The Difference Between a Condo and a “Stock” Co-op


Condominiums and co-ops can be confusing since both types of projects can look the same. The main difference is what you actually own.

A condo means an undivided interest in common with the other condo owners in a portion of real property together with a separate interest in space called a unit. A “Stock co-op” (also called a co-op) means a development in which a corporation is formed for the purposes of holding title to the improved real property, either in fee or by lease, and the shareholders receive a “right of exclusive occupancy” in a portion of the real property and title to which is held by the corporation.

When you purchase a condo what you actually own is the air space within the walls of the unit. The air space is shown and defined on the Condo Plan which shows the dimensions of each unit and and their location within the boundaries of the project. You do not own the land that the condo project sits on. You will also own an interest in the common are of the entire project. The amount of this interest will be established in the Covenants, Conditions and Restrictions (CC & R’s) that govern the use of the entire project. You will also become a member of the Homeowner’s Association (HOA) which is responsible for,among other things, the maintenance and upkeep of the common area, and you will be assessed dues, usually monthly to help fund this maintenance and upkeep.

When you purchase a Co-op you are not purchasing any interest in real property or air space. You become a shareholder in the corporation that holds title to the project.By becoming a shareholder you receive a right of exclusive occupancy in a portion of the project. This right is customarily in the form of a lease between the corporation holding title to the project (Lessor) and the shareholder (Lesee). The portion of the project you gain the right to use will be described in the lease and will be shown and defined on a diagrammatic floor plan which can be recorded as a separate document or made part of some other document. The use of this portion of the project will be regulated by some form of CC& R’s and may be further regulated by the terms of the lease. Just as with a condo you will become a member of an HOA with similar rights and obligations as outlined above.

Remember: A condo is owning real property and a co-op is owning shares in a corporation.

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Community Property with Right of Survivorship-Property Vesting in California


Community Property with Right of Survivorship is a relatively new way for married couples to hold title to property in California. It combines the best features of Joint Tenancy and Community Property and enables property that was deeded after July 1, 2001 to pass to the surviving spouse without having to go through estate administration known as probate.
Historically the benefit of holding title has been a double adjustment in the income tax valuation of inherited assets to reflect the new fair market value at the time of death of a spouse.
The following is an example of how the taxable profit from selling a property can be affected by holding title as Community Property, Joint Tenancy or Community Property with ROS (Rights of Survivorship).

Charlotte and Jake bought a house in 1989 for $100K. Five years later they moved out converting it into a rental. After many years, the rental property has depreciated down to a basis of $40K while the value has risen substantially. If it sells for $300k (after commissions and costs of sale) the story has 3 possible endings, depending on when it is sold and how they hold title.

1.Taxed to the Max
Jake gets terminally ill. During this time Charlotte sells the property. The profit ($300K-basis of $40K) $260K is taxable.

2. Lower Taxes Higher Fee
Jake passes away. Charlotte sells the property immediately thereafter. The amount of taxable profit depends on how they hold title. If held as Joint Tenants, the basis in inherited property is adjusted to the date of death value. This would apply to the half of the property Charlotte inherited from Jake. The other half that she already owned was valued at $20K (1/2 of $40K basis) and stays the same. Jake’s half, now owned by Charlotte is adjusted to $150K. Charlotte’s new basis, her $20K plus Jake’s $150K is now $170K. When she sells for $300K only the difference of $130K is taxable. Under Joint Tenancy the property automatically passes to Charlotte without passing through probate thus avoiding the delay and the expense associated with the process. Unfortunately under Joint Tenancy only the deceased spouse’s one half interest obtains an adjusted tax basis, which is equal to one half the fair market value of the property at the time of death. If held as Community Property each spouse owns the entire property so Federal Tax Law says that the basis is adjusted to the date of death value for the entire property. Charlotte’s basis is now $300K. When she sells for $300K, nothing is taxable.
However a drawback as vesting Title as Community Property is the legal expense often required to process the estate through probate. Probate fees typically equal about 5% of the gross value of the estate. Probate takes a year but can easily last twice that. During that time hearings are held before assets are sold or money paid out to the family.

3. No Taxes-No Fees
If held as Community Property with ROS upon the death of either spouse property automatically passes to the surviving spouse without probate and the property receives a 100% adjustment basis for tax purposes. This allows the inheriting spouse to avoid probate and sell immediately, if desired, with no taxable proceeds from the sale. 

How you hold title can greatly affect the outcome of a sale. Contact your tax advisor to find out about your unique situation. 


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Facebook-It’s Not Just Another Pretty Face!


For better or for worse, social networking is here to stay. It’s the way we communicate in the 21st century, and if you feel it’s just not the same as a phone conversation, you are correct! But that doesn’t mean it’s worse—–in some cases, it can be better. We all recall the first “touch” to a client (friend) may be a post card or a phone call—-think of making a nice comment on their Facebook page as the same thing.

We all lead busy lives and none of us ever have enough emotional support, especially in the Real Estate industry which is loaded with stress, egos, tempers flaring, irate clients and broken “promises”. Sometimes you just don’t want to “talk about it”. You want to partake in a hobby, take a long walk, cook, or a multitude of other things. When I sign onto Facebook, I find a varied assortment of photos and conversations. Somebody’s dog just learned how to sit, an old friend just became a mother for the first time, a co-worker got a promotion  In all of these scenarios, people are reaching out to other people. They want a “good job” or “go get ‘em” or “you ROCK!” as a comment….a little praise, ego-stroking, emotional support etc. Wha’s so bad about that? I just got a “thumbs up” on a photo I had taken and that I was proud of—it really made me feel good. Now of course these comments can get out of hand, and drama rules the day, but I just “hide” those negative friends or comments.

I also have learned alot about some of my Facebook “friends”. Many are not close friends, but I have found out we share the same interests or hobbies, or have mutual friends. One person I found had a cousin I went to elementary school with where we had been really good friends. A few of us have formed a group called “Healthful Food Club”, where many of us are vegetarians, sharing recipes, food industry news and trading ideas on how to eat better. How comforting to come home from a long day and check into see “Omar’s Food Diary” and his progress…he’s on a 99 day quest for healthier eating. Groups of people with similar interests and ideas are the basis of many long term friendships.

Reaching out to other people and sharing similar interests are the basis of forming friendships.

People say social networking is a waste of time, and why don’t we just meet face to face? Well I don’t know about you but with my 200+ friends on Facebook, that would not be humanly possible. How great is it that we can have a social meeting place to reach out to each other and make new friends? They are of course virtual friends, but I have made many new “real” friends from Facebook. We should  take advantage of everything we have to network. Isn’t that the crux of our business?


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Every Referral is a Diamond


I recently got a referral from someone I didn’t know well, but we have a mutual friend who knows I specialize in income properties and niche commercial. I took the lead, followed it up and obtained a listing.

 In looking at my present clients, I realized several clients are a result of Referrals, a few from marketing, one from a sign and another from a family member.

 Each client represents a conduit to more business—think about Facebook, and how 1 friend has a multitude of connections and so on and so forth.

 Taking care of your present clients is so important. Because trying to obtain more referrals may be a result of a newsletter article or even a thoughtful birthday card.. If they are pleased with your services, then that’s easy—they will be delighted to refer you business.


 It’s a “no-brainer”


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Tiny House People—How Much Is “Enough” Space?

Have you ever wondered about how much space you really need to live comfortably? It seems Europeans have different ideas than Americans. Could you live in 150 s.f.? Impossible? Watch this film & see how ingenious some folks are.

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What’s Property Damage?

What’s Damage?

Messy junk in  junkyard.I’ve been asked by my clients who act as their own property manager, what is considered damage after Tenant moves out? The laws in every state differ, so I am not addressing CA laws specifically.

 When a tenant moves into a dwelling, there’s a Move-In Checklist that is given to them. I allow 7 days, giving the tenant some time to settle in. I explain this is simply a “statement of condition”, not a “request for repairs”. BIG difference.

 If the owner would like to take photos, that’s fine. But unless you have a commercial grade camera with zoom lens, dirt on the carpet or wear and tear on the floor is not going to be visible. My advice: get the place in great shape, maximizing your ability to attract quality tenants and insuring your property value stays high.

 Wear and tear: this is something you can’t expect your tenant to pay for. If you have a 10 year old carpet and tenant leaves a small stain that is barely visible, forget it. If the carpet was brand new and  the cat urinated on it, you can have them pay for the entire carpet replacement. If you have screens that were torn by cat (and I have yet to see any catAngry cat not participate in this creative past time)or blinds that were bent by a curious child, then that is damage. They need to pay for replacement, but I’d be very lenient with the cost, since kids and cats act like….well, kids and cats. I delineate between “malicious” damage and accidental or “wear and tear” damage.

 Carpet cleaning is a sticking point since my personal feeling is if the carpets were cleaned before move-in, than tenant’s dirt is on the carpet, and they need to pay to remove it. This is a gray area, since it’s believed to be “wear and tear” but I always deduct for this.

Handsome man painting wall.Repainting is just a fact of life when you own property, but do you expect a freshly painted unit to be filthy after a 6 month lease? Absolutely not, and that is not normal “wear and tear”. After 2 years, I sometimes only wash walls with TSP and touch-up scuffs, but that’s after a really good tenant.

 Lightbulbs: Yes, this has been an issue, since I have properties with recessed lighting and bulbs can cost $6.00/each. Should tenant replace burned out bulbs after move out? Absolutely, or they get the cost deducted from their security deposit.

Being fair is the name of the game….there are just some things that as owners, we have to write off as business expenses. And inappropriate security deposit deductions will many times land you in court.

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Rentals-So Easy Even A Caveman Can Do them-WRONG!

Finding tenants is so easy—all you do is run an ad on Craigslist, answer the e-mail, show the home and BAM—you got a tenant!

 I wish it were that easy!

 For the uninformed owner, finding tenants, getting all the right documentation together, and managing the property seem like a “no-brainer”. I’ll tell you a little secret: it’s not.

The landlord tenant relationship is adversarial at best, so knowing this from the start alleviates making some very dumb decisions.

 Example #1

 Henry owns a home. He works a day job and decides he’d like to “save some money” by finding his own tenant. He runs an ad, finds a tenant, signs a 6 month lease and thinks he has done his job. 3 months later, the place is trashed, and rent hasn’t been paid. Henry thought she was so nice, so didn’t get a security deposit, or even a credit report (where he would have found out she had a previous eviction). When on month 2 the rent was 2 weeks late, the “tenant told him she would pay.” 3 weeks went by, no rent. Henry called the tenant (NEVER beg for rent) and she gave him a “sob story”. He finally called his Attorney and $3000 later, got her out.

 Example #2

Annette owned a lovely large, sprawling home. She wanted to take a year sabbatical and find tenants to rent her home. She ran an ad and found a nice couple, agreed upon a rental amount and drew up “her own lease”. The tenants said they “loved to garden” so Annette left the landscaping and watering up to them. BIG mistake! Upon Annette’s return, the landscaping was overgrown, or dead, poorly maintained and not watered for months (water was too expensive). Since this was a gray area in her “homemade” lease, she could not hold tenants responsible.

Paying property management to maintain your property is worth every cent. The above scenarios would never have happened if I managed the property. I LOVE single family homes. Call me for a FREE consultation.


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Move-Out Cleaning-How I Solved a Problem and Empowered My Tenants



Move-Out Cleaning-How I Solved a Problem and Empowered My Tenants


When I deliver an apt. to a tenant, the place is thoroughly cleaned. If my tenants leave the place as it was on the day they moved in, they get their entire security deposit returned. Unfortunately, what I consider clean and what someone else considers clean are 2 different things. An argument always ensues, where the tenant swears they spent 6 hours scrubbing the floors, kitchen and bath—yet the interior of the oven is dirty, the ceiling fan blades are covered with soot, and the refrigerator has remnants of last night’s dinner. Even with a professional cleaning company, I have had tenants complain about the quality of the work (and I have agreed). What’s a Property Manager to do? I have addressed this issue in the following way:

I allow the new tenant to bring the place up to “their standards” and pay them $25/hour for doing so. I deduct this amount from the previous tenant’s security deposit, and credit it to the new tenant on the subsequent month’s rent. Since it is usually only about 2 hours time, the $50 is a bargain for me to pay. Cleaning companies charge more than 2-3 times that for a couple of hours cleaning. The old tenant is thrilled not to have to pay $150 and the new tenant is thrilled because they get a deduction for cleaning (that they most likely planned on doing anyhow).

Everyone is happy and I empower my tenants in the process and an empowered tenant is a happy tenant!



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Closing Costs: Why Do We Pay Them and What Are They?

As a new Buyer of property in San Diego, CA you may be budgeting for the purchase of your home. Closing costs are a necessary part of the equation. This list will give you an idea of what is typically included. The Buyer and Seller may negotiate “Who Pays What”, but once the contract is signed instructions cannot be changed unless mutually agreed upon by all parties in writing.

Real Estate Commission:

If the property is listed or sold by an agent there will be a commission to calculate.

The Seller is required to pay the taxes through the last day of ownership.

Homeowner Insurance:
The Buyer of property in San Diego,CA
will purchase a fire and hazard insurance policy.

Assessments and Liens:
Assessments and liens against individuals and/or the property must be paid off before the close of escrow. The Title company will normally show much of this information in the (PR) Preliminary Report and the escrow officer will work with the appropriate parties to clear up any problems so that escrow may close.

Escrow Fees and Title Insurance:
The Seller or Buyer can pay the Title Insurance fee that is referred to as the Owner’s policy. The owner’s policy covers the new owner’s interest and “title” to the new property. The Buyer of property in San Diego,CA typically pays for the “Lender Policy” that will cover the new lender’s interest in the “title” to the property. Escrow fees are usually split 50/50 between the Buyer and Seller.

Inspections and Other Fees:
Attorney fees
Loan Fees
NHD (Natural Hazard Disclosure eports)
Pest Inspection and Correction Costs
Document Preparation
Deed Recording
Home Warranty
Tax Service Fees

Specific amounts of fees can vary, but your agent can run a Net Sheet to give the Buyer of property in San Diego, CA a pretty good summary of what to expect.

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The Charlie Stone School of Hard Knocks-Investing in San Diego, CA Property

My dad wasn’t a wealthy man, nor did he have more than a high school education but he was one of the smartest people I knew. His advice has gotten me further than much of the knowledge I have accrued from college degrees and industry courses. Being raised during the Depression, he had to assist supporting his mother and 4 siblings when he was 12 years old (his father had died very young) by being a golf caddy. There was no welfare or public assistance at the time. Fortunately, the Stone brothers had inherited very high intelligence and a strong work ethic. His brother, my Uncle Harold, had nothing more than an 8th grade education, but became extremely successful in the stock market. My dad worked at General Electric for 35 years. He also ran his own business, designing wrought iron fixtures for industry. He was always resourceful and optimistic.I never once heard him complain about what he didn’t have. He was a man of short stature, reserved in nature but one of the most honest and diligent I knew. 

Here are the basics of his business plan:

If you can’t take the heat, get out of the kitchen. This was advice he gave to me when I was complaining about rents and tenant issues. In other words, shut up and keep on working hard, or get out of the business. You will always have battles to fight, no matter what industry you are in.

If you invest in several pieces of Real Estate, you will never be homeless: Perhaps not 100% true, but more than once did I have to move into a rental unit I owned to compensate for a slow R.E. market and less income than I expected that year.

There is no such thing as being a “little” honest. Either you are or you are NOT. Hmmm. We all don’t like to hear this, but it’s the truth. Integrity goes a long way in this industry.


Buy “bread and butter” property. In a market downturn, the demand will be much higher than high end property. Wow, have I learned this. Not only the past few years in San Diego CA Real Estate but also in Boston in the early 90’s. The luxury condos were sitting empty and my phone was ringing off the hook for the “less fancy” affordable units.

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