The Madison Real Estate Group rescues property owner from squatters and vandals upon being awarded management of the building and arrests the five individuals responsible. Despite alarmingly high rate of these instances in Los Angeles, the Madison Real Estate Group is bringing properties such as this one into compliance within 90 days.
The Madison Real Estate Group, a leader in multifamily property management, was awarded the management of an eight unit REO property in Los Angeles. At the time of takeover the property had been placed in the Los Angeles Rent Escrow Program (REAP). Squatters were rotating in and out of the vacant units and it was continuously being vandalized.
Subsequently, upon takeover of the asset, five individuals were arrested for vandalizing the property, the squatters were removed and the REAP case was brought into compliance within 90 days. The necessary paperwork was filed with the city and Madison filed the necessary paperwork to obtain fund in excess of $20,000 being held in the escrow account and placed the property on the market for sale.
In the past few years, the number of REO properties has reached an all-time high, in what some are calling an unprecedented pace. With the number of REO properties hitting the market it is essential the right management company is retained. The Los Angeles REO market has been plagued with problems from squatters to vandalism and are being placed into the Los Angeles City Rent Escrow Account Program at an alarming rate.
For landlords and property owners who have fallen behind in their maintenance and repairs, the city of Los Angeles Rent Escrow Account Program can wreak havoc on their revenue and collectibles, and come close to burying them in a landslide of beaurocracy and paperwork. It’s a legal and logistical mess most property owners don’t have the experience necessary to handle on their own.
The affected tenants are immediately given a rent reduction, usually somewhere between 10% up to 50% range, and it isn’t unheard of to see a reduction in the upward range of 80 to 90%, depending on the severity of the violations. This is lost rent to the property owner and is non-recoverable. A notice of REAP is recorded and filed against the property's title with the County Recorder’s Office. If this is not resolved, this recording may restrict the refinancing or sale of the property.
Once a property is in REAP, even those owners who immediately attend to the complaints have a lot of work ahead of them just to recover even the reduced rent if the tenant has chosen to pay the money into the escrow account set up by the city. The owner must then attain three separate sign offs on all outstanding orders from the LAHD city inspector assigned to the property and a case manager from the cities outreach program before being sent to the city council for final approval and release.
Clearly, owners should be aware of violation notices, and diligently make repairs to avoid this situation. Those that put it off too long are looking at rough waters. Once a property is in REAP, it takes knowledge and expertise to get out – and even that does not guarantee full recovery of your expected income. Trying to navigate those waters alone can leave an inexperienced owner drowning in paperwork, and failing profits.
This coupled with squatters and vandalism at the property were creating life and safety concerns for the ownership that needed to be address immediately. Immediately upon taking over Madison’s team of REO professionals took all the necessary steps needed to ensure their client’s interest were being protected. Madison has systems in place when an REO property is placed under management, allowing them to act quickly and aggressively ensuring residents are protected and the value of the asset is being preserved. As standard protocol during the takeover process of an REO asset, The Madison Real Estate Group notifies the local authorities of the change of ownership and files a Trespass Arrest Authorization form with the local police department. This allows the police department to arrest anyone on the premises who isn’t a resident or a proven guest of a resident without having to contact the ownership of the property. This gives Madison the ability to call in a potential threat to the police department and allows the police to make the arrest without confrontation, protecting the client’s interest, as well as, the residents of the property.
About The Madison Real Estate Group
The Madison Real Estate Group is an entrepreneurial and experienced full service multifamily and commercial real estate company that serves as a trusted advisor to financial institutions and private investors. They have a successful track record working with city officials in getting the properties under their stewardship removed from the REAP program and recovering funds owed to their clients. They have built their reputation by offering innovative solutions to their clients property management needs, adding value to their portfolios, and consistently exceeding their expectations for service and performance.