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Friday, November 28, 2014

$275,000 buys three Angeleno Heights cottages – and a warning

Photo from Google Maps

The real estate listing for three “charming” Angeleno Heights cottages near Echo Park Lake sounds more like the Surgeon General’s warning than a broker’s sales pitch:

“Great property for an investor to go an handle all the notices to comply with city ordinance. One tenant has been behind on rent for months so he has been difficult to comply with owner. The other tenant 4 months behind. The city needs the notice to comply ASAP! Buyer takes care of issues.”

Are these three 1920s bungalows on West Kensington Road still a deal at $275,000?



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10 comments

  1. Way too much risk.

  2. Umm. It depends on what the “Notices to Comply” say. The Tenant is not a problem. A tenant who is not paying rent can be gotten rid of very easily. A tenant who is paying rent has many rights, but a non-rent-paying tenant has nothing. Although, the problem may be that the tenant is not paying rent because of habitability issues? If so, most habitability issues are not very expensive to take care of (less than $25K), so why is this listed for 300K – 400K less that similar properties? How bad is it?

  3. Roof, Siding, foundation, floors, fixtures, tenant theft and damage, city compliance issues(how many units again?), maybe taxes and fines, relocation fees, insects, the list goes on and on. you could easily be into it for 300k…if your lucky.

  4. I love those little houses, and if they were being delivered empty it would be a great price. But filled with tenants? Not a good deal.

  5. If I understand the ridiculous LA rent control laws…if, big if, but if you wanted to convert that 1750 sq ft into your own home live/work space you would have to pay the city and or the tenants to take the units off the market after you closed? IS that right? If so it is nuts.

  6. Jason —
    That is correct. The new owner could move into any one of the units and use it as a primary residence, but you would have to “pay off” the tenant. It used to be $3K. I think it is double that now. It could be triple that if there is a child, senior or disable person involved. Still, though, you are looking at less than $10K per unit. And, from the listing, it sounds like only one of the units is occupied. So, you are dealing with only one (maybe two?) tenants.
    Also, I think that your close family members (siblings, parents, etc), could move into the other units — same deal. You could also just pay the tenant to move out temporarily (pay moving costs, hotel, etc) while you improved the unit and then invite them to move back to the unit and pay market rate. None of these options are cheap, but he property is dirt cheap. And, going rent in Echo Park for a one bedroom apartment is about $1,800. So, it is not a bad investment.

  7. I just re-read the listing. It sounds like there are two tenants. But I don’t believe the posting that they are *not* paying rent. In this kind of situation, the City is collecting the rent and keeping it in trust — the REAP program, I don’t know what it stands for. If the tenants were not paying rent, they would have been easily evicted, very easily. So, I will bet that there are major issues with the plumbing or electricity or something basic that makes the property either not-habitable or barely habitable and that caused the City to issue Notices to Comply. They don’t issue these notices bad siding job or deterioration garages. Whatever the problem is, it is something basic.

  8. The property is in REAP. REAP stands for Rent Escrow Account Program. It’s a special program designed to really hit slumlords – the city collects half the rent until City Council approves REAP removal. Experienced landlords run from REAP properties. Can take YEARS to get out of it. It’s administered by third-party organizations, all tenants-rights organizations that have zero interest in helping landlords. I have a friend who has spent hundreds of thousands of dollars on an apartment building and can’t get the health dept to sign off on it so he can get it out of REAP. Tenants know the game – when the inspector comes, they simply kick a hole in the wall, or smear feces in the bathroom. Landlord gets cited, inspector schedules a return in 60 days, and tenant continues to pay 50% of their rent. This goes on for YEARS. The whole dept is getting overhauled soon apparently. It’s a ridiculous system.

  9. Brock,

    Landlords do not get cited if feces is smeared in a tenant’s bathroom. That bizarre comment makes everything else you said unreliable.

  10. Relocations fees are over $7,000 for a single tenants and over $17,000 for a senior and/or family. $1,800 for one bedrooms? Where? On Carroll maybe? I have a 2 bedroom, 2 bath I will gladly rent for $1,800 on approved credit at 1211 Boston St. After doing several restorations and dealing with the city’s rent control rules, I’d say life is too short to take this on at that price.

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