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Renting Out Your Home

A few ways to generate some extra dough with your home. Seen in the lat:

You can earn semi-passive income by renting out all or part of your personal residence.

Let’s say you list your house to rent while you take a two-week vacation. If you list on Airbnb or VRBO, you can charge a nightly rate plus a cleaning fee. Airbnb will deduct a commission to compensate itself for advertising your rental and collecting payment. If you rent out your house for $250 a night after Airbnb costs, that’s $3,500.  This is semi-passive income since there is a bit of work involved. You need to take photos of your home, list it on a website, respond to potential renters and arrange to have housekeepers do the cleaning. All told, that’s likely to take an hour or two per rental.

And you can rent to movie producers and event planners through Giggster, Peerspace and Splacer, among others. These sites encourage you to charge by the hour, which can enable you to earn four to five times what you’d get with Airbnb or VRBO. But there are unique risks with having movie productions and events at your home. Be sure to collect a deposit for potential damage and consult your insurance agent.

If you don’t want to rent out your house but are OK with letting people use your swimming pool, you can sign up with Swimply. The same cautions apply.

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Partial Ownership

Here’s a local sample of the new whiz-bang partial ownership craze.

The spec builder tried to sell this for three years before taking this $8.25M cash deal.  The same seller/Compass agent has the listing now, on behalf of the new owners:

ABOUT THIS HOME

This is multi-tasking, La Jolla style: Catch the perfect sunset as you splash in the ocean waves or sip a cool drink in the rooftop saltwater pool. The surf breaks just steps from this 3-bedroom, 4½ bath custom home.

Everything is designed to make the most of the Pacific views. Vanishing window walls transform indoor spaces into open-air living at its finest. The open plan living space has a gas fireplace and a sleek kitchen with a curved island and a space for formal dining.

Exotic materials and touchable textures are used throughout the home, including a back-lit Brazilian granite steam room.

The master suite has a luxurious ensuite with double sinks, soaking tub and walk-in shower. A vanishing window wall opens to a private balcony and stunning ocean views.

Enjoy the rooftop infinity pool area with its 8-person spa and adjoining lounge area with wet bar. Restock the bar from the home’s wine room. And when you’re ready to leave this Pacific paradise, there’s a hydraulic driveway and a turntable garage floor that ensures you always leave facing the ocean.

The home comes turnkey, fully furnished and professionally decorated.

https://www.pacaso.com/listings/6653-neptune-pl-la-jolla-ca

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Pacaso NIMBYs

The fight between the NIMBYs and AirBnb/VRBO/Pacaso homes is only beginning…..

Pattie Dullea stepped out one morning last month in Napa, Calif., to have a word with the young man who pulled up in an antique sports car to tour the home across the street.

“You might not want to buy there,” she said she told the man, who was there to consider investing in the home. “We don’t want our neighborhood to turn into a timeshare neighborhood. And we are going to do everything in our power to make that not happen.”

Such scenes are becoming more common in California wine-country towns where a real estate startup called Pacaso is snapping up million-dollar homes, then selling ownership shares to second-home searchers looking for weekend getaways.

The opposition to Pacaso in Napa is the latest attempt by homeowners to block real-estate companies from changing how homes in their neighborhoods are occupied or owned. Homeowners and local governments have for years fought the spread of short-term rentals made through platforms like Airbnb, and high demand during the pandemic for both vacation and primary residences has only intensified the conflicts.

Austin Allison, Pacaso chief executive and a Napa resident, said the local unpleasantness was misplaced outrage about the larger shortage of affordable housing in California. The company’s 14 homes in the region, which the company markets to up to eight partial owners each, are a drop in the bucket, he said. “This housing crisis is a big problem that’s way bigger than Pacaso,” he said.

Homeowners in the Napa Valley say their quiet residential cul-de-sacs are on the brink of becoming high-traffic party zones and no longer affordable to local families. Anti-Pacaso signs dot property lines. Groups opposing its presence have organized in several towns: In Napa, there is Communities Against Timeshares (Cats); in Sonoma, Sonomans Together Opposing Pacaso (Stop) is active; and in St. Helena, Neighborhoods Opposing Pacaso Encroachment (Nope).

The opponents can count early victories.

On Ms. Dullea’s street in Napa, Pacaso said this month it would no longer market shares in the house it bought there. The company cited community feedback in its decision to sell the house, which it will sell to a single owner. To calm concerns about reducing the stock of relatively affordable housing, the company also agreed to only buy homes priced above $2 million. And to help keep the peace, it has placed decibel limiters on stereo systems in its homes.

Napa Valley’s resistance could become a roadblock for Pacaso’s model, which relies on offering luxury-home stays inside traditional residential neighborhoods and away from typical vacation zones. The company so far has launched in 20 U.S. markets and has plans to expand to Europe.

Pacaso has accused some locals of trespassing and intimidation. One Pacaso executive filed a police report after someone responded to an online listing with the message, “I will burn down any home you buy in Napa,” according to a company spokesman. But the residents involved in protesting against Pacaso say that they don’t trespass or act aggressively.

“I think people need to just chill out and mind their own business,” said Will Maroun, a Pacaso customer in St. Helena who bought a one-eighth share in a house with backyard views of the vineyards. Mr. Maroun was hosting an outdoor dinner for four at 7 p.m. one evening when a neighbor called a noise complaint into the police, he said.

The police ordered him to turn off his music, but Mr. Maroun has continued to enjoy poolside tunes since. “They just haven’t called the cops.”

On Old Winery Court in Sonoma, residents of an eight-home cul-de-sac say Pacaso is the big problem. They are hoping to duplicate the victory won by Ms. Dullea and her neighbors in Napa. They are upset about the new house a former neighbor built, then sold to Pacaso this spring for $4 million. Now they worry their tightknit community will become overrun with part-timers coming and going to the house.

Every yard now has an anti-Pacaso sign, and some cars parked on the street have them, locals say. When a prospective buyer arrives to tour the property, residents alert each other and then step out of their houses, making their presence known, said Nancy Gardner and Carl Sherrill, retired homeowners opposing Pacaso.

“It’s nothing personal,” Mr. Sherrill said. “You might be the nicest people in the world. But we’re going to be angry. Because we’re angry at Pacaso.”

Link to WSJ Article

Everyone Is Doing It

While these purchases will only be a sliver of the five million homes sold every year, they could add up over decades and help to keep the supply of homes for sale somewhat limited.

New funding: Seattle startup Arrived Homes raised $10 million in equity and $27 million in debt financing to help scale its tech-infused real estate model that lets people invest in single-family rental homes for as little as $100. The company’s backers include the venture capital arms of Jeff Bezos (Bezos Expeditions) and Marc Benioff (Time Ventures); former Zillow Group CEO Spencer Rascoff; Uber CEO Dara Khosrowshahi, and other longtime tech execs.

The model: Arrived is a crowdfunding platform that allows anyone to purchase shares of rental properties and earn a passive income while the company handles everything from property acquisition to necessary improvements and management of daily operations.

The idea is to open up access to real estate investing beyond wealthy individuals and institutional investors, and use technology to help identify and manage rental properties. It’s a model used by companies such as Pacaso, another new startup which raised $75 million in March and splits ownership of vacation homes into different pieces as part of an LLC, much like Arrived.

Arrived is not legally permitted to share projected returns but does provide historical data and an investment calculator, as well as case studies. Investors can invest up to $20,000 per house and are paid quarterly. Rental tenants also receive shares in the property. If Arrived sells a home, the proceeds are distributed to investors.

The business: The company makes money in a few different ways, including a commission paid by the original seller when Arrived first buys a home; by sourcing the property and preparing it for investment; and through management fees for its portfolio of homes, such as a 1% management fee on the money people invest.

The traction: Arrived has secured more than 30 properties across Arkansas, North Carolina, and South Carolina; 12 of those are full funded or reserved, with about $3 million in property value funded over the past three months. The company declined to provide revenue metrics or number of users. Arrived is focused on residential homes in the middle of the market that can provide strong cashflow and dividends to users, but is also planning to launch in places such as Austin and Seattle that have strong appreciation potential.

Read full article here:

https://www.geekwire.com/2021/arrived-gets-37m-funding-let-anyone-invest-home-rental-homes-starting-100-share/

“Tenant From Hell”

The majestic home had it all — five bedrooms, four bathrooms, a three-car garage and a spacious basement in a beautiful neighborhood in Colorado Springs. If the single-family house sounds too good to be true, stepping inside the property shows prospective buyers a stunning reality: walls spray-painted with vulgarities, rooms destroyed with a hammer, carpet reeking of human and animal feces, and dead cats locked in a bathroom.

“How do you like the s— on the carpets,” read the spray paint in the dining room.

What was once Suzy Myers’s pride and joy was now every landlord’s nightmare, thanks to a departing tenant who didn’t pay rent, she told The Washington Post. A Tuesday listing on Redfin described the house as a “little slice of hell” that stemmed from, fittingly, “a tenant from hell.”

“This house is not for the faint of heart but for that special person who can see through the rough diamond to the polished gem inside,” real estate agent Mimi Foster wrote. She said in a video tour of the home, “Nothing could have prepared me for what I was about to encounter.”

Link to Full Article

Perma-Squatters

Thanks to the many folks who sent in this article about a seller who stayed in his house after escrow closed. In this raging market, it is customary for listing agents to suggest seller rentbacks as one of the sweeteners to get an offer accepted, and will deliver a nice rental agreement but if the sellers don’t move, what are you going to do? In the more affluent areas, a lawyer’s monthly retainer fee is less than the rent, so the squatter can delay until you pay enough lawyer fees to reach a deal – and it probably won’t include paying the back rent. I know of one landlord who hasn’t received one penny of his $5,000+ rent since covid started!

When Tracie and Myles Albert purchased a beautiful four-bedroom house in Riverside, California they never realized that at the end of escrow the seller would suddenly refuse to give up the keys and leave.

“It’s just draining, emotionally and financially,” says Tracie.  On January 31, 2020, the couple purchased the home. More than a year later, they still haven’t been able get inside their property. Chris Taylor is the Real Estate Agent who sold the house to the Alberts from a man who wanted to sell immediately.

“He needed $560,000 from the sale of his house in two weeks and he called me on a Sunday, so in traditional real estate there’s no way of doing that unless the buyer’s a cash buyer,” says Taylor.

Since the house was free and clear and worth more than $560,000 the Alberts felt it was a great deal.

“It took us scrambling to get everything we had, our life savings put together and a hard money loan on top of it to make that happen,” Myles stated.

During escrow they discovered there was a $30,000 tax lien on the house which slowed things down, but in the end, all parties signed on the dotted line and the sale was completed.

“We own the house, outright. That’s our house and it’s all in a contract, written, legal, done. He’s been paid the money in his account. How could we have no rights to go into our home,” asked Myles.

Taylor says, “It’s genuinely unfathomable to me that we live in a state where something like this is even possible. They closed escrow on this home January 31, 2020.”  The Alberts and Taylor have contacted authorities and tried to get the seller evicted but because of the pandemic, they’ve gotten nowhere.

“They have this case under a COVID tenant situation, of no evictions when it doesn’t fall under that at all. This transaction went through in January 2020 before any of that, it isn’t a renter who was getting thrown out. It’s the guy who collected all of this money,” stated Myles.

Eviction Attorney Dennis Block says, “This year alone, we’ve handled at least 7 maybe 8 cases of this exact type of situation.”

He says people purchasing homes need to be extremely cautious, especially if they notice any red flags during the process. Block says what’s happening to the Alberts could happen to anyone.

“This person is not a tenant, it’s a previous owner who is enjoying the benefits of the money that was transferred to his account but of course doesn’t want to move out of the premises that he no longer owns,” Block stated.

The Alberts filed an unlawful detainer but because of the California eviction moratorium, the case has been stalled. Time is simply passing by and the immaculate house they fell in love with is now becoming an eyesore.

Tracie says, “I tried watering the lawn one time and he came out and ripped my sprinkler lines, ripped all the wires. The Palm trees are dying, everything was beautiful and everything is dying.”

Her frustrated husband says when he contacted law enforcement, they told him, “If you were in Arizona, if you were in Nevada, this wouldn’t be a problem, you would just go take your house back. But in California, like our hands are tied, even though we’re on your side, there’s nothing we can do.”

https://www.foxla.com/news/couple-buys-riverside-dream-home-but-seller-refuses-to-move-out-in-eviction-moratorium-loophole

Downtown Carlsbad is Cooking

Two downtown residential condominium buildings with a mixture of market-rate and affordable housing, ground-floor commercial space and underground parking got the go-ahead for construction last week from the Carlsbad City Council.

The Carlsbad Station project will cover 1.76 acres of the city block between State and Roosevelt streets, north of Grand Avenue and a half-block walk from the Carlsbad Village train station. The site includes several different lots with eight buildings constructed between 1947 and 1981, some which are occupied by long-time tenants such as Hennessey’s Tavern that could resume business in the new structures.

The two four-story buildings will include 79 residential condominiums ranging from 14 one-bedroom units, each with 747 square feet, to four four-bedroom units, each with 2,877 square feet. Twelve of the condos will be reserved for occupants who qualify for affordable housing and will be indistinguishable from the market-rate condos. Four commercial units will occupy the ground floor, and the underground parking will have 143 spaces.

Frontage along Roosevelt and State streets will get new curbs, gutters, sidewalks, bike racks, street trees and landscaping.

The City Council voted 3-1 Tuesday to approve a tentative tract map and site development plan for the project, with Councilwoman Cori Schumacher opposed. Schumacher said the city should be “more prescriptive” with its affordable housing requirements, such as specifying whether the affordable condos should be for sale or for rent. City officials said those details will be determined later.

Mayor Matt Hall and a number of long-time Carlsbad residents praised the project.

“You truly went far and beyond,” Hall said of the applicant McKellar McGowan, a San Diego real estate development firm. “I like the architecture and that you will bring back some existing tenants.”

Parts of the two buildings will be set back from the street to make them appear less tall than they really are. The side facing Roosevelt will only have three stories at the street, and the side facing State will only have one floor at the street, with the upper three stories set back 50 feet. A pedestrian promenade will connect Roosevelt and State streets between the two buildings.

Several speakers said the project is an example of “smart growth,” in which more dense residential development with affordable homes is built near public transit, jobs and services.

“This is exactly where a mixed-income project should be located,” said Angeli Calinog , a policy manager for the nonprofit public transit advocate Circulate San Diego.

“This is one of the best projects we’ve seen in many, many years, and the first one to use the new Village and Barrio Master Plan,” said Gary Nessim, a Carlsbad Village business owner. “It fits the community very nicely.”

While all the speakers at the council meeting supported the project, a few residents wrote letters in opposition.

“It’s sad to see major developments taking over our beach town,” wrote lifelong resident Adam Faringhy. “I beg of the City Council to slow their pace and consider saving some of our local landmarks.”

Others said the project would increase traffic congestion and force out more small businesses.

But most were in support, including Christine Davis, executive director of The Carlsbad Village Association, a nonprofit that promotes business and culture in the Village.

“While a large project, it has been thoughtfully broken into smaller pieces to blend into our downtown environment,” Davis wrote.

Link to Article

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