All Forum Posts by: Rob B.

I have a friend who wants to sell their triplex in San Francisco, but they have two long term tenants who have been there and because of rent control, they have a hard time asking them to leave. I've never worked in rent controlled cities, so I don't know how it works. They live in one unit and rent out the other two, so I'm hoping to clear out at least one unit so that it can be sold easier. Any suggestions? One of the tenants has more people living there than are on the lease, so that should be grounds to evict. The upstairs one has been there for sixteen years and is only paying $1,150/Mo for a 2/1, 900 sq ft. 

Does anyone have any other suggestions? So far neither company can be bothered to return a phone call, even knowing that I'm an owner. 

I'm just wondering if anyone has a recommendation for a good property management company in Fresno. Specifically the El Dorado Park area aka Sin City. It's a 16 unit apartment building that has been severely mismanaged by the current company. I bought it in May and wanted to improve the building, making it a decent place to live, but the management company is running it like a slum. Currently at 75% occupancy and needs some work. 

Recommendations on a company who can handle this complex in a bad area would be appreciated. 

Not sure what the point of that last one was. 

Here's the situation: I bought a 16-unit complex in Fresno in May. It's in a bad neighborhood and I knew it would take a lot of work so I hired a property management company. Normally I manage my own properties, but I'm really busy with some recent purchases and work so I decided to pay out the money so that I wouldn't have to worry about it. The problem is that they've been negligent, ineffective and possibly criminal. Without too much drama or embellishing, I will try to give you the bullet points. 

• They're running their repairs through their own maintenance company. This was disclosed to me at the beginning, but they are billing me extremely high for some very basic stuff. They're also not putting unit numbers on some of the bills so I have no idea what unit it was for. 
• They have four vacancies and when I scoured the web looking for listings of the vacant  apartment, I could only find postings on Trulia and Zillow, none of the auxiliary sites. 
• They recently informed me that one tenant was withholding her rent because she had been advised to not pay until repairs were taken care of. They tried to make it seem like she was being unreasonable, but they couldn't even tell me what the repairs were that she was asking for. 
• They send me statements at different days of the month and they skip the last few days of the month. It's not 6/27-7/26; it's 7/1-7/26 and 8/1-8/26. So they're just sending out statements and not waiting for the end of the month. They also forgot to send me a statement in July and got an attitude when I asked why it hadn't been sent. 
• I just found out that the "lawyer" that they're charging me $900 for evictions is actually the office manager of the company who does nothing more than serve papers. This was NOT disclosed to me. She took three weeks to file the most recent unlawful detainer of a tenant who had gotten into a fight and was two months behind on his rent. I don't mean three weeks to decide to do it; I mean I told her to evict him and it took her 23 days to file the paperwork with the courts. She claimed to be trying to get ahold of him but when I asked her how many times she had been out to the property, she admitted it was three times in as many weeks. So she cost me almost a month's rent with her laziness. I also went through the charges on her invoice and they add up to $880, but the total is $900. I went back to my last eviction and it was the same. They also get a flat fee every month for management, not a percentage of rent collected, so they make more money if they put bad tenants in my property, which strikes me as a huge conflict of interest. And the more that the tenants trash the place, the more repairs they can charge me for. 
• One of our tenants moved out in July. There's a $100 bill for cleaning his unit that was charged to me on 7/16 and a statement saying that his apartment was in the same condition that it was when he moved in so they gave him back his full deposit: dated 7/17. They took the $100 out of my owner draw, instead of out of his security deposit. So either they didn't do a walk through, or forgot to charge him or something, but either way, they decided to try to skate it past me and hoped I wouldn't notice. 
• Since before the purchase was complete, I told them that I wanted a section of the roof repaired since there have been problems with leaks and tenants have even reported it to the city (under the previous owner). It's been over three months and they haven't even gotten me a bid. 
• There were bed bugs when I bought the property. I told them that I wanted the entire complex heat treated. It took them two months to schedule this. 
• The statements, the invoices and the owner draws never match up. I am getting ready to print out everything they've ever sent me and enter it all in myself to see what the heck is going on. 

Do you want to know the really twisted part? I am a property manager! I own a property management company in the San Jose area, but since business has grown so much, I decided that I didn't want to deal with an out of town property in a bad area. I assumed that they would handle things the way that I handle things for my clients. Since I've never screwed up this badly, I don't know where the line is between lazy and breech of contract. They've lost me money and instead of making my life easier, they've made it harder because I have to try to figure out what they're doing. This is not an exhaustive list, there's a lot more. My concern is that when I purchase the building, the bank required me to sign a one year property management agreement as part of the deal if I wasn't going to manage it myself. It's only been three months and they've already done a lot of damage. I've never tried to hold a client who wasn't happy with my services, but I'm worried that they're lazy enough to keep the contract and continue billing me $85 for 2 lightbulbs and 3 outlet replacements on every unit. They're taking home more money than I am from this property each month. 

Do I have any options other than trying to be a big enough pain that they let me go as a client? I'm genuinely concerned that things are only going to get worse from here. 

 Jeff, You pretty much nailed it. The market in San Jose and surrounding areas is so hot that there's no point in trying methods like that. It's not that they're not available, it just that it would take a long time to find them and I don't have that time. Secondly I'm not looking for a lowball offer on a foreclosure property, I'm just looking for a creative way to buy a good house at a good price to cut down on my commuting. We just got a request to bid on a 66 unit complex in San Jose, so my workload is going to continue to increase. I'll probably end up using private money on a short term loan, 18-24 months. Either that or I'll hire a driver so that I can work in the car :-)

Thanks, that's perfect. We mainly do in state owners, so we wanted to make sure we were providing the best service for that 6% management fee. 

So here's the scenario: My wife and I have been investors for about five years. We have a good sized portfolio that makes us good money, but it has also maxed out or DTI for residential loans. We recently purchased a residential property management company in San Jose, CA that is very profitable, but it's also part of the problem. We have a nice home in San Leandro, CA (About 30 miles North, between 1-1.5 hours in traffic). Because the business manages about 110 units, I am in San Jose nearly every day and I'm spending a large portion of my week commuting.

We want to buy a property in San Jose because it is central to the units that we manage and will take three hour trips for showings down to an hour. The problem is that even though we are making good money and financially sound, our DTI is through the roof, all the more so because it was an asset sale, not a stock sale, and so the banks consider it a new business, even though it's ten years old. We have about $200K to put down on a house that will be in the $600-$800K range. In reality, we make good money, about $300K/year, but $200K of that is from this "new" business, $50K is from my commissions as a real estate agent, and $50K is from my rental properties, a lot of which have been purchased in the last 12-18 months, so most lenders won't count them.

We considered going with a commercial/residential building that we could buy as a live/work space (still an option, but we haven't found many good properties). I know that we can go hard money if we keep under 65% LTV, but it wouldn't be worth it to me. Other options are Seller Financing or Creative Financing Options. We only need it for 16 months since we'll be at the two year mark where we can count the business income.

Does anyone know a California lender who goes off of common sense principles? Either stated income or hard money that isn't too expensive. With how hot the market is out here, Seller Financing isn't going to be an option. We make good money, but we have a ton of debt too, and most of the income can't be counted by using standard bank principles. Our total debt is about $1.5M, total assets about $2.4M. Monthly PITI payments; $9,800, Monthly Income: $25K. Thoughts Appreciated.

Can someone explain the FTB withholding for foreign owners in California? I have a foreign owner wanting to rent out a Townhouse in San Jose and I want to make sure he knows what he's getting into. Is the 7% from the Gross Rent or from the Owner's Dispersion? Also, what needs to be withheld for the IRS for a foreign owner?

Does anyone know if it is possible to rush formation of an S-Corp in California? If so, how quickly and how much extra does it cost? I have a deal that is ready to close, but we are having problems vesting and we need to form a new S-Corp to hold our purchase.