WEBVTT 1 00:00:00.966 --> 00:00:15.496 Munzer Ghosheh: Good morning and or afternoon, wherever you are, everyone, and thank you for joining us for this edition of our monthly education. Webinar. Thank you again for taking time out of your busy schedule to join us today 2 00:00:16.416 --> 00:00:32.015 Munzer Ghosheh: we at the entrust group strive to continuously provide our listeners with new information and content to better prepare them in becoming experts. In the self-directed retirement plan investing world. 3 00:00:32.206 --> 00:00:37.305 Munzer Ghosheh: We invite guest speakers and experts to our webinars with that in mind 4 00:00:37.656 --> 00:00:50.745 Munzer Ghosheh: for the purpose of educating our listeners on the benefits of self-directed retirement plans and the different investments one can take advantage of through this vehicle. 5 00:00:51.286 --> 00:00:55.595 Munzer Ghosheh: I think today's guest speakers and topic is no exception. 6 00:00:56.626 --> 00:01:22.935 Munzer Ghosheh: excited to have with us today the Ruthian investment team, part of that which is Kimberly, Conti Degrude and Dan Degrude, who will talk to us about the ins and outs of hoas, and so on. I've known Kim and Dan for many years. They're valuable clients of the entrust group, and I'm really excited to have them 7 00:01:22.986 --> 00:01:28.656 Munzer Ghosheh: as part of our webinar and and looking forward to to their presentation. 8 00:01:28.876 --> 00:01:38.515 Munzer Ghosheh: But before I bring on Kim and Dan. Please allow me just a few minutes to kind of discuss. Talk to you about the interest group and our role, and so on 9 00:01:40.406 --> 00:01:41.996 Munzer Ghosheh: next slide, Dan, please. 10 00:01:44.766 --> 00:01:45.356 Dan: And. 11 00:01:49.946 --> 00:02:13.156 Munzer Ghosheh: So disclaimer. Here we have to start with that always that the interest group does not provide any investment, advice, or endorse any products, all information and materials are for educational purposes only. All parties are encouraged to consult with their attorneys, accountants, and financial advisors before entering any type of investment. 12 00:02:14.915 --> 00:02:28.526 Munzer Ghosheh: A little bit about our today's agenda. We're going to start with introducing hoas, reviewing the top, Hoa issues to consider comparing the types of hoas, what to know before inspection. 13 00:02:28.676 --> 00:02:43.236 Munzer Ghosheh: analyzing new laws. And then finally, a bit of Q&A. So please go ahead and input your questions at time allows. Towards the end of the presentation. We're going to go ahead and take your questions. 14 00:02:43.756 --> 00:02:56.675 Munzer Ghosheh: So I'm your host today, Manzer Ghoshea, the regional business developer manager at the End trust group. I've been doing this for over the past maybe 20 years, plus. I've enjoyed working with investors and professionals, alike. 15 00:02:56.776 --> 00:03:01.476 Munzer Ghosheh: educating them on the benefits of self-directed retirement plans 16 00:03:05.566 --> 00:03:15.855 Munzer Ghosheh: a little bit about the interest group for those of you out there that are not familiar with us. We're one of the nation's oldest and largest self-directed Ira administrators. 17 00:03:16.006 --> 00:03:20.715 Munzer Ghosheh: We provide account administration and record keeping for clients 18 00:03:20.836 --> 00:03:29.425 Munzer Ghosheh: and investors who wish to invest in alternative and assets such as real estate, private equity, precious metals, which is 19 00:03:29.546 --> 00:03:33.035 Munzer Ghosheh: very, very popular these days, and so much more. 20 00:03:33.166 --> 00:03:43.776 Munzer Ghosheh: We have highly trained staff with most of us holding the prestigious Cisp, which is a certified Ira specialist certification which is highly regarded in our industry. 21 00:03:44.006 --> 00:03:50.076 Munzer Ghosheh: We pride ourselves with our client education resources that are available through our 22 00:03:50.216 --> 00:03:54.916 Munzer Ghosheh: online library and our monthly educational webinars that we do. 23 00:03:58.936 --> 00:04:22.766 Munzer Ghosheh: For over 40 plus years we have empowered our over 24,000 clients and investors to take charge of their retirement plans. So we currently have over 5 billion dollars of assets under administration and with our 1 point of contact model business model, we provide our clients with superior customer service and faster transaction times. 24 00:04:24.786 --> 00:04:37.965 Munzer Ghosheh: Okay, so now it's time for us to bring on Dan and Kim with with the Ruthian investment team for their presentation. Welcome, guys, thank you for joining us, and the mic is yours. 25 00:04:37.966 --> 00:04:39.366 Kim Conti DeGroot: Thank you. Munzer. 26 00:04:40.186 --> 00:04:47.756 Dan: Thank you, Munzer. So today we're going to start talking about investing in hoas and what no one is really talking about 27 00:04:48.066 --> 00:05:06.596 Dan: by now, I'm sure most investors and homeowners have heard of horror stories about buying and or living in an hoa. Geico even made a commercial on the topic, and while the commercial seems humorous. There's far too many horror stories. I'm sure. We've all heard that revolve around mismanaged hoas. 28 00:05:06.776 --> 00:05:08.926 Dan: having insufficient reserves 29 00:05:09.146 --> 00:05:18.745 Dan: being hit with large special assessments, or finding out the Hoa is involved with a lawsuit usually due to actions of the board of directors or its management company. 30 00:05:19.496 --> 00:05:35.576 Dan: As we go through this. We are not trying to scare you off or dissuade you from buying in an hoa, but rather, we want to give you tools to adequately assess if a certain property has Hoa related issues that may be of concern 31 00:05:37.828 --> 00:05:49.436 Dan: so today, you're gonna be hearing from Kim and myself as well as our partners, John and Amber are joining us. Later on, possibly for our QA session. 32 00:05:50.296 --> 00:05:51.525 Andrew Crawford: Dan quick note. 33 00:05:51.716 --> 00:05:52.256 Dan: Yes. 34 00:05:52.256 --> 00:05:56.876 Andrew Crawford: Can I go ahead and share the poll results of the experience and learning goals? So you can see the audience. 35 00:05:57.593 --> 00:05:58.726 Dan: Sure go ahead. 36 00:05:58.726 --> 00:06:11.735 Andrew Crawford: Cool gonna share that. Now, just so you all see, Dan, as far as who's invested, who's just looking and the main goal today of really learning the different types and how to verify impact. So really excited for what you're gonna present. Thank you. 37 00:06:13.566 --> 00:06:15.746 Dan: Okay, let me. There we go. 38 00:06:18.446 --> 00:06:29.225 Kim Conti DeGroot: Thank you very much for the survey and the information behind it. So you want to invest in a property in an Hoa. What are the hurdles. 39 00:06:29.366 --> 00:06:40.355 Kim Conti DeGroot: Well, until recently, if you were investing in property, you probably did your due diligence on the unit, starting with inspections 40 00:06:40.456 --> 00:06:56.235 Kim Conti DeGroot: just before close, and after spending a thousand to 1,500 on inspections, you find out the Hoa has issues that, had you have known, you would never have spent the money on inspections. And you cancel. 41 00:06:56.646 --> 00:07:13.605 Kim Conti DeGroot: So today, what we're proposing is a shift in how to the information, and at time of purchase one of the main things to ask for at the very beginning is the Hoa Documentation and Financial Review. 42 00:07:14.226 --> 00:07:32.036 Kim Conti DeGroot: The next that you're going to want to ask for is the is insurance. You're going to speak to your insurance company immediately within the 1st 24 h. Give them the address and have them run the address to ensure it is insurable, and that there are no problems. 43 00:07:32.306 --> 00:07:51.636 Kim Conti DeGroot: Then the next you're going to do is with lending. Everybody knows this, but we have some new updated information. Why, it's really important that you look at lending immediately. Don't delay. Make sure your lender gets the contract and has the address so that they can run a search on the address. 44 00:07:54.596 --> 00:08:08.696 Dan: So we'll start off with just talking about what is an Hoa or Homeowners Association. It's a private nonprofit organization that governs residential communities, such as subdivisions, plant communities and condominiums. 45 00:08:09.126 --> 00:08:15.316 Dan: And they're charged with setting rules and collecting fees to maintain common areas and amenities. 46 00:08:17.706 --> 00:08:25.935 Dan: So what should you expect from an Hoa, typically, you're going to get guidelines on how to maintain property values and community standards. 47 00:08:26.126 --> 00:08:38.355 Dan: All hoas are different, but the guidelines can include these are typical ones color of your home, the appearance of your lawn window coverings that can be seen from the street 48 00:08:38.526 --> 00:08:41.395 Dan: type of holiday decorations. 49 00:08:43.276 --> 00:08:50.115 Dan: when you put your garbage out even pets the breed of your dog, and we'll get into that a little bit more 50 00:08:50.536 --> 00:08:54.726 Dan: if you can have an Rv. Parked in on your yard, or if it can be seen 51 00:08:55.335 --> 00:09:05.535 Dan: types of plants. And we've also. And we're going to cover this a couple more times. Some areas we see restrictions on usage such as not allowing the unit to be rented out. 52 00:09:05.816 --> 00:09:12.656 Dan: requiring the property to be owner occupied. And again, every hoa is different. 53 00:09:15.426 --> 00:09:28.115 Dan: So every Hoa is going to have some sort of fees. Fees can vary widely, some hoa's. We've seen charge as little as $100 a year, and they're just maintaining signs and mailboxes and things like that. 54 00:09:28.306 --> 00:09:40.185 Dan: Others can cost upwards of a thousand dollars a month, and that's really based on the community and its amenities, sometimes the size of the community, and and so forth. 55 00:09:40.986 --> 00:09:59.706 Dan: The other thing are, what do these fees fund? So they typically fund the operating fund, which is your day to day expenses for your community, and then they fund a reserve fund which is for long term maintenance issues, and we'll be looking at that as we go here. 56 00:10:01.786 --> 00:10:02.666 Dan: So 57 00:10:02.986 --> 00:10:19.466 Dan: this is a little long here. But what are the top common problems in an Hoa? One is not maintaining the value of your homes within the hoa, and that can come from not doing maintenance or repairs and things of that nature. 58 00:10:20.046 --> 00:10:35.336 Dan: Then there's lack of communication as a homeowner. You need to understand the hoa structure, how decisions are made, new rules or changing of existing rules, and if communication is lax from the board 59 00:10:35.416 --> 00:10:53.015 Dan: or the Property Management Company to and back to the members that can create problems, regular communications via meetings, newsletters, and such need to occur. And if they're not. It does lead to problems. 60 00:10:53.376 --> 00:10:55.365 Dan: I briefly mentioned pets. 61 00:10:56.066 --> 00:11:00.866 Dan: Some hoa is gonna have restrictions on the size of your pets. 62 00:11:00.975 --> 00:11:06.938 Dan: Typically a dog. In that case, breeds and so forth. They can also restrict. 63 00:11:07.686 --> 00:11:15.115 Dan: have rules about barking excessive barking. So if your dog is one to bark at the squirrels all day. Don't be surprised if you receive a fine. 64 00:11:15.656 --> 00:11:18.566 Dan: Then also mentioned earlier rentals. 65 00:11:18.726 --> 00:11:24.516 Dan: One of the top problems. Surrounds rentals. If you have 66 00:11:25.316 --> 00:11:32.378 Dan: restrictions in your Ccnrs or your rules and and procedures that can create problems 67 00:11:33.036 --> 00:11:39.115 Dan: whether it be long term rentals or short term rentals, such as an Airbnb or a vrbo 68 00:11:39.606 --> 00:11:45.146 Dan: vehicles, and parking is another one that we see a lot of sometimes. 69 00:11:45.791 --> 00:12:12.560 Dan: They'll have a restriction that says your vehicles must be in the garage can't be in the driveway. Then there'll be restrictions on your Rvs. Or and where you can park them, and things of that nature, and then mortgage approval which will cover a little bit more. When you talk to your lender, and they give you say you can buy Xyz amount of 70 00:12:13.316 --> 00:12:29.556 Dan: approval. Then when, if it's an hoa, you have to take and consider the fees, because that will affect your debt to income ratio and your your lender is going to be looking at that as far as does it fit within what they've approved for you. 71 00:12:33.656 --> 00:12:49.196 Kim Conti DeGroot: Thanks, Dan. Now we're going to take a look at some types of hoas that we've come across and examples. So let's start looking at Hoas, and how they differ in their management and effectiveness as well as the communities and the homes themselves. 72 00:12:51.946 --> 00:13:05.576 Kim Conti DeGroot: Our 1st example is a self managed hoa. This is typical for hoas that are up to maybe 9 units below. This is an example of a 6 unit. 73 00:13:06.189 --> 00:13:21.126 Kim Conti DeGroot: And that's not a bad situation. It was actually an opportunity whereby the the the buyer was able to get a price reduction of almost 15%, 74 00:13:21.176 --> 00:13:49.915 Kim Conti DeGroot: because the the inspections showed that there was exterior pest damage that was deferred. Maintenance on the exterior of all 6 units. The management did not have the money or the reserves to be able to facilitate this. As a result, the owner was able to negotiate with the Hoa directly for paying upfront fees at a discounted rate. 75 00:13:50.461 --> 00:14:09.176 Kim Conti DeGroot: for the for the for 2 years, and thereby allowing the the the repairs to be done. So but it is a very well self managed facility. And this is how you can work with these opportunities. 76 00:14:10.456 --> 00:14:16.976 Kim Conti DeGroot: Our next example is with regards to manage with a great board of directors 77 00:14:17.126 --> 00:14:32.556 Kim Conti DeGroot: and a great experienced property management company. They also have members that are fully engaged, fully funded, great finances, everybody's working well together, but 78 00:14:32.666 --> 00:14:39.516 Kim Conti DeGroot: and a new law comes into play that is not a part of their reserves, and it 79 00:14:39.986 --> 00:14:46.616 Kim Conti DeGroot: creates a $20,000 assessment to each owner. We'll get into that a little bit later. 80 00:14:51.496 --> 00:15:01.136 Kim Conti DeGroot: Here's another example. It's managed by board of directors that are not existent, and a property management company that's not engaged. 81 00:15:01.346 --> 00:15:24.926 Kim Conti DeGroot: However, it again was an opportunity, because by luck. The grounds, the buildings, everything, are in compliance and very well maintained. The rents are high, so this one worked out very well. Why, it's also important to see not only the documentation, but to walk around the complex. 82 00:15:29.366 --> 00:15:46.056 Kim Conti DeGroot: Another example. This is a unit complex of 198 units. It's managed by a board of directors that are present, but not familiar with laws, and a property management company that is not current on laws, rules, and regulations. 83 00:15:46.679 --> 00:15:51.215 Kim Conti DeGroot: The deferred maintenance at the property is a problem. 84 00:15:51.276 --> 00:16:04.767 Kim Conti DeGroot: However, again, it's an opportunity to get in at a lower price versus the complexes that are around it, which are much higher, but not as 85 00:16:05.316 --> 00:16:21.905 Kim Conti DeGroot: great of a location as this complex is a more active board that has some real estate experience. Accounting experience will help this along getting it up to up to snuff. 86 00:16:25.316 --> 00:16:35.915 Kim Conti DeGroot: This example is managed by a board of Directors and Property Management company, all in great standing, but the members are not engaged. 87 00:16:35.976 --> 00:17:01.015 Kim Conti DeGroot: The property is as well maintained as can be. However, they need a quorum and majority votes in order to pass things. This particular complex may be difficult to rent at times because of parking. There's a lack of parking in the area, and because they're not able to enforce parking. They have people from other areas coming to park. 88 00:17:01.026 --> 00:17:07.666 Kim Conti DeGroot: Also, trash is a problem here which has created an additional cost burden for all the members. 89 00:17:07.686 --> 00:17:10.335 Kim Conti DeGroot: These are things to be aware of. 90 00:17:15.346 --> 00:17:17.786 Kim Conti DeGroot: So you want to invest in an Hoa. 91 00:17:17.806 --> 00:17:44.245 Kim Conti DeGroot: what steps should you take in addition to the ones that we have already stated, it's important to get in touch with and speak to the Property Management Company for the Hoa. Ask who the property manager is, have a live conversation with them, and a good feeling of how involved they are, and their feedback with regards to the property that you're looking at. 92 00:17:44.246 --> 00:17:55.145 Kim Conti DeGroot: Another is speaking to the Hoa President or any of the Board members. Having a live conversation with them, is really important to ascertain their skill level. 93 00:17:55.446 --> 00:17:57.376 Kim Conti DeGroot: and their involvement. 94 00:18:01.566 --> 00:18:07.937 Dan: Okay. So we're gonna look at some of the things you wanna review when you're in the process of 95 00:18:08.916 --> 00:18:11.136 Dan: trying to buy out in an Hoa. 96 00:18:11.166 --> 00:18:33.736 Dan: So the 1st thing is, you would like to see the annual disclosure package now in California. This is a law that they have to send this out. All owners receive the annual disclosure package. Typically in late November, early December. Other states. The information we're going to cover here is all available. They may not have it codified like California does. 97 00:18:33.736 --> 00:18:48.595 Dan: but it's available in California. Here's everything that would come in your disclosure package, and I've also included, you know the the civil codes that require them to do this, and we'll go through most some of this stuff. 98 00:18:49.573 --> 00:18:56.566 Dan: This is a typical cover page on your policy statement, your annual policy that you would get if you're here in California. 99 00:19:00.116 --> 00:19:08.465 Dan: And so what do you need to also look at and request you want the Ccnrs that stands for covenants, conditions, restrictions. 100 00:19:08.876 --> 00:19:16.486 Dan: You also want all the approved policies, procedures, and bylaws. Now, in your annual disclosure package. 101 00:19:16.836 --> 00:19:26.676 Dan: they only send typically what is required to be sent. But most hoas have additional procedures and and policies. 102 00:19:26.786 --> 00:19:29.295 Dan: So you would like to see what those are. 103 00:19:29.977 --> 00:19:43.794 Dan: They. They can have things like decorum, and parking and easements and and things of that nature that could be include could be part of of their 104 00:19:44.876 --> 00:19:46.235 Dan: their documents. 105 00:19:48.616 --> 00:19:56.375 Dan: You want to look at the last 12 months worth of board and committee meet meeting minutes. 106 00:19:59.416 --> 00:20:20.206 Dan: Part of that is, you want to see how the Board's operating. So if you look at like the how the boards voting, are they all in sync, or are they, you know, are all the votes? 3, 2, 4, 1, 2, 1. Whatever the the number is, it can not necessarily always, but it can indicate dissension amongst your board members. 107 00:20:20.987 --> 00:20:29.516 Dan: Also, some boards have been noted to be zealous over controlling, onerous, difficult to deal with. 108 00:20:29.816 --> 00:20:34.225 Dan: Others don't hold meetings at all, leaving decisions to the property management company 109 00:20:34.456 --> 00:20:43.906 Dan: or through backroom or email discussions in California. Email discussions backroom. This decisions are not legal, that they're illegal. 110 00:20:44.356 --> 00:20:56.226 Dan: Ask if the Hoa is currently, or in the past 5 years have been involved in any lawsuits. Find out what the lawsuit was over, and if the hoa is, or had to make a payout or settlements. 111 00:20:59.276 --> 00:21:11.985 Dan: You want to look at their reserve study. This is part of their financial package. Hoa reserves are portions of the monthly dues that are held back in separate accounts for current or future maintenance or repairs. 112 00:21:12.376 --> 00:21:16.355 Dan: This can be anything from roofs, paving, lighting. 113 00:21:16.526 --> 00:21:20.046 Dan: shared facilities like pools, saunas, meeting rooms 114 00:21:21.726 --> 00:21:31.966 Dan: the reserve studies are only required to consider ongoing maintenance and anticipated repairs that would occur on a 30 year basis or less. 115 00:21:32.806 --> 00:21:49.416 Dan: You want to look at how well funded the reserve accounts are. Usually 70% or more is considered good. Less than 70% funded is likely to lead to future special assessments or large increases in your monthly dues. 116 00:21:51.326 --> 00:22:00.515 Dan: So here's 1 example of a sheet from your reserve study. We'll look up here at the at the top. It says, balcony, walls and handrails 117 00:22:01.016 --> 00:22:07.305 Dan: they project, needing to replace them in 2036. So you have 2012 years of life left. 118 00:22:07.626 --> 00:22:13.825 Dan: and this is how much they're projecting the cost to be, and then how much they have in the fund right now. 119 00:22:14.056 --> 00:22:19.846 Dan: I also mentioned that if you some things are not funded down here towards the bottom. You have walks. 120 00:22:20.056 --> 00:22:24.116 Dan: and like sidewalks. 121 00:22:24.386 --> 00:22:37.926 Dan: Those things have a lifetime of more than 30 years, but so you don't have to fund them. But if something were to happen where you need to make major repairs, and I'll give you an example, let's say you have a big tree that's pushing a sidewalk up. 122 00:22:38.236 --> 00:22:55.915 Dan: That wouldn't have been something that they had money set aside for so that could could potentially lead to additional costs. This particular reserve study only is 53%. So not great, not bad, but not great. 123 00:22:58.136 --> 00:23:11.235 Dan: Here is, sometimes you'll just see a reserve summary. The numbers here are not especially important other than the one down there in the circle. They're really poorly funded at only 24%. 124 00:23:15.566 --> 00:23:16.606 Dan: So 125 00:23:17.256 --> 00:23:29.775 Dan: part of your financial package is you'll get a balance sheet. Okay? Balance sheets show bank account balances your accounts, payable accounts, receivable and things of that nature. 126 00:23:30.206 --> 00:23:59.605 Dan: And we'll we have a couple of examples here. The one on the right is fairly simplistic. Small time, but the big, the thing there is no 2 balance sheets are the same. The one on the right is in columns, the one on the left is in rows. The other thing. If you look down here at the reserves, you see that they have 5 different reserve categories, and in this case this is just they cut up their reserve based on the street that the property is on. 127 00:24:03.476 --> 00:24:04.820 Dan: You also want to look at your insurances. What happened to my 128 00:24:05.445 --> 00:24:08.395 Dan: Okay, so you want to look at your insurance decorations. 129 00:24:11.225 --> 00:24:24.845 Dan: in California, what insurance you have to have is codified. But also, I think it's pretty same across the country. You need your liability insurance. You need your property, or sometimes called fire and hazard insurance. 130 00:24:24.975 --> 00:24:37.645 Dan: and you're you need directors and officers also commonly referred to as dno insurance. You want to make sure that they have all of their insurances, and they're they're up to date. 131 00:24:42.605 --> 00:25:07.514 Kim Conti DeGroot: Our last area of concern is with regards to your lender. So most of us who have invested we're very versed in the owner occupied versus non owner occupied ratios. Those are still important, especially when it comes to student centric areas near campuses. They're going to mainly 132 00:25:07.515 --> 00:25:18.735 Kim Conti DeGroot: non-owner occupied, and thus the property becomes only a cash based transaction, but that's normal and still very profitable. 133 00:25:18.875 --> 00:25:44.395 Kim Conti DeGroot: However, now we have, as of March 18.th If any of you read the Wall Street Journal there is a new issue that has surfaced, and where lenders and insurance companies are blacklisting hoa complexes. Now this is not limited to townhomes condos. It's also single family dwellings. 134 00:25:44.888 --> 00:25:49.334 Kim Conti DeGroot: And it's it's it's a it's a problem. 135 00:25:49.335 --> 00:26:05.485 Kim Conti DeGroot: And what makes you be on that blacklist for your lender. And this is why it's imperative to get with your lender and with your insurance company right from the beginning and have that Hoa documentation so they can see it. 136 00:26:05.485 --> 00:26:30.154 Kim Conti DeGroot: Lenders will not lend on complexes if they're not funded properly. So probably the 2 examples that Dan gave. Most likely the one that is 24% is not going to be funded. It will be a cash only transaction. The one that's 53% may or may not be. They are looking for 70%. And above, in speaking with our 137 00:26:30.155 --> 00:26:59.144 Kim Conti DeGroot: are lending referrals. So that that is something really important to discover upfront. The other issue is with insurance. This is not just limited to California. This is an issue across the country. Florida has had their problems, Illinois, New York, Texas, and and California. So this is something that needs to be 138 00:26:59.325 --> 00:27:23.125 Kim Conti DeGroot: to looked at in advance, because your lender is going to want to sell their loan, most likely to Fannie. Mae. Freddie hasn't come out and said anything. But Fannie Mae certainly has made a statement that they are looking at these indicators. If there's deferred maintenance, not enough reserves, fire hazards. 139 00:27:23.125 --> 00:27:46.494 Kim Conti DeGroot: and all of those things any potentials for not in compliance with new laws, and specifically as they center around decks and stairwells. The new laws in California as well as Florida, has some issues with that. So check out the Wall Street Journal. That's important. 140 00:27:49.204 --> 00:28:01.445 Kim Conti DeGroot: This is by no means is an exhaustive checklist. To work through every purchase is different. But these are areas to start looking at. Dan is going to give an example of a case study. Now. 141 00:28:03.525 --> 00:28:11.495 Dan: Okay. So in a recent deal that we're aware of the prospective property that you see here in the picture was a beautifully maintained condo 142 00:28:11.825 --> 00:28:18.285 Dan: and the Hoa had some nice amenities. You can see in the picture there's a pool, some tennis courts 143 00:28:18.405 --> 00:28:23.715 Dan: it it had gated, it was gated so it had a security access. It was. It was nice. 144 00:28:24.195 --> 00:28:25.065 Dan: But 145 00:28:25.245 --> 00:28:35.125 Dan: as we started getting the documents from the hoa, they were looking at a massive shortfall in their reserves. They they needed 146 00:28:35.305 --> 00:28:45.754 Dan: $500,000, or maybe more, to pay for some long overdue roof replacement, tenting of termites, taking care of dry rot things of that nature. 147 00:28:46.195 --> 00:28:54.594 Dan: and that shortfall did not include getting the reserve fund up to an acceptable level. Like, like we said, 70% or more is typical. 148 00:28:55.945 --> 00:29:03.885 Dan: So the 31 owners in that complex we're looking at a very sizable special assessment. 1st off, you're looking at 500,000 149 00:29:04.382 --> 00:29:24.295 Dan: that shortfall. You know, little bit back of the envelope type scratching might be, you know, 300,000 or more. So take that that amount 800,000, or whatever it needed to be, and divided by 31. And you were looking at a very sizable special assessment to be able to take care of this. 150 00:29:28.435 --> 00:29:51.725 Kim Conti DeGroot: The new laws in California. We had Berkeley in 2015, where students were on a balcony, and they fell to their death. Unfortunately, as a result new laws were created. The unintended consequence of great new laws was the unfunded 151 00:29:51.755 --> 00:30:11.774 Kim Conti DeGroot: improvements that needed to take place, and this is throughout the State of California. As I said, Florida has some similar stuff going on with their new laws and their condo market. Their condo market is almost a cash. Only basis at this point. 152 00:30:11.855 --> 00:30:29.115 Kim Conti DeGroot: And so here. What happened was by January 1st of 2025. All condo complexes were required to have any decks or stairwells or balconies that were above. I think it's 5 feet 153 00:30:29.115 --> 00:30:46.215 Kim Conti DeGroot: off the ground needed to be inspected. They haven't stated yet that the repairs needed to be completed. In a certain time, however, the inspections needed to be completed and disclosed to the members. 154 00:30:46.215 --> 00:31:09.645 Kim Conti DeGroot: and then budgeting, taken into account because most of this was not in anybody's reserve study. It's just come up. They didn't anticipate any issues, and the reserve studies are done, or this has to be done for condos every 9 years. 155 00:31:09.805 --> 00:31:21.604 Kim Conti DeGroot: So if you look, we have an example great. It was one of our 1st examples, great board, great members, great property management company, a lot of reserves 156 00:31:21.665 --> 00:31:42.454 Kim Conti DeGroot: in in funding, and the unintended consequence of the new laws was a $300,000 repair to to the decks and stairwells, which, to the tune of $20,000 per unit owner for repairs 157 00:31:43.135 --> 00:31:44.675 Kim Conti DeGroot: in a given year. 158 00:31:47.015 --> 00:31:52.615 Kim Conti DeGroot: So time is precious. We want to thank you for yours, Munzer. We're going to hand it back to you. 159 00:31:56.965 --> 00:32:02.962 Munzer Ghosheh: Thank you, guys, that is very, very informative information. And I thank you again for that. So 160 00:32:03.936 --> 00:32:09.415 Munzer Ghosheh: a couple things here, if we can go to the next slide, please, Dan. 161 00:32:12.655 --> 00:32:24.824 Munzer Ghosheh: there you go. Okay. So some of you might have some questions about you know how to set up a self, directed Ira, and so on and so forth. Real quick, really, 3 easy steps. 162 00:32:25.125 --> 00:32:31.565 Munzer Ghosheh: 1st step is you just go online to our website, the entrustgroup.com and 163 00:32:32.635 --> 00:32:34.994 Munzer Ghosheh: It takes you minutes to get the account set up. 164 00:32:35.325 --> 00:32:44.954 Munzer Ghosheh: Second step is you're looking to fund your account one of 3 ways. You either fund it from, you know, transferring funds from a current Ira. 165 00:32:45.065 --> 00:33:00.125 Munzer Ghosheh: or doing a rollover from a previous 401 K plan, profit, sharing plan. What have you, or just setting up a new Ira with doing your annual contribution, which, ironically, we just finished that 166 00:33:00.235 --> 00:33:29.705 Munzer Ghosheh: yesterday, I believe, last day to file taxes. This whole process typically takes about 7 to 10 days. 3rd step and final step would be to direct us, the passive custodian, to make your investment purchase your asset for you, because keep in mind the entrust group we are. We don't sell any products, and we don't give any sort of advice, investment, advice, or any sort of advice. We're just merely order takers. So we will take your order to purchase the asset. 167 00:33:29.745 --> 00:33:32.334 Munzer Ghosheh: And that typically takes about a day or 2. 168 00:33:32.465 --> 00:33:42.725 Munzer Ghosheh: So the whole process, we always say, from A to Z is about 10 to 14 days from the time you open the account to the time we fund your investment. Very simple. 169 00:33:44.635 --> 00:34:04.275 Munzer Ghosheh: so what's next? We'll be sending you out replay and additional resources. There will be a follow up email from our marketing department which includes our video replay the slides and more education. Just in case you want to recap. Or also some of you that have registered, and we're not able to attend. 170 00:34:04.705 --> 00:34:21.775 Munzer Ghosheh: Speaking of registering love, to have you register for our upcoming May's webinar, the 5 golden rules for purchasing for precious metals investing in Iras, which is becoming very, very popular these days and times. So 171 00:34:22.035 --> 00:34:23.975 Munzer Ghosheh: hope to see you there. 172 00:34:24.675 --> 00:34:48.965 Munzer Ghosheh: and for more information on self-directed Iras, please visit our website. theentrustgroup.com the learning center. There's a lot of information, wealth of information there, or feel free to call our our offices as well follow us on the social media for updates. We're always have more information for you on that as well. 173 00:34:51.185 --> 00:35:05.575 Munzer Ghosheh: Okay, so we're going to open it up for some Q&A here for some questions. I I believe there are a couple, and as we do that, then let's have our last slide out there, please. 174 00:35:05.775 --> 00:35:32.544 Munzer Ghosheh: which there you go has our information. If you have any questions about self-directed retirement plans. That's my information. Feel free to to email me. Feel free to call me directly. I'm happy to assist you, or any information about Hoas or the Ruthian Fund. Please reach out to Kim, Dan and John and Amber for that information. 175 00:35:32.655 --> 00:35:39.755 Munzer Ghosheh: Alright. So let's see, I think we have some questions here. Let's are you. Can you also take a look at the questions, Dan or. 176 00:35:41.265 --> 00:35:42.715 Munzer Ghosheh: Or should I read them out. 177 00:35:42.715 --> 00:35:46.284 Dan: Go ahead and read them out, because I'm not sure. Where. Where should I pull them up from? 178 00:35:46.285 --> 00:35:47.314 Munzer Ghosheh: Got him. I got him. I got him. 179 00:35:47.315 --> 00:35:47.705 Dan: Okay. 180 00:35:47.705 --> 00:35:56.955 Munzer Ghosheh: So we have a question here from Glenn Anderson. Question is, can we purchase Hoa liens as an investment strategy? 181 00:35:57.681 --> 00:36:04.964 Munzer Ghosheh: If so, how do we contact the hoa and approach them for what might be confidential information? How could this work. 182 00:36:07.288 --> 00:36:18.185 Dan: Actually, we've never heard of anybody purchasing a lien on an hoa! To tell you the truth, so Kim or John I if you have any input, go ahead. 183 00:36:20.055 --> 00:36:31.784 Kim Conti DeGroot: I I can't comment on that. I haven't. Are you talking about hoa liens on a specific unit? That 184 00:36:32.975 --> 00:36:43.825 Kim Conti DeGroot: I I think. Yeah, I'm I'm not sure how that would work. You would have to get in touch directly with an Hoa president, property manager in order to discuss that. 185 00:36:44.655 --> 00:36:45.495 Munzer Ghosheh: Right? Okay. 186 00:36:45.495 --> 00:36:51.195 Kim Conti DeGroot: Assure that there's legalities around that, and we can't comment on anything legal or accounting. 187 00:36:51.475 --> 00:36:53.474 Munzer Ghosheh: Yeah, it sounds like more of an attorney question. 188 00:36:53.925 --> 00:37:07.174 Munzer Ghosheh: But yeah, Glenn, go ahead. Thank you. Anyway, for your question, Dennis. We have a question from Dennis, how do you address loss of ability to get insurance in the future as environmental risks increase. 189 00:37:10.965 --> 00:37:12.435 Dan: Kim, you want to do that one. 190 00:37:16.325 --> 00:37:30.385 Kim Conti DeGroot: Well, there it's I'm not. I haven't come across anything that you aren't able to get in the State of California that you're not able to get insurance, and I haven't seen it anywhere else. 191 00:37:30.435 --> 00:37:50.155 Kim Conti DeGroot: California has the fair plan, and other States have plans like that, too. So I guess the insurance issue is an issue across the country, and unfortunately, I don't have any answers for that. Sorry. 192 00:37:50.695 --> 00:38:10.655 Dan: I will add that some of your insurance agents can go outside of the area, and there's a term for it, and I can't remember what it is, but rather than California, only insurance carrier, they can find somebody out of the out of state. And we're we're finding that that occurs, but it's very expensive. 193 00:38:11.675 --> 00:38:34.885 Kim Conti DeGroot: And I would recommend that you go to the state you're purchasing the property in to the Department of Insurance, the Commissioner's website, and they should have on there a list of a huge list of people who you may not have heard of a lot of small companies that are still in the game. 194 00:38:38.475 --> 00:38:53.384 Munzer Ghosheh: Okay, great Herman has a question, Dan, you mentioned that the reserve should be funded at 70%. May I ask if it's 70% of what metrics 70% of your yearly exposure expenditure. Sorry. 195 00:38:54.287 --> 00:38:58.212 Dan: Now, this is my understanding, because I don't do the 196 00:38:59.205 --> 00:39:04.305 Dan: the financial reserves that takes a special qualification. But 197 00:39:04.745 --> 00:39:14.525 Dan: my understanding of 70% is, how much money do you need today for your reserves, and how much of it do you have now? 198 00:39:15.235 --> 00:39:20.585 Dan: So let's say, you know, let's say, in 2030, 199 00:39:20.875 --> 00:39:32.324 Dan: your predict you. You need a reserve of, let's say, a hundred $1,000, and you have $70,000 of that 100 you would be 70% 200 00:39:33.045 --> 00:39:48.225 Dan: those numbers would be different if you were looking at, say, 2028, or 2040, or whatever. But it. It's looking at what you have available. Today. For, based on your projections of needing needing the money. 201 00:39:50.045 --> 00:39:50.865 Munzer Ghosheh: Okay. 202 00:39:51.325 --> 00:39:59.714 Munzer Ghosheh: Paul, I had the same question. So I'll pass on that one. Eric, 70%. I I think that's a statement he's saying, or. 203 00:40:00.609 --> 00:40:15.585 Kim Conti DeGroot: I might add to that, because so it's every lender is looking at different things. Okay? And it's the total package. But a lender. The more 204 00:40:15.695 --> 00:40:28.474 Kim Conti DeGroot: funded, obviously the best is 100 funded for your reserve studies, which is your your over 30 year or up to 30 year, repairs 205 00:40:28.475 --> 00:40:51.324 Kim Conti DeGroot: the better you're going to be. If you're. We've seen condo complexes or just complexes that are only at 9%. They're not fundable. There's no lender. It's going to be a cash based transaction. So really, it's a conversation with your lender to see what they're willing to do. And if they can outsource it. 206 00:40:52.225 --> 00:40:52.905 Munzer Ghosheh: Right. 207 00:40:53.445 --> 00:40:54.565 Munzer Ghosheh: Thank you. Kim. 208 00:40:54.565 --> 00:40:55.135 Kim Conti DeGroot: Awesome. 209 00:40:55.135 --> 00:41:04.885 Munzer Ghosheh: So Eric, I think, has a statement. I don't think it's a question, but I'll read it out. 70% funding is ideal, but not typical of many of the common interest 210 00:41:05.065 --> 00:41:12.874 Munzer Ghosheh: developments out there. California doesn't have a funding requirement, just a requirement to have a reserve study performed. 211 00:41:13.835 --> 00:41:22.285 Dan: Well, that's essentially true. You you are required to do the reserve study every 3 years and update it every year. 212 00:41:22.780 --> 00:41:31.555 Dan: It were the requirement for 70%. That that's an industry standard. And also the that's a number that the lenders are looking at. 213 00:41:33.925 --> 00:41:34.755 Munzer Ghosheh: Okay. 214 00:41:35.525 --> 00:41:47.265 Munzer Ghosheh: Daniel, I think, has a question for me here. When, with investing Via Ira, can owners become board members or officers, or are they prevented because of the trust relationship. 215 00:41:47.425 --> 00:41:56.604 Munzer Ghosheh: The short answer, Daniel, is, they shouldn't. We'd like to have some kind of arm's length between you and your Ira. That's it's got to be a purely a passive investment. So 216 00:41:56.755 --> 00:42:09.845 Munzer Ghosheh: if you want to err on the conservative side, the answer should be, Yeah, that you should not be a board member or an officer. Have we seen it? Yes, but in my opinion it should not be 217 00:42:10.854 --> 00:42:22.385 Munzer Ghosheh: eric also, I think, has another. I don't know if it's a question, he said. You can have this place in the reserve study. This legislation has been back and forth for several years. 218 00:42:22.835 --> 00:42:29.735 Munzer Ghosheh: There has been adequate time for Cids to place these inspections in the reserve studies. 219 00:42:33.245 --> 00:42:37.428 Kim Conti DeGroot: I I'm not sure I I'm not. I don't know that there's a comment there for us. 220 00:42:37.675 --> 00:42:41.455 Munzer Ghosheh: I think so. But maybe maybe best for Dan to just 221 00:42:41.795 --> 00:43:00.215 Munzer Ghosheh: reach out to you guys directly there, if he has any questions or comments, okay, great. From Qon I have a question. I have a question about Sep Ira. If I am self-employed and earn $10,000 a year, and the business cost is 8,000. Shall I apply in certain amount based on the net income 2,000 or gross income of $10,000? 222 00:43:00.335 --> 00:43:19.245 Munzer Ghosheh: So basically, in general terms, you can. You can contribute 25% of your adjusted gross income. What that is. That's a Cpa question. We always say, talk to your Cpa. And or accountant to find out what or how much you should be contributing on that. Okay. 223 00:43:22.055 --> 00:43:30.655 Munzer Ghosheh: There is a question, or actually a comment. I wonder if Kim can repeat the example whereby the owner was able to negotiate 224 00:43:31.225 --> 00:43:39.954 Munzer Ghosheh: directly with Hoa to get their own repair done? If I hear this correctly. In any case, this is my question. If this is ever done. 225 00:43:41.568 --> 00:44:00.985 Kim Conti DeGroot: Everything is negotiable in the case that I had presented. It wasn't their own. It wasn't just their own repairs. It was the entire complex repairs that needed to be done, that the Hoa was responsible for in this case, because it was a smaller group. 226 00:44:01.095 --> 00:44:07.515 Kim Conti DeGroot: It was easily a negotiable item that was a win-win for all parties. 227 00:44:09.155 --> 00:44:10.610 Munzer Ghosheh: Okay? Great thanks. 228 00:44:11.255 --> 00:44:24.415 Munzer Ghosheh: Kiana is also trying asking. I mean, I shall certain percentage to my Sep Ira, based on net income or gross income. It's 25% of your adjusted gross income. But again, please discuss that with your Cpa. 229 00:44:25.345 --> 00:44:28.206 Munzer Ghosheh: See what other questions we have here. 230 00:44:29.155 --> 00:44:33.794 Munzer Ghosheh: are we able to get out of the Hoa, especially on a new build home. 231 00:44:35.385 --> 00:44:36.005 Dan: I'm. 232 00:44:36.005 --> 00:44:38.445 Kim Conti DeGroot: You have to refer to your documentation. 233 00:44:40.565 --> 00:44:46.255 Dan: The Ccnrs and their bylaws will give you some guidance on that. 234 00:44:46.535 --> 00:44:50.815 Kim Conti DeGroot: And if that isn't clear, then then you need to seek legal counsel. 235 00:44:54.225 --> 00:45:01.335 Munzer Ghosheh: Okay, Cheryl has a question. Wouldn't you also look at the arrears or the accounts, receivables. 236 00:45:03.765 --> 00:45:09.299 Dan: That would accounts receivable and accounts payable would be as part of their 237 00:45:09.925 --> 00:45:23.404 Dan: balance sheet, and it would, it would show up as a number. But if you wanted more detail, you would have to contact the the Hoa or the property management firm. That does the accounting. 238 00:45:25.435 --> 00:45:39.614 Munzer Ghosheh: Okay, Steven has a question pertaining to Iras. Some insurance providers require the property to be in the name of a person not the name of the custodian Fbo for the benefit of. Is there a way around this? So everything that is 239 00:45:39.725 --> 00:45:52.534 Munzer Ghosheh: versus through an Ira has to be titled in the name of the custodian for the benefit of your legal name, Ira Number. So, for instance, with the the entrust group for the benefit of John Smith, Ira number 1, 2, 3, 4, 5. 240 00:45:52.745 --> 00:46:04.695 Munzer Ghosheh: There's really no other way around it unless you want to set up your own Llc. Have the Ira purchase. The membership interest in the in the Llc. And then 241 00:46:04.815 --> 00:46:08.325 Munzer Ghosheh: put, you know, put the property in the name of the Llc. 242 00:46:08.435 --> 00:46:17.375 Munzer Ghosheh: Then then you can go around that if you will but feel free to reach out to me directly for any, for for more information on that. 243 00:46:17.905 --> 00:46:35.394 Kim Conti DeGroot: And also I've I've never seen. We've never had. We like, as Munzer had said at the opening we've been doing Ira investing in real estate for over 20 years, and we've never had a problem. So you might just have to look for a different insurance company. 244 00:46:35.895 --> 00:46:41.214 Munzer Ghosheh: Same. Here. You're right, Kim. We've not. We've we've done this for, you know, over 245 00:46:41.605 --> 00:46:44.180 Munzer Ghosheh: 40 years now, and we've never had issues with that. But 246 00:46:44.645 --> 00:46:58.735 Munzer Ghosheh: yeah, some insurance companies maybe try to call have them call us so we can give them a better explanation of why it's it's titled that way, but but the the only way to get around it, if you will is if you set up your own Llc. 247 00:46:59.527 --> 00:47:07.385 Munzer Ghosheh: Another question is, can you lose your current loan if you, the insurance coverage or reserve is not fully funded. 248 00:47:10.065 --> 00:47:13.095 Kim Conti DeGroot: Question for your lender. 249 00:47:13.095 --> 00:47:13.865 Dan: Right. 250 00:47:16.815 --> 00:47:21.324 Munzer Ghosheh: Okay, see other other questions. 251 00:47:25.525 --> 00:47:41.054 Munzer Ghosheh: Eric saying, I own an Hoa Management company, and I also own a reserve study company. Fair plan won't cover all of the community. I worked on the Hoa Insurance Task force. Non admitted. Carriers are accepting some policies. 252 00:47:42.455 --> 00:47:45.215 Munzer Ghosheh: I think that's a comment, not a question. Okay. 253 00:47:45.215 --> 00:47:55.804 Dan: Yeah, that non, admitted carriers are are, as far as I, my understanding, are the out of state ones that we we gave made comment to earlier. 254 00:47:56.825 --> 00:48:04.115 Munzer Ghosheh: Great great. So that would do it in terms of our our questions. A lot of good questions out there. 255 00:48:05.115 --> 00:48:18.635 Munzer Ghosheh: again. Very informative presentation. Thank you, Dan. Thank you, Kim, John and Amber, and of the Ruthian team for this wonderful presentation. I'm sure our listeners found this to be very valuable and educational. 256 00:48:18.755 --> 00:48:32.145 Munzer Ghosheh: I want to also thank you all all the listeners out there for taking time out of their busy schedules to join us, and we look forward to seeing you at our upcoming webinars. Everyone have a great day. Thank you so much. 257 00:48:32.575 --> 00:48:33.704 Kim Conti DeGroot: Thank you. 258 00:48:33.705 --> 00:48:35.575 Munzer Ghosheh: Thank you for joining us.