2026 Real Estate Market Predictions | OCREIN

Yes, I'm going to talk about President Trump, and if you get triggered because I'm talking about President Trump, sorry, but you'll see why I'm talking about him and what he's done for real estate. He's obviously a real estate investor himself. So, new president in office this last year. Are the adults back in the room? My opinion is yes. Money is green, and woke has nothing to do with it. I'm not talking about any woke stuff. I'm talking about real estate investing and how to make money. Doge—we talked about that last year. Was it going to work or not? Wow! We found out really quick that it actually works, but this government does not want it to work at all. You know, we have too many politicians. that have too many little pet projects that they didn't want killed, and boy, they booted him out real quick. Will Democrats get on board? Obviously not. Sorry, but they're not. What we're going to cover today are the Trump tax cuts. What will the real estate market crash? What will be crashing in my previous predictions for this year, 2025? I'm going to cover 3 team members, Leo, Alex, wherever you are. Yeah. And Lauren and Stephanie, my 3 pet projects for the year. My previous prediction, interest rates would hit 5%, and I was really hoping that it would hit 5%. And the reason I was hoping that is because the last time this happened, Another president was in office. His name was Ronald Reagan. He just got in office after Carter was in office. My first mortgage on the house that I'm living in now, I was paying 14%. And the minute that Reagan got in office, it just went down. And he was what I call the cheerleader for the economy. And once, once people feel good about the economy, then everything feels good, like it can be possible. Well, I guess I was off like a point and a half maybe. No? How much is the lowest interest rate right now? 6?

6.2.

6.2, okay. I got a little bit close, but not there. I'm not going to give myself credit for that. Real estate up, commercial down. That hasn't changed. It's still, it's still the way it is. Uh, commercials coming down. Real estate, I would say if anything, it is leveled off at this point. Uh, Canada, the 51st state. I did not predict that it would be the 51st state. I thought it was just hilarious that he was messing with, uh, other people. Um, I, I watch a lot of YouTube and There's actually referendums in Canada about breaking away, maybe not becoming the 51st state, but their own country. And I think there's 3 provinces that that's happening. Who knows? War on cartels, I did predict. And where are we? Yeah, we're like bombing these boats coming out of Venezuela and we've Nigeria. We've got more military assets along the Caribbean than we've ever had. Who knows what he's going to do, but I did predict that. Yay.

Yay.

Tax cut. The Trump-era tax cuts will be made permanent, and they were made permanent, thank God. No tax on tips, Social Security, and what else? All that's come true. Check, check, check. At-home gym equipment is now a tax write-off. Okay, so you, you can go buy a Peloton machine that you store and never use, and you can write it off. Check with your CPA for that. That was true. Check with your CPA. Will the markets crash? Again, if you watch any YouTube, everybody says it's crashing. I am going to talk a little bit more about that. The market crash is a 3-legged stool. Interest rates are number 1. And as long as interest rates are going down, I don't, I don't see a market crash at all. Employment's number 2. Employment's very low. So as long as somebody has a job, they can make that mortgage payment. Back in 2008, everybody lost their jobs. And, you know, that's what happened in 2008. And then the banks, the banks have not gotten crazy this time at all. You don't see— You know, zero-down loans, you know, warm-body loans like I used to call them. So there's the— I mean, these 3 legs of the stool are still good. I don't foresee a crash. And then, you know, let's define a crash. A crash, is it like 2008 where some properties went down as much as 75%? Or is it maybe like we're headed into maybe a market correction where it comes down 20%?

30%.

30%, okay. Do you own any property in the D.C. area? If you do, the government has started downsizing, okay? So during the stoppage of the government, he started laying off lots of people. And they're not coming back. So if you lived in the DC area or own properties there, you probably have them on the market ready to sell. Okay, I don't know if there's going to be any good deals over there because I don't invest out of state. So what's happening now? Historically, we still have low inventory. That's why I don't see a market crash. Stock market at record highs. I don't invest in the stock market, so I'm not an expert on the stock market. But saying that, it's at record highs. Okay, so you have to be careful that it's— if you're invested in the stock market, I would take a second look at it. Seller's market has slowed to a crawl, and I'd say All the month of November and December, my listings were hardly getting any showings. This weekend, I found through open houses that they were getting a lot of traffic. I have one property for a client, it's a flip in Riverside, and we have 3 offers that we received today. So I think it's getting a lot more positive.

Okay.

Slight growth, appreciation will continue. And I'm talking about California. I don't, I don't know about anything else. Florida, Florida may be the opposite. Florida, I think, is in a downturn, but it's in a downturn for a lot of different reasons. Insurance, uh, the condo situation, um, you know, all, all sorts of problems that they have over there, but Foreclosure rate is actually down. And in 2008, there was literally thousands and thousands of foreclosures on a weekly basis that we used to go to the courthouse steps and buy foreclosures at the courthouse steps and not have any problems. Like today, I would say maybe if you find 10 or 15 that are going to actual foreclosure, That's a lot. And so that's what I'm saying. It doesn't even compare to that. So not something that I would look at. Preparing for '26, interest rates won't come down until after April 2026. And does everybody know why that's going to happen? Because the Fed's going to get kicked out and they're going to put somebody favorable in there. And again, the Fed doesn't have a lot of control on mortgage rates, believe it or not. But it's a positive thing. It's like, okay, we have a new Fed and he was appointed by Trump, and I'm sure he sat him down and said, you better start lowering these interest rates to kind of get things going, get the economy going. So that's, that's why I see that things are going to change. Learn how to buy assumable properties. And I want you to check with Stephanie if you raise your hand, okay? Why wait for interest rates to drop? She's actually helping people out of state now find assumable properties. We got really excited the other day because she found one at 1%, and I said, oh gosh, call, I want that one. But it was a typo, it was a mistake.

Okay.

But we're getting them at 2.5%, 3%. Out of state, we're getting— I found one today in Texas, and it was, uh, what do they call it, a barn what?

Barndominium.

Barndominium. If you don't know what that is, it's a giant barn, and it was like 2.5%, but it looked like a barndominium, and that one was only $5,000 down to take over that loan. So if you're interested in investing out of state and you want to assume a low interest rate loan, you don't want to wait until something happens next year, please reach out to Stephanie and she can help you with that. Learn how to flip mobile homes. Alex? Leo? I am doing one with Alex right now. We actually took out a single-wide Completely out. He's got all the videos and everything of what he did. And then he put it— we put a brand new double-wide in there. Um, it's on the market like as of Friday or Saturday. It's on the market getting showings. We're supposed to get an offer this evening. Who knows? Leo, and, and that's on property that we own, so you own the land underneath. Okay. Leo and I are doing a flip where it's in a park, and Leo has found a special place in LA where the park is amenable to having us flip properties. How many have you done in there? 3. He's done 3. Andy did 1. I've got another agent that did 1 or 2. Reza, how many did he do? 1 or 2? 2. Okay, that's totally different. Yes, I have to pay the space rent every month, but the process is the same. It's, it's like flipping a house, but it's a mobile home. So we're doing that. If you're interested in something like that, then please reach out to Alex, please reach out to Leo or my son Andy to learn about that process.

Okay.

My oldest son is— I call him a hacker because he likes to do a lot of internet stuff, and I hired him to put together a multifamily home calculator that's on my website. So if you're looking at multifamily and you want to go in and figure out all the numbers and stuff, it's on my website. So just go to my website and you'll find it there. Okay, if you run into any issues or you think anything is not correct, please let me know and I'll go back to the hacker and have him fix all that stuff. Okay, so it's, it's there if you're buying multifamily and you want to kind of figure out whether it's going to be worth it or not, go there. Learn how to pay zero taxes when you withdraw money from your 401. Must be 59 and a half or over. Now, this is my idea. I have not heard this anywhere else. This is— I like literally, I'm in my sleep and it came in my sleep. So I don't know if it was some alien that got into my head. What I am talking about is again, is assumable loan strategy. And I'm looking in California because I like California. I don't necessarily want to go another state. I would be like everybody else. I don't know what's going on in another state. So Stephanie's looking for me Riverside, mostly 2.5%. And what I'm looking for is something that is going to cash flow. I don't care if it's a dollar. I really don't care that it's a dollar. What I care about is I'm going to put $50,000 to $100,000 down on the property. I'm going to take that out of my 401 because I'm old enough and federal government says you have to start taking it out. Okay, if I take out $100,000 and I buy a property with an assumable and I'm breaking even— even if I'm breaking even, I'm fine, okay, because I need the tax write-off— then I take that property and I do cost segregation on it. If it's $400,000, I'm assuming that I'm going to be able to cost segregate probably $100,000 of that. So follow my math here. $100,000 for my IRA that I have to pay taxes on, cost segregation $100,000 that I can write off. So what do I pay for that, taking it out? Zero, right?

Zero.

Is everybody with me? Is that a good plan? I hope. Is there any CPAs that want to dispute what I just said? No? Yes? Yes? No? Okay. That's my plan, to take my money out and buy a property every year until I'm not here anymore. Every year and not have to pay Anything from my 401 withdrawal. Okay, now understand you have to be 59 or over to withdraw without a penalty, and you also have to be a real estate professional. Okay, you have to designate somebody in your family as a real estate professional because that's the only way you're going to be able to write this off. Okay, so with those 2 caveats, This is an example of a property that we found. Sales price $439,000, loan $2,196 a month at 2.75%. The loan amount was $380,000, so you can see that there's a $59,000 gap. That's it, $59,000. I can buy this place. Taxes are $450.

$450.

Insurance, $200. Total, $2,846 a month. I can rent it out for $2,800 a month. I'm negative cash flow $46 a month. Am I okay with $46 a month negative? I'm okay with it. Again, I've got plenty of write-offs that I need, so this is, this is okay with me. Um, So if I withdraw $75,000 from my 401, I do cost segregation and I get $75,000 back. I pay the IRS zero. That's my goal. Zero.

Hold on.

My predictions for 2026 interest rates. I'm going to say it again. Interest rates down to 5%. Okay. I hope I can get there. Uh, Leo, where'd he go? Oh, Leo, Leo, Leo's— Leo's goal was to get his broker's license, but I think you just did that a couple weeks ago.

Yes.

Okay. Uh, Leo's expanding in into commercial, but you were doing a little bit of that as well. Uh, Leo has a brokerage underneath my brokerage. I don't know if he's going to stay or not, but You know, I don't hold anybody hostage. If he wants to leave and take his agents, it won't make me sad. I am always predicting good things for Leo. Leo's a very smart person, investor. He does a lot of things out of the box, which I like. Okay. Real estate market up or down? I think residential is going to keep going up and commercial is going to go down. Alex and Lauren, I predicted last year, number one, they were going to be with child. Okay, she is with child. Okay. I predicted that it was going to be a boy, but I wanted a girl. girl because I wanted him to be a girl dad. It's a boy. Okay? It's a boy coming in April on Tax Day, April 15th. Okay? Trump just also passed whatever you want to call it that he is giving every child born from next year on $1,000 to put into an account that will grow until their 18th birthday, and then they can do whatever they want on their 18th birthday with it, which is the only thing I disagree, because can you imagine an 18-year-old with— if you only do $1,000, I think you end up at 18 with maybe $40,000 or $50,000. He's encouraging parents to put in $5,000 a year. And then that brings it up to like $600,000 or $700,000 when they turn 18 because the magic of compounding. Okay, so please don't get triggered. That's what Trump did. That's what I encourage you to do if you have children, because that's what he's encouraging everybody to do is have children, is you have these accounts and then obviously Like if you want to— Like it's very similar to a 529 plan. If you're not familiar with a 529 plan, it's investing for a child's future education. It's very similar to that, except the 529 plan, which I have set up for my grandkids, I'm always in control. I never lose control. So they can't just go out and spend the money when they turn 18. I have control of the money and can send it to the school that they're going to. Okay, so that's why I disagree with giving them control when they're 18, because they're not adults yet. Okay, but anyways, I predicted that and it came true. Another pat on the back for me. Trump will begin fixing the housing market. There's things out there, 50-year loans, which It's not going to do much. $20,000 credit for buying a home. When Obama came into office in 2008, the housing crash, he said, if you buy a house, you get $10,000.

Okay.

It was just really the perfect time. I bought each of my kids a condo. At the time, the condos right before the crash were at $500,000. We ended up buying condos for them at $100,000 to $150,000. Okay. And were they excited when they got that money back from Obama? And I said, well, here, pay me back. Yeah, I'm still waiting for the payback. I never did get it back. So that's what I'm thinking, that he's hopefully going to propose something along those lines. Elimination of capital gains taxes. So people like myself, I've been in my house for 45 years. I bought it for $160,000. It's worth $1.6 million now, believe it or not. It's like I'm frozen there because if I sell it, then I have to pay Uncle Sam. And what did I tell you? I don't like paying Uncle Sam. So I'm frozen there. But if they get rid of the capital gains, who knows? Maybe I'll sell my house. Maybe real estate agents will have more inventory out there. The more inventory, then the prices will start going down because there's more inventory. So even if it's a short-term, let's get rid of capital gains for a couple of years, or let's get rid of capital gains for people like myself who live in the house, principal owner of the house, not for investors, but, you know, That's a lot of us. Remember, we're the, we're the baby boomer generation and we're the ones with all the money. Okay, so if you want some of that, then you're going to have to come up with these ideas. I think he's going to do a lot of that stuff. Okay, so be prepared when it starts to come out. Get ready for all this because there's going to be some really, really good deals and really good opportunities out there. Okay, especially if you're a real estate agent. Stephanie. Oh my God, I have been working diligently for the past year to get her out of what I call the mommy mode. Okay, the, the mommy mode is— oh, I'm telling you, you, you ask her a question and she'll mother you for the rest of your life. She'll give you the shirt off her back. I mean, she's really good at all this stuff. But at the end of the day, you know, does that make you any money? No. You know, you're good friends, but it's not making you any money. So her goal this year, her New Year's resolution is— oh, besides stop drinking. Yeah, that was a— No, if it doesn't make you any money, you're not doing it. Thank you. So I ran across this YouTube guy, and if you take a picture of this, everybody has to see this guy, okay? Because he is calculating when the bottom of the market is going to hit. He says we're in a downturn right now. Not a 2008. And he shows it mathematically. And he says, I, you know, spoiler alert, but you need to, you need to watch this guy. He does everything mathematically. He says that 2027, I think February 2027, will be the bottom of the market. I thought it was really interesting. He really presented it well. And that's the only reason that I have this here. If you have 15, 20 minutes to look at this guy's video, you'll find it very interesting. It really is. It was super interesting to me. That's how come I put it down here. But he is predicting to the month when the downturn in the market is. Yeah.

When you say the bottom of the market, what defines that?

Okay, so 2006, '07, a condo in San Juan in the area I've been buying for the last 50 years was selling— 2-bedroom, 1-bath— was selling for $500,000. 2008, the bottom dropped out. That same condo was selling for $125,000. That's how much it went down.

Okay.

Right now they're back up. They're selling for $500,000 again. So that's what I mean by the bottom of the market. Is it going to go down that dramatically? I don't think so. But he is saying that we're in a downturn right now, and we've got about another year and a month before we get down to the bottom where it starts to go up again. In 2008 and '09, you could see it. You could see that the market is down here, and I was listing probably 10 to 15 homes a month. I was door knocking. These were all short sales. I was negotiating them directly with the bank. I was only working with investors because I knew investors would stick around until the end of the day. It was taking me— 10 to 15 homes a month. Back then when we first started, 6 months to put a deal together. A regular buyer is not going to wait around for 6 months. So that's why I was only working with investors. And I could see that I had lots of investors that wanted properties at $100,000, and then they started to bid it up a year after, and we were getting up to $125,000. And then I had more coming out of the woodwork and offering me $150,000. for these properties. That's what I mean about the bottom of the market. You can see that, okay, we're down here, this is what they were selling for, and I keep very close track of that market because I'm heavily invested in it. So if we're down here and I can see that they're starting to go up, that's what I mean about the bottom of the market. Okay. What's happening next year? January 26th, It's going to be a special event and it's going to be here, and it's what I call Unlock Your Real Estate Success Stand Up and Connect. So next month here, I want you to bring your expertise and I want you to stand up here for 10 or 15 minutes and do what I do and present to everybody here why you're an expert on whatever it is you want to talk about. Okay, that's next month. It's your turn to shine and to tell everybody, this is why I'm the greatest thing since sliced bread. Okay, so next month. And if I don't get a lot of volunteers, I'm just going to start picking people to come up here. So be prepared, whether you're sitting up front or not, you're going to get chosen. Okay. February, again here, multifamily is better than single-family, and Mike is going to speak about multifamily. Mike is going to speak about multifamily, and he's going to tell us everything that you need to know about multifamily. He's written a book on the subject, a great resource. He does pretty much everything out of state, correct? Yeah, it does everything out of state. So great resource, Mike. So it's not Christmas if I don't give away some gifts, and you're going to find these gifts on my website, joeholmes.com, and then go to training, and then you'll find all the books I've written. I've written 7 books. Wholesaling real estate in California, remember, Alex is the expert on that. Subject-to domination, you can talk to me about that. Does everybody know what subject-to is? Yes? No?

No.

No. Oh, we got a no. Subject-to is, let's say, You own a house, it's got $1 million in property value, and you've got a $900,000 loan, and you want to sell it. And I come to you and I'll say, I'll pay you $1 million, but what I want to do is I want to take over the responsibility for that loan.

Okay.

I'm not assuming it, that's totally different. I'm taking over the responsibility to pay that loan. And then I'm a negotiator, so I also want you to take back $100,000 in seller financing so I literally can walk into that property with no money down.

Okay.

Now you may say, I don't want to do seller financing, and I say, okay, not a problem. Well, you know, what's the interest rate on the loan? How much time is left? Maybe I'm going to answer your question here, but I'll get to your question. You are, again, you are taking the responsibility for that loan. That loan remains in your name. Okay, the only time it gets removed is if I pay it off. So if somebody runs your credit, they're going to say, what about this house and this loan? Oh, well, I sold that to Joe. Okay, well, we're still gonna put that, you know, as part of— you want to buy this house, then we're going to think like Yeah, you're still responsible for this loan. Can you get around a lot of that stuff with lenders? Yes, you can say, look, Joe's been making the mortgage payment, and here, here's proof that he's been making the mortgage payment. Because you, you can look on there and say, okay, Joe's been making a mortgage payment. So some banks will say, oh, okay, yeah, he's kind of doing that. The danger— and I'm not going to really say it's a danger, but the danger is that the loan company can actually call that loan due if they find out. In my lifetime of investing, over 50 years, maybe a handful I know that have actually been called, especially in today's economy and market. The banks only care if you send them the money. They put a check mark, we got the money this month. That's all they care about. They're not going to go out there and try to find out that somebody else owns this property. Okay, but it can happen, but it's very rare. Questions? I answered it. Question? I'm sorry, I can't hardly hear you. So I'm just coming back to what you were saying where they can, they can call the loan due. That would be, that would all be disclosed in the due-on-sale clause on the contract, correct? Correct. Okay, correct. Yeah, great point. Um, I'm all about ethics and I'm all about disclosures, and if I'm going to do a deal like that You're going to get about a, I'd say about 10-15 page document. All those sections like he was just talking about highlighted that, you know, these, these are the problems. But at the end of the day, if you want to sell your house and you can't sell it anywhere else, or you need to do like creative financing. In, in 1980 when I bought my house, remember I said 14% interest? The house I sold to buy that I did creative financing. I took back a second on the property, seller financing, and I took it back for 5 years at a low interest rate. And 5 years later, the owner of that property, because the market was going up, he refinanced and I got paid my money. But that's just real estate and always has been. You know, it's just— that's just the way it is. My first property that I bought 50 years ago, was actually subject to. But back then, the banks didn't care. In fact, I went to the bank and I said, this lady is getting divorced, she doesn't want this property, there's little to no equity here, she wants me to take over the loan. The bank said, thank you, you know, we would have had to foreclose and probably lose money. Thank you. And I said, oh no, thank you. Okay, so A lot of these things have been around for a long time. Okay, Flipping the OC, that's a book that I wrote. So if you download that, I have a lot of people that ask me, Joe, I'd like to flip properties. This is the book that you're going to want because I want you prepared before you come to me and say, I'm ready to flip properties, because I'm going to ask you a lot of questions that are on this book. Okay, and the way way I have clients that you know partner with me is I want them educated because my goal is not to raise funds for a property. My goal is to teach. Okay, and the best way to teach is to show you how to do these things. And if you're not ready to do these things, then I don't I don't know a reason that we would partner. Okay, now if you found a fantastic deal and you wanted to partner with me, great. Let's talk about that partner, and then, you know, we'll talk about the logistics from there. But I want you to have a background as to flipping and what it is all about. It is literally a cookie-cutter process. Once you learn how to do one, you just continue to do the next one the same way. It's, it's not Not difficult, it's cookie cutter. Assuming Advantage is about assumable loans, and again, Stephanie, reach out to her. Why I've met with over 500 investors from BiggerPockets in the last 10 years. And that's what I've done. I've been on BiggerPockets for about 10 years, and I have actually met for coffee or lunch with about 500 people. It's like anything else. It's like they come, they listen to me, I give them all the information that they need, try to head them in the right direction. And I can tell you, out of those 500, 15 to 20 have actually taken advantage. And that's not unusual. It's sad to say that, but it is what it is. Okay. Flipping mobile homes, Alex is the expert and Leo is an expert. The last one I want to talk about is adverse possession. Does anybody not know what adverse possession is? You know what adverse possession is? You know what adverse possession is?

Yes. No. No.

No. Oh, some honest people here. Okay, adverse possession is, let's say you are living in your house and your next-door neighbor passes away and you know them very well and you know that they have nobody. They, you know, there is nobody to give their house to.

Okay.

In California, there's a law, and basically it's an adverse possession law, that if you take over that house and adversely possess it, which means you're going to let the whole world know that you're doing this, okay, and you pay the property taxes for 5 years, you go to court and you get what's called a quiet title action The court will award you that house. Did you know that? Really? That's been around like since England came over. Yeah. Okay. And the reason I say that, Alex found this mobile home out in Hemet where he lives half the time. And The owner of the property passed away and his son was there and he's trying to buy it from his son, but it was in the owner's name, so he has to go through probate. The mobile home was— how much was it worth? Maybe $50,000, $60,000, if that much.

Yeah.

And the son said, you know, I want nothing to do with this property. It's like, it doesn't matter to me. I don't need the $50,000, $60,000, Alex. Do what you want with it. And Alex was telling me the story, and I go, have you ever heard of adverse possession? He says no, and I explained him the story, and then I told him what to do. And so him and his wife, who's a real estate agent, went out there. She's a real estate agent. They called the locksmith, they opened up the door for them. Okay, they took possession of the mobile home, they went in and did a little bit of rehab, and he has it rented now for how much a month?

$1,000. $1,800.

$1,800 a month. The space rent? No space rent. No space rent. The HOA fee?

$100.

$100 a year. Oh my God. See, so he's immediately making $1,800 a month. Okay, I helped him lease the place out because he had bad experience with that. I'll get to you in a second. So he has it leased out for $1,800 a month. He will be paying those property taxes for 5 years, then he'll hire an attorney to do what's called a quiet title action, and at the end of the day, he will own that mobile home. Okay, yes.

How much is the property tax?

Yeah, if it was, if it was worth You know, who knows when he bought it? Maybe he bought it for 10, so property taxes maybe 100, the total for the whole year 200 for the whole year. So, and that's what I told him. I said, you know, be careful on your rehab. Don't spend too much because you want to make your money back within 2 or 3 months. Okay, and then after that, you're positive cash flow for the rest of the time that you're there. Okay, he is the owner of the property, but the way I like setting up things, I'm the property manager. So the tenant comes through me for questions and problems, and then I reach out to him because I don't want them to know who the owner of the property is. Okay.

Is there, is there an agreement with the original owner's family?

No, no, no, no agreement. That's, that's the adverse possession part. He knows because Alex told him what he's going to do, but no, you don't need to know.

Okay.

You have to do it before it goes to probate? If it goes to probate, that means that there's, there's an heir. Okay, so no, you can't do it then because the heir is going to get the money. These situations are there is no heirs at all, or there's an heir that said, I don't want anything to do with this property. And the other thing, it needs to be hopefully free and clear, which is what his was.

Okay, what if there is a mortgage?

Then you have to find out who the mortgage company is, which is going to be Not impossible, but difficult, because then you're going to need to make that mortgage payment every month, and that's where the difficulty lies. And again, you're going to have to put all that together number-wise and say, okay, if I have to make a $2,000 or $3,000 mortgage payment, how much can I rent it for, and how much am I actually putting in my pocket? So you have to do those numbers, but it makes it a little bit more difficult. These are properties, and believe me, they happen all the time, What happens in a normal process is nobody finds out for 5 years and the county says, we haven't been getting paid our taxes for 5 years, we're gonna foreclose on them. And then they foreclose on these people and then they end up with the property and the money goes into the coffers of the county.

Wow.

Okay, it happens all the time. You know, unfortunately there's people that pass away Without any relatives. Okay.

I'm curious, you said there's an HOA, so what's the conversation that you have with the HOA? I mean, you're not the owner. How does that work?

I am the property manager. They love speaking with me. Again, they're like banks. Are you going to be paying me every month my HOA? Yes. Okay, not a problem. As long as we're getting our money, we're good. Okay, they're the same thing as the banks.

As long as they're getting their money, they're good.

Okay, she's asking what happens if the son comes back. Yeah, that's a problem.

Yeah, he know her mom.

Yes. Yeah, that's a problem. So possession, if you haven't heard this, possession is 9/10 of the law. Okay? You're not going to kick the tenant out because we have a legal binding contract with the tenant. The tenant has no idea this is going on. So if the owner comes back, then Alex is going to negotiate with him and say, you know, I did all this rehab and I paid your property taxes. If you want it back, then okay, then just pay me this back. But again, this was a probate situation, so he'd still have to go to court and get and pay all those probate fees and put it in his name. Okay, yes, there's a problem if that happens. Okay, so hopefully you want to find it where there's no heirs to come back at you.

Probate.

Huh? Um, I think it still does, but it's a shortened version of probate. Yeah, paperwork and stuff. Okay, but don't, don't tell him that. Okay, so Daniel is here from San Francisco, and I met with him and his wife a few months ago, and they were buying a place from a close friend, and they were doing seller financing, and they wanted me to walk them through that process of the seller financing, which we did. And I said, this must really be a good friend, and it was. They were getting a really good Deal on the property and, you know, seller financing to boot. And then he called me. He's a landscape contractor. And then he called me about this house. He went to do landscape contract, and then the owner was saying, you know, can you like fix my neighbor's house?

Why?

Well, because they passed away like a year or 2 ago and nobody's been by. Nobody does anything. And he called me and he goes, Joe, like Is this like an adverse possession place? And I go, yeah, find out. So we did some research and found out that they hadn't paid the taxes in what, 2 years, 3 years?

3 years.

3 years, okay. 5 years, it's going back to the state. Again, I walked him through the process, okay. He's really good with ChatGPT. He created a property management agreement. Which is what I told him to do. He took possession of the property. It's in San Francisco. The value is $1.3 million. It does not have a loan on it. Did you finish renting it out?

Yes, I finished 2 weeks ago. $4,500.

$4,500 a month. On a $1.3 million property that he's paid the property taxes. He has to do that for 5 years, even though he had to catch up the 3 that were behind. He has possession of the property. He's rented it out. He went in and did some work on it. He fixed it and stuff. Last time I was in San Francisco, he was kind enough to show me. It's a beautiful place. It's, you know, I mean, you know, it's the Bay Area. It's a beautiful place. He, he— uh-oh. Test, test. Battery's dead. Hold on. Hold on. Hold on. Battery dead. Battery replacement. I'm talking too much. I'll answer your question in a second. It's always good to travel with tech support. I highly recommend it. Question?

How do you access the features that take a while to load?

No, her question was, he has to pay back the 3 years in taxes, does that count as the 5? No, you have to, you have to be in adverse possession for 5 years, so he has to pay the whole 5 years. Okay, understand the question and the answer? Okay, yeah.

So he creates a lease agreement to him or to somebody else? Who signs the lease agreement?

Great question. He's the property manager, okay? He created a lease agreement, he's managing the property, so he signs all the lease agreements, which I do a lot of times for my clients, is just sign the lease agreement for them, okay? So it kind of keeps the continuity going on there, and it doesn't, doesn't bring up any questions as far that Tenant knows. Okay, the neighbors are ecstatic. The house has been vacant for almost 2 or 3 years. It's like, we have, we have somebody there, we have a neighbor there. Awesome, you know, great. And plus, he went in and did a lot of fixing up and stuff.

Did you just break into the house? I mean, how did you get into the window?

Okay, break-in is like a bad word, but that's the word. Break-in. In a legal way, Alex, his wife's a real estate agent. They called the locksmith. Locksmith said, who are you? Here I am, I'm a real estate agent. We are managing this place now, but we don't have the key. Could you change the locks for us? Again, they want to get paid. Okay, okay, I'll pay you.

No way!

I don't know how you got in, but probably something similar. Yeah, something very similar. Yes?

It has a mortgage on it.

I couldn't hear you.

It has a mortgage on it.

No mortgage. No mortgage on both of them.

No, no, I'm asking if the house has a mortgage.

If the house has a mortgage, it's very much more difficult because you need to find out who the mortgage company is and then be able to link online to make those payments. And mortgage companies are not going to give you that information. You can call a mortgage company and say, hey, okay. But the, the house was like a hoarder house. It was a— yes, it was. And it was sitting there for 3 years like that. It was a hoarder house. It took how many truckloads of— to get all the stuff out? 7, 5 big jumbo, 20 Okay, yes, it was, it was really bad. I didn't see it when it was bad. I saw when he fixed it up, which is really nice. Okay, any questions on that? Okay, so no, you can manage your own property. You can manage your own property. It is his. Well, how is it not his? He's the owner right now. As far as everybody's concerned, he's the owner right now. Yes. After five years, yes. After five years, he's going to be the legal owner. Correct. But for right now, he's the owner. Yes.

So after 5 years, he gets a lawyer and then the lawyer—

After 5 years, he hires an attorney to do what's called a quiet title action. He goes back to court and tells the court, I've been making the tax payments, here's what I've done for 5 years. I've been adversely possessing this property because look, I put a tenant in there. It doesn't have to be you that's living there, it could be somebody else. But for adverse possession, you have to show that you're doing something that everybody in the world should know that that's what's happening, but they don't. Okay, so that that's the process. No, the the agreement is legal. It's a legal binding agreement between him and the tenant. Okay, because he's the property manager. Okay, so there's nothing wrong, there's nothing wrong with that at all. Yeah, yeah.

They have to put a notice on the newspaper.

That's in 5 years. Yes, in 5 years he's going to have to advertise this is what's happening. If, if, you know, if you're a person that owns this and you know, we didn't find you for whatever reason.

Just like a probate.

Yes, just like a probate. Very, very similar. Yes, I mean, you have to go through a court process and it's like a probate. They're going to charge a certain amount, you know, but again, $1.3 million. He's been getting $4,500 a month for 5 years minus the taxes in the back. Yes, what she said. When you're looking for properties like that, do you look in the delinquent tax rolls? Somebody's thinking. Thank you for thinking. I appreciate it. Yes, the problem with— like, I called my title rep the other day and I said, send me over Everything that in the last 3 years has not been paid. And he already told me, like, Joe, before I send this to you, I want to let you know that I can send it to you today and then tomorrow they pay it. Okay. And plus, the county is literally a year behind everything. Okay. So take what I send you with a grain of salt. And then we started to look at stuff. We looked at like the first 20 and they were all paid off. Okay, so it's a tedious process that you would have to go through, but yes, you can get those records from a title rep, and yes, those are the ones to go look at. The next process is, okay, let me go find out where the property is. You know where the property is, but let me go knock on the door, see if anybody's there. If there's nobody there, then that's a Another positive sign. I would knock on the neighbor's doors and say, hey, I got hired by the family to manage this property, but we're looking for a relative. Do you know what happened? They're going to know, you know, and hopefully they'll tell you, and they will, they'll tell you. So there's a process that you need to go through to get to that point. The easiest way is if you actually are the next-door neighbor and you know That, that's happened. That's, that's the easiest way. But that's not what happened with him, and it's not what happened with Alex. And yes, they're out there. I'm not telling you there's thousands of them out there. There probably are, but you know, there's not thousands of them, and it's a little difficult trying to find them.

Yeah.

Okay, you can find them, but a little bit more difficult than just saying, give me the tax rolls for the last 5 years and just give me the ones that haven't been paid in the last 3 years because that's where you want to start, and then find them that way. You can find them that way, but it's a little bit hard.

After once he's awarded the property, will the county reassess the value and make him pay the new property tax value?

A great question. I have no idea. What he asked was After he gets awarded the property, will the county reassess the property to the value at that point in time and reassess the property taxes? Probably so, but I don't know that for sure.

I would assume they would.

Yeah, I mean, he could say, well, you know, estimate the value 5 years ago when I started to do this, not at the value that it is at that point in time. I don't know what the answer is there. That's a great question, but I don't know what the answer is. I have a crystal ball, but I don't know all the answers. Any other questions?

I believe this happens if you submit a permit to upgrade something and then the city— you do the upgrade and the city charges for new value after the rehab, right?

Okay, so he says if you're going to upgrade something that needs a permit Then the city's going to come over and they're going to reevaluate the property because obviously you put an improvement there. So it's not going to go up 100%, it's going to go up whatever the value is of your improvement. Bottom line there is don't improve it. And that's what I told both of them. I said, you know, be careful how much money you put in because you want to get that money back out in the first 3 or 4 months. Okay, I know Alex is you know breaking even after what two months three months at the most, and hopefully the same with you. Okay, see because I knew he liked he likes things a particular way, so he probably put too more too much money into it, and that's why it's taking that long. Okay, and we're not complaining. Okay, it's 1.3 million. We're not complaining that we had to spend a little bit of money. Okay, and plus all of that you can write off because this is a rental for you now. You can write off all that on your taxes. Okay, and I was gonna say, I don't know why you don't do a cost seg on that. And write off all your W-2 income. Think about that one. Yeah, like you're going to be like Trump. They owe him money instead of the other way around. We're going to call you San Francisco Trump. Yeah, obviously check with a CPA, my disclosure. Make sure that you're doing everything legal. Because I'm not a CPA, but that's a great point. Awesome, awesome point. Anything else on any of my books? Again, they're going to be free on my website for the rest of this month and probably next month as well. So if you want any of these books, just go onto my website and sign in with your name, click the link, and it'll take you to the free part where you can download them. Okay, feel free