Los Angeles rent controlled cash for keys

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Los Angeles rent controlled cash for keys

David Shaw
Member since 2018 · 26 posts · 12 votes

Hi, first time posting, long time following the great advice here. 

I own a 4 unit in rent controlled Los Angeles and I am looking into cash for keys for a tenant that has been there for 8 years. 

Looks like it's more complicated in Los Angeles, and many use a company or lawyer. One company quoted me $2500. I wanted to see if anyone has any experience/guidance for doing this? What are typical costs, should I be using a lawyer in Los Angeles with all the regulations, and any idea what amount can be offered to the tenant? 

Thank you in advance! 

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KJ L.
Rental Property Investor · Los Angeles, CA · Member since 2017 · 210 posts · 155 votes
7y

When I initially made the cash for keys offer to my tenants, I consulted with my lawyer and she suggested that I started with a verbal conversation with the tenants to see if they were interested and then she'd get involved in the backend if necessary (since there are forms and all the requirements now). 

Long story short, the tenants didn't accept cash for keys so we went through the city for formal RSO eviction and actually spent 6 hours in court yesterday.

PM me if you want my attorney's info; she's the best.

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  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    I Found this.  Looks like it is regulated and you might just call the rent board

    https://hcidla.lacity.org/system/files_force/documents/cash_for_keys_notice_english__0.pdf?download=1

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    7y

    Is the tenant under a term lease or month-to-month? What's your reason for getting rid of them after 8 years?

    Tag me with some details and I'll see if I can help.

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  • KJ L.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 210 posts · 155 votes
    7y

    When I initially made the cash for keys offer to my tenants, I consulted with my lawyer and she suggested that I started with a verbal conversation with the tenants to see if they were interested and then she'd get involved in the backend if necessary (since there are forms and all the requirements now). 

    Long story short, the tenants didn't accept cash for keys so we went through the city for formal RSO eviction and actually spent 6 hours in court yesterday.

    PM me if you want my attorney's info; she's the best.

    2Reply
  • David Shaw
    OP
    Member since 2018 · 26 posts · 12 votes
    7y

    @Nathan Gesner thanks for the response. They are month to month. I inherited this tenant from the previous owner. Here in Los Angeles we have rent control, the max I have been able to raise the rents are 3% and even with raising it every year he is well below market rent. Cash for Keys provides a way where the tenant and landlord can benefit, but they have added regulation on regulation so I just want to make sure I go about it very legally. 

    @KJ L. thank you! I will PM you. Yes they have made it very difficult and there seem to be minimums that are offered etc, a Lawyer sound like a good idea, hopefully won't cost an arm an a leg. 

    0Reply
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    7y

    @David Shaw

    We use a tenant negotiator in LA, if you PM me I can give you is contact. Our average buyout is 18k with 2 mo free rent. We base the buyout amount on how far under market the unit is. Usually if we can recoup the payout in 2-3 years we'll do the buyout. We get the benefit of having all that extra income hit the bottom line at a 4 cap, so the math works all day long. 

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  • David Shaw
    OP
    Member since 2018 · 26 posts · 12 votes
    7y

    @Lee Ripma thank you! I didn't know a tenant negotiator existed. I will PM you. 

    0Reply
  • KJ L.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 210 posts · 155 votes
    7y

    @Lee Ripma Does your tenant negotiator speak Spanish? I didnt know that was a thing but it's a great resource for future projects. 

    0Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    The link I posted above gives a step by step process for LA cash for keys and the amounts that are to be offered. Might be a good place to start and free :)

    2Reply
  • David Shaw
    OP
    Member since 2018 · 26 posts · 12 votes
    7y

    @Mary M. thank you, yes I saw those as well. It is a good starting point but definitely also need someone for the buyout agreement 

    1Reply
  • Mary M.
    Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
    7y

    @David Shaw  Buyouts are never fun....  we had a rental in SF with a tenant in a protected class who was a professional at getting tenant buy outs....  anyway, we ended up 50k in the hole on that one.....  good luck in your situation...

    0Reply
  • David Avetisyan
    Rental Property Investor · Glendale, CA · Member since 2013 · 685 posts · 334 votes
    7y
    Originally posted by @Mary M.:

    I Found this.  Looks like it is regulated and you might just call the rent board

    https://hcidla.lacity.org/system/files_force/documents/cash_for_keys_notice_english__0.pdf?download=1

    This link Mary has provided is all you need. I’ve made attempts in similar cases, but most LA Rent Control tenants know they are in the drivers seat. 

    Besides the 3% there are other minimal fees you can tack on, but it absolutely does no justice in many cases.

    Good luck!  

    0Reply
  • Lee RipmaPro Member
    Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
    7y
    @KJ L. He does! You can’t do what he does in LA without speaking Spanish.
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  • Elmo Wally
    Member since 2022 · 5 posts · 1 vote
    4y
    Quote from @KJ L.:

    When I initially made the cash for keys offer to my tenants, I consulted with my lawyer and she suggested that I started with a verbal conversation with the tenants to see if they were interested and then she'd get involved in the backend if necessary (since there are forms and all the requirements now). 

    Long story short, the tenants didn't accept cash for keys so we went through the city for formal RSO eviction and actually spent 6 hours in court yesterday.

    PM me if you want my attorney's info; she's the best.

    Yes, please can I get your lawyer's information I need help badly. And did you end up paying your tenant?

    0Reply
  • Elmo Wally
    Member since 2022 · 5 posts · 1 vote
    4y
    Quote from @KJ L.:

    When I initially made the cash for keys offer to my tenants, I consulted with my lawyer and she suggested that I started with a verbal conversation with the tenants to see if they were interested and then she'd get involved in the backend if necessary (since there are forms and all the requirements now). 

    Long story short, the tenants didn't accept cash for keys so we went through the city for formal RSO eviction and actually spent 6 hours in court yesterday.

    PM me if you want my attorney's info; she's the best.


    0Reply
  • Elmo Wally
    Member since 2022 · 5 posts · 1 vote
    4y
    Quote from @Lee Ripma:

    @David Shaw

    We use a tenant negotiator in LA, if you PM me I can give you is contact. Our average buyout is 18k with 2 mo free rent. We base the buyout amount on how far under market the unit is. Usually if we can recoup the payout in 2-3 years we'll do the buyout. We get the benefit of having all that extra income hit the bottom line at a 4 cap, so the math works all day long. 

    I have a property management but their so sucks communicating to me about my cash for keys for tenant I did not know there is a negotiator. Can I get information of the negotiator.Thank you
    0Reply
  • Elmo Wally
    Member since 2022 · 5 posts · 1 vote
    4y

    Does the amount for cash keys are different from the tenant that still in lease agreement. I have tenant month to month and I am in escrow now I offered her $2,800 She refuse cause it is too small. I guess she wants right amount and I do not know how much is right amount in City of Inglewood. I just dont want them to take advantage of me. I work hard to buy this duplexes. New buyer will occupied the unit that is reason that I need to offer her cash for keys and vacant. I need help so bad. My property management is sucks too when communicating to them and to me too. Hay! This situation making me sick. Any information help. Thank you so much in advance.

    0Reply
  • David Shaw
    OP
    Member since 2018 · 26 posts · 12 votes
    4y
    Quote from @Elmo Wally:

    Does the amount for cash keys are different from the tenant that still in lease agreement. I have tenant month to month and I am in escrow now I offered her $2,800 She refuse cause it is too small. I guess she wants right amount and I do not know how much is right amount in City of Inglewood. I just dont want them to take advantage of me. I work hard to buy this duplexes. New buyer will occupied the unit that is reason that I need to offer her cash for keys and vacant. I need help so bad. My property management is sucks too when communicating to them and to me too. Hay! This situation making me sick. Any information help. Thank you so much in advance.

    If the new buyer will occupy the unit then there is no need for Cash For Keys, but your broker should be able to help you in what needs to be posted, I believe it is a 60 day notice to vacate due to intent to occupy by Owner or Owner Family. Of course the new owner will have to deal with the headaches of making sure the person leaves. . I say offer a more reasonable amount, such as $25k and get rid of them so your sale can go through. I have not heard of cash for keys less than $20k in LA. 
    0Reply
  • Ethan Hanes
    Real Estate Agent · Westlake Village, CA · Member since 2021 · 64 posts · 41 votes
    4y
    Quote from @David Shaw:

    Hi, first time posting, long time following the great advice here. 

    I own a 4 unit in rent controlled Los Angeles and I am looking into cash for keys for a tenant that has been there for 8 years. 

    Looks like it's more complicated in Los Angeles, and many use a company or lawyer. One company quoted me $2500. I wanted to see if anyone has any experience/guidance for doing this? What are typical costs, should I be using a lawyer in Los Angeles with all the regulations, and any idea what amount can be offered to the tenant? 

    Thank you in advance! 


     David, it depends! You could definitely start at a lower number. I have heard that some people offered up to $10,000 cash for keys. This is in areas where there are little vacancies. I would say something to do would be offer it to them starting at a low number, then if they deny, ask what they want. 

    Just an idea! 

    Thanks,
    Ethan

    0Reply
  • David Shaw
    OP
    Member since 2018 · 26 posts · 12 votes
    4y

    I definitely agree with your negotiating tactic!

    0Reply
  • Elmo Wally
    Member since 2022 · 5 posts · 1 vote
    4y
    Quote from @KJ L.:

    When I initially made the cash for keys offer to my tenants, I consulted with my lawyer and she suggested that I started with a verbal conversation with the tenants to see if they were interested and then she'd get involved in the backend if necessary (since there are forms and all the requirements now). 

    Long story short, the tenants didn't accept cash for keys so we went through the city for formal RSO eviction and actually spent 6 hours in court yesterday.

    PM me if you want my attorney's info; she's the best.


     Hi, My property is in Inglewood .I offered my tenant $12,625 but they want the deposit too but that is my protection just in case they trash my place. I am in the escrow now i have mentioned to her on Sept 13 that I want to offer them cash forbkeys in exchange of complete turn over of the property on or before Nov 1 2022. They could have said something about the dates that if they can move out after that that Now she said Jan 01,2023. I afraid I am losing my buyer. What are my options and what can I do. their are delaying my sale. Please I need your lawyer's info I need help badly. Their are taking advantage of me I am not a bad lanlord.Thank you in advance.

    1Reply
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