REAP, Tenant Occupied and Rent Controlled Properties
In Los Angeles County
This arena is where we excel and understand and have the correct connections in every facet of these problems. We currently and in the past have represented every Major Bank, S&L, Mortgage CO, Asset Management Firm, Hard Money Lender, GSE, Hedge Funds Nationwide and private sellers in the disposition of these problematic assets. Most of our clients and us are experiencing a catch 22 on their 2-4 unit properties. The issues related to these problems are as follows:
1. Rent Control (under market rents).
2. LAHD compliance issues (illegal occupied units).
3. REAP Uninhabitable units that the city will cite and garnish Rents until it is solved.
4. Squatters, this is very serious as there are many scams and rings going around that target Bank Owned and Investor Owned properties. They make up phony leases and have utilities turned on and you must start an eviction or pay relocation fees again. The LAPD usually sides with the illegal occupants unless you have a relationship with the Sergeants. We have the best attorneys that know how to deal with this fast and quick.
5. Tenants rights Groups, for example BASTA,have been very successful in making selling in L.A. extremely difficult. Organizations like this are known to have cases (evictions) postponed for years on the smallest technicalities thus taking away any monthly profit on these Investments.
6. Vandalism Risk, again this takes away from profit.
If you are having trouble in this area, our award winning team has had great success with all our clients to move these assets from their portfolios. An example of L.A. County typical Duplex would breakdown as follows:
We must always assume the relo cost will be $18,700 per unit or $37,400 which is the maximum.In addition, an illegal garage unit or LAHD repair will typically run $15,000 to $25,000 to correct, of course this would not include rehab which can be another $20,000 plus give or take. Whether your strategy is to hold or sell, these issues will have to be resolved. Most of our sellers do not want to spend $60,000 to $100,000 if their game plan is to liquidate. It makes more sense to sell these AS-IS to an Investor at a discounted price, disclosing the current property issues.