All Forum Posts by: Rick Albert

It depends, do you have the cash?

Otherwise you could consider the FHA 203(k) loan (I used this one) or the homestyle renovation loan. But if those are the only issues then it is easy to fix and I wouldn't finance it.

This is definitely a lawyer route. Here might be tricky. I would also look into implications with statewide rent control. It is my understanding that if a property doesn't fall under statewide rent control, it will once an LLC is created.

Doesn't Airbnb take something like 3%? You will be spending that or more in website hosting, design, maintenance, and processing. Keep in mind you need so many different website plug-ins and features and you have to make it secure for credit card processing. That would be like me posting my rentals on my own website in the hopes that I get more exposure than on Zillow or Apartments.com.

Consider it a marketing expense. 

If they are adamant about it, then you can go on Wordpress and look up different "themes" that might work for you. That way most of it is already built out. But even then it needs to look sharp, otherwise it may come off as scammy and no one will book.

I was just about to post this question and then saw this, well done! You basically confirmed my thought that older homes would appreciate better. A couple other thoughts:

1. Older homes are typically in more established neighborhoods. Local coffee shops, restaurants, schools, etc. In dense areas like DC, LA, NY, and SF, you have to go to the outskirts because there isn't land to build. I saw a townhouse development in an established area and even then they added a commercial building for a bakery/coffee and a dentist office. 

2. If I were to buy in a new construction development, I would want to be one of the last to buy. Yes, in theory those would be more expensive, but if I'm one of the first to buy and two years goes by and I need to sell, I'm now competing against brand news homes in my development. Because I'm an older model, my only play is price. That might hinder the appreciation. That's where the age of the home does matter.

REOs are typically bank owned properties that are on the MLS. I personally have never known a bank to sell a property off market. It is usually first through a general auction and if it doesn't sell there, then it goes to the MLS.

Keep in mind bank owned properties aren't always the best deals. Because they never lived there, their obligation to disclose anything about the property is typically zero and they just do don't have any knowledge about the property. I had a client buy an REO property and there was a water leak. We opened the drywall and discovered duct tape was holding the pipes together. I wouldn't be surprised if the previous owner knew this. Although I have been able to negotiate on pricing before, it can be tough.

I can't speak for Tampa, but back in the day for Los Angeles County there was a minimum bid at the auction at the courthouse steps and then it went up from there. You had to have cashier's checks. You were also responsible for anyone inside the properties and you were buying them blindly with no initial walk through. On our development side we stopped going because it was getting too costly and time consuming to deal with.

Not sure if they are still around, but check out ForeclosureRadar.com. That was one of the services we used to find information.

You can go to the events section here in BP and see what unofficial events are happening. There is one I attend on occasion in the Valley.

One option is house hacking here in LA. You get better appreciation and you can use the equity to invest out of state (that's what I did). Especially at your age you have time.

I don't think this is a good idea for the sole fact that you intend on selling after his passing.

Once they pass (which I hope is a long time from now), those who inherit the house will benefit from the step up tax basis, meaning the net proceeds could be TAX FREE. If you buy now and sell, you are hit with a tax bill. No one wins. You can try to claim this as an investment property but if the IRS catches wind they are going to see that you are directly related to the "tenant."

Plus depending on how much equity they have, only the first $500K is tax free. Anything after that is taxed. Another loss.

I would actually explore the reverse mortgage or talk to an attorney/tax professional about you being a private lender and maybe structuring that way. The parents get tax free money and when you sell you get your money back and the rest may be tax free because of the step up basis.

It is imperative that you speak with a tax professional on this. I cannot give tax or legal advice, but this is based on my understanding (recently dealt with an inherited property).

I would get a new photo if the dishwasher was changed out. Real Estate is more emotion than anything. 

I think the extra bathroom looks bland in comparison to the other bathroom. The problem is consistency throughout the house. Everything should be on the same design level. We have to keep in mind flippers have a bad reputation of doing the bare minimum and making loads of money (which we know isn't true).

It would be hard for me to recommend remodeling it without spending more time on it. Your agent should do that for you. Have them look at the competition and the comps you used to price out your home. That will give you your answer. Intuitively, probably just do a price reduction because once you open up walls, who knows what else you might find. Alternatively, you could provide a credit towards closing costs. That is a little harder to get the word out about it but just a creative thought.

There are two reasons why a property doesn't sell. It is either the price or the agent. If you feel you have done everything to advertise the property, then it is a price issue.

The 1.5 car might be a deal breaker if the comps have a full 2-car garage. An appraiser doesn't make much of an adjustment, but the market will. I don't know what the weather conditions are there and if a garage is necessary. 

Without looking at comps, I do see a few things that would turn me off if I were looking at turnkey:

-One bathroom is done really nice. The other looks like the original tile, thrown in bath and Home Depot vanity. When I've seen flippers do this, my buyers almost always say, "if they went cheap here, where else did they go cheap."

-The kitchen is throwing me off. Really nice backsplash, nice cabinets nice handle bars, but you didn't at least match the dishwasher with the other appliances (black versus stainless steel) and you use granite countertops? There are quartz counter tops that would have been fine and not much more in costs. The black dishwasher is something I noticed pretty quick. Your microwave hood is also crooked and not aligned with the range. If I can see all of this in the photos, I can only imagine what I would see in person. Buyers right now are being overly critical because we have high prices and still high interest rates (when compared to the last few years).

-The water lines don't bother me because I know that is a utility room.

This is also me being overly critical. But if these are coming up, then the only thing is to either correct it or drop the price. You really need to get the full feedback from agents and buyers in your market. Have your agent throw a broker open (possibly with food) to get agents through and get feedback. 

Sometimes settling is actually better than going to court. I do think what they are asking for is ridiculous. Although I have heard tenants getting paid as much as $60,000.

If it is because of remodeling, then it is considered a "no-fault" eviction. I would brush up on what your rights actually are. They may be entitled to compensation regardless since you are in LA County. If it is because they didn't pay rent, then leading with that may be a far better option. The knob and tube could be an issue. What if a judge says, "you have to pay for their relocation and then they have a right to move back"? If you go the non-payment route, it is far better.