, quit a few STR's do exist, some folks in Big Bear Lake are apparently posting signs that say "Neighborhoods Need Neighbors" because, and I'm paraphrasing here, they no longer have neighbors, only STR's. I've had 6 pop up in my neighborhood over the last year, when before, none existed that were registered.

As a full-time resident for the past few years (I moved up here in 2017) I have 0 concerns so far with having STR's as neighbors. Only positive experiences.

3 of the houses that were sold were in disrepair (some significantly) and are now nicely remodeled. No more piles of trash and junk in the yards. Which I am happy about as that directly impacts the value of my home in a positive way.

Big Bear has 2 governing agencies. Big Bear Lake, with a mayor and board. The rest of Bear Valley is in unincorporated San Bernardino County. It depends on your goals and needs, however, you may want to think about the unincorporated areas for investment if you are considering utilizing the property to get away from the crowds. I had one colleague visit from OC and he did not enjoy the traffic and hustle and bustle of The Village. He was stuck in traffic and amongst crowds, which he was trying to get a break from.

I know folks who were dead set on buying in Moonridge, The Village, or Boulder Bay...and that's it. Yet they ended up buying in a nice quiet area with great access to hiking and biking. Much like my colleague, they also did not enjoy driving through the downtown on a Friday and Saturday (I avoid on the weekend whenever possible).

The market here has great opportunity as approximately 20 million people live close by. Google maps says you can get to Santa Monica in about 2.5 hours without traffic. If you time it right, that is accurate.

I see a lot of folks up here from San Diego, OC, LA, Oxnard and even quite a few folks with Nevada plates too.

So there is the potential for an extremely large population to draw from for owners of STRs. And in comparison to a lot of SoCalm, this area is still relatively affordable it seems.

I live up here full time. Car and Airplane traffic seems much, much lighter than last year.

Zillow has 92314 appreciation pegged at 17% for 2022 but we know how well their predictive analytics worked out this year.

Long term rentals have INCREDIBLE demand. Renters often have to move off of the mountain if the owner of the property decides to sell. LTR is perhaps a viable option if STR doesn't work out.

My guess is that many investors have accrued fairly substantial appreciation --even if purchased only 12 months ago-- and will exit the market to reap the gains if STR's don't perform as well as hoped. I am interested to see how the market performs in the next year.

There are also a number of folks with a buy and hold strategy and they own a 2nd home that is rented occasionally as an STR. One neighbor does not use their property as an STR, LTR, or Vacation home. They are just holding until retirement.

Feel free to reach out with any questions.

Matt

DRE 02100289

If you are interested in learning more about investing and/or buying a home, networking with others....come join us for caffeine.

Looking forward to meeting you there....

I worked for 2 years as a full-time telemarketer selling an investment newspaper (in the modern era when newspapers were folding like linen closets).

I was successful enough to live in Marina Del Rey, CA on newspaper money.

I was one of the top agents in a room of over 100 people.

A good conversion rate was 3% +or- in any given week with 50% of calls hanging up before the computer made the connection.

I am looking to further my education in real estate.

I am looking to partner with a successful investor/agent who has experience in SFR, Multis, and Syndication.

I have 4 hours a week to devote to making calls.

Thanks in advance,