Interior Decorator · Los angeles, CA · Member since 2016 · 26 posts · 34 votes
Hi I just bought a 4 unit apt building near USC and all the tenants are giving me issues. They currently have no lease with old landlord and were paying $800 rent a month for a 1 bedroom. Each unit has over 5 people living in them and one unit there are 10 people living. I gave them notice that rent will increase to $1300 or they have an option to take $4000 for keys. All the tenants say they will take me to court. Any advise for Los Angeles?
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
9y
Make sure you talk to an attorney before you do anything else! They are right, you can't raise their rent more than 3% if the building is rent controlled and it probably is. Tenant relocations usually run 45-75k per unit in LA. Did you get estoppel certificates before you bought? Did you check to see what year the building was built? Do you plan to renovate the entire thing? If so you may be able to do an Ellis Act eviction. But you need a lawyer fast!
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
9y
Make sure you talk to an attorney before you do anything else! They are right, you can't raise their rent more than 3% if the building is rent controlled and it probably is. Tenant relocations usually run 45-75k per unit in LA. Did you get estoppel certificates before you bought? Did you check to see what year the building was built? Do you plan to renovate the entire thing? If so you may be able to do an Ellis Act eviction. But you need a lawyer fast!
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
9y
Wow! A classic case of "should have gotten educated first"!
You can't just acquire a property and say, "Oh, it's mine now, I can do as I damn well please." Society has laws. We may dislike many of them, and many more are just plain stupid. Still, "the law is the law". Landlord / tenant laws ...
Since you didn't learn first, get an attorney on your team, and let him/her educate you what you can do going forward. Right now, you're running head-long into the ditch!
Real Estate Agent · Redlands, CA · Member since 2016 · 253 posts · 115 votes
9y
Hi Jonathan. The previous posters are correct unfortunately. You need a lawyer. I hope the property is not rent controlled but if it is near USC and in LA city it probably is. This means you cannot move the tenants out or raise their rent easily. Did your agent tell you anything about rent control when you purchased the building? The seller and sellers agent should have disclosed that at some point. I have a good RE attorney if you need his contact information.
I agree with consulting with an attorney right away. California is very renter friendly so you have a fight in front of you but 45-75k relocation is in my opinion not accurate. However, it could get to 10k per unit so it's wise to seek professional help on this matter asap. Good luck.
Interior Decorator · Los angeles, CA · Member since 2016 · 26 posts · 34 votes
9y
Lee Ripma Thank you for the reply. Just a little more info these tenants have no lease agreements, they are paying $800 a month rent, and the average in the city is $1300 a month rent. I was under the impression that if I buy the building and if the tenants do not have a lease then I can raise the rent to the average. Would that be correct? Thank you
Interior Decorator · Los angeles, CA · Member since 2016 · 26 posts · 34 votes
9y
Kiersten Vance I understand tenants have rights, however without any lease agreements how can I not raise the rent that was set fifteen years ago. So basically these people will pay $800 for as long as they want with 3 percent increases? Each one bedroom has over 10 people living and they built rooms throughout the house like a maze.
Yes they can stay there. How do you know they are paying $800 per month? Did the seller tell you this? Did you get tenant estoppels signed by all the tenants? That would have shown you what they were paying and who was living there. Why were you under the impression you could just raise rents? Have you figured out if it is under rent control?? If it isn't under rent control, then you can raise rents with the proper notice. If it is under rent control (which we all think it is), then you are in for a lot of trouble. 45-75k I don't think is accurate for relocation but you will be spending a lot in lawyers fees. I think it is closer to 18k in relocation due to the tenant. Not positive. Start looking at rent control laws if it is under rent control...
Interior Decorator · Los angeles, CA · Member since 2016 · 26 posts · 34 votes
9y
Seller is a good friend looking to retire that never took a deposit from them nor did he take care of the units. He gave me a heck of a cash deal just to get it off his hands and when it's all said and done there's about 350k worth of profit to be made so I will seek lawyer advise and thank you all for the advise. He has several similar apts throughout LA so I guess once I figure this one out the others should be a breeze.
Developer · Torrance, CA · Member since 2013 · 59 posts · 51 votes
9y
I recently purchase a MF near USC as well, on 36th Place and Normandie. Tenant occupied. No lease agreements. Both tenants claimed rent was below market, which I knew they were going to argue that. I approached them in a way that I would rehab the kitchen and raise their rents to market. Initially they agree, then a day later they asked if they were allowed to stay one month free they would find a new place. Luckily for me they moved. However, in the past during arbitration, the judge tends to rule in favor of the tenants even without lease agreements. Bottom line, my suggestion is talk to them directly and see if you can negotiate a new rent amount. The minute they don't pay, give notice. But its fair to say you should contact an attorney.
Real Estate Investor · Milford, NE · Member since 2011 · 201 posts · 140 votes
9y
Unbelievable....................how anyone can do business out there is beyond me. Surely having 10 people in a 1 bedroom should have some claws shouldn't it. It would around here.
Interior Decorator · Los angeles, CA · Member since 2016 · 26 posts · 34 votes
9y
My main priority is to get the place up to code. As a general contractor I see many hazards in the unit. One unit has a disabled kid sleeping in the closet. Truly sad
San Diego, CA · Member since 2015 · 273 posts · 226 votes
9y
I'm guessing you can come at it with your lawyer from the maximum occupancy angle, and the safety issues you mentioned. And if there are kids CPS, etc. That comment above about the child sleeping in a closet is really sad...
Would love to know how you resolve the issue, keep us posted!
Investor · Miami, FL · Member since 2016 · 75 posts · 23 votes
9y
@Jonathan A. - You are in a tough situation, but there are solutions. Find yourself a lawyer. You purchased a headache. You need to weather the storm and hopefully have funds to cover the mortgage and any additional expenses. It's an asset and your wealth. Take care of the issue immediately.
My main priority is to get the place up to code. As a general contractor I see many hazards in the unit. One unit has a disabled kid sleeping in the closet. Truly sad
Indeed - a lesson in what people will do to survive any way they can. College years aren't a lifetime. People will "suffer" a while in their young days to (hopefully) prosper later (since they've bought into the "get an education, get a good job, work hard for 40 years and try to survive on your savings and investments when you retire" bull cookies - the "40-40-40 scam").
Wholesaler · Los Angeles, CA · Member since 2016 · 276 posts · 181 votes
9y
If mining diamonds was easy, they would be worthless.
If what you say is true about your possible profit, you may have uncovered a gem. Pay the attorney fees and make sure you get it cleaned up and cleaned up right.
Best of luck!
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
9y
@Jonathan A. I'm not expert on this stuff, which is why you need an attorney. Do you have estoppel certificates? I believe that you can only raise the rent 3% per year with or without a lease. Tenants have crazy rights in LA.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
9y
I've never done tenant relocation, I just know that folks usually budget 45k-75k per unit that needs to be relocated. Some is probably for attorney fees, some for paying the tenants to leave. My current landlord in LA has a tenant he has offered 75k CASH to leave, he won't take it.
Interior Decorator · Los angeles, CA · Member since 2016 · 26 posts · 34 votes
9y
Lee Ripma thanks for the reply, I do not have the certificates. I am confident that they will all leave since each unit has over 10 people living in a small 1 bedroom. When you walk the apts there is no walking space because they all built bedrooms where ever they could. Seems like they are renting spaces of the house. Two tenants have already agreed to leave. The remaining two refuse to fill out an application and show identification. They claim it's discrimination to ask for id and that I am assuming they are illegal immigrants because I wrote them a letter in Spanish to give them options.
My main priority is to get the place up to code. As a general contractor I see many hazards in the unit. One unit has a disabled kid sleeping in the closet. Truly sad
That sounds like a child neglect/safety issue and or abuse of the disabled - with all the laws California has they are probably violating a couple there. Ask your lawyer what you should do about that, I might be calling Health & Human Service if it was me. They might not hang around with government agencies showing up wanting to investigate them.
Los Angeles, CA · Member since 2016 · 21 posts · 5 votes
9y
The city of LA has Rent Control Workshops that could be informative. Below is a link to the 2017 calendar. The topic for the March meetings are Rent Increases allowed in RSO(Rent Stabilization Ordinance aka rent control).
http://hcidla.lacity.org/system/files_force/documents/2017_rent_stabilization_workshop_schedule.pdf?download=1
Rental Property Investor · Oakland, CA · Member since 2014 · 730 posts · 1k+ votes
9y
The old adage of "when your barber and babysitter are talking about flipping houses, you know the market is overheated"
Same thing here - an "investor" purchases a 4plex for CASH, without getting signed estoppels, without researching Los Angeles rent control or how it works, without looking up code violations. We have a problem. Everyone wants to get into real estate and the sad truth is, most people aren't cut out for it. There is so much money flowing around right now and everyone thinks they can be Tarek and Christina.