REO (real estate owned) property where the previous owner live in

[Dong Eun Kim]

Hi, 

I found a property with a great potential in a very nice location in Berkeley, CA. The property is on the market for 2 months. After getting disclosure, I found that it is REO where an old lady, previous owner refuses to leave the house. The bank got the house in 2019, but she used Covid eviction rule and has lived in over 3 years. The eviction was ruled but she appealed to the court to maximize her staying.

Here, my question is whether there is anyone who has a similar experience. And how long does the appeal process take and let her move out? Do you think that it is a crazy idea to buy it? 

[Greg San Martin]

No comment on existing "tenant."

Would the home be owner occupied or a rental? Does it have ADU potential? Under Measure Q, rent control would not apply if owner occupied one unit after ADU is built. The exemption extends to eviction controls in most if not all properties.

Rents have been flat for a few years.  And Berkeley remains very anti-small landlord.  Rules often get changed behind closed doors and without notice.  Building would be expensive. Tenants control the ballot box so expect wealth transfer measures to become even more outlandish. If you leave the owners unit vacant, or rent it, you lose the exemptions 

Still, if I were starting out, I'd consider building and living in the ADU and renting the larger house. It is nice to have options.

Berkeley Measure Q

[Andrew Crinnion]

I agree with Greg San Martin, building an ADU on a property is a great opportunity. I am currently adding an ADU to my place in Walnut Creek and plan to rent it out short term (30 day minimum in my area) in part to try and avoid any potential long term tenant issues. My uncle has or had some rentals in the Oakland area and he always complained about them because of the rental laws and his inability to increase rent or remove tenants that were destroying the place.

I rented a place in San Francisco where the primary tenant was illegally subleasing out rooms and charging significantly more than he was paying to the home owner, all because it was a rent controlled unit. I understand the idea behind rent control and creating some stability for renters, but it seems like the laws in SF in particular aren't having their intended results. 

With that said if you're looking for a place to buy and build an ADU we should connect.

[Brian Garlington]

Quote from @Dong Eun Kim:

Hi, 

I found a property with a great potential in a very nice location in Berkeley, CA. The property is on the market for 2 months. After getting disclosure, I found that it is REO where an old lady, previous owner refuses to leave the house. The bank got the house in 2019, but she used Covid eviction rule and has lived in over 3 years. The eviction was ruled but she appealed to the court to maximize her staying.

Here, my question is whether there is anyone who has a similar experience. And how long does the appeal process take and let her move out? Do you think that it is a crazy idea to buy it? 

If you are able to be very, very patient then it could be a good opportunity, however.....you still have not said how much it is going for. I am very familiar with Berkeley and recently someone came to me with a similar scenario. We looked at the comps and the REO actually was a decent, but not great price. Factor in that they literally had no idea when they could potentially move in to the property because of a similar "tenant" situation and it just wasn't worth the risk.

As an aside I expect to see more of this sort of situation coming up by this time next year here in the East Bay.