All Forum Posts by: Dan Schwartz

I’m not going to re-read the whole thread, but I hardly feel the advice given here was to raise a middle finger and tell the PM to pound sand. The PM has claimed, well after the end of the relationship, that a debt is owed to them.  The debt seems to be a result of an issue with a credit card, which is not a terribly common form of payment in real estate.  Many, myself included, have advised the OP to ask for detailed clarification on how this debt was created and what the PM did to avoid its creation. 

Anyone who is wont to simply send money to people without verifying that it’s actually due is welcome to ask me for my Venmo QR code.  

@Caroline Gerardo BUT, since you are self-employed you could open a solo 401(k) and roll your IRA into that. Then you could take a loan of 50% or $50,000 (whichever is less, but in your case will be 50%, or the $34K you need) from the 401(k) and apply it to your credit card debt. I think (and @Dmitriy Fomichenko could fill in or correct the facts here) that you will need to amortize that loan over 5 years and charge yourself a fair interest rate.  That said, the interest rate will be less than all of the above credit cards, especially the non-AMEX ones.  Your payment on a 5 year amortization will be high, but it might be the hurdle you need to jump in order to both free yourself from this situation AND have a monthly payment in your budget that you'll be able to re-direct productively once you've paid off the loan.

You are currently paying $382 a month in interest alone.  To make a 1% minimum monthly payment, you are paying another $343 in principal, and it will take 20+ years to pay it off (I haven't done the math, but your statements will show you this.).  That's north of $700 a month, which is higher than your 401K loan payment would be at 3.25%.  And at 3.25%, your interest costs would be less than $100 a month and falling, with 85% or so of your payment going towards principal payback that you can get working for you again in your 401K.

And, the 50% of the 401K you didn't loan to yourself will still be working for you in whatever investments you choose.

So what if this takes 5 years?  At the end you are debt-free, have $700 a month in your budget to invest as you please, you haven't lost 30% or more of your capital to taxes (remember that the amount you withdraw is also income and will affect your tax bracket!), you haven't forfeited your retirement account to pay off your 30-year-old-self's debts, and you should be ready to rock!  Just never put something on a credit card again that you don't intend to pay off at the end of the month, regardless of the teaser rate or the rewards offered.

Good luck!

Edit: you might not be able to open a solo 401(k) depending on the nature of your soccer school business.  Namely, if it has employees.  But, you could look at creating a 401K plan for you and your employees and doing the same thing outlined above.  It's a different beast, but done right it will still be well-worth it.  I don't believe you HAVE to match employee contributions unless you are looking to safe harbor your own contributions to the 401K.  So, maybe you could create it, offer it to the employees, make no contributions yourself (for now, at least), and implement the above strategy.  It would go through your custodian at that point, since it wouldn't be a solo 401K.

@Account Closed I forgot something!  Call it b2).....of course you want to see their written response to the card processor regarding the chargeback!  Merchants have to provide contracts, etc., that prove the cardholder both agreed to the charge and is liable for it.  Upon remembering this crucial point (duh!) I'm now wondering if they took this payment over the phone without proper authorization, or if they took it by a form and never processed it, etc.  Collecting rent from someone on a lease of any length should be a no-brainer defense to a chargeback.  

@Account Closed

Credit cards don't bounce six months after the fact.  The transactions are authorized in real time and batch processed at night.  If your PM is saying it "bounced," well I'm not surprised that you and they are in this situation.

If the more-likely scenario of a "chargeback" occurred, then you need to write a letter to the PM asking that they provide, within x number of business days,

a) the initial chargeback notice from the card processor, which must state the date of the chargeback, the reason for the chargeback, and the date given by the processor as the deadline to respond to the chargeback.

b) Any documented attempts to resolve this with the tenant outside of the chargeback process, once the chargeback is initiated and prior to the deadline given by the card processor to respond to the chargeback.  This is possible, as the tenant/requestor can rescind the chargeback.

c) Any documented attempts to further resolve this with the tenant after the chargeback was completed (meaning the card processor either denied the PM's response, or the PM didn't respond in time) and prior to their contacting you to request that you pay them "back."  One assumes that even if the tenant won the chargeback, the rent was still due.  The PM's responsibility to you is collect that rent, regardless of whether the initial payment was made with bad money (which could be a declined credit card, a bounced check, or even a counterfeit bill.)

My suspicion is that the PM will not be able to provide these documents, and is hoping that you will just pay what they say you own them.  I believe it is well within your rights to request this simple documentation, as your agent/PM's primary responsibility is to collect and disburse your rents.

Good luck.  We'll all be eager to know what happens next, I'm sure.

Did you just publicly post that you wouldn't accept rent from an LGBT person because they may have access to funds pooled by their own community (and quite possibly others outside of their community) to support members that may be in need of assistance? Which rent would you not accept? Would you simply not lease to that person because he or she is LGBT, or would you not accept the rent payment in full out of suspicion that he or she may have received it from an entirely legal source? This is quite fascinating.

Sorry about your tree.  I hate seeing good trees improperly cared for.  It probably won’t die for a while, but I doubt it will come back to what it was, either.  Maybe get an opinion from a qualified arborist, and also consider using such a person for your trees in the future, if you can afford it and if you find the value of your trees warrants it.  

I can't be the only person on this thread who continues to wonder what an eviction moratorium has to do with non-renewal of a month-to-month lease......

Should I put 100% of the proceeds in Dogecoin, or no?

@Alexandra West if she didn't pay for an entire year, can't you apply the security deposit towards unpaid rent?  I am not familiar with the California laws about this.

@Emily Beck "I find that many people that invest in real estate the way I want to, either do not have a degree or do not use the degree they worked hard and paid a lot for to accomplish these goals."

You didn't share what "that way" is, so we are merely speculating. No tenant and no mortgage lender has ever conditioned their participation in my furthering my REI goals upon the level of education I've attained. If I wanted to be a CFO at a major REI company, I suspect HR would be very interested in my education and other standard markers of my pedigree.

What do the people whom you want providing your income stream(s) want?  Start there.  Interview people if you are unsure.  The path will only be as clear as you are clear on what you want the path to be.