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So Wait. Let's say you require 3x the rent as a qualifying income. Let's say your rent is 2000 a month so they need $6K a month to qualify. Let's say sec 8 gives them $1K a month for rent as a subsidy. If they make 2k a month in wages the certainly don't hit the 6K a month you have for all tenants equally. How does that work out? Or is sec 8 100% there?
I'm sure the details have not been thought out as is often the case...
The goal of the new Washington State law is to make those on assistance a protected class as it was explained to me.
The old income rule of thumb was 3 times the rent and Section 8 follows this in that a family should not pay more than 1/3 income for housing with the taxpayers making up the difference.
A big problem here is many owners are now requiring two months security... so that would be 4k to come up with now that Section 8 is out of the Security Deposit side of things and a real problem... Section 8 urges owners to accept installments for the security... I kid you not.
Several organizations in Oakland are offering deposit assistance since the change... mostly religious.
As a side note... my longest Section 8 tenancy was initiated in 1988... the Housing Authority has lost all original documentation.... not confidence inspiring at all... (I have copies but they have nothing)
Not an owner I know would willingly turn down a model tenant... it is just working with the Housing Authority that I don't care for.
I had one issue in a nearby city... the Housing Authority threatened to with hold rent because the tenant had the Utility turn off the furnace pilot in the summer... this is free program the utility offered for many years to assist low income households as summer is not heating season.
I sent a certified letter to the PGE saying under no circumstances are they authorized to turn off pilot lights as this results in a home that that fails habitability...
PGE got back and said they cannot honor my request as the service is not in my name... I as owner have no standing.
It is this kind of nonsense I no longer want any part of...
Another Housing Authority was being investigated for fraud... this left owners in limbo... I got on BART and went the San Francisco West Coast Office of HUD... boy did that make waves... lucky I wasn't hundreds of miles away! The city of Pittsburg manager got involved after getting a call from HUD...
Last edited by Ultrarunner; 10-13-2018 at 04:34 PM..
It just goes to show you when the government steps in and disturbs the economic laws of a free market and supply and demand. They seem to get it wrong every time, IMO.
we just made our tenant a final offer at 50 cents on the dollar for the co-op to make buying attractive to them . .
$600,000 ---100% financing for 5 years —30 year amortization --- 3% interest rate. The son can be the buyer as long as mother and father guarantee the loan. $10,000 non refundable deposit to be applied to the initial mortgage payments.
if they can do it they pick up 600k in equity day 1 .
while we did well just because of rent stabilization , you can see how this is really not equitable for landlords . i mean these people are tenants not family .
<Smack>
What are doing? You're tired of running a co-op so you're just going to hand over $600K to people that have no skin in the game and have been pains in your side?
You don’t understand what being stabilized means as far as values .
There is no other way. It goes with the territory when you dabble in stabilized apartments. That is why they go for cents on the dollar . You buy a bunch , the few you buy out the leases on can make you a ton of money and the rest just dies on the vine .
The two left are break even . One is a slight gain the other a slight loss . The one at a slight loss has an older couple and a 26 year old son with succession rights . Investor groups only want the one without the son.
We will only sell both together to investors . So the only option is to offer it to the tenant at a very attractive deal.
just so everyone understands how these deals work with stabilized apartments i will explain .
because landlords were tricked in to believing that stabilization was only to prevent rent gouging and it instead became a political pawn with many many years of artificially held down rents , many owners took the building co-op .
most co-ops were non evicting conversions . those tenants who did not buy stayed on as stabilized tenants .
anyone living with them was protected too so basically they became part of your family forever if they did not die or move .
the only way to free up the apartment is they move ,die or take a lease buy out . we offered 100k to the tenants to move . since most were close to retirement age and could not afford to live near central park with no pay checks they jumped at it .
then the apartments can be sold or have no rent restrictions anymore .
so depending how old and who lives with the tenant these apartments can be sold and passed around to investors . some go for as little as 30 cents on the dollar .
in the deal we did , we got a 50% stake in 9 apartments ranging in value at the time , 15 years ago from 800k to 2.5 million plus a 10% stake in the commercial lease rights which ended up selling for 18 million dollars, all of which we split with our son who is a partner too , all for 500k . the people we bought out looked at only rent roll and not actual street value since they could not sell them .
how they came up with as little a valuation as they did still escapes us . the lease rights alone were spinning off quite a bit of money by themselves , so yeah luck was a big part of this venture .
we can actually give away those two remaining apartments for free and it would still be a fabulous investment .
in this case if it was not for the 26 year old who has succession rights we would just hold the apartments forever and our kids would win as the tenants would not outlive our kids so the kids would get them and be able to sell them . but with a 26 year old it is a game changer .
the 26 year old is much younger than our kids so it's silly to sit with these . it is found money offering them to the tenants at a greatly reduced price .
but of course the problem is still that the tenants need to be able to afford to buy a 600k apartment . many would not have been tenants since the 1980's if they could afford to have bought .
so basically it is what it is and for all purposes we don't even count the value of the apartments for much . they are pretty much off our yearly net worth review when we do one .
this is why usually investor corporations dabble in these things and not something the public gets involved with . corporations have infinite lifetimes to wait . it is like those companies who buy out structured settlements and then wait .
Last edited by mathjak107; 10-15-2018 at 03:51 AM..
Thanks for the write-up. It's a very interesting dilemma, and makes sense the way you write it up. Tenants won't go, and have a right to be there until they and/or kids pass on. To paraphrase Dr. Strangelove, we have a mine shaft gap.
I guess first call is to the alderman. If there's an entire market on this stuff I'm sure people are interested in making it go away so it's likely fruitless, but you probably already know.
Then you can look for the gotchas, which if you're already offering $100K I'm sure you've done this as well. How much or little you want to help someone towards that gotcha is at your own discretion.
There could also be fees of some sort. They've likely been in an made adjustments to the place. While you might normally not charge for them, you might also normally raise the rents every decade or so...
Why don't you want to sell the interest to someone else though? Someone has kids that are younger. Worst case is it's like a 60 year bond or something. In the meantime, politics change and I'm sure Central Park rent carries an insane premium when free floating. Maybe the kid would be willing to agree to give it up for help with college or something. Kid gets to live their own life and is content that parents will be fine for as long as they live there.
Not sure...it just strikes me really wrong though...like squatter rights or something. Totally fine with you bought knowing rents can't go up, but you're actually going to lose your property. Rent rights override ownership rights? It just seems very wrong. I just don't think I could do it.
At the same time, we've got a rent control initiative on the ballot right now, so what you're saying scares the hell out of me. Oddly enough, I don't raise my rents, but the thought of the government telling me not to makes all the difference in the world. If it passes, my rents are definitely going up.
Prop 10 is on a lot of California minds right now because it is far reaching and would be a huge fundamental shift when it comes to the concept of private ownership.
Thanks for the write-up. It's a very interesting dilemma, and makes sense the way you write it up. Tenants won't go, and have a right to be there until they and/or kids pass on. To paraphrase Dr. Strangelove, we have a mine shaft gap.
I guess first call is to the alderman. If there's an entire market on this stuff I'm sure people are interested in making it go away so it's likely fruitless, but you probably already know.
Then you can look for the gotchas, which if you're already offering $100K I'm sure you've done this as well. How much or little you want to help someone towards that gotcha is at your own discretion.
There could also be fees of some sort. They've likely been in an made adjustments to the place. While you might normally not charge for them, you might also normally raise the rents every decade or so...
Why don't you want to sell the interest to someone else though? Someone has kids that are younger. Worst case is it's like a 60 year bond or something. In the meantime, politics change and I'm sure Central Park rent carries an insane premium when free floating. Maybe the kid would be willing to agree to give it up for help with college or something. Kid gets to live their own life and is content that parents will be fine for as long as they live there.
Not sure...it just strikes me really wrong though...like squatter rights or something. Totally fine with you bought knowing rents can't go up, but you're actually going to lose your property. Rent rights override ownership rights? It just seems very wrong. I just don't think I could do it.
At the same time, we've got a rent control initiative on the ballot right now, so what you're saying scares the hell out of me. Oddly enough, I don't raise my rents, but the thought of the government telling me not to makes all the difference in the world. If it passes, my rents are definitely going up.
we do want to sell the interest to someone else , they are for sale right now but so far no investors want them when you have a 26 year old with succession rights and a slightly negative cash flow . if we can't get at least 50 cents on the dollar we will just sit with them . we only want to sell the two as a pair to investors as the slightly positive one is paying for the slightly negative one . we have had takers for the positive one but won't sell it unless the negative one is sold .
we will hold them if we have to forever as long as they cancel each other out . we already made our money on the deal .
Last edited by mathjak107; 10-16-2018 at 03:24 AM..
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