Should I Propose A Buyout to My Landlord?
Should I propose a buyout?
I live in an old 12 unit Victorian (1890s) in San Francisco’s Haight Ashbury district.
Tenants in our building suffered through the Lembi years where some of my neighbors were offered $25k to move (poor timing on my part).
The new owners are currently renting upgraded units for $3200. I would like to propose a buyout to the owner and see if they would be interested in my unit.
My rent is $1140 for a large 2 bedroom. We have a middle man management company that facilitates all correspondence. Should I send the request to them or is it a better tactic to try and locate the actual owner’s contact information to send the proposal letter to?
I have no idea if the owner would consider offering a buyout, but figured a good pitch may make them consider it considering after upgrades, they would yield a $2k profit monthly.
As you may know, I help tenants negotiate buyouts all the time. I’ve written four articles that illustrate the negotiation process, strategies to obtain the best price and the provision that should be contained in a settlement agreement:
Tenant Buyouts: Your Absolute Bottom Line
Tenant Buyouts: Strategy for Success
Tenant Buyouts: The Agreement
99.9% of buyout offers are initiated by landlords accompanied with a vague or overt threat of an Owner-Move-In (OMI) eviction or an Ellis Act eviction. Landlords rarely move into 12-unit buildings and almost never take them out of the rental market using an Ellis eviction because 12-unit buildings cannot be converted to condominiums.
The Lembis offered buyouts four or five years ago as a part of their scheme to inflate the projected income of their buildings to refinance them using collateralized debt obligations (CDOs), “a strategy that made their holdings more attractive to all that practically free short-term money—hundreds of millions of dollars—flowing in from around the globe.” Danelle Morton, “War of Values,” San Francisco Magazine.
In my experience, I haven’t seen many successful buyout when tenants propose them. the landlord think the tenant will vacate voluntarily anyway.
The best way to deal with this is to show the landlord the value that he will gain if you move. And if you’re planning to move anyway look at a buyout as “found money.”