All Forum Posts by: Lucas Allmon

Hey all,

An opportunity came my way to purchase a piece of land that I think makes sense, and may be going in on it with a couple people.

I am not sure what kind of expectations to set for what folks need to put in vs what folks gain. Typically I don't invest with other people, as their expectations of returns are a little unfounded, but I do want to make this happen?

I'd like to hear how folks approach this kind of thing.

@Roy Kwak I totally get the emotional aspect. I don't immediately assume people are bad, but always follow the axiom of "Trust, but Verify". So when I did a title pull, I googled the owners because neither of the names on the title matched the name of the 'owner' I was introduced to. 

Turns out one of the owners goes by multiple aliases and has multiple judgements against them for not paying people what they were owed. Combine that with the owner clearly not wanting to give the property up (divorce), and the strange, long term leaseback contingency, I can say that my hunch is strong and the red flags raised high.

Someone might want to take on the problem, but with a current tenant upstairs paying 40% below market rate, and the current owner possibly renegging on their agreement without repercussion other than a formal eviction, I can say it's not a risk I was willing to take. Worst case for me would be paying multiple thousands of dollars to subsidize other people's housing.

I don't want the property that bad. Some might have the patience and bankroll for those shenanigans, but I don't. haha

@Account Closed They passed on our offer (to release funds half way through the 45 day escrow) to help with moving costs. The offer they went with was the same as ours, but with the LeaseBack they wanted.

However it's status has not changed to Pending or anything since we were denied. I'm sure it's a *****how.

I'm convinced the endgame for this person was to squat.

@Bryan Zuetel It was in Highland Park in Los Angeles, and I 100% agree that is what was happening. We had the same offer as the other competitor, but our offer was to release the escrow funds halfway through (after inspection) the 45 day escrow  to help cover moving/storage for the seller.

They denied it for the offer contingent. with their wishes. You could tell the seller didn't want to leave.

It was a great house, but I would not want to end up paying the full mortgage on a place with a 10 year tenant and a previous owner with tenants rights.

@Colleen F. My simple math may be off, but the PITI from my estimate is closer to $4000 total, minus $1600 is $2400. Market rent is probably $1300 to $1500.

Regardless of if the math is correct, its the residency details that I dislike. 

I believe the intention of the person is to straight up not pay anything and, thus forcing us to go through the eviction/relocation process while they live in the house that they have tenancy on.

So here are my questions, really.

- How do I make sure residency is abolished when I take possession?

- What is a good strategy to use to close on the house with that unit vacant?

The LA market is INSANE and a total sellers market. I need a strategic position that doesn't end up with me owning a house that I'm paying the full mortgage on and not living in. lol

@Kyle J. I somehow missed your post. Thanks so much for that info! I'm reading all of it now.

So this deal is slowly trudging along, and the current owner (bottom unit resident) is looking for a Leaseback Agreement of 60 days, where he pays the PITI of the place after escrow, minus the current tenant's (top unit resident) payment.

Something seems fishy. That would make the payment much higher than the market rent for the unit he would be occupying, and there is already a longer escrow time built in.

I'd like to do everything as cleanly as possible, but this area is one of the main considerations of the seller, so I still wonder what would be the best advice going forward? Would it make sense to write up a potential lease agreement that if they do stay longer than 60 days, the seller has to keep paying at that rate?

Overall, I would have the ability to evict via owner occupancy if worse came to worse?

Thanks for all the input. While having a tenant that likes the place is appealing, I am giving a long close and requiring the place empty and then offering my lease to the person (at market rate and standard application). 

I’m possibly buying a house where the one owner might stay on as a tenant one of the units. I want to offer first right of refusal on a lease, but I also want to make sure that they would not be able to establish residency.

He mentioned something like needing 30 (maybe 45) days after close of escrow to “find a new place”, but it comes across as a way to establish tenants rights in my view.

I thought I might suggest offering a lease, with the first month free, that way if he breaks it, I can file formal eviction that isn’t a “no fault” level eviction.

What are your suggestions/input?

@Steve Hodgdon Earning while learning sure sounds better that losing while learning.  Lol

Good workshop with you and Dion on Saturday. Cleared up a lot of the missing pieces.