Anyone have experience with tenant buyouts in SF?

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HI BP friends another question regarding tenants here....has anyone had an experience they'd like to share about negotiating with tenants (rather than evicting them) for a tenant buyout so they leave voluntarily? Would love to hear any stories. Thanks!

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Yes I have some direct experience here in SF. This story will cover the extremes that a story of this kind may go to. Had to get two sets of tenants out for serious capital improvements issues, life and safety issues. The totality will give you a good idea of how things may go. While I am aware of both easier and harder (money wise) stories, I will stick to ours. Also this was nearly 10 years ago, during the downturn. Easier process then, rents were were cheaper and alternative apartments were much more available.  

One set, a couple, who we got along we well enough, basically became a typical buyout situation. The buyout cost 28K for 2 tenants. Both sides still had attorneys. 

The other set, actually a single tenant, sued 7 business days later, with the help of a tenant's rights organization, for 500K for wrongful eviction. Serious stress beginning. While we already had attorneys and rock solid insurance, it was still an ordeal. The suit went basically away, with relatively small pay outs, the tenant still extracted more money for the buyout. 

Total cost for all the process, 105K. Beware.

Hi Katrina,

Yeah, it was. We have owned the property for actually over 18 years and resided here. A good run for the buy and hold concept. We are about to find out just how well our little nest egg has done as we are going to put it on the market soon. We had another stressful situation over the holidays, a fire. We are of the age where we just do not want to go through the rebuilding process and so it is just time to move on and give others the opportunity to build their dream. 

I have a bit of an extreme story for you…

My company purchased a 4 unit in SOMA at auction. The city attorney's office seized the property from the landlord due to the 16 outstanding orders of abatement on the property. 

3 occupied, 1 vacant and 4 "guest rooms" in the basement that was overrun by druggies, drug dealers, bike thieves, etc.

The 3 occupied units upstairs were vacated through several different strategies and one case of dumb luck on our part.

Only one person in the basement claimed tenancy with a lease. We got that person to agree to an eviction/buyout but would never put the eviction on his record in exchange for his cooperation.

The day of the sheriffs eviction,  28 people were removed from the basement along with over 300 stolen bikes. 2 firearms, a giant fish tank suspended 6' in the air. I could go on.

We rehabbed the four units upstairs and added two legal units downstairs. It now cash flows very handsomely. 😊

As an aside...

Landlord attorney Jeffrey Woo and Tenant attorney Joseph Tobener had a joint seminar on buyout strategies a few weeks ago.  They both agreed that one of the better ways to buyout  tenants in this city is to begin temporary eviction proceedings in order to perform work to the property and engage in negotiations with the tenant after those proceedings have begun.  This strategy spares the landlord from the whole registering with the rent board and a tenant's 45 day right of rescission process. Jeffrey Woo used to have another young attorney in his office who was successful in tenant buyouts ( his name escapes me right now). 

Best of luck!

@George Nyquist quick question regarding your comment above. You mentioned that one of the people in the basement agreed to a buyout in exchange for not putting the eviction on his record. Is there some sort of consequence or something that goes on someone's record if they've been evicted? 

MJ, any chance you can post to this thread the text from whatever contract you ended up with (MINUS ANY SENSITIVE INFORMATION of course)? As far as I can see, there are no templates of cash for keys contracts online.

@George Nyquist or anyone else in this thread: Can you message me Jeffrey Woo's contact information? Or any reputable, well reviewed landlord attorney?  I want to run a situation by an attorney to see what best steps are. 

I've never dealt with any landlord attorneys before but I assume they charge a fee whether or not there is any work legal action or paperwork served? As in they charge for advice also?

Are you still interested in stories? - I have a simple one. My tenants make 5 times my income, and yet when I asked them if they were leaving at the end of their one year lease so I could move back into my house, they denied any intention of wanting to leave the house, the neighborhood or SF, and we settled with a buyout agreement that benefited them financially ($18K). After the buyout was signed one of them says he received an unexpected offer and the family will be moved to NYC for what I presume is an even higher paid job. Meanwhile I paid for an airbnb as I await for them to leave my house and they will have free transitional housing. So, i know there are greedy landlords out there but in this case it was the tenants who had all the greed.  

Ok, I just did a buyout... Tenant is late 30s and has been there for 7 years... It is a 2/2 in Pac Height...

Tenant lost his roommate in April and could not afford to stay there by himself... instead of moving out, he paid $5k for someone to move in so that he could negotiate a buyout w me....

I ended up paying him $61K....Ugh...

@Diane G. It will probably still be worth it! Thank you for sharing that. Does anyone have any tips on initial contact with the tenant? Perhaps some ideas of verbiage to put in a letter to the tenant without sounding too threatening?

@Scott Cattaneo   - is it worth it? depends on how you look at it...

Do I gain more than $61K once the tenant moves out? yes!! Did he do anything to earn that money? No, I dont think so..

Anyway, back to your question, I have always had very good relationship with this tenant to the point that we hang out a few times when I go to SF ....Still, the buyout negotiation completely drained the friendship...

If you dont consider you guys friends, I wont try this negotiaton myself... You will be better off getting a lawyer for that...

Jeff M Woo, Andy Zach are some of the good ones that I heard..

@Diane 

@Diane G. I work for a property management company in the Bay Area, and this particular building has lots of long standing tenants that the owner would like to turn over in order to achieve market rent. As the middle man, I am looking for the most judicial way to go about this with the tenant. 

If done right, I think buyouts can be a win for everyone involved, but I would love some advice on how to initiate the process.

Originally posted by @Diane G. :

Ok, I just did a buyout... Tenant is late 30s and has been there for 7 years... It is a 2/2 in Pac Height...

Tenant lost his roommate in April and could not afford to stay there by himself... instead of moving out, he paid $5k for someone to move in so that he could negotiate a buyout w me....

I ended up paying him $61K....Ugh...

 I thought you only buy condos. Why are you doing tenant buyouts on condos? 

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