Catching up to the 21st century, part 4...land, finally

The last "Catching up" post ended with us finding out that our favorite piece of Santa Cruz land was potentially for sale. We made an offer to Ben (Karsten's land partner) in November, 2005. He accepted! A series of counteroffers ensued over the next several weeks until a final offer was arrived at. Due to circumstances outside the scope of this blog, we did not close until December of 2006.

One of the items we had to take care of during that long escrow was to modify the Tenancy In Common (TIC) agreement between Karsten and Ben so that it applied to Karsten, Mike and Cindy. We chose to modify the document Karsten and Ben drafted rather than have an attorney draft a new document. All of the items in a boilerplate TIC agreement were already addressed by Karsten and Ben, so we chose to save the attorney fees. There is a risk in this approach that we chose to accept given our good relations with Karsten. The primary advantage of sharing land ownership under a TIC agreement is the reduction in land cost in areas such as California where even raw land prices are astronomical. TIC agreements are becoming more common in the San Francisco Bay area as property prices become unaffordable to more folks.

Flashback to an important missed item in the chronology:

While Cindy was a Trinity Alps ranger in the Summer of 2004, we became attracted to and started searching for a home in the Eureka area. The twin cities of Eureka and Arcata are on a beautiful stretch of coastline in far northern California. The cities are in close proximity to the Trinity Alps Wilderness which is like a smaller, less populated Sierra Nevada range. Arcata is home to Humboldt State University, so there is a nice college town vibe. After a long search, in March 2005, we closed escrow on a nice turn of the century main home with a small rental above the garage. The idea was to rent out this home while working back in the San Francisco Bay area to pay it off. After reducing the mortgage to zero, we would "retire" to Eureka and live in the main home while renting the apartment above the garage for extra income.We spent a rainy week in March cleaning the place and getting it ready to rent. We hired a property management company to oversee the rental. The garage apartment was already rented, and the main home rented quickly.

Once in escrow on the Santa Cruz property, our plans were to build a home and "retire" there. Since I did not enjoy owning a long distance rental property, we wanted to sell the Eureka rental home. The problem was, the Eureka/Arcata real estate market had already started to fall by early 2006. We put the occupied rental up for sale in early 2006 and hoped for the best.

The first half of 2006 went by with no serious offers on the Eureka home. In the fall of 2006, the tenant moved out of the main home. This gave us an opportunity to clean and properly stage the empty main home for sale. We received one unreasonable offer in the fall. Finally, we decided to paint the exterior and make one more big push to sell the home before pulling it off the market. We accepted an offer in late November, 2006. We closed escrow in December, 2006, just weeks apart from closure of the Santa Cruz escrow. Our land search was over! Almost 5 years after falling in love with Santa Cruz on paper, I owned dirt there. Be careful what you wish for.

A word about professionals:

Our real estate agent, Mikki Cardoza, did a great job marketing the property throughout the year in a difficult market. I would highly recommend Mikki if you are looking for real estate in the Eureka/Arcata market. By the way, our real estate agent in Redondo Beach is also excellent. Her name is Paula Oliver, and I would highly recommend her if you need a Southern California real estate agent. Cindy and I represented ourselves for the Santa Cruz land purchase. We had already been through 5 real estate transactions and were familiar with the contracts and process. We downloaded a land purchase agreement from Reveal Systems and prepared it ourselves. This process worked for us and Ben (the seller). We learned that realtors work for their commission. We also learned that the effort was manageable and worth our time for the thousands in commission we saved. In my opinion, the property management service received was not worth the commission I paid. I will never again own a long distance rental. My personality requires more involvement with management activities.

To be continued...