Government has stolen this landlord's property. Check this out!

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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
4y

Well, just did a tiny bit of research on this (google search and read a few articles) and this post title and the podcast are both misleading. The building has not been stolen by the government. They are considering buying it. It was built as subsidized affordable housing in the first place and has been part of the section 8 program for 30 years. Now the city is considering offering $46M (formally appraised fair market value) because the 30 year agreement for it to remain affordable housing has expired. The owner was enriched by an initial affordable housing subsidy when it was built, and then the section 8 program paid him rent consistently for 30 years and he's now about to cash out. He says the building is worth $57M but it appraised for $46M. I doubt any of us would pay $11M over appraised value for this building and it sounds like the owner benefitted greatly from these "socialist" programs to me, and is now simply negotiating for a larger buyout. The building is probably actually worth less than $46M.  

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  • Robert Fiorenzi
    New Smyrna Beach Fl. 32168 Jacksonville Fl. · Member since 2022 · 18 posts · 5 votes
    4y

    I hate LA! Socialism is scary!

    2Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    4y

    There is no telling what the blue states will do if there was a real recession (and/or no ability to stimulate the economy through loose monetary policy because of inflation).

    7Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y

    @Robert Fiorenzi

    Eminent domain. While I don’t agree with them taking this property for public use / owner can do nothing except argue he was not fairly compensated.

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    3Reply
  • Robert Fiorenzi
    New Smyrna Beach Fl. 32168 Jacksonville Fl. · Member since 2022 · 18 posts · 5 votes
    4y

    Unfortunately I agree. For a reason such as this one it is far more likely to happen in California or New York. I feel for the property owner. 

    1Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y

    Not quite accurate title or podcast. The LA City Council voted to explore the purchase of the building. 

    7Reply
  • Robert Fiorenzi
    New Smyrna Beach Fl. 32168 Jacksonville Fl. · Member since 2022 · 18 posts · 5 votes
    4y

    Now that is a different story!

    0Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    When the government takes property via eminent domain it isn't called stealing.

    2Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    4y

    Who are these people? Is this a local LA channel, or just some guys doing a podcast

    from their living room?

    1Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    4y

    Well, just did a tiny bit of research on this (google search and read a few articles) and this post title and the podcast are both misleading. The building has not been stolen by the government. They are considering buying it. It was built as subsidized affordable housing in the first place and has been part of the section 8 program for 30 years. Now the city is considering offering $46M (formally appraised fair market value) because the 30 year agreement for it to remain affordable housing has expired. The owner was enriched by an initial affordable housing subsidy when it was built, and then the section 8 program paid him rent consistently for 30 years and he's now about to cash out. He says the building is worth $57M but it appraised for $46M. I doubt any of us would pay $11M over appraised value for this building and it sounds like the owner benefitted greatly from these "socialist" programs to me, and is now simply negotiating for a larger buyout. The building is probably actually worth less than $46M.  

    19Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y

    Yes, there are many unfair actions taken by government, particularly in California, but I think this one is greatly exaggerated, possibly even false.

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    7Reply
  • Paul Smythe
    Investor · Greenville, SC · Member since 2012 · 269 posts · 187 votes
    4y

    Nothing like a fake story to reinforce one's political beliefs. Have a better filter people instead of just believing everything negative you read about opposing politics.

    Also, keep politics off of a real estate forum.

    8Reply
  • Brett C.
    Real Estate Agent · Manhattan · Member since 2018 · 9 posts · 3 votes
    4y

    California's whack, but this story has no credence. 

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    4y
    Quote from @John Underwood:

    When the government takes property via eminent domain it isn't called stealing.


    if we did not have eminent domain we would not have a highway system or many other public improvements.. this is why the railroads that secured all those easements and rightaways in the 1800's to early 1900's wont give them up .. where i see railroad rightofways use being changed out here on the left coasts is for linear parks or trail systems.. Oregon   this is one thing this state has done right there are some awesome trails now through the woods that follow the old railroad grades that were used for logging.
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    1Reply
  • David Dachtera
    Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
    4y

    As usual, I'm the contrarian here.

    Folks are talking about how this impacts the owner / landlord. I'm reminded of a line from "Star Trek II: The Wrath of Khan": after saving the ship and now dying from radiation burns, Spock tells Kirk, "The needs of the many outweigh the needs of the few - or the one."

    Misguided as it may be, the local government is telling the owner, "O.k. You're not willing to do the right thing? We'll do it for you."

    The REALLY right thing to do? The owner should, as the podcast suggested, sign up for another 55 years. Guaranteed income, no vacancy explosion, no rehab to bring the building up to where it can command market rents.

    1Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    4y

    Here's the story, and the 12-0 vote: L.A. City Council moves to buy apartments to protect tenants from huge rent hikes 

    Landlord signed up for S-8 decades ago per the article. 82% of the apartment is section 8 per the LA Times article. At least where I am, S-8 rates are federally controlled. The FMR system for LA county is a little below the LA county development authority rates. I know what I'd do if I were in the owner's shoes. 

    2Reply
  • Chris Martin
    Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    4y
    Quote from @Jay Hinrichs:
    Quote from @John Underwood:

    When the government takes property via eminent domain it isn't called stealing.


    if we did not have eminent domain we would not have a highway system or many other public improvements.. this is why the railroads that secured all those easements and rightaways in the 1800's to early 1900's wont give them up .. where i see railroad rightofways use being changed out here on the left coasts is for linear parks or trail systems.. Oregon   this is one thing this state has done right there are some awesome trails now through the woods that follow the old railroad grades that were used for logging.

    I've walked quite a few miles on the 'rails to trails' system that covers the east coast states. Indeed, the right move. Maybe that apartment owner will do the right thing. 

    2Reply
  • Steve Olivier C.
    Investor · NJ · Member since 2015 · 20 posts · 12 votes
    4y
    Quote from @David Dachtera:

    As usual, I'm the contrarian here.

    Folks are talking about how this impacts the owner / landlord. I'm reminded of a line from "Star Trek II: The Wrath of Khan": after saving the ship and now dying from radiation burns, Spock tells Kirk, "The needs of the many outweigh the needs of the few - or the one."

    Misguided as it may be, the local government is telling the owner, "O.k. You're not willing to do the right thing? We'll do it for you."

    The REALLY right thing to do? The owner should, as the podcast suggested, sign up for another 55 years. Guaranteed income, no vacancy explosion, no rehab to bring the building up to where it can command market rents.


    0Reply
  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y

    Everyone saying the owner should do the right thing should shut the hell up. Not a single one of you hypocrites would willingly bend over and get screwed by the government, but in typical fashion someone else should take the hit because you think it is the right thing to do (as long as someone else pays for it). You're like the billionaires that complain they pay too little in taxes, yet never mention that they have 50 dummy corporations set up from Angola to the Virgin Islands to reduce their tax burden.

    The right thing is for the government to honor its agreement. The builder was given a construction loan in exchange for having a 30-year affordable housing covenant. The builder honored that agreement. The City benefitted from that agreement for 30 years. The City knew for the past 30 years that this agreement would end on a specific date. The City did nothing to prepare for this. The City could have easily had a clause in the agreement to be able to buy the building at the end of 30 years at a set price, but they didn't. The City could have had other housing lined up for these people. The City could have put them on Section 8 vouchers. The City failed here. 

    BTW, the only reason anyone is hearing about this is because the local elected official is in a tight reelection race against an activist candidate. There are 10,000+ units that have were constructed under the same terms as this one that are nearing their 30 year end. There is no way the City has the funds to purchase all these buildings - especially since any purchase will be tied up in court for many years. 

    1Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    4y

    @Elizabeth Calleja no they didn’t.

    0Reply
  • David A Lisowski
    Rental Property Investor · Inlet Beach, FL · Member since 2018 · 199 posts · 111 votes
    4y

    @Elizabeth Calleja

    Sorry, but this is a garbage post

    1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    4y

    I am curious, for all those posting this property owner should "do the right thing", I am curious, how many sec8 properties do you have?     How many properties are you buying too convert to sec8?     That is, by your statements, "doing the right thing" is it not? So, are you "doing the right thing"????

    Or is it just what someone else needs to be doing with there $$$$, not you with yours?

    0Reply
  • Nancy Truong
    Attorney · Houston · Member since 2022 · 84 posts · 116 votes
    4y

    Condemnation cases are common.  The constitution states that government cannot take without just compensation but unfortunately many homeowners can't afford or do not seek attorneys to help protect them from low appraisal values.  

    0Reply
  • Huso Akaratovic
    Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes
    4y

    @Henry T. Patrick bet David is a very inspirational entrepreneur. Look him up, he has his channels on YouTube. You won’t regret if you start following his content.

    0Reply
  • Account Closed
    Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
    4y
    Quote from @Steve K.:

    Well, just did a tiny bit of research on this (google search and read a few articles) and this post title and the podcast are both misleading. The building has not been stolen by the government. They are considering buying it. It was built as subsidized affordable housing in the first place and has been part of the section 8 program for 30 years. Now the city is considering offering $46M (formally appraised fair market value) because the 30 year agreement for it to remain affordable housing has expired. The owner was enriched by an initial affordable housing subsidy when it was built, and then the section 8 program paid him rent consistently for 30 years and he's now about to cash out. He says the building is worth $57M but it appraised for $46M. I doubt any of us would pay $11M over appraised value for this building and it sounds like the owner benefitted greatly from these "socialist" programs to me, and is now simply negotiating for a larger buyout. The building is probably actually worth less than $46M.  


     Now now, dont let facts get in the way of Fox propaganda! As for eminent domain, didn't Trump appropriate a bunch of border land for the wall the Mexico was supposed to pay for?

    2Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    4y

    Bring back the Fairness Doctrine.

    0Reply
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