In English this means: 78 unit apartment building, $1,2000,000 Sales price, Owner Will Carry at 10 percent interest, $260,000 Gross income from the rentals, Low down payment, and a short escrow, for sale by owner.
This ad is really screaming, hey, world, I am a DON'T WANTER and would you please take this property off my hands, and I will sell it to you for nothing down!
I called the owner, and, yes, he did want to sell fast. I went out and looked at the property and it did need some cosmetic repair, but mostly the tenants needed repair. What do I mean? I mean drug and gang members were over-running the subject property and the entire street. But don't give upI was an optimist so I went ahead and made the purchase.
I offered $1,140,000 with four-thousand down and I would take Subject To all other financing, and the owner would carry back $150,000 at 10% interest due in 7 years. Sweet deal, right? But as we got closer to closing the escrow the senior lender wanted a $25,000 Assumption/Principal pay down. I agree, accessed a line of credit, closed the escrow, and I became the owner.
When I took over I spent many hours at the property to figure out how to turn it around. There were 38 vacancies and non-paying tenants. I did a rent survey and found that the average rent in the area for similar units was about $275.00/month. Most of the paying tenants were already paying $325.00 per month. What I did was to LOWER ALL OF THE RENTS! Even people that were already paying on time the $325 per month. Then a great thing happened. The building began to fill up rapidly, the non-paying tenants began to pay, and I found a tenant in the building that became the manager and threw out the drug dealers and gang members. What was the financial result? The gross income collected went from $12,000 per month (break even was $16,000) to $22,000 per month. I had turned a $4000 per month, negative cash flow, gang invested building into a $6,000 per month, positive cash flow, happy tenant building. I had found my niche.
Then it happened. One I repeat one tenant got upset at the strong manager, and the tenant, in order to retaliate, called in one day the Building and Safety Department, Legal Aid, Fire Department, Health Department, and the City Attorney's Office. Within the next three weeks I had approximately twenty-two inspectors at the building looking with magnifying glasses at any crack or crevasse, any bee hole in a window, any bit of gum or stain on the new carpet. In essence I was getting Black Balled. Most of the agencies wanted the building to be totally refurbished with a new electrical system, new heating system, new roof, screens, more painting inside and out, new doors, new plumbing system among other items.
All that's fine with me, but, Mr. Inspector, how long do I have to get the work done?
Here it comes.
Sir, you have thirty days to rebuild the structure, and I should inform you that if any item is not done within thirty days we will be filing criminal charges and asking for a lengthy jail term!
Well, I picked myself up off the floor emotionally and immediately got a general contractor and started the work. As the work was progressing I called the inspectors out to approve the work. They came out but to my surprise again they didn't like any of the work that was being done. When I politely asked them why, then they really got mad at me. They didn't like the color of paint I was using, they didn't like the workers that the general contractor was using, and most of all they didn't ;like my attitude of questioning why didn't they like the color of paint I was using.
Time passed and I couldn't get any of the inspectors to sign off any of the $140,000 work I had done. A few weeks later I was personally served with a thirty-three count complaint for substandard housing and my name was placed in three different newspapers as being L.A.'s most notorious, unrepentant slum landlord. The lenders, the insurance agency, and other vendors saw this and the lenders started foreclosure, the insurance agency canceled my insurance, and who I thought were my good friends began to leave me and later betray me. Each count carries with it a six-month consecutive jail term so I was looking at sixteen and a half years in jail.
Wow! you say. How could this happen in America? An American citizen stripped of all rights? The truth is that it can and it does.
In court the prosecutors wanted me to plead guilty and if I did I would only be looking at one year jail term
But, wait, I said. I have done all of the work the inspectors asked for, and besides, I haven't even had my day in court to find out if I am even guilty. Well, you know what happened nest? The prosecutors got mad at me for challenging their system.
Fine, they said, and we will be asking for the full sixteen years jail term.
To share the pain of this prosecutorial spider web nightmare I came to find out that about twenty other landlords were facing the same type of condemnation. In talking to a few of them I found some to be very obstinate and difficult to work with. Now, my opening. I set a goal to be the first landlord to get the building signed off, and not to file bankruptcy, and not to be driven out of the business. Little did I know that I was just another mark on the prosecutor's gun. Absolutely everything I did lead into a dead end. I went to the Mayor's office, I went to the FBI, I called all of my congressmen. Any rights of political power that it tried to muster up became null and void. After All, I was now a SLUMLORD. No one wanted to help me.
Editor's note: Some of us, also in naivety, contacted the above referenced government officials/ entities after we had gathered several such testimonies as Mr. Priess' with the intent of getting an investigation. They all lost our documentation. When pressed, all of the agencies/officials claimed that they had no jurisdiction to seek investigation. It took many years of investigation and research on our part to discover the reason for this.
I now realized that I was in big trouble. My upbringing taught me to face my adversary head on and negotiate a settlement. So I did. May of 1991 I walked into the City Attorney's Office and asked them what they wanted. I will never forget what they said for the rest of my life. They, in essence, said that if I would agree to give GIFT my $1,140,000 building to a non-profit housing corporation, they could try to get my sixteen and a half year jail term reduced somewhat. That did it. Now I knew what they were after, but I never thought they would resort to extortion to get it, so kept fighting. THIS IS AMERICA, RIGHT? I am not giving up so easily, I swore to myself.
I went home and wrote in tall letters, GET WESTLAKE SIGNED OFF! I then distributed it to all of my workers, general contractor, attorneys and friends. Time went on and so did the prosecution. I cold not talk in the courtroom, I could not show any of the pictures of the thousands of dollars of repairs, I could not have any of the tenants from the building come to testify on my behalf. I was choked off from any kind of help available to any person in my position.
Then came the judgment day and day of sentencing. All of the inspectors were there, three people from the City Attorney's Office, and the media. Each and every inspector testified UNDER OATH that nothing was done at all at the building. The Judge read my sentence and to my great surprise only gave me a year jail sentence, which would start out with house arrest in the subject building. I thought, Great!
I was arrested and taken into custody and booked. Ten days later my probation officer came to County Jail and took me out of jail and put an ankle monitor on my left ankle and then took me to the building to start serving my sentence. I had to be in a room ten foot by fifteen foot from 4:00 p.m. to 10:00 a.m. every day. From 10:00 a.m. to 4:00 pm I could be in the building helping the crew get the work done. By this time I had already filed Chapter 11 Bankruptcy and I was still trying to hold on.
Then another surprising thing happened. The inspectors and a representative from the City Attorney's Office came to the building. A few days later I was called in for another court appearance. I went to court and the prosecutor told the Judge that upon a recent inspection of the building we find that the building looks so nice now that we don't feel that this defendant realizes the severity of his crime. We would like to recommend that he be taken off of house arrest and put into County Jail immediately! The Judge said, O.K., and I was arrested again and booked into custody. I began serving a one year jail term in county jail with murderers, rapists, drug dealers, any other criminals that require incarceration. I thought I was done, but, no, I kept calling the manager of the building to tell him how to pay the bills and keep the building running.
Finally, one day I called the manager and he said that the lender had foreclosed the building and was now taking over. At that point I began to realize that my days as a property owner were over. The shock waves didn't stop there, however5. I ended up losing my house, my car, and they came into my house and took all of my personal belongings. I lost everything even down to my underwear.
Now it was done. Another property owner's out of the business. This is the pattern that so closely fits anyone who tries to own and maintain older, low-income property in the downtown area of Los Angeles. It therefore is not surprising that owners or investors are afraid to take on this kind of losing proposition. It also follows that if there is no one to buy and fix-up this kind of property that the prices they command for purchase will plunge greatly, just as does the tax base in the County of Los Angeles. It seems to me that on a bigger picture that the prosecutors are shooting themselves in the foot from a county tax base income standpoint. (sic)Not really. I know that each inspector, and each prosecutor has gotten promotions or raises based upon the demise of another property owner.
Editor's Note: Mr. Priess, as is true of many others in the same situation, is trying to use logic to discover why this is happening as it is to him. However, the reason they can't understand why this is all happening is because there are many different layers of corruption with different entities each benefiting in a slightly different way. And those who are pulling the strings of this racket from beyond the local operatives (inspectors, prosecutors, city officials) have gone to great lengths to hide their motives and actions. You can learn about the various layers of corruption and why they exist in the upcoming book, THE LIBERTARIAN BUREAUCRAT.
In conclusion, I know that in the State of California that it is easier to put a landlord in jail than it is to evict a non-paying tenant. Where have personal property rights gone? Will they ever be restored to the free enterprise system that was the basis for the great success of these United States? I hope so. I have learned that you can't fight City Hall or can you?