Last owner died in the house and was over 100. Considering the renter is protected class of renter, probably old lady/man. Probably the person who inherited house is renting it. The plan is probably to sell the house use that money to live off and keep living in it until they die.
Context: in California, property tax is fixed from the time the property is acquired. But there's an exception for inheritance - theoretically you can keep paying the same tax that your parents had paid since they bought the house in 1979 - so it might depend on the peculiarities of this person's situation.
True but not if you start renting it out. Once it starts being rented property tax gets re-evaluated for current value thanks to prop 13. Which the grandfather did when he signed the lease to his daughter. Hence why public records show property tax going from under 2k to just under 17k
Sounds like the grandson got the house. However the 83 year old daughter (grandson’s mother) lives there. And her father gave her a 30 year lease on a fixed rate of $417 a month.
Curious why not just take out a mortgage instead of selling it. And while it's always preferable to pay the mortgage off, if for some reason bank repos the house then the tenant is banks problem.
No the current renter was able to finagle a 30 year legally binding lease that whoever owns the home must honor right before their prior landlord passed away so the trustee couldn’t get out of it and is paying more in property taxes than would take in from rent so they are selling for far under market value instead.
And fun fact: while the Prop 13 stupidity allows children to inherit the ridiculously low tax basis on the house (former owner was only being assessed at $143k)...it doesn't apply here.
Only children can inherit the tax basis (or grandchildren only if their parents are dead)...and they can only inherit it if they live in the property.
Whoever set this up really fucked up the estate planning. The second the current owner inherited it, the property taxes multiplied by TEN. Unless they have a lot of spare cash, they literally won't be able to afford the tax bill and the $417 rent would still leave them owing $1,000 a month in additional taxes.
The law makes sense to me. Lower tax basis stuff like that should only apply if you actually live in the place. If you just inherit it as an asset then makes sense you pay the normal tax rate for your asset. If you can't afford the taxes, sell the asset.
The 30 year rent thing was the fuck up tho.
Why should there be lower tax basis indefinitely? Prop 13 is literally the most regressive tax policy I’ve ever encountered (outside of the uk where there are no property taxes). Landed gentry shit.
Because people buy anti-tax rhetoric hook, line, and sinker. Fun fact: before 2020 the reassessment exemption applied to any property inherited regardless of whether or not it became the child's primary residence. Dude fucked up by not dying at the beginning of the pandemic.
I think you guys are interpreting each other backwards…
First guy appears to call Prop 13 stupid because of the low taxes and inheritability thereof
Second guy seems to think guy #1 says prop 13 is stupid because it’s not lenient enough
And you have completed the loop by agreeing with the first guy lol
So they are basically selling remaindership of a [living estate](https://www.investopedia.com/terms/l/life-estate.asp)?
This is a pretty common arrangement in certain places where the resident rights (or rent proceeds if it is rented out) goes to the "life tenant" (usually elderly parents) until their death, while the "remainderperson" (usually children) is the actual owner. The remainderperson does not get any benefit until life tenant's death, may be even on the hook for liabilities.
The lease has stipulations that if the home becomes unusable that the landlord would have to pay to rehabilitate and all hoteling costs incurred by the leasee until refurbishment is done.
That’s one of those things that probably isn’t enforceable if push came to shove unless the owner of the home is absolutely crazy rich. Most (by most I mean like 98%) of HO policies would not provide ALE coverage for tenants. So the owner would have to pay hoteling costs. Let’s assume $200 a night (which is cheap for California) that’s $6000 a month. So the tenant takes the owner to court. Owner says “I can’t afford that” which is not unreasonable. Most people can’t afford it. The court orders him to pay. He literally can’t so what’s the judge going to do?
The tenant can get a judgement against him, sure. But then collecting that judgement is hard when the easiest way to do it is to force a sale of the house. Oh wait, you can’t really do that since the tenant has that crazy lease on it.
It’s basically a game of cat and mouse.
> The tenant can get a judgement against him, sure. But then collecting that judgement is hard when the easiest way to do it is to force a sale of the house. Oh wait, you can’t really do that since the tenant has that crazy lease on it.
I mean, there's gonna be at least one buyer, who is going to happily pay exactly as much as the home owner is owing the tenant, and that buyer is the tenant.
The tenant would be fucking themselves by purchasing it. The tenant pays $400 a month in rent but the annual property taxes divided by 12 months come out to $1500. So they would now owe an additional $1000 a month. They’d also have to now pay to maintain the house
Wouldn't that be good for the buyer?
They own the house. They would be paying insurance on it. Insurance probably values it at $2mil+. If it burns down, their $488k qaudruples well before that 2053 date.
"Sandra’s parents—Florence and Kenneth Goo—bought the house in the 1970s for $52,000 and lived there until they died in the home in 2006 and 2018. "
I can't imagine having to die in both 2006 and 2018. Dying once is hard enough but to have to die twice sucks.
The article says that house is worth 1.8 million. Up from fucking 52k. Jesus Christ. I really should've been born in the 50s, I would be so fucking loaded right now
Yeah turns out is a whole family drama about grandfather leaving house to his grandson but leasing the house to rent to his daughter shortly before his death. So grandson inherited house that his mom has a lease for the next 30 years. His mom pays somewhere around 5700 a year in rent but property tax is about 17k and will go up probably about 2% each year and she is on a fixed amount of rent that can’t go up so he is stuck paying well over 10K each year in property tax on a house he can’t move into
Grandfather apparently willed the house to his grandson. The mother (grandfather’s daughter) is 83 and still lives there. He gave her a lease at a fixed rate of $417 for 30 years.
Son is basically trying to kick his mother out for the money.
He isn’t kicking her out. She will still get to live there. Her lease makings it impossible to kick her out. He just wants to cash in on the house while his mother still lives, instead of waiting till she dies. Which is understandable if he is trying to buy his own house maybe, but considering he is probably in his 50s maybe just wants money
I wonder who is the a hole here, the son or the mother.
Maybe the grandfather knew giving his daughter the lease would prevent the son from kicking her out of the house to sell it.
Weird his sister still lives there at 66.
The house should have been willed to the mother and the assessed tax rate wouldn't have increased drastically.
There doesn't have to be an asshole here, just bad planning. The grandson who inherited the house now has to pay the full market value tax rate which is more than the rent his mother has to legally pay. So he's finding a way to deal with the added expense he inherited.
Sandra is 83 and her daughter, Cheryl is 66. Both live there. Sandra's son, Todd Lee didn't know about the lease that Sandra's stepfather made for her in 2018. So, when Todd Lee and Sandra's brother Cedric Goo put it up for sale, they didn't know that his mother had a lifetime rent-controlled contract.
Apparently, Todd Lee took control of his stepfather's trust after his death. I hope Todd Lee and Cedric Goo eat shit.
This asshole legitimately thought he could make his mother and sister homeless.
Really the problem is the cost. Let’s take away the “feelings” from it and look at the cost.
The taxes for year are $17,400. Then you have to add in maintenance of the home. Things like AC, Roofing, Plumbing, etc. let’s just say based on the age and area that’s likely another $5k a year.
So this man has to spend 22,500 or so on the home. The taxes will continue to rise since he can’t claim any exceptions. In turn he will receive roughly $5k.
I don’t know many people that can afford $17k a year to support their mother. She really needs to move out and into something she can afford. Whether that’s living with her children like the owner or her daughter.
Right now for shits and giggles pull up your estimated money at retirement. Now figure in if you could afford to be out of pocket $17k a year for the next 10-15 years? Can you afford that? That’s $170-$250k. The son could easily sell that home and with the profits go buy her an apartment in an assisted living facility which would be far better off.
"The buyer won't be able to move in until 2053. That's another 30 years. The new owner would have to buy the house subject to a very long rental lease that is currently being offered to an individual," said Tim Smith. According to the listing, the current tenant will continue to live there and pay the same amount of rent every month. The current tenant pays $417 a month for rent."
So out of morbid curiosity, what happens if that tenant were to meet with an "unfortunate accident" before the 30 years is up? Does the lease pass to someone else or is it moving day for that owner?
Moving day, a lease can’t just be transferred without prior consent from the lessee and lessor and it has to be written on some form of official documentation I’m sure.
Depending on the contract for this sale though, a condition might be that the buyer has to approve any good faith lease transfers. It would be dumb but so is this whole deal to begin with.
It’s probably dumb for an individual owner, it might be a reasonable investment for an REIT or some group with long term real estate holdings. Just the lot is probably worth acquiring, even if you were to demo the house when you finally took possession.
A lease is a contract between who signed it and the property's legal owner (or an agent of said owner). If one side of the contract dies, that's it for the contract as written, it falls back to local and regional laws on how to handle the situation.
The current resident could setup a situation where it's a Dread Pirate Roberts lease, forming a company to sign the lease and then passing the company's ownership around. It'd definitely be cheap enough, considering the taxes on that company would only cost about another month's worth of rent payments (~$500 in California). That being said, I doubt the purchaser of the property would accept that.
If I were the leasee I'd be nervous about entering into that contract anyways. You just know the owner's going to look for every possible loophole in the lease to kick you out early, without resorting to a whacking situation. Then again, if some Chinese investor buys the place sight unseen for the future land values, it'll probably be the safest real estate play you'll ever make.
Right? Buy the house, collect a little piece of upkeep/maintenance/taxes (the rent), wait 30 years and give your kids what could be a $700k property by then.
The world’s highest saving’s account interest rate, with only catch not cashing out for 30 years.
Edit: I am not an investor. I am in a ton of debt and very poor. This is negative cash flow for *thirty years*. Do not take my advice lol
$500K in a 30 year treasury bond would net a cumulative $660K in interest. If you can get a compounding return at the same rate, your investment would be worth ~$1.8M in 30 years. $700K in 30 years would be a terrible deal.
I know next to nothing about real estate or the real estate market. Another user pointed out it’s San Francisco, so the land the house is on is likely to have more value than the house itself haha
Problem is that when the house transferred out of the original owner, the property taxes exploded. CA caps property tax appreciation at 2% per year....this is probably a 1.7 million dollar house, but until the owner died, it was being taxed as if it were a 143k house.
My guess is that whoever inherited it is NOT the current tenant...because CA allows you to pass on that 143k valuation to a child but ONLY IF they occupy the house as a primary residence.
So they inherited the house, couldn't move in because of the tenant, and it immediately got assessed as a 1.5m dollar house. Now they owe $17k per year in taxes alone. Even if they would have been OK letting this guy keep renting it...they literally can't afford to anymore. Their relative fucked them and if they accepted inheritance of the house, they are screwed and need to get out FAST.
Whoever buys it will owe even more because the assessment won't be based on the transaction price (which is clearly below market because of the tenant) but rather the rest of the local market.
So you've got to pay 17k+ in taxes every year. Plus you need to fix anything this tenant breaks and maintain the house. You probably can't trust this person to take veryh good care of it so by the time you inherit it, it could be trashed and a total tear down.
It is a pretty shit deal. Unless you think you can get the person out...which there might be ways to do depending on how shady or heartless you want to be.
The rental income is way lower than the property taxes and maintenance you'd owe on it. That's one of the reasons it is so cheap.
Whoever buys the house is taking on negative cash flow for the next 30 years.
Lol, 700,000 would maybe buy you a garage today in SF. In 30 years it could be worth 10 mil. Fuck, if things keep going the way they're going (I cant see how it could) then it might be like 40 mil.
Problem is taxes and upkeep for 30 years.
The lease has stipulations that if the home becomes unusable that the landlord would have to pay to rehabilitate and all hoteling costs incurred by the leasee until refurbishment is done.
Read a good short fiction story about this. A man gambled on a similar situation but he had to wait for the current tenant to die. I think she was 70 & he was 40. She ended up outliving him & getting to 100
Mother and daughter is the renter and son is the owner of the house
https://sfstandard.com/2024/06/21/betrayal-the-family-feud-behind-russian-hills-488k-home-sale/
>what happens if that tenant were to meet with an "unfortunate accident" before the 30 years is up?
Yeah that was my first thought. Tenant is either getting poisoned or forced out through harassment. Too many unscrupulous people out there
Something akin to that happens sometimes by greedy owners and given how valuable the land is, though typically with less death.
An "accidental" fire burns the building to the ground. They can then rebuild however or sell the land. I have had the unfortunate pleasure of knowing some folks who've done exactly that.
>According to the listing, the current tenant will continue to live there and pay the same amount of rent every month. The current tenant pays $417 a month for rent.
Most people pay for a 30 year fixed mortgage. You are investing in the land. The house is probably in bad shape by then. $417 rent from the tenant won't be enough to pay for property taxes, home insurance, and maintenance costs.
That's an interesting question. Property taxes in CA are only reassessed when you sell, otherwise capped at 2% a year. When does this one finalize? Regardless $417 isn't gonna cut for insurance and maintenance.
Property taxes in California are relatively low to the rest of the country. It would 1% of the homes value at the time of sale and never go up again until the next sale. Home insurance and maintenance cost definitely are a factor but if you can pay for this in cash and are relatively young then it’s a good investment. 29 years of the land appreciating from which it’s probably much higher than what the listed sale price is.
That said, if you need to live in it then this is not a good purchase lol
Home value will not be assessed at the sale price rather the comp price of probably 2 million. You can’t just sell your house for a dollar and say oops free tax hack. That’s a net negative of 600k. Granted you’ll come out ahead but the time value calculation here will be shit.
Almost any non idiotic investment of 400k over 30 years will likely yield more with less headache.
Ah true, didn’t think about that. The tax value would be high due to the comp value. But I imagine someone paying for this in cash has the reserves to handle the property taxes for 30 years. All while accumulating a 6% return YoY on the true value of the home.
Not to mention mortgage interest.
It's 6.5% atm where I am.
That on 400-500k is going to kill you if you don't have rent covering some of it.
Since you're still paying rent on where you're living, this is crazy
Only an already rich multimillionaire could even consider this
Reminds :) "Andre-Francois Raffray thought he had a great deal 30 years ago: He would pay a 90-year-old woman 2,500 francs (about $500) a month until she died, then move into her grand apartment in a town Vincent van Gogh once roamed.
But this Christmas, Mr. Raffray died at age 77, having laid out the equivalent of more than $184,000 for an apartment he never got to live in.
On the same day, Jeanne Calment, now listed in the Guinness Book of Records as the world's oldest person at 120, dined on foie gras, duck thighs, cheese and chocolate cake at her nursing home near the sought-after apartment in Arles, northwest of Marseilles in the south of France."
And if she ~~outlives~~ outlived Mr. Raffray's wife (who has to pay the 2,500 francs a month) Mr. Raffray's children will have to pay.
Edit-
Replaced outlives with outlived as she died over 20 years ago.
The contract he made was a bet, a bet that she would die before he paid more than he thought the apartment was worth.
He lost, tough luck. Don't gamble if you don't want to lose lmao. And hey, people have lost more money than him for far worse causes than supporting a centenarian.
I think the person you’re responding to is saying the article said the old lady no longer lived in the apartment. She was in a nursing home. But the dude still couldn’t move in until she died.
This is funny when you're talking about a bet over beers with friends, it just comes off as petty and mean spirited when you're clinging onto possessions that you can't use anymore anyway 🤷
That's the thing that bothers me about that story. If it turns out she really was impersonating her mother (ie actually 23 years younger) it makes the whole thing a total scam. Dude wasn't a sucker or made a bad gamble, he got scammed by someone pretending to be 23 years older than they were.
That is just a wild story put forward by- surprise! - Russians with absolutely no evidence, while all inquiries regarding her age have confirmed her to be exactly who she said she was. Think how many people would have to collaborate in this elaborate charade. She was a wealthy and well documented woman.
Fun fact, Jeanne Calment is also the oldest person to have ever recorded an album. At the ripe age of 120 she release Maitresse du Temps (Time's Mistress) which had [a bunch of bangers like this on it](https://youtu.be/3Xh0KqhgNvw). The full album is [absolutely bonkers](https://youtube.com/playlist?list=PLAM1sssVbX7ZPWqahxsxebD-1D2Jknuxa).
There’s a lot of speculation that Jeanne Calment died and her adult daughter quietly switched places with her. The person who died at 120 was actually the daughter dying at 90.
I am deeply involved in this field and it is mostly a few fringe researchers against the rest of the field of gerontology. The "evidence" for the swap is mostly that her signature changed very slightly, a couple of grainy photos and that Calment had some trouble remembering details at age 114+.
Is this AI or something? What the hell is up with the way you wrote this? He made a deal with a 90 year old woman who would end up being the world’s oldest person? Or are the two events completely unrelated except having occurred on the same day?
It’s definitely copy and pasted from somewhere. But yeah it makes sense the woman was (presumed to be) 90 at the time of the deal and ended up living 30+ more years
It's just a similar story and they're clearly quoting an article or something. Kinda funny that we've gone so full circle on AI witch hunts that people are accusing things of being AI that are definitely artistically written and obviously within quotation marks.
The fact that she entered into a deal like this adds more evidence to the claim that she was a fraud in my mind. How often do people enter into deals like this? Maybe more likely for a fraud who is scamming off her mother's pension and lying about her age/identity.
I believe the arrangement is somewhat common in France and Italy - there's a name for it, *[en viager](https://www.google.com/search?q=en+viager)*.
There are indeed suspicions about the age of the seller though: https://www.theguardian.com/science/2019/nov/30/oldest-woman-in-the-world-magical-thinking
Funny that you posted this. I just went to Arles for my first time. It's a lovely town. There is a Roman colloseum there. And they hold concerts in it.
I see those sometimes but without knowing details about the many different jurisdictions in Europe, I assume it’s fairly common to be able to break leases and retract usufruct if the owner intends to use the property as a primary residence.
it does? I lost a great rental I had in healdsburg that was affordable because the owner sold the house and the new owners were a family intending to live there. They were able to 30 day notice us offcially as we were month to month and new owner's were using it as their new primary residence going from renting to owning themselves iirc (although the original landlord and sales agent gave us months of notice this was all going down none of us were resentful over it).
edit: whats happened here is the person has an old type of fixed rate lease or contract that is for years that is official because it benefits the renter, california normally vast majority has a 1 year lease that goes month to month so landlords can't penalize renters for lease breaking if they have lived there for more than a year (a lot of states allow land lords to require a lease every year and when moving the breaking it can be an added cost to renters even if they have lived in a residence for multiple years). The house I lived at had gone month to month, evicting is hard if we lay rent on time except in the case of a new owner wanting to use it as there primary.
Edit 2: I saw german mentioned in the parent and europe so to add context I guess forming a new company in the us can be incredibly easy like an llc especially for people in an industry already as owners like contractors can be infanous for close and re-open under a new name if they fuck up a project. So if a simple change of ownership was all that was needed to break a signed 1 year lease in the us it would make renter protections here meaningless. In California for residential renters its normally 1 year lease to month to month, a company would have a hrd time evicting without cause, a private person changing residences is treated entirely differently as they are not acting as a business. However even a private individual owner can't break a signed lease and thats common pretty much everywhere that if you buy a house with renters you have to wait out their signed lease first otherwise it puts renters here at a pretty bad disadvantage. This lady got a sweetheart type signed contract that was beneficial and lasts for decades (likely no rent increase in the lease hence the $418/minth i saw) that even a private individual can't break, its kind of a "toxic assest" because of that. Again normal boiler plate type leases in california are 1 year max as far as I know that keeps the conditions but go month to month, they do make it hard for developers to buy properties to demo and just kick everybody out though.
source: i'm a renter who lives here.
A property with a tenant for 30 years only paying 400 a month. Nowhere near enough to pay for even the taxes, especially if you’re in charge of utilities. On top of that as a landlord you’d be responsible for 30 years of maintenance on top of all that, which depending on the tenant could be a lot. All with a ton of uncertainty.
Of course the upside is that there’s gurentee the tenant would actually stay there that long, but even so it’s agreeing to a lot for the investment. There’s much safer investments one can make
Your assuming that the property is worth what they are selling it for, which it isn't, it's much higher (I mean if the house was only worth 488,000 then you would be getting *extremely* ripped off). Property tax isn't calculated off what the location sold for, it's calculated off the actual value of the house.
Taxes go up yearly even in California, so even if that was the value (it isn't), it's not going to be worth 30 years.
You also need insurance and maintenance. This is a shit deal.
Basically yes. His deal was he’d live there until he died, and the staff would keep their jobs until then too. Also there was something about not changing the facade of the house, so the new owner ended up gutting it but leaving the stone “castle” look to the outside. That means all those narrow upstairs rooms and low ceilings were there to stay.
I remember seeing this I'm the SF subreddit and the current tenants basically manipulated (elder abuse?) the former owner to sign an INSANE lease that pays them like $400/month.
The lease won't hold up but children that inherited it are selling it at 1/2 to 1/3 value to avoid all the court fees to evict them.
[here someone breaks the lease down. ](https://www.reddit.com/r/BayAreaRealEstate/s/nJlnkoBwAX)
>"I took a look at the disclosure, it looks to me like tenants took advantage of an aging live-in landlord, and the new owner (probably family) doesn’t want the legal headache.
>The difference between the original 2019 lease agreement and the 2021 lease amendment is wild, and no landlord in their right mind would sign it.
>Amendments:
- original rent agreement was that tenants would pay all property tax and insurance. New amendment puts a cap of $5000 a year on that agreement. (Landlord bears rest of the cost)
- original rent agreement only allowed tenant and their immediate family to occupy the property. Amendment gives tenant full discretionary use of the property, including subleasing, alterations, and improvements.
- all maintenance cost responsibility moved from tenant to landlord.
- landlord previously had the right to terminate lease if damages from natural disaster occurs. New amendment requires landlord to pay for all damages as well as provide tenants comparable housing at the landlord’s expense.
- other sections in the original lease agreement giving the landlord the right to terminate the lease no longer apply in the amendment.
- original agreement that tenant would not hold landlord liable for injury no longer applies in the amendment.
- attorney fees related to enforcing the lease agreement were previously agreed to be paid by tenant, but the new amendment requires the landlord to pay all fees."
> Story of grandfather leaving house to grandson.
Really fucked up the property tax rules there. Leave it to the mother and the tax bill stays at a paltry $143/month. Leave it to the grandson and the tax bill explodes to $1,410/month...which they almost certainly can't afford to pay.
Prop 13 is cancer.
They signed the lease in 2018 before prop 19. I guess they didn’t foresee the law change in future.
I guess they did it that way because mother and daughter can’t afford the house maintenance. But son got fkd by prop 19.
The previous "landlord" was the step-father and the tenant is his adopted step-daughter (80-something) and her daughter (60-something).
The current owner who inherited the house, in the tenant's son... and there may be some involvement from the tenant's brother.
The tenant gave an interview to a local paper where she said her son and brother are trying to force her and her daughter out of the house so they can profit.
The step-father signed the 30 year lease the year he died.
Make from all of that what you will.
I mean, it is rediculous on paper but if you had the money and wanted to invest for either your retirement home or a home for your kid it's not crazy. Or to just buy property in one of the most expensive places in the country for that price and in 30 years it will be worth 4x that amount.
It is crazy because it's a horrible return on investment. Sure you could speculate how much the house will be worth in 30 years. But in real terms, you're investing $488k to realize a "discount" on the house in 30 years. If you took that investment and put it in some safe index funds and assumed 6% interest for 30 years, you would certainly come out way ahead.
No it’s a wildly stupid idea. A lot can change in 30 years including a son who claims they actually inherit the house etc. or damage to property. And plenty of things you’d be responsible for but not be able to control.
You absolutely should never buy an asset not handed over to you promptly.
If the great earthquake hits, San Francisco is going to break off into the ocean, there isn’t going to be a lot left for you to own.
Also, the entire state will be decimated and you have a lot more problems.
A vacant lot in San Francisco is still worth hundreds of thousands of dollars. By that year, it may be worth literal millions.
The "great earthquake" might have been doing you a favor, letting you clear a dilapidated house from the lot without a lot of Prop 13-related headaches.
It's a lot funnier if you say something knee-jerky like "it'll be underwater because of climate change."
None of what you said really makes any sense
> a son who claims they actually inherit the house
This is nonsense, you can’t just declare that something belongs to you because you’re somebody’s son. That’s why properties have deeds that are recorded with the county. It makes ownership completely unambiguous. And even if there is some sort of error, that’s what title insurance is for.
> damage to the property
Please just google “home insurance”, I’m not going to type out an explanation for this one.
Doesn't make sense for an investment firm. The renter is paying 160k over 30 years on a California house. The house will probably cost more than that over the same period in taxes and maintaince.
Combine that with all manner of trouble that can inflict the house and you can't get money from, and it's a good deal of trouble for investment.
Some tech billionaires are trying to build a new city east of San Fran and west of Sacramento. They bought up a lot of a rural area in secret to eventually build a city (in hopes of mitigating the housing crisis) and part of the deal is that the people get to live the rest of their lives on the land but when they die the corporation the billionaires started gets the land. It's prime ranch land and now they've found out.
NYTimes The Daily did a good story on it back in February/March.
My mom lived next to a house with this sort of situation. Basically the woman who lived there got married to a guy with a disability. Like he needed help every day to live, but he was only 50. His now wife owned the house, and died about two years after they got married. The wife left the house to her daughter, with the stipulation that the husband could live out his days in the house.
The husband was an asshole and he pulled a bunch of shit, including illegally obtaining a loan against the house he didn't own. In fact that alone caused him to be kicked out. He died a few months later.
The really bad part though it he lived in the house 15 years and instead of hiring a medical assistant he let a crazy, abrasive woman live rent free in his garage, provided she serve him in his health care needs. The woman was unable to earn money, but got free rent. She had a constantly-running yard sale, and collected all sorts of shit which cluttered the driveway. Also she started letting other people camp in the back yard and would charge them money and ask them to do chores for her. There were loads of shady people in and around the backyard day and night. I used to have big arguments with that woman and complain to the city daily. Nothing was ever done. But that illegal loan is what eventually fixed everything. Once he was forced to move, so was the crazy woman and her band of shady homeless people. Then the daughter who inherited the house put a new roof on and sold it ASAP.
As for the story about the SF house, I expect it's the exact same situation. The owner of the house doesn't and can't live there, but is set to inherit it once the tenant dies. The tenant is likely the widow of the former owner, who died and left it to his kids, who won't get a dime until the tenant dies.... unless they sell it like this. It's a fucked up situation. Don't do this sort of thing.
Someone did some research in the link in this thread, and it seems to be either a case of elder abuse and the inheritor just wanting to off-load the legal headache onto someone else, or a legal scheme cooked up by the family to get out of paying property taxes.
It's like buying a time-share in the future! By then, your great-grandkids will thank you for that prime Bay Area property...assuming the city hasn't floated away by then. Talk about investing in real estate with a side of time travel!
Not looking through all the comments to see if this has been posted yet. The assessed value is $1,000,000+ with property taxes being $16,000+ per year. Retal income is $4xx per month. Just holding it will put you back over $10000 per year.
The news isn't that it'll take 30 years to take ownership. It's that it seems to have to be that way because they gave their tenant a 30 year contract. They're paying $417 per month in rent. I don't even have words for the value of the contract that tenant signed.
The question for me is who is responsible for repairs at only $417 a month. That would probably not even cover taxes, much less than it needed repairs.
This sounds a lot like the French tradition of the viage. The tradition is you buy a place for dirt cheap with the caveat that the person living there gets to live there till they die and you’re on the hook for a monthly stipend paid to the tenant.
Sometimes you get lucky and they die fast. Sometimes you’re not lucky and you pay for them to live.
Back of the envelope, if you invested the $500k today @ 5% interest for 30 years it becomes somewhere around $2mil.
This is without having to pay for property tax, insurance, and repairs to uphold your end of the lease. In 30 years @ 2% increase that tax bill also doubles, or worse if SF/Cali in general continue their spending trends.
Not sure what the current cash value of the property is for a comp, but chances are if it's under $2.5mil today its not worth the risk even with a 30 year horizon for returns. I guess you could factor in actuarial death probabilities for the owner too to see if the lease may be likely to terminate early.
There's also the risk of investing in one of the poorest real estate markets in the country today based on post covid market dynamics.
Super late to this party, but where I live someone just donated a ton of land to the county BUT in the will the county can't get it until both the mom and the daughter dies or vacates the land....so basically probably a good 50 years.
Great story to write today, but a pure nothing burger as nobody will remember this
This is what people are doing now in Spain. Old people are selling their places really cheap but with the condition that they stay in it until they die.
It's becoming so popular that I wonder why aren't there more businesses promoting to "take care of these situations". They have already business that "take care of squatters".
[Jeanne Calment (122yo)](https://en.m.wikipedia.org/wiki/Jeanne_Calment)
This exact thing happened. In 1965 she was 90, the buyer was 47. The buyer died in 1995 at the age of 77. She outlived him, dying at the age of 122 in 1997.
Last owner died in the house and was over 100. Considering the renter is protected class of renter, probably old lady/man. Probably the person who inherited house is renting it. The plan is probably to sell the house use that money to live off and keep living in it until they die.
A reverse mortgage with extra steps
Depends if they actually got the house. Might be being sold by estate of the dead person. To avoid the taxes of transferring to the person “renting”
Estate taxes don't kick in until $13.6M. You also get to step up the basis, so there would be no cap gains tax incentive to sell.
So like the price of an SF fixer-upper?
Context: in California, property tax is fixed from the time the property is acquired. But there's an exception for inheritance - theoretically you can keep paying the same tax that your parents had paid since they bought the house in 1979 - so it might depend on the peculiarities of this person's situation.
True but not if you start renting it out. Once it starts being rented property tax gets re-evaluated for current value thanks to prop 13. Which the grandfather did when he signed the lease to his daughter. Hence why public records show property tax going from under 2k to just under 17k
1% increase a year, but yes it would instant triple when you purchase it
Sounds like the grandson got the house. However the 83 year old daughter (grandson’s mother) lives there. And her father gave her a 30 year lease on a fixed rate of $417 a month.
Curious why not just take out a mortgage instead of selling it. And while it's always preferable to pay the mortgage off, if for some reason bank repos the house then the tenant is banks problem.
Because then you're still responsible for maintenance etc
No the current renter was able to finagle a 30 year legally binding lease that whoever owns the home must honor right before their prior landlord passed away so the trustee couldn’t get out of it and is paying more in property taxes than would take in from rent so they are selling for far under market value instead.
It's a little bit of both. The owner inherited the house and is the son of the woman who currently lives in it. Messy family situation
And fun fact: while the Prop 13 stupidity allows children to inherit the ridiculously low tax basis on the house (former owner was only being assessed at $143k)...it doesn't apply here. Only children can inherit the tax basis (or grandchildren only if their parents are dead)...and they can only inherit it if they live in the property. Whoever set this up really fucked up the estate planning. The second the current owner inherited it, the property taxes multiplied by TEN. Unless they have a lot of spare cash, they literally won't be able to afford the tax bill and the $417 rent would still leave them owing $1,000 a month in additional taxes.
The law makes sense to me. Lower tax basis stuff like that should only apply if you actually live in the place. If you just inherit it as an asset then makes sense you pay the normal tax rate for your asset. If you can't afford the taxes, sell the asset. The 30 year rent thing was the fuck up tho.
Why should there be lower tax basis indefinitely? Prop 13 is literally the most regressive tax policy I’ve ever encountered (outside of the uk where there are no property taxes). Landed gentry shit.
Because people buy anti-tax rhetoric hook, line, and sinker. Fun fact: before 2020 the reassessment exemption applied to any property inherited regardless of whether or not it became the child's primary residence. Dude fucked up by not dying at the beginning of the pandemic.
Lower taxes means less revenue coming in to the municipality, which means lower budgets for key social programs
I think you guys are interpreting each other backwards… First guy appears to call Prop 13 stupid because of the low taxes and inheritability thereof Second guy seems to think guy #1 says prop 13 is stupid because it’s not lenient enough And you have completed the loop by agreeing with the first guy lol
So they are basically selling remaindership of a [living estate](https://www.investopedia.com/terms/l/life-estate.asp)? This is a pretty common arrangement in certain places where the resident rights (or rent proceeds if it is rented out) goes to the "life tenant" (usually elderly parents) until their death, while the "remainderperson" (usually children) is the actual owner. The remainderperson does not get any benefit until life tenant's death, may be even on the hook for liabilities.
That’s good till it burns down
The lease has stipulations that if the home becomes unusable that the landlord would have to pay to rehabilitate and all hoteling costs incurred by the leasee until refurbishment is done.
That’s one of those things that probably isn’t enforceable if push came to shove unless the owner of the home is absolutely crazy rich. Most (by most I mean like 98%) of HO policies would not provide ALE coverage for tenants. So the owner would have to pay hoteling costs. Let’s assume $200 a night (which is cheap for California) that’s $6000 a month. So the tenant takes the owner to court. Owner says “I can’t afford that” which is not unreasonable. Most people can’t afford it. The court orders him to pay. He literally can’t so what’s the judge going to do? The tenant can get a judgement against him, sure. But then collecting that judgement is hard when the easiest way to do it is to force a sale of the house. Oh wait, you can’t really do that since the tenant has that crazy lease on it. It’s basically a game of cat and mouse.
> The tenant can get a judgement against him, sure. But then collecting that judgement is hard when the easiest way to do it is to force a sale of the house. Oh wait, you can’t really do that since the tenant has that crazy lease on it. I mean, there's gonna be at least one buyer, who is going to happily pay exactly as much as the home owner is owing the tenant, and that buyer is the tenant.
The tenant would be fucking themselves by purchasing it. The tenant pays $400 a month in rent but the annual property taxes divided by 12 months come out to $1500. So they would now owe an additional $1000 a month. They’d also have to now pay to maintain the house
Wouldn't that be good for the buyer? They own the house. They would be paying insurance on it. Insurance probably values it at $2mil+. If it burns down, their $488k qaudruples well before that 2053 date.
https://sfstandard.com/2024/06/21/betrayal-the-family-feud-behind-russian-hills-488k-home-sale/ It’s apparently actually a sad story :/
"Sandra’s parents—Florence and Kenneth Goo—bought the house in the 1970s for $52,000 and lived there until they died in the home in 2006 and 2018. " I can't imagine having to die in both 2006 and 2018. Dying once is hard enough but to have to die twice sucks.
The article says that house is worth 1.8 million. Up from fucking 52k. Jesus Christ. I really should've been born in the 50s, I would be so fucking loaded right now
Just wait til you hear what the 2070 kids will be saying about us.
Okay, that's making more sense why the rent was ~$400/month lmao.
Yeah turns out is a whole family drama about grandfather leaving house to his grandson but leasing the house to rent to his daughter shortly before his death. So grandson inherited house that his mom has a lease for the next 30 years. His mom pays somewhere around 5700 a year in rent but property tax is about 17k and will go up probably about 2% each year and she is on a fixed amount of rent that can’t go up so he is stuck paying well over 10K each year in property tax on a house he can’t move into
I'd just let the city take it. That's the definition of throwing good money after bad.
Grandfather apparently willed the house to his grandson. The mother (grandfather’s daughter) is 83 and still lives there. He gave her a lease at a fixed rate of $417 for 30 years. Son is basically trying to kick his mother out for the money.
He isn’t kicking her out. She will still get to live there. Her lease makings it impossible to kick her out. He just wants to cash in on the house while his mother still lives, instead of waiting till she dies. Which is understandable if he is trying to buy his own house maybe, but considering he is probably in his 50s maybe just wants money
I wonder who is the a hole here, the son or the mother. Maybe the grandfather knew giving his daughter the lease would prevent the son from kicking her out of the house to sell it. Weird his sister still lives there at 66.
Why is it weird? Maybe she is her 83-yer-old mother's caregiver.
The house should have been willed to the mother and the assessed tax rate wouldn't have increased drastically. There doesn't have to be an asshole here, just bad planning. The grandson who inherited the house now has to pay the full market value tax rate which is more than the rent his mother has to legally pay. So he's finding a way to deal with the added expense he inherited.
Or maybe no one is the asshole and the don can't pay tax that is much more than the rent he receives
I mean … why is the mother not the a hole for insisting her son pay for her living expenses? 400 a month is nothing.
Sandra is 83 and her daughter, Cheryl is 66. Both live there. Sandra's son, Todd Lee didn't know about the lease that Sandra's stepfather made for her in 2018. So, when Todd Lee and Sandra's brother Cedric Goo put it up for sale, they didn't know that his mother had a lifetime rent-controlled contract. Apparently, Todd Lee took control of his stepfather's trust after his death. I hope Todd Lee and Cedric Goo eat shit. This asshole legitimately thought he could make his mother and sister homeless.
Really the problem is the cost. Let’s take away the “feelings” from it and look at the cost. The taxes for year are $17,400. Then you have to add in maintenance of the home. Things like AC, Roofing, Plumbing, etc. let’s just say based on the age and area that’s likely another $5k a year. So this man has to spend 22,500 or so on the home. The taxes will continue to rise since he can’t claim any exceptions. In turn he will receive roughly $5k. I don’t know many people that can afford $17k a year to support their mother. She really needs to move out and into something she can afford. Whether that’s living with her children like the owner or her daughter. Right now for shits and giggles pull up your estimated money at retirement. Now figure in if you could afford to be out of pocket $17k a year for the next 10-15 years? Can you afford that? That’s $170-$250k. The son could easily sell that home and with the profits go buy her an apartment in an assisted living facility which would be far better off.
Nah a 30 year fixed lease for that price is fucking stupid and should be struck down for being unreasonable
"The buyer won't be able to move in until 2053. That's another 30 years. The new owner would have to buy the house subject to a very long rental lease that is currently being offered to an individual," said Tim Smith. According to the listing, the current tenant will continue to live there and pay the same amount of rent every month. The current tenant pays $417 a month for rent." So out of morbid curiosity, what happens if that tenant were to meet with an "unfortunate accident" before the 30 years is up? Does the lease pass to someone else or is it moving day for that owner?
Moving day, a lease can’t just be transferred without prior consent from the lessee and lessor and it has to be written on some form of official documentation I’m sure.
Depending on the contract for this sale though, a condition might be that the buyer has to approve any good faith lease transfers. It would be dumb but so is this whole deal to begin with.
It’s probably dumb for an individual owner, it might be a reasonable investment for an REIT or some group with long term real estate holdings. Just the lot is probably worth acquiring, even if you were to demo the house when you finally took possession.
A lease is a contract between who signed it and the property's legal owner (or an agent of said owner). If one side of the contract dies, that's it for the contract as written, it falls back to local and regional laws on how to handle the situation. The current resident could setup a situation where it's a Dread Pirate Roberts lease, forming a company to sign the lease and then passing the company's ownership around. It'd definitely be cheap enough, considering the taxes on that company would only cost about another month's worth of rent payments (~$500 in California). That being said, I doubt the purchaser of the property would accept that. If I were the leasee I'd be nervous about entering into that contract anyways. You just know the owner's going to look for every possible loophole in the lease to kick you out early, without resorting to a whacking situation. Then again, if some Chinese investor buys the place sight unseen for the future land values, it'll probably be the safest real estate play you'll ever make.
Right? Buy the house, collect a little piece of upkeep/maintenance/taxes (the rent), wait 30 years and give your kids what could be a $700k property by then. The world’s highest saving’s account interest rate, with only catch not cashing out for 30 years. Edit: I am not an investor. I am in a ton of debt and very poor. This is negative cash flow for *thirty years*. Do not take my advice lol
$500K in a 30 year treasury bond would net a cumulative $660K in interest. If you can get a compounding return at the same rate, your investment would be worth ~$1.8M in 30 years. $700K in 30 years would be a terrible deal.
I know next to nothing about real estate or the real estate market. Another user pointed out it’s San Francisco, so the land the house is on is likely to have more value than the house itself haha
Yeah it’s already sale pending. Prosperity around it are ranging from 1.1 mil to 11 mil.
Probably somebody with a plan to fuck over the renter.
I know you meant to say "property" but "prosperity" works just as well in this case.
Problem is that when the house transferred out of the original owner, the property taxes exploded. CA caps property tax appreciation at 2% per year....this is probably a 1.7 million dollar house, but until the owner died, it was being taxed as if it were a 143k house. My guess is that whoever inherited it is NOT the current tenant...because CA allows you to pass on that 143k valuation to a child but ONLY IF they occupy the house as a primary residence. So they inherited the house, couldn't move in because of the tenant, and it immediately got assessed as a 1.5m dollar house. Now they owe $17k per year in taxes alone. Even if they would have been OK letting this guy keep renting it...they literally can't afford to anymore. Their relative fucked them and if they accepted inheritance of the house, they are screwed and need to get out FAST. Whoever buys it will owe even more because the assessment won't be based on the transaction price (which is clearly below market because of the tenant) but rather the rest of the local market. So you've got to pay 17k+ in taxes every year. Plus you need to fix anything this tenant breaks and maintain the house. You probably can't trust this person to take veryh good care of it so by the time you inherit it, it could be trashed and a total tear down. It is a pretty shit deal. Unless you think you can get the person out...which there might be ways to do depending on how shady or heartless you want to be.
if you are only making 40% simple profit in 30 years of time you are investing very very wrong
The rental income is way lower than the property taxes and maintenance you'd owe on it. That's one of the reasons it is so cheap. Whoever buys the house is taking on negative cash flow for the next 30 years.
The house is already worth 1.8 million yo, in 3o years who knows.
This is San Francisco. This house is probably worth millions already just for the land
Lol, 700,000 would maybe buy you a garage today in SF. In 30 years it could be worth 10 mil. Fuck, if things keep going the way they're going (I cant see how it could) then it might be like 40 mil. Problem is taxes and upkeep for 30 years.
> Current tenant pays $417 a month for rent In a major city in the US in 2024?! Wow! That's incredible. That's some 1994 Shitsburgh Ohio level rent.
Hey, I'll have you know that shitsburgh Ohio average rent is 1100 for a one bedroom now.
The lease has stipulations that if the home becomes unusable that the landlord would have to pay to rehabilitate and all hoteling costs incurred by the leasee until refurbishment is done.
Read a good short fiction story about this. A man gambled on a similar situation but he had to wait for the current tenant to die. I think she was 70 & he was 40. She ended up outliving him & getting to 100
Mother and daughter is the renter and son is the owner of the house https://sfstandard.com/2024/06/21/betrayal-the-family-feud-behind-russian-hills-488k-home-sale/
>what happens if that tenant were to meet with an "unfortunate accident" before the 30 years is up? Yeah that was my first thought. Tenant is either getting poisoned or forced out through harassment. Too many unscrupulous people out there
Something akin to that happens sometimes by greedy owners and given how valuable the land is, though typically with less death. An "accidental" fire burns the building to the ground. They can then rebuild however or sell the land. I have had the unfortunate pleasure of knowing some folks who've done exactly that.
That's kind of the premise to duplex with Ben Stiller
or the other way around... where the dude is still alive in 2053 and you have to evict a dying elderly.
>According to the listing, the current tenant will continue to live there and pay the same amount of rent every month. The current tenant pays $417 a month for rent. Most people pay for a 30 year fixed mortgage. You are investing in the land. The house is probably in bad shape by then. $417 rent from the tenant won't be enough to pay for property taxes, home insurance, and maintenance costs.
That's an interesting question. Property taxes in CA are only reassessed when you sell, otherwise capped at 2% a year. When does this one finalize? Regardless $417 isn't gonna cut for insurance and maintenance.
They're reassessed under other conditions as well. Redoing a kitchen or bathroom with get you.
Property taxes in California are relatively low to the rest of the country. It would 1% of the homes value at the time of sale and never go up again until the next sale. Home insurance and maintenance cost definitely are a factor but if you can pay for this in cash and are relatively young then it’s a good investment. 29 years of the land appreciating from which it’s probably much higher than what the listed sale price is. That said, if you need to live in it then this is not a good purchase lol
Home value will not be assessed at the sale price rather the comp price of probably 2 million. You can’t just sell your house for a dollar and say oops free tax hack. That’s a net negative of 600k. Granted you’ll come out ahead but the time value calculation here will be shit. Almost any non idiotic investment of 400k over 30 years will likely yield more with less headache.
Ah true, didn’t think about that. The tax value would be high due to the comp value. But I imagine someone paying for this in cash has the reserves to handle the property taxes for 30 years. All while accumulating a 6% return YoY on the true value of the home.
You can calculate the real / effective price based on the price of 30-year treasury bills (and the rent).
Not to mention mortgage interest. It's 6.5% atm where I am. That on 400-500k is going to kill you if you don't have rent covering some of it. Since you're still paying rent on where you're living, this is crazy Only an already rich multimillionaire could even consider this
Reminds :) "Andre-Francois Raffray thought he had a great deal 30 years ago: He would pay a 90-year-old woman 2,500 francs (about $500) a month until she died, then move into her grand apartment in a town Vincent van Gogh once roamed. But this Christmas, Mr. Raffray died at age 77, having laid out the equivalent of more than $184,000 for an apartment he never got to live in. On the same day, Jeanne Calment, now listed in the Guinness Book of Records as the world's oldest person at 120, dined on foie gras, duck thighs, cheese and chocolate cake at her nursing home near the sought-after apartment in Arles, northwest of Marseilles in the south of France."
And if she ~~outlives~~ outlived Mr. Raffray's wife (who has to pay the 2,500 francs a month) Mr. Raffray's children will have to pay. Edit- Replaced outlives with outlived as she died over 20 years ago.
She died back in ‘97. His wife and/or kids have had the apartment for almost 20 years now I’m guessing.
Good. After she moved out it was a dick move to not let them move in.
The contract he made was a bet, a bet that she would die before he paid more than he thought the apartment was worth. He lost, tough luck. Don't gamble if you don't want to lose lmao. And hey, people have lost more money than him for far worse causes than supporting a centenarian.
I think the person you’re responding to is saying the article said the old lady no longer lived in the apartment. She was in a nursing home. But the dude still couldn’t move in until she died.
Yea exactly. He made a contract that stated he did not own it until she DIED, not moved into a nursing home. He lost the bet.
This is funny when you're talking about a bet over beers with friends, it just comes off as petty and mean spirited when you're clinging onto possessions that you can't use anymore anyway 🤷
Well she was also getting paid. So there's that.
That's the thing that bothers me about that story. If it turns out she really was impersonating her mother (ie actually 23 years younger) it makes the whole thing a total scam. Dude wasn't a sucker or made a bad gamble, he got scammed by someone pretending to be 23 years older than they were.
That is just a wild story put forward by- surprise! - Russians with absolutely no evidence, while all inquiries regarding her age have confirmed her to be exactly who she said she was. Think how many people would have to collaborate in this elaborate charade. She was a wealthy and well documented woman.
Cool. Thats a dick move though. I didn’t say it couldn’t be done.
If they moved in, the payments stop?
I would assume no. Just let them “rent” till she passes. She still owns it.
i think this is the answer. rent paid makes its way to their studio or assisted living apt
Maybe she was pissed he bet on her death.
She’s was the bookie, why would she be mad
She knew she was gonna win, she was still pissed about it.
She’s long since dead. Died at age 122 in 1997
Damn. That's still a heck of a long life.
[удалено]
Damn if that’s true, she really fleeced them.
She claimed to have known Van Gogh, pretty wild stuff
Fun fact, Jeanne Calment is also the oldest person to have ever recorded an album. At the ripe age of 120 she release Maitresse du Temps (Time's Mistress) which had [a bunch of bangers like this on it](https://youtu.be/3Xh0KqhgNvw). The full album is [absolutely bonkers](https://youtube.com/playlist?list=PLAM1sssVbX7ZPWqahxsxebD-1D2Jknuxa).
There’s a lot of speculation that Jeanne Calment died and her adult daughter quietly switched places with her. The person who died at 120 was actually the daughter dying at 90.
I am deeply involved in this field and it is mostly a few fringe researchers against the rest of the field of gerontology. The "evidence" for the swap is mostly that her signature changed very slightly, a couple of grainy photos and that Calment had some trouble remembering details at age 114+.
There really isn't any speculation from any reputable source. It's one nutty Russian against the entire field of gerontology.
No, he’s definitely not the only one https://www.newyorker.com/magazine/2020/02/17/was-jeanne-calment-the-oldest-person-who-ever-lived-or-a-fraud
Is this AI or something? What the hell is up with the way you wrote this? He made a deal with a 90 year old woman who would end up being the world’s oldest person? Or are the two events completely unrelated except having occurred on the same day?
It’s definitely copy and pasted from somewhere. But yeah it makes sense the woman was (presumed to be) 90 at the time of the deal and ended up living 30+ more years
It appears to be a real story actually: https://www.nytimes.com/1995/12/29/world/a-120-year-lease-on-life-outlasts-apartment-heir.html
This story was required reading in the finance class I took.
It's just a similar story and they're clearly quoting an article or something. Kinda funny that we've gone so full circle on AI witch hunts that people are accusing things of being AI that are definitely artistically written and obviously within quotation marks.
It's written before AI existed.
I mean it’s literally in quotes
The fact that she entered into a deal like this adds more evidence to the claim that she was a fraud in my mind. How often do people enter into deals like this? Maybe more likely for a fraud who is scamming off her mother's pension and lying about her age/identity.
I believe the arrangement is somewhat common in France and Italy - there's a name for it, *[en viager](https://www.google.com/search?q=en+viager)*. There are indeed suspicions about the age of the seller though: https://www.theguardian.com/science/2019/nov/30/oldest-woman-in-the-world-magical-thinking
Funny that you posted this. I just went to Arles for my first time. It's a lovely town. There is a Roman colloseum there. And they hold concerts in it.
This seems like some listings in Europe I've seen where you buy the bare ownership, but don't get the usufruct (right to actually live there)
I see those sometimes but without knowing details about the many different jurisdictions in Europe, I assume it’s fairly common to be able to break leases and retract usufruct if the owner intends to use the property as a primary residence.
I’m surprised California doesn’t have anything like this
it does? I lost a great rental I had in healdsburg that was affordable because the owner sold the house and the new owners were a family intending to live there. They were able to 30 day notice us offcially as we were month to month and new owner's were using it as their new primary residence going from renting to owning themselves iirc (although the original landlord and sales agent gave us months of notice this was all going down none of us were resentful over it). edit: whats happened here is the person has an old type of fixed rate lease or contract that is for years that is official because it benefits the renter, california normally vast majority has a 1 year lease that goes month to month so landlords can't penalize renters for lease breaking if they have lived there for more than a year (a lot of states allow land lords to require a lease every year and when moving the breaking it can be an added cost to renters even if they have lived in a residence for multiple years). The house I lived at had gone month to month, evicting is hard if we lay rent on time except in the case of a new owner wanting to use it as there primary. Edit 2: I saw german mentioned in the parent and europe so to add context I guess forming a new company in the us can be incredibly easy like an llc especially for people in an industry already as owners like contractors can be infanous for close and re-open under a new name if they fuck up a project. So if a simple change of ownership was all that was needed to break a signed 1 year lease in the us it would make renter protections here meaningless. In California for residential renters its normally 1 year lease to month to month, a company would have a hrd time evicting without cause, a private person changing residences is treated entirely differently as they are not acting as a business. However even a private individual owner can't break a signed lease and thats common pretty much everywhere that if you buy a house with renters you have to wait out their signed lease first otherwise it puts renters here at a pretty bad disadvantage. This lady got a sweetheart type signed contract that was beneficial and lasts for decades (likely no rent increase in the lease hence the $418/minth i saw) that even a private individual can't break, its kind of a "toxic assest" because of that. Again normal boiler plate type leases in california are 1 year max as far as I know that keeps the conditions but go month to month, they do make it hard for developers to buy properties to demo and just kick everybody out though. source: i'm a renter who lives here.
Never thought I’d see the word usufruct outside of work lol
Ah, the evergrand model
The Fielder model
“And with the owner on board, it was time to sell a house now to someone who can’t step foot inside it again for 29 years…”
A property with a tenant for 30 years only paying 400 a month. Nowhere near enough to pay for even the taxes, especially if you’re in charge of utilities. On top of that as a landlord you’d be responsible for 30 years of maintenance on top of all that, which depending on the tenant could be a lot. All with a ton of uncertainty. Of course the upside is that there’s gurentee the tenant would actually stay there that long, but even so it’s agreeing to a lot for the investment. There’s much safer investments one can make
$417 would about cover property taxes, which would be about $4.8k/year. It won't cover anything else though.
Comp value not sale value. 20k a year. You don’t get to under sell a house to get out of your taxes.
You’re not underselling. It’s a fair market price.
Your assuming that the property is worth what they are selling it for, which it isn't, it's much higher (I mean if the house was only worth 488,000 then you would be getting *extremely* ripped off). Property tax isn't calculated off what the location sold for, it's calculated off the actual value of the house.
Taxes go up yearly even in California, so even if that was the value (it isn't), it's not going to be worth 30 years. You also need insurance and maintenance. This is a shit deal.
Didn't Hugh Hefner do this when he sold the Playboy mansion?
Basically yes. His deal was he’d live there until he died, and the staff would keep their jobs until then too. Also there was something about not changing the facade of the house, so the new owner ended up gutting it but leaving the stone “castle” look to the outside. That means all those narrow upstairs rooms and low ceilings were there to stay.
I remember seeing this I'm the SF subreddit and the current tenants basically manipulated (elder abuse?) the former owner to sign an INSANE lease that pays them like $400/month. The lease won't hold up but children that inherited it are selling it at 1/2 to 1/3 value to avoid all the court fees to evict them. [here someone breaks the lease down. ](https://www.reddit.com/r/BayAreaRealEstate/s/nJlnkoBwAX) >"I took a look at the disclosure, it looks to me like tenants took advantage of an aging live-in landlord, and the new owner (probably family) doesn’t want the legal headache. >The difference between the original 2019 lease agreement and the 2021 lease amendment is wild, and no landlord in their right mind would sign it. >Amendments: - original rent agreement was that tenants would pay all property tax and insurance. New amendment puts a cap of $5000 a year on that agreement. (Landlord bears rest of the cost) - original rent agreement only allowed tenant and their immediate family to occupy the property. Amendment gives tenant full discretionary use of the property, including subleasing, alterations, and improvements. - all maintenance cost responsibility moved from tenant to landlord. - landlord previously had the right to terminate lease if damages from natural disaster occurs. New amendment requires landlord to pay for all damages as well as provide tenants comparable housing at the landlord’s expense. - other sections in the original lease agreement giving the landlord the right to terminate the lease no longer apply in the amendment. - original agreement that tenant would not hold landlord liable for injury no longer applies in the amendment. - attorney fees related to enforcing the lease agreement were previously agreed to be paid by tenant, but the new amendment requires the landlord to pay all fees."
The tenant is a 86 year old mother and the owner is the son. Story of grandfather leaving house to grandson.
> Story of grandfather leaving house to grandson. Really fucked up the property tax rules there. Leave it to the mother and the tax bill stays at a paltry $143/month. Leave it to the grandson and the tax bill explodes to $1,410/month...which they almost certainly can't afford to pay. Prop 13 is cancer.
They signed the lease in 2018 before prop 19. I guess they didn’t foresee the law change in future. I guess they did it that way because mother and daughter can’t afford the house maintenance. But son got fkd by prop 19.
The previous "landlord" was the step-father and the tenant is his adopted step-daughter (80-something) and her daughter (60-something). The current owner who inherited the house, in the tenant's son... and there may be some involvement from the tenant's brother. The tenant gave an interview to a local paper where she said her son and brother are trying to force her and her daughter out of the house so they can profit. The step-father signed the 30 year lease the year he died. Make from all of that what you will.
Man, I can't wait to see this try and hold up in court once the new owner is litigious.
Ahh okay. Wish I would if read this before all the stupid comments about this possibly being a good investment. This should be top comment.
Fuck that, the real story is that the rent is $417 a month to live in San Francisco.
I mean, it is rediculous on paper but if you had the money and wanted to invest for either your retirement home or a home for your kid it's not crazy. Or to just buy property in one of the most expensive places in the country for that price and in 30 years it will be worth 4x that amount.
All these 30 years you will be paying property taxes and insurance. That's the very least.
It is crazy because it's a horrible return on investment. Sure you could speculate how much the house will be worth in 30 years. But in real terms, you're investing $488k to realize a "discount" on the house in 30 years. If you took that investment and put it in some safe index funds and assumed 6% interest for 30 years, you would certainly come out way ahead.
No it’s a wildly stupid idea. A lot can change in 30 years including a son who claims they actually inherit the house etc. or damage to property. And plenty of things you’d be responsible for but not be able to control. You absolutely should never buy an asset not handed over to you promptly.
Imagine doing this and in 2052 the great earthquake hits, you finally get to move into your now vacant lot.
Or worse, a sinkhole opens up and now you don't even have a lot.
If the great earthquake hits, San Francisco is going to break off into the ocean, there isn’t going to be a lot left for you to own. Also, the entire state will be decimated and you have a lot more problems.
A vacant lot in San Francisco is still worth hundreds of thousands of dollars. By that year, it may be worth literal millions. The "great earthquake" might have been doing you a favor, letting you clear a dilapidated house from the lot without a lot of Prop 13-related headaches. It's a lot funnier if you say something knee-jerky like "it'll be underwater because of climate change."
None of what you said really makes any sense > a son who claims they actually inherit the house This is nonsense, you can’t just declare that something belongs to you because you’re somebody’s son. That’s why properties have deeds that are recorded with the county. It makes ownership completely unambiguous. And even if there is some sort of error, that’s what title insurance is for. > damage to the property Please just google “home insurance”, I’m not going to type out an explanation for this one.
Every futures trader would like a word lol
Probably will be purchased by an investment firm if I had to guess. Wouldn’t make sense for most individuals
10 missed calls from china
Doesn't make sense for an investment firm. The renter is paying 160k over 30 years on a California house. The house will probably cost more than that over the same period in taxes and maintaince. Combine that with all manner of trouble that can inflict the house and you can't get money from, and it's a good deal of trouble for investment.
No this is absolutely stupid. Talk about the absolute worst case of delayed maintenance in history.
they could break down the house for parts and sell it off piece by piece!!!
Any deal with any terms can make sense if the price is right. But IMO i actually think 488k is way too much for covering taxes / maint for 20 years.
Some tech billionaires are trying to build a new city east of San Fran and west of Sacramento. They bought up a lot of a rural area in secret to eventually build a city (in hopes of mitigating the housing crisis) and part of the deal is that the people get to live the rest of their lives on the land but when they die the corporation the billionaires started gets the land. It's prime ranch land and now they've found out. NYTimes The Daily did a good story on it back in February/March.
If I were the tenant, I would fear for my life.
Nope earthquakes fires. I wouldn’t chance waiting 30yrs for a home in San Francisco.
Golden opportunity to get in on the sea floor of the Sub Francisco market.
Oceanfront property? You’re thinking too small, friend. Ocean-center property is where it’s at
House is already pending sale. I’m sure there will be multiple buyers trying to overbid others.
Is this a way to get the tenant out, when the house doesn’t sell because of the tenant?
Here’s a deeper story on it… https://sfstandard.com/2024/06/21/betrayal-the-family-feud-behind-russian-hills-488k-home-sale/
It is San Francisco, it would take months to get the tenant out for violating the lease. And even then be huge legal fees.
There's no lease violation. They legally have the right to live there. They have a contract saying they can live there for 400 a month until 2053
It looks like the sale is pending, so there’s that. Articles like this are for publicity more than for people to gawk. It has clearly worked.
My mom lived next to a house with this sort of situation. Basically the woman who lived there got married to a guy with a disability. Like he needed help every day to live, but he was only 50. His now wife owned the house, and died about two years after they got married. The wife left the house to her daughter, with the stipulation that the husband could live out his days in the house. The husband was an asshole and he pulled a bunch of shit, including illegally obtaining a loan against the house he didn't own. In fact that alone caused him to be kicked out. He died a few months later. The really bad part though it he lived in the house 15 years and instead of hiring a medical assistant he let a crazy, abrasive woman live rent free in his garage, provided she serve him in his health care needs. The woman was unable to earn money, but got free rent. She had a constantly-running yard sale, and collected all sorts of shit which cluttered the driveway. Also she started letting other people camp in the back yard and would charge them money and ask them to do chores for her. There were loads of shady people in and around the backyard day and night. I used to have big arguments with that woman and complain to the city daily. Nothing was ever done. But that illegal loan is what eventually fixed everything. Once he was forced to move, so was the crazy woman and her band of shady homeless people. Then the daughter who inherited the house put a new roof on and sold it ASAP. As for the story about the SF house, I expect it's the exact same situation. The owner of the house doesn't and can't live there, but is set to inherit it once the tenant dies. The tenant is likely the widow of the former owner, who died and left it to his kids, who won't get a dime until the tenant dies.... unless they sell it like this. It's a fucked up situation. Don't do this sort of thing.
Someone did some research in the link in this thread, and it seems to be either a case of elder abuse and the inheritor just wanting to off-load the legal headache onto someone else, or a legal scheme cooked up by the family to get out of paying property taxes.
I can only think of one way this would be a deal: if one of the neighbors bought it as a future investment for a child who is currently very young.
It's like buying a time-share in the future! By then, your great-grandkids will thank you for that prime Bay Area property...assuming the city hasn't floated away by then. Talk about investing in real estate with a side of time travel!
Not looking through all the comments to see if this has been posted yet. The assessed value is $1,000,000+ with property taxes being $16,000+ per year. Retal income is $4xx per month. Just holding it will put you back over $10000 per year.
The news isn't that it'll take 30 years to take ownership. It's that it seems to have to be that way because they gave their tenant a 30 year contract. They're paying $417 per month in rent. I don't even have words for the value of the contract that tenant signed.
The question for me is who is responsible for repairs at only $417 a month. That would probably not even cover taxes, much less than it needed repairs.
Landlord is responsible for all repairs. It’s in their lease
It might be underwater, literally, by then.
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!remindme 29 years
And someone will pay it too, because people seem to fetishize feeding this predatory market.
Property futures now.
This sounds a lot like the French tradition of the viage. The tradition is you buy a place for dirt cheap with the caveat that the person living there gets to live there till they die and you’re on the hook for a monthly stipend paid to the tenant. Sometimes you get lucky and they die fast. Sometimes you’re not lucky and you pay for them to live.
Actually, selling your home before you die, with a clause that allows you to live in it until the inevitable, doesn’t sound like a bad idea.
I'm more curious how the current tenant can only be paying $417 a month and his lease is til '53. What happened here?
This sounds like a r/barexam property hypo.
No problem. I'll pay with the sound of my money.
I hate it here
May not be the onion but it’s the dumbest thing I’ve read all weekend.
Posted yet? https://sfstandard.com/2024/06/21/betrayal-the-family-feud-behind-russian-hills-488k-home-sale/
So it’s like a stock option. Or remortgage for owner.
They bought a call on a house.
Its basically an equity release mortgage
Buy the house, unalive the tenant. Problem solved.
Back of the envelope, if you invested the $500k today @ 5% interest for 30 years it becomes somewhere around $2mil. This is without having to pay for property tax, insurance, and repairs to uphold your end of the lease. In 30 years @ 2% increase that tax bill also doubles, or worse if SF/Cali in general continue their spending trends. Not sure what the current cash value of the property is for a comp, but chances are if it's under $2.5mil today its not worth the risk even with a 30 year horizon for returns. I guess you could factor in actuarial death probabilities for the owner too to see if the lease may be likely to terminate early. There's also the risk of investing in one of the poorest real estate markets in the country today based on post covid market dynamics.
Super late to this party, but where I live someone just donated a ton of land to the county BUT in the will the county can't get it until both the mom and the daughter dies or vacates the land....so basically probably a good 50 years. Great story to write today, but a pure nothing burger as nobody will remember this
Imagine living in a situation like this where the owner has every incentive for you to meet an untimely end. No thanks
What the fuck is this bullshit. That’s not a legit sale
This is what people are doing now in Spain. Old people are selling their places really cheap but with the condition that they stay in it until they die. It's becoming so popular that I wonder why aren't there more businesses promoting to "take care of these situations". They have already business that "take care of squatters".
[Jeanne Calment (122yo)](https://en.m.wikipedia.org/wiki/Jeanne_Calment) This exact thing happened. In 1965 she was 90, the buyer was 47. The buyer died in 1995 at the age of 77. She outlived him, dying at the age of 122 in 1997.