Rent Control Scam

Repeat after me: Friends don’t let friends buy rent-controlled apartments.

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Rent control is a legal way for tenants to steal equity from landlords

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Why would the landlord agree to let the tenant assign the lease to new tenants? Is the landlord too old to think?

Dude, this is a scam, not something that I believe would hold up legally. This is not representative of something that would happen typically. My dear old mother earns more money from her rent controlled apartment building than she knows what to do with. All she complains about is her high taxes. Well yeah, Mom, you have no mortgage nor any major housing expenses but are just raking in money every month, on the month…


She can get a commercial mortgage and buy new buildings. Never too late to buy :slight_smile:

This reminds me a grave reality. Once you stop working, how do you get a mortgage or refinance? Wuqijun, elt1 and Peter might have this dilemma.

Dude, she is old and wants to enjoy the rest of her life by playing mah jong every day. The “problem” is that she wins all the time that she technically was banned from one family association before since some members complained that she was too good. My Mom could make a living gambling. She don’t give a F about more property. Mult units, even in a rent controlled setting have paved the way to an easy life of retirement. Many people have done the same, if not more (Mom’s building is ONLY 3 units…).


One benefit for rent controlled building is that you do not worry about it. No worries about recession, no worries about earthquake, no worries about fire. No worries. Any natural disaster would actually mean property value increase. A job loss of the tenant would be blessing since you have a really valuable vacancy. Rent controlled building fits your carefree mom perfectly

This may not be a scam. Dragon’s mom could offer her tenant such a deal so that she can focus on her retirement life and not bother with finding a new tenant.

The ad was well written and seems pretty legitimate. I would call him to find out more if I were looking for a rental.

Well, that is not exactly correct. Remember, rents are not guaranteed like say if under a federal Sec 8 contract. Yes, you don’t get to enjoy the ability to raise it as much as you want to but you are still subject to market forces (that may drive rents down) and expenses. In fairness, that is why some folks don’t like owning rent controlled properties. But as someone who knows first hand, it is not that bad. What usually happens, not always, is that people’s lives change. They have to move for jobs or for family. Sheet happens. When apartments become available, you can go to market rent then. Sure, I have friends who may own some units that are unfortunately occupied by seniors and they pay low rents. I repeat again: there are very few landlords in SF actually doing so poorly that they have to sell a building because of it. Have you ever really heard of something like that???

The ad is from Craigslist, so yes, legit looking but totally a scam. Believe me, there are ads that ask people to send the deposit somewhere and they DO. Stupid people! Now, I don’t know how some people managed to gain access to a vacant apartment that is not theirs and show it as theirs. That is pretty crazy. Craigslist is great but you have to be careful.

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“landlord agrees” might be a misleading wording, but not a wrong statement.
The reality is probably that their rental contract does not forbid assigning the contract to someone else. So, the landlord has no choice.

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with income from work (W-2 or 1099), it’s easy to buy SFR or 1-4 units, since they are financed based on your personal income. Real sweet if you can buy them for owner-occupancy. Last time I did this was in 2007 :frowning:

Next step is to buy some commercial properties, could be residential 5+ units or anything else that produces income. Your personal income is not considered for the loan. The property’s income is what drives the loan.

One day you wake up and are looking at $1M annual gross rent, $450k debt service, $150k RE taxes and insurance, $100k repairs, $100k vacancy (according to the banker - LOL) and… $200k income.

Then you can go back to buying an SFR based on your personal income (but it’s not that W-2 this time).

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That’s a grand and satisfying scenario.

How much rental income do you need before you can quit your w2 job and enter the commercial RE? At current price, BA commercial RE is hard to make rental income. But I guess that the most difficult barrier is the 30% down payment for commercials with a large price tag

The key to wealth building is 1031ing sfhs that have no cash flow into multi family that do…You need a balanced portfolio. …not just sfhs that have appreciation only…Stockton and Sac are probably the closest areas that can provide decent cash flow. .The best purchase I ever made was in Sac in 1999…Even today there are 10 caps out there…In the BA the best you can do is a 4 cap which provides no cash flow in a 4%+ interest environment

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I have a really hard time believing those outlier areas are that good when we all know the economy will take a dive one day. Where are the jobs and where is a good area that can weather the storm when the economy downturns? I don’t think it is Stockton or Fresno and obviously Sacramento housing market did not do so well in the last downturn. Sac, I can see perhaps maybe now being better positioned but the other two, no way. You can knock SF and the Bay Area all you want, but the economies here are fairly diverse and stable that you are not going to lose your shirt though in bad times.

What’s a typical financing structure of commercial deals nowadays? Let’s say I am looking at apartment buildings between 1 to 2M. Is it possible to do something like 10% down, 20% owner financing and 70% bank financing? And what’s typically the rate?

I think I may need to go into commercials this year or next.

There are different commercials. You can buy multi family apartments, or mixed residential/retail/office. Is it better to focus on residential?

Yes, market for commercial buildings are more volatile than residential. If you must, buy REIT and let the professionals do it.

Why would someone forego $1.5K a month to avoid this type of hassle? The landlord can just hire a property manager.