All Forum Posts by: Clarence Johnson

Excuse the typos, I was typing fast and didn't review.  I looked for an area to edit post but only saw an area to edit the title.  Thanks again!!!

I May my one of my parents tenants in Compton, Ca caused a fire in one of their units which caused fire damage to their unit and water damage to the lower unit and adjacent unit.  The fire departments report determined that the fire was caused by the tenant throwing a cigarette into the trashcan, and also mentioned finding drugs on the premises.  The building is a LA Housing Authority Mod Rehab building (section 8 like program with weird rules, anyone familiar with this program please reach out) that they have owned for about 7 years.  

When my parents asked the Housing Authority about tenant relocation they knew very little about the program.  The Housing Authority and firre department declared the unit condemned due to the fire and smoke damage and the fact that the water, and gas were turned off.

Remediation and construction to repair damage were started immediately as my parents tried to decide if they would evict the tenant based on nuisance.  While construction was going on the tenant continued to access the property, use marijuana on the premises and get the way of construction workers.  Tenants were informed to call the owner if they needed to access the property doing construction so that they would not be injured in the condemned unit.  Tenants continued to access the property with no regard to instructions or their safety and on one occasion removed the entry door knob to install it on their bedroom door (breaking the door in the process).  For the safety of all parties and security of the construction site my father changed the entry knob and deadbolt and informed the tenant that if she gives 24hrs notice he can meet her to retrieve any belongings she may need.  

Without our knowledge Housing Authority canceled the tenants contract the week of the fire and sent notification of such to her.  Housing authority and the tenant both received notice from my parents to stop payment until the construction was complete.  Within 2 weeks of the locks being changed the tenant filed suit ($10,000) against my parents in small claims court claiming that she was illegally locked out of her home and denied access to her medicine which caused pain and suffering.  We did not receive notification of the housing authoruty canceling her contract until after we were be sued.  The tenant later made contact with my parents and moved her personal effects, refusing to sign a disclaimer stating that she is not being forced to move or being evicted by the owner.  At the time her home was a work site and we will be bringing pictures and documentation to court to support our case.

Does anyone have any suggestions in regards to how we should approach the case in court (7/28/15)?  Can we deduct the cost of the insurance deductible ($1,000) from the tenants security deposit?

Thanks In Advance for your answers and suggestions, and I hope I can add value to the board with by helping others with my areas of expertise (So Ca Single Family and Investment properties as well as real-estate contract law)

From an agents perspective I would not do a transaction for a flat rate.  I work hard and fight diligently for my clients.  You often get what you pay for and saving money on a discount agent may cost you money in a transaction.

As an investor, I definitely do not want to give up 3% off of every transaction ($300-500k avg in Ca) but I do understand and respect the value that a quality agent brings.  

Strategically I have seen people very successful in using the listing agent to represent them on the purchase side of REO, shortsale, and foreclosure properties. If necessary you may need to offer the listing agent the resale to acquire the property.

If there was an investor feeding me transactions I would not work for a flat rate ($400-500), but I would not charge them the market rate (3%) to list and market the property.  My overhead to properly market a property hovers around $400.  Open houses, social media and email blast, professional photography and virtual video tours of every property cannot be done for $400 flat rate or even $1000 flat rate on my end of the world.  Your $400 listing agent may lose you money by having your house sit on the market with their $40 marketing plan.

My opinion is that there is value in getting your license provided that you have the time and energy to properly market the property when the time comes.  Listing a property is one thing and selling it is another.  When time is money I suggest spending the money, that's why investors aren't painting their own flips on their off days, they hire a crew to have it done in 2 days.

Hey Linda,

Your agent needs to provide you with an estoppel from each unit. The estoppel is signed by the tenant and verifies the amount of rent they pay as well as any security deposits they have on file. Security deposits should be transferred with the building, but in the case of a REO I am not sure of the exact process. As the landlord you are responsible for the security deposits on file plus interest, so I agree with Bryon in regards to having your agent draft an addendum. You inspection contingency period protects you against losing your deposit, ask your agent how many days she specified for this process, and be aware your inspection is not complete until you have viewed the entire property. I have viewed great looking properties and when I was subsequently granted access to other units discovered units with obvious mold growth, fire damage, and squatters. Be sure to speak with the inspector to see if he will charge you for additional trips to inspect the other units, do not release your physical contingency until all units have been inspected. Also, while everyone needs a start in the industry, using a new agent (family friend, brother, cousin) for such a purchase can be very risky. Most of your questions are not very complicated, and it concerns me that if the agent could not answer/or find an answer that they may drop the ball elsewhere costing you your hard earned money.

Michael, yes you are supposed to stay in the FHA property for a minimum of 1 year. If you look on the FHA website you can find ways around this and specific exigent circumstances that allow you to move without penalty.

John, agents can see if the property is occupied on MLS, and the search can be altered to specifically target occupied multifamily properties.

First form a relationship with a Realtor you trust; and second it is their job to run comps for you as long as you have an intent to do business with them.  As an agent I would advise you to be weary of any agent who charges you to do something as menial as running comps.