All Forum Posts by: Bradley Bogdan

Originally posted by @Corey Hassan:

Hey @Bradley Bogdan 

thanks a lot for the response.  I am still a little unsure of if this would be an opportunity or not.  Are you saying that although the person in the assisted living facility is not receiving financial assistance via Medicaid, the assets such as real estate sold off would go to the government anyway?

 Not that I can see. It would be my impression that if the folks are paying either out of pocket, or using private insurance (either a very generous comprehensive plan or specifically a long term care add on or plan) I would think you would be in the clear. 

Where it would get messy that I could see is that often low income programs (like Medicaid, Section 8 and SSI) have guards that make it tough to "dump" assets in a certain amount of time before utilizing the program. So, if you were to buy someone's property below market value, that could leave them vulnerable in the future if they don't have adequate coverage or income and end up needing Medicaid or another low income program and then can't get in because they sold off assets. The thought being that you didn't want seniors dumping assets at bargain rates to friends and family to become eligible for Medicaid to cover their long term care or other big medical bills. 

While the things I've mentioned all seem to point to the seller needing to make sure a sale doesn't screw them in the long run, I'd definitely speak to a financial planner or a friend in hospital/long term care billing to make sure you're knowledgable enough not to accidentally put someone is a bad spot. It sounds like your director friend has part of the know how, perhaps he can point you to someone that has the rest. 

Corey Hassan , I'm not an expert at the implications of assets in Medicare and Medicaid, but I work with folks in end of life situations fairly often and can share some general rules: 1. Medicare (the govt insurance you get at 65) does not have any bearing on ones estate/real estate. As it's not a means test program (everyone gets it) it operates much like your private health insurance does, basing its premiums on how much it pays out. As a partial result, it DOES NOT cover long term nursing home care, as those costs can be huge. It will cover short term rehab stays though, such as post surgery. 2. Medicaid (the federally funded state run insurance program for the poor) does have rules on what can be done with assets before and after enrollment. This program DOES cover long term nursing home care, and so can rack up some major bills on behalf of someone who is in a home for years with little or no income. 3. There is a specific rule that allows Medicaid to collect money from the patients estate after they pass to recover the costs of long term care. This can include proceeds from the sale of real estate if the person passing was the last resident. If there is a spouse, it can be deferred until they pass away and no longer reside there. I'm guessing this is what would cause a problem in you purchasing their property. 4. If a person is receiving Medicaid or SSI (different from Social Security retirement), there is a pretty low cap on the amount of liquid assets that can be retained ($2000 IIRC). If someone sold a house while in long term care, that money would mostly go to the govt anyway, reducing the incentive for someone to sell. The house is protected as a primary residence on being counted as an asset before sale. Hope this helps!

In addition to the great points @Marcia Maynard shared, being accessible (or even simply being "friendly" if it doesn't quite meet that higher bar of accessible) can definitely help it command a premium in the market. Specifically in regards to Section 8, it is fairly easy to rent it for a 10% premium over the Fair Market Value rate for your locality for applicants that ask your local PHA for a "reasonable accommodation" to spend more than the voucher would usually allow for a unit, as yours has X features that allow them to live there with their disability, which can't be found in available units under the FMR. Over 10% has to go through extra levels of approval, but can be obtained if someone can demonstrate needs that can't be met in most/any other local rentals.

In terms of the general market, being more accessible than most units really helps attract older tenants who often struggle to find housing that meets their needs as they age, especially in markets with a large share of older housing stock (which tends to have much more steps, narrow/awkward bathrooms, etc.). In general, the more people that want to rent your unit, the more $ you can command in rents and the more selective you can be in choosing your next tenant.

@Mike Williams , I'm not a lawyer so this isn't legal advice, but it would seem that you're bordering on blatantly discriminating against people with disabilities by excluding them out of hand. It's one thing to expect your tenants to have documented and IRS reported income (you're totally right that many tip based jobs don't report a substantial amount), it's another to state that anyone receiving disability payments will be denied.  Fair housing laws are pretty clear that those with disabilities are a protected class. 

As @Ned Carey  points out, a substantial number of areas do have income discrimination laws that prevent landlords from discriminating against fixed incomes (including the entire state of CA). Some of those laws also make it illegal to deny applicants based on other forms of public assistance (such as Section 8). Just be careful that your blanket policies aren't misinterpreted as discrimination, or are copied by others here where they are against the law. 

Originally posted by @Ron Drake:

@Jade Wong I served the 90 Day notice myself. You have to also give the housing specialist a copy of whatever notice you decide to serve. If you were to have an attorney help you with this, I recommend Kimball Tirey & St John. They have an office in San Francisco.

@Bradley Bogdan since you are in California and may run into this in the future, I suggest you read this out of the California / Tenant Handbook at http://www.dca.ca.gov/publications/landlordbook/ca...

Suppose that you are a tenant who participates in the Section 8 housing voucher program. While the lease is in effect, the landlord must have good cause to terminate (end) the tenancy. Examples of good cause include serious or repeated violations of the lease, or criminal activity that threatens the health or safety of other residents.207 However, incidents of domestic violence may not be used as a violation by the victim or threatened victim as good cause for the landlord to terminate the tenancy, occupancy rights or assistance of the victim.208 The landlord must give the tenant a three-day or 30-day or 60-day notice of termination under California law (see pages 67–69), and both the landlord and the tenant must give the public housing agency a copy of the notice.209 What if the landlord simply decides not to renew the lease, or decides to terminate the HAP (housing assistance payment) contract? In this case, the landlord must give the tenant 90 days’ advance written notice of the termination date.210 If the tenant doesn’t move out by the end of the 90 days, the landlord must follow California law to evict the tenant.21

 Wow, I'm actually pretty surprised about that Ron, thank you for pointing this out. In my personal experience in placing well over 200 veterans with vouchers and continuing with them afterwards, as well as helping other social workers and PHA staff in the counties I mentioned, that's not been brought up to us by either PHAs or landlords as something to follow. Obviously its there in writing, so its the law, but I can very confidently tell you it isn't common practice in any of the places I've worked or worked with in the state. I'm actually even more surprised the PHA head up here in Humboldt County, where I'm located, hasn't held us/landlords to this, as he's a particularly "by the book" guy. The standard has been that to terminate a rental agreement for reasons other than violating the lease in some way, the landlord simply needs to adhere to the 30/60 day notice structure. Thanks for pointing out exactly where the verbiage is!

@Jade Wong I've actually never had to evict a Section 8 tenant in California (only NY state), but I'm usually working on the opposite side of the coin here in California, with the low income tenants, so I've seen my fair share. 

Oakland's PHA (along with SF and other big cities) has a fairly strict and regimented set of rules for things like evictions, rent increases, etc that smaller area PHAs are usually much more flexible about. I'm not well versed in Oakland housing rules, with my experience being primarily the North Coast counties, SF and the counties south into the Central Coast. I know generally in California, the length of time you must give a tenant notice (30 or 60 days) to end a month to month agreement is based on the amount of time they have been in residence there (more or less than 1 year). Many California PHAs use those same rules for the notice they require. I'm not very familiar with SD, perhaps their PHA uses a minimum 90 day notice, but that is not the case everywhere.

My personal opinion is that it sounds like they've been in residence long enough where they would be granted a 60 day notice period, so I would give them one pronto. You can also probably start the eviction process based on not allowing access to the apartment for repairs with appropriate notice (which I'm assuming is stipulated in your rental agreement) at the same time, if they're going to give you more trouble. 

Since you're uncomfortable with the current tenant situation, and the situation is more complex than just a normal tenant not paying rent, its probably worth your money and time to hire a professional service/lawyer to help with this eviction. If you follow what they do closely, you can likely use it as a learning experience and perhaps be able to do them yourself in the future, need be. 

Please let us know how it goes!

Originally posted by @David Cook:

@Albert Hoffman In addition to being a RE investor I'm also a Product Representative for a company that sells pest control products including some that treat bed bugs so I have a bit of a foot in both worlds.  Bed bug sniffing dogs are useful, especially in early detection, but if three of the units are at a level that could be labeled "infestation" I would say it's likely that you need to get every unit treated even if the tenants aren't complaining.  In addition to being an all around good idea this will be necessary for any reputable pest control company to guarantee their treatment.  Bed bugs are an extremely hearty pest and a big part of a successful treatment involves proper preparation of the units.  Tenants need to prepare the area by cleaning and removing clutter.  I also recommend you have them wash and dry anything cloth on a high heat setting.  Feel free to reach out if I can help you in any way.  I don't claim to be an entomologist but I probably have a leg up on the average lay person.  Also tread carefully, bed bug litigation is on the rise.  Here is a relatively unfortunate example:  http://www.desmoinesregister.com/story/news/local/des-moines/2014/04/24/bedbug-lawsuit-settlement-elsie-mason-manor/8083961/  

 Just an extra tid bit to the washing and drying on high heat, you can actually skip right to the drying on high heat. Bedbugs are hearty enough where washing usually doesn't get rid of the eggs, but the high heat dry does. I've been warned in the past to actually not wash before drying as not all dryers will heat the wet clothes high enough during the dry to kill the eggs, while if they're already dry, its not an issue (yay physics!). Fortunately, I've never run into these pests in any rental, just in a hotel room or two and during my day job with the homeless, but the effort the shelter I used to work for had to go through to rid themselves of an infestation was pretty epic. I would highly recommend not skimping on the efforts to eradicate them, as half measures just do not work. 

@Elliot Mendoza Thank you for sharing your struggles. I know a lot here on the boards focus on all the good that can come from REI (and there is a ton!), but its always a sobering reminder that its by no means a foolproof way to financial success. The farther away from home you invest, the more diligence and outside help you will need to succeed. Hopefully this will remind others who might get overly excited about investing in another state that its not easy. I hope that after these tough first couple years your properties start cash flowing well and get you out of the woods on them.

@Jade Wong Sounds like this tenant is absolutely looking to cause trouble. You can always remind the tenant that not only did they sign a lease with you (in front of you) but they also signed off on the Request for Tenancy Approval that was submitted to the PHA when they first moved in that they read, understood and would abide by the lease and rules of the program. Hopefully that will let you sidestep any (obviously false) claims that they didn't sign the lease and therefore don't need to abide by it. Good luck, let us know how it goes. 

@Jade Wong Most PHAs do not automatically renew leases in one year terms, though some do, so do check your paperwork or with your local PHA. Most just follow your lease terms, which usually indicate reverting to a month-to-month after the initial term, and allow you to stop renting to a tenant with proper legal notice for your area. Just make sure to also inform your PHA of any notice or the tenant leaving, or they will likely try to keep paying you for someone who's not living there anymore and then get very cranky when they figure it out. As for the tenant, not renewing a lease is not an eviction, provided they leave when their term is up, or after you give them appropriate notice. If they don't leave after your term/notice is up, then you'll have to go through the eviction process. 

As an aside, if a tenant isn't making repairs easy, they're not one I'd recommend keeping. You'll end up paying in the long run with the wear and tear on your rental.