Why Buying an Occupied Property Is Harder Than It Looks With Fred Glick and Arrivva Real Estate Agents

Drew Thomas Hendricks00:00:28

Hello everyone. Welcome to We Fixed Real Estate. Today, we’ve got a packed house today. We’ve got Mark Levy, our San Diego representative. We’ve got Precious Star up from San Francisco. We have Jen May take covering the East LA not, that doesn’t sound right, you’re not East LA Arcadia, the Foothills.

And we have Fred from the coastal section of Marina Del Rey and me Drew. So we have a round table conversation here. We were kind of brainstorming different ideas.

Let’s talk about end of the year. Let’s talk about end of the year preparing. I know Precious, you were talking about 1031 exchanges. When someone buys a house, sells a house, they have a certain period of time to reallocate those funds into the next investment.

Why don’t you give us a rundown on that?

Precious Star Moreno00:01:14

Okay. I only know this in theory. I just started nine weeks ago, so I know that now’s the time to sell it up.

Fred Glick00:01:21

10 weeks by the way.

Precious Star Moreno00:01:23

10 weeks. Thank you. Thanks for counting, Fred. Thank you so much. So I’m not off the hook because I have that extra week, is that what you’re saying?

Fred Glick00:01:31

Yeah, pretty much. You should know everything. Well, you just type in ChatGPT and that’ll tell you.

Precious Star Moreno00:01:36

I’m on my phone currently, so I can’t do that. So from what I understand is that now’s the time to buy. So you’re avoiding capital gains tax that’s gonna happen come tax year, which I’m not looking forward to.

That’s not gonna be very fun for me. But that’s okay. So people could definitely go the 1031 exchange. There is a certain time limit to how you can do that, and I think Fred is an expert given, you know our, our recent conversation, so I think he should go over the timelines on that.

Fred Glick00:02:05

Well, here, here’s really the bottom line.

What this whole 1031 does is for your investment property, investment property only. Let me just tell you this, is that you sell a property and instead of paying capital gains, at this point, you buy one or more properties that are equal to or more than the house, the property that you sold. Now it could be any kind of real estate, it could be land, it could be commercial.

Doesn’t really matter as long as it’s real estate. So it’s a matter of people thinking about diversification. Let’s say they own three multi-families in San Francisco and the laws are crazy. They don’t want tenants anymore. They get rid of this property and they buy, you know, a warehouse in, in San Bernardino.

You know that the cartel rents from them and a nice price. So, but eventually you’re gonna have to pay taxes. So here’s the other theory. The flip side of all this is that you sell now or next year and pay the capital gains because the way things are looking, the current administration has given everybody the lowest amounts they’re ever gonna get.

It’s not going any lower. And if it flips to the Democrats, they’re gonna wanna raise money, raise taxes, maybe capital gains is one of those ways. So it’s just my personal opinion, I don’t, I don’t think capital gain taxes are going to go any lower. If you’re gonna hold it for another 20 years or put it in a trust your kids get it and all that kind of stuff, it’s a different story.

But if you’re selling, might want to do it. Let’s also talk about, while we’re on the subject of capital gains is primary residences. There are people out there who’ve owned their house for a gazillion years. They talk to a real estate agent about selling the property, but what they’re not told and what they should check on is if they’re going to have capital gains and how much it’s going to be.

It’s obviously long-term capital gains if you own it over a year. And here’s the thing, if you’re over 55, you get a one time exemption on the capital gains tax. 250,000 if you’re single, 500,000, if you’re married and I think I heard something, it either went up or they’re thinking about raising that number.

But then let’s say you buy another house and then you sell it and you replace it just like you did in the last one. Well, guess what? You’re gonna pay tax on that next one no matter what, what it is. You can only use that exemption one time. So what happens is somebody sells the house they bought for a hundred thousand, 10, 30 years ago, and now they’re selling it for 2 million, and they adjust their basis.

And let’s say they got 1,000,007 of capital gain and they’re gonna buy a $200,000 condo somewhere in Costa Rica to retire. Well, guess what? You’re gonna pay the tax on that number because it’s not exempt ’cause you’re not replacing with something else. So that one time thing, right? So when you’re going to list your property, check to see if you’re gonna owe capital gains tax.

That’s very, very important on an under occupant, same as second home. Second home, you don’t have any waivers. It’s only for primary residence. If you’re selling a second home, you’re gonna have tax and you can’t 1031 a second home. There’s some food for thought, kids.

Drew Thomas Hendricks00:05:36

You can’t 1031 your primary residence either?

Fred Glick00:05:39

No, no. 1031 is specifically for investment property. Investment property only.

Drew Thomas Hendricks00:05:44

As far as capital gains though, I mean there’s, in past episodes we’ve talked about always recording everything you’ve put into the house, every improvement you’ve made.

Fred Glick00:05:54

Right.

Drew Thomas Hendricks00:05:54

Because you can really knock off a lot of those perceived gain.

Fred Glick00:05:58

Sure.

Drew Thomas Hendricks00:05:59

By showing the work put into it.

Fred Glick00:06:01

Yeah. Any closing costs you have going in, going out, plus any improvement you made? Not like, “Hey, a plumber came over for $30 and adjusted my pipe.” It’s like, “Hey, I put it in a whole bathroom for 50 grand.” That counts as your basis. So you add that to the sale price plus the closing costs of when you bought it so that, that adds up.

So you can subtract that amount from the sale price plus the closing costs on the way out.

Mark Levy00:06:36

And if I can interject, I was just thinking about the exemption, you know, as far as primary residence, if I’m not mistaken, that happened during the Clinton administration, so it’s a little bit dated on the actual exemption amount.

‘Cause originally it was, you know, $250,000 and $500,000. That was a lot of money back then. But now there’s talk about doubling that. Right? But whether or not that’s going to ever get approved, that’s a whole another other set of

Fred Glick00:07:10

Exactly.

Mark Levy00:07:10

Situation. Portable situation.

Fred Glick00:07:13

But the bottom line is, if you’re ready to sell, check on that and remember to put that money aside when you close.

Precious Star Moreno00:07:20

So you basically, you’d basically be benefiting just for that, for that transaction and not necessarily for the next is what you’re saying, but it could benefit, benefit someone that is in that like kind of in between and maybe, yeah, they’re doing that, but after they’re sticking with the property, would that be more beneficial for that type of person?

Fred Glick00:07:40

Again, it depends. I don’t think capital gains taxes are gonna get any lower. But by the way.

Precious Star Moreno00:07:44

So you don’t think beneficial at all.

Fred Glick00:07:47

Well, it depends on the person. Everybody’s gonna be different. Now, let’s say you have this capital gain, you can offset that gain against capital losses. So if you decide, you know, the, you bought Bitcoin at 120 and now it’s at 90, sell it, you have a capital loss.

Let’s say it’s a year over a year. The long term capital loss that you can offset against the long term capital gain, you can buy that Bitcoin back. And I believe the statute is 10 days. Don’t quote me on that, but you can buy it back. So early December’s a good time to sell, to accumulate your losses so you can buy it back, or you wait till next year to buy it back, stick it in cash.

So planning’s important and it’s all about getting with your tax professional. And doing it before you sign a listing contract, people. I always, that’s a big question I always ask any prospective sellers.

Precious Star Moreno00:08:45

Interesting. Okay, well that fleshes it out a little bit.

Fred Glick00:08:50

There you go.

Precious Star Moreno00:08:51

Next time we’ll talk about prop 19.

Fred Glick00:08:55

We should go to like, you know, we shoulda have a prop show.

Precious Star Moreno00:08:58

Listen, people wanna know. People wanna know.

Fred Glick00:09:01

The California Prop Show. Totally separate podcast, but just talk about each proposition from the very beginning.

Precious Star Moreno00:09:08

Why not?

Fred Glick00:09:10

Yeah, why not? Exactly. There you go. You wanna get bored to death? There you go.

Precious Star Moreno00:09:18

No, we’ll make it fun.

Fred Glick00:09:22

We’ll make your propositions.

Precious Star Moreno00:09:23

We’ll make it fun.

Fred Glick00:09:25

I dunno how they number these propositions. ‘Cause we just went through prop 50 today. I’m sorry. In the last election was prop 50, but there’s definitely been more than 50 props. So.

Precious Star Moreno00:09:38

Well, they don’t name every star. They just started putting numbers in random letters.

So, I mean, if they’re not naming every star, why, why would they make this any special? So I’m just saying.

Fred Glick00:09:48

Because you got physicists who take care of that, who are logical people.

Precious Star Moreno00:09:52

Thank you. RXT star at this latitude. It’s like, come on, just name it.

Fred Glick00:09:58

No. Well, it wasn’t discovered by a person. A person who discovers it gets to name.

Precious Star Moreno00:10:02

star should have a name, a star shoulda a name. And I said what I said.

Drew Thomas Hendricks00:10:05

I’ll tell you though, the propositions are numbered by the decade that they’re used in and it they reset in 2030. We’re gonna go back to prop one again.

Fred Glick00:10:12

Wow. Wow. Interesting. Look, you press two thing Drew ran waiting around.

Drew Thomas Hendricks00:10:21

Oh, someone’s gonna add some value here. So yes. You know, between 2010 and 2019, they only got up to 77. Between 2020 and 2029, its current cycle started over in 2020.

Fred Glick00:10:33

That’s silly and stupid. Anyway,

Precious Star Moreno00:10:36

What’s new with our government.

Fred Glick00:10:38

I do have something else to talk about. This is on rental property. I was talking to a person who is a landlord who’s got three units and her tenant of like 12 years just moved out. And so she said, “So, you know, I wanna interview the clients. I want somebody quiet. I don’t want any children.”

Precious Star Moreno00:10:58

Oh, no discrimination. ‘Yeah, don’t say that. Don’t write it either.

Fred Glick00:11:03

No. She has no idea. Here’s what I suggested to her. I said, “I could sit here and tell you all the rules, but I want you to go home.” And she was an older woman who had never done it. I said, “Download ChatGPT. Go in there and first of all tell you, tell them who you want them to be,” meaning I’m the greatest lawyer for rentals in Los Angeles or whatever.

“And then tell them exactly everything about your situation and ask them what you should and shouldn’t do. You’re gonna thank me for this.” You know what?

Precious Star Moreno00:11:31

Oh, do they live there? They live on site?

Fred Glick00:11:34

No. No.

Precious Star Moreno00:11:36

Okay.

Fred Glick00:11:36

But anyway, it’s a recommendation for people who maybe aren’t up to date on things or don’t know about what something like AI can do for you.

And it’s really cool. I mean, she’s going to go, she hasn’t come back. I’ll, I’ll update you next week. But she you know, she thanked me. She’s not a computer person. Most of these people like that aren’t, but it’s gonna give them real answers like a real person would. So you don’t have to go around and ask your cousin who owns a property or, you know what I mean?

Everybody asks everybody’s advice and you end up getting 17 different pieces of advice and they’re all wrong in one way, shape, or form. This way it puts you on the track. So if you’re somebody in this situation, you own a property�� or two, you do it✅ yourself you manage✅ it yourself. You know, find out what you’re doing right and wrong.

Precious Star Moreno00:12:33

Yes. And then you could also get in a lot of trouble if you’re saying no, can’t, you can’t do that.

Drew Thomas Hendricks00:12:38

Mark, what’s new with you?

Mark Levy00:12:42

Boy, that’s a, that’s an open ended question for sure. Drew.

Precious Star Moreno00:12:46

It’s not a hard one.

Mark Levy00:12:48

No, no it’s not. You know, it kind of realigning after a really nice weekend which was good. I think, going into December, probably is a, is a really good time, you know, for people that are interested in buying, right? They’re thinking about it. This is probably one of the best times of year, I think to, to get out there and, and start looking and, and seeing what kind of deals are happening. There’s a lot of favorable scenarios right now. Interest rates are probably helping the cause ’cause they haven’t dropped dramatically.

And I think that really, you know, if we, if if putting the message out there that if you are considering buying next year, now is the time to be getting out there before the herd.

Precious Star Moreno00:13:43

Yeah. I feel that too. People are like, when is the best time? I’m like, “Now.” You know, it’s a holiday and if, you know, most of the sellers on the market right now are trying to price to move.

It’s just before the holidays, just before the new year. So yeah, definitely now.

Mark Levy00:14:02

Yeah. Yeah. I think it’s a, it’s a big advantage, but yes, it is the holiday, there’s a lot of stuff going on. So if you’ve got that window, take the opportunity, get out there and get on the internet and see what, what looks good and pick out a couple and go check them out.

Fred Glick00:14:23

We have a buyer who’s looking at a TIC, Tenant In Common. Look it up. Kids look on ChatGPT with that. It’s a regular single family house, but the ownership is everybody. ‘Cause there’s three or four units.

I don’t know what it exactly is, I can’t remember. But it happens a lot in San Francisco. It’s, it’s kind of like a condo, but it’s not because there’s no title insurance you’re gonna get, there is a deed for the particular unit, but everybody kind of owns the whole place with stock transactions.

So, this guy who’s had the listing now, I think four months, we had made an offer and they counter it, some ridiculous thing, and the agent says, “Well, the owner’s very emotional.” So we finally decided, okay, what we’re gonna do, I’m gonna call. My buyer, let me add, my buyer also said that the agent said that the seller wants to meet with the prospective sellers, prospective buyers.

And it’s like I wrote ’em today. I said, “Look, here’s our bottom line. This the last offer we’re gonna make, and your seller’s not meeting with the buyers.” Because like what they look like or their religion or something. He would just not sell to them. It’s, you can’t do that.

And the guy’s moving, it’s, he’s not gonna be living there. So it’s another form of discrimination. And the agent was too stupid to know that this is wrong and tell a seller no. And also get a seller off the emotional stuff. It doesn’t matter, dude. It’s a business transaction. And that’s what we try to push here at Arrivva.

This is a business transaction. I know a lot of realtors wanna become your best friends. Go out to dinner on Saturday night, it’s great, whatever. But the bottom line is it’s a business. This is a transaction. That’s why I’m a pain in the ass when I represent you to the sellers and the seller’s agents to get you the deal you want.

Because it’s just a business transaction. It’s all, so.

Precious Star Moreno00:16:30

Yeah, that’s awkward too. That’s really awkward.

Fred Glick00:16:32

If you’re a seller, do not talk to buyers. You might get sued because, you know, you just ignore their offer and then they sell it to someone who’s the same ethnicity as them and they didn’t sell it to you, and they sold it to ’em at a better price.

Guess what? I got hundreds of lawyers salivating over that one. And not only is the seller gonna get sued, but the agency’s gonna get sued for allowing it. So just don’t do it.

Precious Star Moreno00:17:00

So I have a juicy one. And you might, you might not have the opinion that I have. So my first ever like listing, I was gonna just potentially show, I went to go look at the listing and it was a duplex and it was two, two apartments and these people lived in this apartment. And what I didn’t know is like, at least in San Francisco, you cannot make these tenants leave unless one, you pay them out or two, you get them lawfully evicted through the judicial system.

Those are the only two ways they cannot leave.

Fred Glick00:17:29

Good luck with that.

Precious Star Moreno00:17:31

Yeah. So number one, number one with the first one, they could potentially be paid out, but the second one is a protected, protected class. So like you can’t even, unless you go through a whole situation and they were problematic. And I told, like, guy, I was like, “Personally speaking, I think this is a big moving, moving, like a part that unless you have experience with.”

I’m like, “If that’s something you’re comfortable with, it’s something you dealt with before. Yes, sure, I’ll show you the property, but if this is not something you’ve dealt with or even experienced, it could be very, it could be very complicated to say the least. And also the people that would be exiting. The other tenants would be only be paying $2,300 per month for their side. That’s all you would be making after this transaction. Transaction plus whatever you had to pay per month for your mortgage fees.” But what’s your opinion on those duplexes that are occupied and how would you go about, like?

Fred Glick00:18:27

You mean live in one and rent out the other?

Precious Star Moreno00:18:29

Yeah. So it’s either that or you’re just buying, like what would your opinion on those in general?

Fred Glick00:18:34

Well, yeah, you have to have kahunas to understand, especially in San Francisco. You know, San Francisco and LA, two big cities are gonna be the worst.

Precious Star Moreno00:18:43

They’re crazier. Tenants have, it’s good on the tenant side, but I’ve also been like the landlord and you have to go through, like, I’ve had to evict a roommate before, and let me tell you, that wasn’t easy.

Fred Glick00:18:53

No, it’s crazy. So, you know, if you have somebody who’s been paying for 10 years and has income and keeps the place nice. Okay, fine. You just have to do your numbers based on that. Now remember the seller’s doing their numbers based on the fact that somebody’s gonna have to buy and deal with what these prices are.

Precious Star Moreno00:19:12

Exactly.

Fred Glick00:19:13

Grow former rents of, you know, 10,000.

Precious Star Moreno00:19:15

Yeah. And you couldn’t even, like in San Francisco there’s a lot barely protected like rent control. And not just that, it’s like talking to ’em. They’re like, “Oh it’s for my girlfriend. My girlfriend would live in one of them. ‘Cause I would be able to like make them leave.”

And I’m like, “I mean about that. It doesn’t quite work that way.”

Fred Glick00:19:32

You don’t get it.

Precious Star Moreno00:19:32

Doesn’t quite work that way. That was, yeah.

Fred Glick00:19:36

You don’t get it.

Precious Star Moreno00:19:37

Yeah. They decided not to go view the place. I don’t, I don’t blame them like that. That did sound like a landmine. ‘Cause they also had like some court stuff between the two of them.

They also had additions on the property that was illegal. And it’s just like, why would anyone buy that.

Fred Glick00:19:51

At the right price? Anything sells.

Precious Star Moreno00:19:53

Really. No. But what would be the right price?

Jennifer May00:19:55

Oh, it depends on how much you have to pay to relocate the, how much you have to pay to now.

Precious Star Moreno00:20:00

Exactly. Oh my God. They were not in that place.

I don’t believe that they were remotely in that place. They just thought they would just ask someone to leave and just move in.

Fred Glick00:20:08

I had a client who looked on the sand in Marina del Rey, looking at a two unit. The upstairs owner’s unit was gorgeous. It was two story, it was four bedrooms, gigantic, but underneath on the first floor you had some little old lady who’s been there and paying like 2000 a month.

She’s been there probably since she was born or something. You’d have to pay her gazillion dollars to get it, get them out. And the agent who’s also the owner, like said, “Oh, that’s your problem.” And he wants the highest number. So it’s still sitting on the market ’cause he’s arrogant.

Precious Star Moreno00:20:40

Well, you’re gonna keep that property for much longer than you want to. And that’s on you.

Fred Glick00:20:45

Exactly. Pretty much.

Precious Star Moreno00:20:46

That’s on you.

Fred Glick00:20:48

So it’s…

Jennifer May00:20:50

That’s fun. That’s a, that’s probably one of the most shocking things I’ve learned in the last 10 weeks of being a, you know, in real estate. It’s kind of like shocking to me. I’m like, why would you even do that unless you had lots of money to get them out. Any knew Ellis Act? A duplex or just a single family?

Fred Glick00:21:09

No, you can. The Ellis Act is even for multi-family units that you wanna make into condos, but someone, you have to wait five years. Which is ridiculous. And then you have, and have to go back to the people who you rented to and give them Right of First Refusal to buy the condo unit.

Jennifer May00:21:31

Oh geez. Oh wow. So that’s the cause.

Fred Glick00:21:34

It’s stupid.

Precious Star Moreno00:21:35

And it would take like seven years to get a outcome.

Fred Glick00:21:38

Probably.

Here’s the problem. You probably have a lot more condo conversions if you didn’t have the Ellis Act and you’d help housing sales. But you kill rentals and the rental prices would go up ’cause there’d be less properties available.

And people need more help with lower price rentals than they do lower price condos for sale. There’s enough condos out there. San Francisco would be great for this condo things, but gotta wait five years.

Precious Star Moreno00:22:08

Why five years? That seems excessive.

Fred Glick00:22:11

Ask, what you’re trying to do is prevent it from happening.

You gotta pay taxes and insurance and maintenance for five years and have the building completely empty.

Precious Star Moreno00:22:21

Okay, well five years. And then they, there’s a whole process of offering it to the tenant. And how long does a tenant have to respond? You know how long that is. And then you get to respond and then you go back and forth and then it, it’s gonna be longer than five years.

It’d be more like seven to eight years.

Fred Glick00:22:39

Could be, who knows? But it’s crazy. They did five years at least to prevent it from happening. They did five years.

Precious Star Moreno00:22:46

Interesting. Okay. That’s something to know.

Mark Levy00:22:52

There are, going from where, what Precious was talking about into the Southern California duplex market, there are quite a few here in Encinitas, It was a very common practice to build them in the eighties. And, you know, now what I’m seeing is people are actually, you know, remodeling these places that are really run down that, they buy them, run down and remodel ’em and live on one side.

And you’ve got the other side and it covers, covers, you know, pretty, pretty big chunk of your mortgage.

So there, there’s some huge benefits to that here. There still are some that needs some love, I guess you could say.

Precious Star Moreno00:23:39

Yeah.

Mark Levy00:23:40

There’s still, you know, a handful of ’em, but I’ve seen, I’ve seen a big shift in really old rundown, you know, held together with duct tape and chicken wire to these beautiful duplexes.

Precious Star Moreno00:23:54

So you think it’s more beneficial to buy a duplex or something? Like generally has at least one unit open? Is that what you’re saying?

Mark Levy00:24:02

Well, I’m saying that if you have an opportunity to buy the entire, like a two unit duplex and, and be old rundown by it at a good price, and you’re either have connections in the construction industry or you’re in construction.

It’s a huge, huge opportunity, I think.

Precious Star Moreno00:24:21

Okay. Even that there was one open, right?

Drew Thomas Hendricks00:24:24

No, my mother-in-law’s got one. She, Precious, he’s just talking about buying the entire duplex.

Precious Star Moreno00:24:30

So it could be multiple units is what you’re saying?

Drew Thomas Hendricks00:24:33

Well, duplex is two. Yeah, there’s three.

Mark Levy00:24:36

Yeah.

Precious Star Moreno00:24:38

So I guess what I’m speaking to is that if you were to purchase, say like a duplex or it could have a few units, one needs to be available for it to be a good transaction. Yes? Like so would it be a good, what’d you say?

Jennifer May00:24:54

I think to be the most beneficial, you’d want it to buy it empty without anyone in it.

Fred Glick00:24:59

Yeah.

Precious Star Moreno00:24:59

Ah, okay. That’s my question.

Fred Glick00:25:01

Totally. Sure. Yeah. Speaking of totally empty duplexes, I might as well put this out ’cause it’s going to already be listed. We have one coming up in Santa Clara right near the airport in an area that’s kind of a combined industrial residential area.

It’s two units. The, it’s totally empty. That’s the good news. One tenant had been in there 20 some years, he just left and the other person was only in there a few years, but there had been a bunch of rentals. So, if you’re looking for something like that, ping us. Go to our page. What did we end up calling it?

Arrivva.com/active.

Drew Thomas Hendricks00:25:41

Active.

Fred Glick00:25:41

Active okay. Arrivva.com/active. You’ll see the property in Santa Clara. Click on it. Get all the details, get the disclosures, get the inspections. Make an appointment. Easy to show. It’s empty. And that’s, you know, an owner occupant would be great there. I mean, we’re just looking for the best deal, best price.

Here’s the thing. This property, this property is gonna be at a price that is well under the two unit maximum for Fannie Mae and FHA. So the idea is you can actually get into this property by getting a type of loan where you buy it and they give you the money to fix it up.

Precious Star Moreno00:26:23

Oh, nice.

Fred Glick00:26:23

There’s FHA 203K and there’s a Fannie Mae program. Can never remember the name home, something. But this is great for an owner occupant and with FHA put three and a half percent down with the commercial, the conventional loan, it’s 5% down. Fix it up. Get a tenant at a better rent because it’s gonna be nicer.

You know, upgrade the appliances and fix the floors, paint it, you know, the usual stuff. Upgrade the bathroom to something modern and have it as part of your loan. So it can be done. So that’s another way to add on to this. Now, they’ll do the same thing for a owner occupant situation only even if the second unit is occupied, or you can do it for a triplex or a quad, two to four units.

So these programs are available. And ping us for information and we’ll be happy to go over it with you. But yeah, it’s just a nice unit, you know, it’s like a $4 million house in, in Morgan Hill we have for sale, which is a little bigger.

Precious Star Moreno00:27:34

That one looks crazy. That one looks absolutely insane.

Fred Glick00:27:36

1089 square feet of everything. And outdoor space that’s, they have two separate outdoor spaces. One is cemented and part of that cement is undercover. So you literally could have TVs out there, anything. And then all the grass space that’s out there. And that is, is it here? No, not, this is our property page, by the way.

So you could see literally every property we’ve ever sold. This is, this was current from a couple weeks ago. There’s this one.

That was a condo in San Francisco and what do I see? I can’t really see it. Anyway, we put all our properties on there and, when we do redo our website, which is coming soon, you’ll be able to search by city. Hopefully, that kind of stuff and see everything we’ve done to particular city. And this is over many years, all this stuff. All the stuff we’ve done, sellers, buyers, et cetera, et cetera. So.

Precious Star Moreno00:28:46

Thanks.

Fred Glick00:28:47

That’s what I got.

Precious Star Moreno00:28:47

Yeah. Beautiful. Thank you.

Fred Glick00:28:50

My pleasure.

Drew Thomas Hendricks00:28:53

My mind stuck back on this Tenants in Common again. Could you paraphrase the issue? We started talking about something else and I’m,

Fred Glick00:28:59

Well, I’m talking about discrimination is really why I said it.

Drew Thomas Hendricks00:29:02

But I thought that Tenants in Common aren’t subject to fair housing rules.

Fred Glick00:29:06

Oh, yes, they are. Absolutely.

Precious Star Moreno00:29:09

Drew is not convinced.

Drew Thomas Hendricks00:29:12

You can minimize the TIC and then it is subject to it? But that’s why there’s so many people in the Bay Area, like, “Must be a childless buyer.” Must, you can definitely enforce religion, I thought. Similar because it’s a it’s outside of the condominium.

Fred Glick00:29:27

Yeah, but I think it has to do, you have to state the subject information, something like that. But when it comes to mortgages, you gotta follow the mortgage rules. The mortgage rules have discrimination sites in it. Some of these TICs like co-ops, I think it, it might be co-op and not TIC you’re talking about. Co-ops can then few…

I think. I think it is. I think it’s a co-op. Co-op difference.

Mark Levy00:29:59

They’re similar.

Fred Glick00:30:00

It’s similar but not the same.

Drew Thomas Hendricks00:30:03

Well, maybe that’s where I’m confused.

Precious Star Moreno00:30:06

Drew, you could ask ChatGPT to clear that up for you.

Drew Thomas Hendricks00:30:09

I did, I just brought that your real estate expert fully skilled in the legal laws in common.

Precious Star Moreno00:30:16

Oh, Drew doesn’t need it.

Drew Thomas Hendricks00:30:17

Got a full rundown.

Precious Star Moreno00:30:19

Alright, sorry, Drew. Sorry.

Drew Thomas Hendricks00:30:21

So, according to Grok, a fractional fair housing laws do not apply and you have almost entire freedom to choose who buys your share.

Fred Glick00:30:32

In the TIC in California. You put California?

Drew Thomas Hendricks00:30:36

The only real limits when selling your TIC is the first right of refusal.

So all the other members of the TIC have

Fred Glick00:30:42

Right. That I know.

Drew Thomas Hendricks00:30:43

Close chance.

Fred Glick00:30:44

Yeah.

Drew Thomas Hendricks00:30:44

Financing issues. Most lenders will not give a mortgage to a fractional TIC. And that once you kind minimize it, then all the fair housing laws apply.

Fred Glick00:30:53

Right.

Drew Thomas Hendricks00:30:53

Because you, you’re basically don’t wanna get stuck with someone that’s in, in an entirely different lifestyle then the house you’re forced to live.

Jennifer May00:31:01

They’ll be sharing like a hallway.

Drew Thomas Hendricks00:31:04

Yeah.

Jennifer May00:31:04

Or they’ll be sharing like they’re renting rooms out of a house, basically, like they’re sharing the kitchen.

Drew Thomas Hendricks00:31:10

The biggest example is the listing right here. It says, “That’s why you’ll see a Bay Area listing such as this 25% TIC interest seeking ‘childfree buyer must love dogs’ perfectly illegal.”

Fred Glick00:31:21

Yeah.

Precious Star Moreno00:31:21

Wow. Because they live there, right?

Fred Glick00:31:23

That, yeah, that stuff, yes. What I was specifically saying is who to sell to, and if I’m looking at it just race, religion, things like that, that these people come in and their name is foreign and they meet them and they talk with an accent and the buyer is a, the sellers doesn’t like them and then they sell to Mr. White, Mr. Whitey White for a less price, then you gotta discrimination suit. So that’s why I won’t let the selling.

Drew Thomas Hendricks00:31:53

Yeah. We need to do deeper research. ‘Cause the question was, “Can I refuse to sell my TIC share to someone because of race, religion, family status and gender?”

“Yes. Completely legal. The sale of a fractional TIC interest is treated as a sale of personal property interest in a joint ownership agreement. Not the sale of a dwelling under the fair housing.”

Fred Glick00:32:10

Right. But again, I’m worried about them discriminating against that buyer because of who they were. See, I’m being really specific.

Drew Thomas Hendricks00:32:19

Ah, that’s where I got confused.

Fred Glick00:32:20

Yeah. Yeah.

Precious Star Moreno00:32:21

And so Drew, you’re more talking about the, the inhabitants of the dwelling.

Right? That they’re able to make that decision ’cause they’re living in tendencies. Is that what you’re talking about?

Drew Thomas Hendricks00:32:31

Yeah. If there’s four of you that own a hou a house and one person wants to leave the other three, have a say in the type of person that can live, buy that third ship that

Precious Star Moreno00:32:40

Got it. As long as they live in the home, they’re, yeah, that’s what I was thinking too.

Drew Thomas Hendricks00:32:43

Partnership agreement.

Precious Star Moreno00:32:45

Okay. Yeah. Thank you.

Mark Levy00:32:46

Similarly to renting a home in your single people residence.

Precious Star Moreno00:32:51

Because you do have a say in that. Who lives with you, who doesn’t.

Mark Levy00:32:54

Exactly.

Precious Star Moreno00:32:56

Okay. Thank you for clear that up.

Fred Glick00:32:59

Just be careful out there kids.

Drew Thomas Hendricks00:33:01

Be careful and don’t trust what I did.

I just typed it in very quickly. I might have even,

Fred Glick00:33:07

I don’t trust Elon.

Mark Levy00:33:09

Oh yeah. Grock is fun. It’s like conversational. The information’s wrong though. Not kidding. I dunno. It’s not bad

Drew Thomas Hendricks00:33:17

For coding, it definitely codes better than the other two platforms that I use.

Fred Glick00:33:21

It’s just everything is just getting better and better and better every day.

So like for example, does anybody use SORA anymore? Do you care about an

Jennifer May00:33:30

I never have.

Drew Thomas Hendricks00:33:32

Did you Fred?

Fred Glick00:33:33

Anybody can sign up.

Drew Thomas Hendricks00:33:34

You’re the one that gave me my first invite I sent you.

Fred Glick00:33:36

I know.

Precious Star Moreno00:33:36

Why do you guys have an invite? ‘Cause I can’t get into the club.

Fred Glick00:33:39

You can get in now. It’s completely open.

Precious Star Moreno00:33:41

Oh really?

Fred Glick00:33:42

Yeah, but if you need an invite code, let me know.

I got five.

Precious Star Moreno00:33:44

Okay.

Fred Glick00:33:45

So.

Drew Thomas Hendricks00:33:45

Well, it needs to be able to do something that’s like,

Precious Star Moreno00:33:47

I just wanna make videos.

Drew Thomas Hendricks00:33:48

Instead of 12 seconds.

Fred Glick00:33:50

Yeah, but it’s stupid. No, you’re better off in Nano Banana. I mean, Nano Banana the bomb. I mean, we’re doing, I’m doing my listing pictures in there. I don’t, right now when I get listing pictures, I get them and I put ’em into Nano Banana.

I don’t hire anybody outside. There’s no need to. Those people who’ve been doing digital staging and all that, they’re done.

Drew Thomas Hendricks00:34:15

Oh, done.

Fred Glick00:34:16

For them. You know, eventually Nano Banana’s gonna do full video. It’s insane right now. And we’re probably the only agency in the country that is not only digitally staging a house with furniture, but we’re putting digital people in them.

Because the idea is I’m marketing your house as a lifestyle.

Drew Thomas Hendricks00:34:40

Yep.

Fred Glick00:34:41

You know, and so I wanna show it. And you’re more induced to look at pictures that have some kind of life to them and something going on. Eventually, you know, if the MLSs get it, get it together.

Precious Star Moreno00:34:55

The MLS is never gonna get it together. Come on.

Fred Glick00:34:57

Which they won’t.

Precious Star Moreno00:34:57

No, they’re not. They’re not.

Fred Glick00:34:58

But if there’s some other, right, they won’t. But if another MLS comes out, or Zillow comes out and says, “Look, upload videos all you want,” and we can upload a, you know, a five second video of people walking around in a kitchen as opposed to having just a still picture.

Something like, I’m talking about Zillow. I’m not talking about the,

Precious Star Moreno00:35:16

Oh, Zillow maybe, but even then,

Fred Glick00:35:17

Zillow is a maybe, right. I have heard secretly there’s somebody coming out with an amazing national MLS product. I know nothing more about it, but it was told to me by,

Precious Star Moreno00:35:28

Are you just saying that?

Fred Glick00:35:30

No, I’m not just saying that.

Drew Thomas Hendricks00:35:31

Is it you? Did you just?

Fred Glick00:35:36

You Drew, if you can figure out how to do it. I mean, but simply, you know, I mean, AI’s just been helping a lot and it’s gonna help sell houses. That’s really the bottom line. We use it for writing descriptions.

Drew Thomas Hendricks00:35:51

Oh, yeah.

Fred Glick00:35:52

You know, all the time. To see a description, fire your agent, or don’t hire them if they’re going to use the word charming in the description.

Precious Star Moreno00:36:00

Oh my God.

Can we get, can we get started on those descriptions? They’re horrible.

Fred Glick00:36:05

Nobody really reads them to the end.

Precious Star Moreno00:36:07

I read one yesterday when I was doing an open house and it was just like, just charming, blah, blah, blah. I’m just like, I’m looking at this apartment that I’m showing for rental. And I was like, it was so dusty and grimy.

And I was just like, who, who wrote this? Because this is not charming and this is not queen. And this is not, I don’t know what they said, but I was horrified. They typed it into ChatGPT for sure. ‘Cause I was scared.

Fred Glick00:36:31

Didn’t even do that. They used their old script that they’ve been using for years.

Precious Star Moreno00:36:35

It was bad. It was bad. It was under this underpass in Oakland. It was a thing. It was a thing.

Drew Thomas Hendricks00:36:40

We way close. Yeah.

Precious Star Moreno00:36:43

So is the people underneath it though? So no, thank you.

Fred Glick00:36:46

Get free name?

Precious Star Moreno00:36:47

No thank you. No, thank you.

Fred Glick00:36:50

Hey, crack must be really cheap there too.

Precious Star Moreno00:36:54

Probably. Yeah, probably.

Fred Glick00:36:54

You don’t need to go out.

Precious Star Moreno00:36:55

And thriving. You know, independent markets right there underneath the underpass there actually, there was a table set up. They were, they were selling something. I don’t know what they were selling, but I didn’t go too close.

Fred Glick00:37:05

Good news.

Precious Star Moreno00:37:07

I was like, oh no. Heck no.

Fred Glick00:37:10

Well, that’s the other thing we didn’t talk about with rentals. If you have a squatter, forget it. Airbnb squatters are a thing now.

Jennifer May00:37:18

Oh yeah. No. I actually had a squatter.

Fred Glick00:37:20

About Airbnbs.

Jennifer May00:37:21

My neighbors are squatters. Which is crazy. The house sold

Drew Thomas Hendricks00:37:26

Your neighbor?

Jennifer May00:37:27

Yeah. It’s crazy. The household two years ago, and they lived in it. They were renting and the person who bought it, they just never pay.

They’ve never paid rent. So the owner comes every so often to check and see what’s like, if they’re gonna move out, he, they have the sheriff come.

Precious Star Moreno00:37:43

They have to be evicted.

Jennifer May00:37:45

Yeah. They’ve tried evicting them a few times, but they lie all the time. And it’s crazy because it’s, it’s a nice neighborhood. It’s not like I live in a place where you’d think that would happen.

Fred Glick00:37:57

You know…

Drew Thomas Hendricks00:37:59

Do you talk to your them?

Jennifer May00:38:01

No, I never talked to them and they never tried, they never tried to talk to me because I did, one day the owner was in front of the house and he asked me for help with something. He was like, oh, I’m trying. And then he told me the whole situation. So now they won’t talk to me at all.

Precious Star Moreno00:38:15

Oh my lord.

Jennifer May00:38:15

They won’t look at me.

Drew Thomas Hendricks00:38:16

Now what happens if everybody leaves? They just go to the store. The owner can change the locks.

Precious Star Moreno00:38:22

No, you can’t do that. It’s illegal. They could sue you.

Jennifer May00:38:26

They do have a notice on their door that says that they have young children.

Fred Glick00:38:31

Oh.

Jennifer May00:38:31

Which they don’t, but.

I think that’s one of the tactics.

Fred Glick00:38:35

They’re playing all the games. The neighbors all get together and decide they’re going to have a block party. And the block party is when everybody is away for two weeks and you hire a guy to come out with two massive speakers and just play helter skelter on a loop tape that aims right at their house.

That might help.

Jennifer May00:39:00

Yeah.

Precious Star Moreno00:39:01

Fred. Okay. Okay.

Jennifer May00:39:03

Just drawn out this long because I would put a tent in the front yard and say, I own that property. I’m just gonna live here.

Fred Glick00:39:09

Let’s call this podcast Why You Should Never Be a Landlord. Especially in California. You’re outta your fricking mind.

I know Jen has been in the property management business. I have, I think Mark has, and now has been, been doctrinated into it. No, no.All these, “Hey dude, you can buy a four unit property.” Blah, blah, blah, “And get cash flow and have the government tell you.” And it’s like,

Jennifer May00:39:41

No, it’s best if you buy a vacant property without any tenants.

Precious Star Moreno00:39:49

Amen.

Jennifer May00:39:50

Or if you can get them on your lease before you close escrow, because I think that’s where the guy across the street messed up.

He had never have them sign a lease with him.

Precious Star Moreno00:39:59

What?

Jennifer May00:40:00

So their financial obligation is to the per the seller?

Fred Glick00:40:03

No, no, okay, let me, let me clarify that. The lease is a sign then to the new owner. You can only be the lessor if you own the property. So that’s the way the leases work. You just assume the lease.

So the lessor, but it might’ve been a crappy lease from years ago, but it, it really doesn’t matter. Even if you had him sign it, this guy would’ve pulled off the same stuff. He just sounds like a creep.

Jennifer May00:40:29

It’s horrible.

Fred Glick00:40:30

You know, tell the seller to call like channel four or whatever and you know, have them investigate it and have scammy tenants.

Good tenants are great. Scammy tenants need to be told, and what they can get away with and what they cannot get away with. And the legislature needs to see what’s really happening on the ground because every time they pass something, they blindly pass it. So the tenants are great because it’s political, guys. Let’s be honest.

Precious Star Moreno00:40:57

It’s horrible.

Fred Glick00:40:57

You know, if you’re managing property in Montana and you don’t pay, I think they can shoot you if you’re one day late. You know?

Precious Star Moreno00:41:04

Really? Is that real?

Fred Glick00:41:05

I’m kidding guys.

Precious Star Moreno00:41:05

Just making that up.

Fred Glick00:41:06

No, I’m making that up. But I’m saying the laws in that state are a lot different than they are in Cuckoo California. Oh yeah. We know it’s cuckoo. Cuckoo for cocoa puffs with this stuff, and it,

Precious Star Moreno00:41:19

That’s why I live alone. Can’t do it.

Fred Glick00:41:21

Yeah. There you go.

Drew Thomas Hendricks00:41:23

This has been another episode of We Fixed Real Estate, doing a deep dive into tenant landlord relations.