All Forum Posts by: Account Closed

I believe the same thing as you do in that there are no bad assets; there are only bad prices. I also grew up in the Northeast where the frost line in winter got below 4 feet. Foundations went down 6 feet and became stand-up cellars to create additional rooms. In my mind, if it's a house that's going to survive more than a couple of winters, it has to by definition have a deep foundation (which is a psychological bias discussed by Nassim Taleb in his book The Black Swan).

When I bought my house, my realtor used the half-inch rule. As long as the foundation cracks were less than half an inch, that was to be expected (the foundation cracks in the house I bought were a quarter of an inch). What I learned over the years is that the expansion (during rainy seasons) and contraction (during periods of drought) of the adobe soil wreak havoc on houses without a deep foundation. My house sat on concrete for the two-thirds that only had a crawl space, but I don't know how deep it went. I also counted 16 bolts holding the house to this concrete wall, which is better than nothing, but it doesn't comply with the seismic bolting codes I researched a few years ago.

The front picture window cost me a few hundred dollars to replace, but it's the only thing I had to replace. The glazier struggled to fit the replacement window and I didn't ask why (I stood on the sidelines and let him do this thing). At the time, my mindset could not believe the house had shifted ever so slightly on its foundation (my psychological bias). Since I sold my house as is, I never had to deal with the larger cost of repairing the foundation. My buyer turned the house into a McMansion and flipped it. I have no idea what he did. The real estate lawyers advised me to have no contact with the buyer. I'm getting my former address information from Zillow and the street and satellite views of Google Maps.

In the 1990s, the San Jose Mercury News ran a story about how homeowners had to bolt their house to the foundation (either then or when they sold the house) and I received junk mail from contractors offering their services. I added this newsbit to my my mental checklist, but when I asked my realtor about it a few years ago, she had never heard of it. Perhaps the takeaway is to read, but take with a grain of salt, stuff you see in newspapers. In the 1990s, the Mercury News also ran a story about San Jose's Urban Forest initiative that required homeowners to plant a tree between the sidewalk and curb if feasible to do so (either then of when they sold the house). My realtor had never heard of this requirement either.

Other houses on my street were much older than mine (they were built in the 1890s, while mine was built in the 1930s). The Victorian house with its charming gingerbread trim next door to mine had been retrofitted in the 1950s and was raised a few feet off the ground (to create a lean-over cellar for additional storage space). I don't know what the driving force was for this change. Perhaps the house had a foundation, or perhaps it didn't and one had to be installed. Philosophically, when you buy an old house with its charm, you also buy the problems that come with it. Since I don't fix and flip really old houses (or any house, for that matter), I'm not aware of the costs involved. Experienced rehabbers on BiggerPockets know the costs better than I do. My conclusion for me is to stay away from houses that require extensive work because I can change a light bulb and the smoke alarm batteries, but not much else.

Houses built in the 1920s and 1930s (before the United States had building codes) often did not have foundations. The 1930s house I owned in San Jose, California for 33 years, for example, had two-thirds of the house sitting on top of the ground with no foundation (the one-third of the house had a partial basement for the water heater). The locals did not freak out, but the adobe soil there expands when it rains and contracts during long periods of droughts (the late 1980s and the early 2010s).

What you do in your area is your business, but I learned the hard way to be on a solid foundation (my picture window at the front of the house cracked during the drought of the late 1980s and it took me awhile to figure out why). Some California cities also have seismic codes requiring the house to be bolted to the foundation, but I don't know how they are being enforced. The seismic retrofit issue did not come up when I sold my San Jose house in 2015 (realtors would know about this requirement).

Right now, the seller owns a house with foundation issues. The seller has a problem.

One escrow closes and you become the legal owner, you have a problem. Is this a problem you want to own?

If you're planning to tear down the house and replace it with a McMansion (the dirt is worth more than the sticks and bricks), then perhaps the existing foundation is not an issue because you'll likely be replacing it anyway.

If the police can get a DNA warrant, the statue of limitations is suspended until they find the suspect. 

I haven't seen drones mentioned on BiggerPockets, but drones have been mentioned in the business press for property inspection and showing.

Inspecting commercial building with drones is cheaper than using helicopters to do the thermal imaging (which can detect potential problems before they become visible to the naked eye). I don't know if they make sense for single-family homes, but I'm sure they will if the price gets cheap enough (peace of mind).

DISCLOSURE. I've invested $200 in a Reg CF offering of a company that provides drone services for commercial building inspections (among other end markets).

The odds are the police won't be able to solve this crime. But reporting the theft to the police might be required by the insurance company and it also puts the details into the police crime data base.

When my house in San Jose, California was burglarized twice in the 1980s, I had the police come out (non-emergency phone call) to take the report and dust for finger prints. The police asked me if I knew of any suspects (I didn't). Nothing was ever recovered, but I provided the police report numbers to my homeowner insurance company as part of filing a claim. Filing a false police report is a crime in itself, so the insurance company had a stronger reason to believe me and my claim.

The police see patterns individual citizens cannot see. For example, when there was a rash of burglaries many years ago in San Jose, the police noticed the same burglar alarm saleman showed up right away after each one (in some cases, arriving to the burglarized home before they did). It didn't take the police long to solve that crime spree.

The theft in the OP's case might have been spite-motivated as a way to "get even" (if in fact the items were stolen by the evicted tenant). But most burglaries are motivated by economics. Once something is stolen, it has to be fenced to make it pay off. The police know where fenced merchandise is often taken for resale (craigslist, Ebay, and so forth) and have officers monitoring these sites. Before the Internet, undercover officers would attend the weekly San Jose flea market to look for goods that had been reported stolen.

Some police departments also set up sting operations where they buy the stolen merchandise themselves and take names and other information for a mass arrest operation when the sting operation is shut down. Word gets around the criminal element that these storefront operations are a good deal and then to their surprise, they get busted months later.

I'm going to comment on your question from a different angle, not as a recommendation, but as food for thought.

As you spend time on the BiggerPockets forums, you'll learn that hands-on real estate when done correctly is a full time job requiring highly specialized knowledge. Just as anyone can learn to code (as I did in high school in the 1960s writing Fortran II programs on punch cards for an IBM model 1401 computer), anyone can learn how to buy the house next door and fill it with tenants who pay for it for you with their rent payments over the next 30 years. But will it be the most effective use of your time?

In my case, I took a page out of Silicon Valley's playbook and kept my "core competency" in house (technical writing) and outsourced the other aspects of running a business to a boutique temporary help agency (marketing, accounts receivable). I knew I received only 80 cents of every dollar the client paid the agency, but some of that profit went to pay the employer's share of the FICA tax (which I would otherwise have to pay as the self-employment tax). I used my spare time to study the many different ways to invest, from publicly-traded securities to direct real estate to private equity (angel investing).

One of the opportunities I discovered was real estate investment trusts through Ralph Block's Investing in REITs book and the National Association of REITs site. I started buying REITs in the early 2000s when the typical yield was 6% (it's less than half that now). I wanted to build my passive income stream. I looked at direct real estate, but the NINJA loan craze of that era scared me away. With public investments, the SEC is looking at financial statements reported under penalty of perjury (which is why executives from scam companies such as Enron and Worldcom were sent to prison), while the promoters of private investment scams don't receive as much government attention and require defrauded investors to file the lawsuits.

But with the greater potential risk of private investments comes the greater potential reward. It's a "return on effort" tradeoff. Crowdfund real estate provides something of a compromise because the Reg CF and Reg A+ offerings have made an attempt to screen out the bad actors. But investors are on their own in terms of bad actor screening with the Reg D (506c) offerings (Reg D 506c investors have to be accredited, which suggests they know how to fend for themselves).

If you're bored with tech and believe real estate is your passion, however, then it makes sense to figure out how to phase out of tech and into real estate in a manner that disrupts your income stream as little as possible. I know others have made this transition successfully. I'm just not one of them. Instead, I retired and have no desire to take on the full-time job of being a landlord or take on the potential risk of an unregulated private investment (although I don't mind toe-dipping in crowdfund offerings because the amount of money I can lose is only a small percentage of my net worth).

The interest rate on a high-yield savings account can be changed at any time by the bank.

I first learned about these accounts several years ago. The interest rate at the time was 1.80%. I opened one after the interest rate had dropped to 1.50%. The interest rate got as low as 0.55%. The interest rate has been steadily climbing over the past few months and the account where I have money is now at 1.75%.

The money is liquid and the principal is FDIC insured. The Alliant CU savings account, where I also have money on deposit, offers a similar high rate and is NCUA insured. I think of these accounts as "guaranteed principal" where I might not make as much money on the upside as with other investments, but I'm not going to lose any money on the downside either. I keep a portion of my net worth in these high-yield accounts as a diversification strategy.

Just as landlords like to rent to the ideal tenant, bankers like to lend money to the ideal borrower.

I've found it useful to learn the system and use it to my advantage for accomplishing what I want to do (build wealth) rather than fight the system and face an uphill battle. All it takes is a willingness to learn and a sense of humor.

In the early 1990s, someone (I forgot who) was promoting tax lien certificate investing through a now-defunct organization called the National Association of Secured Income. Later in the 1990s, I attended a similar class by John Beck. My takeaways were that tax lien certificate investing is a viable means for generating income, but only with the appropriate specialized knowledge. Acquiring this specialized knowledge is on my bucket list, but I haven't found the time to do it yet.