200+ Families Evicted! Continued (3) - Posted by RT in CA

Posted by MatthewC on February 18, 2002 at 24:43:07:

I just wanted to thank you for bringing this story to the forefront. I would never have found this story if you hadn’t posted it.

I have learned a lot from the ongoing articles. I am personally following it.

And I am learning an awful lot, not about real estate, about people in general and how it relates to real estate.

From what it sounds like, these people were paying below market rents for years. In other words, they were living way at a higher standard of living and better than the market would have otherwise dictated.

Because the investor bought with all cash, he really didnt have the incentive to raise rents to keep up with market rents as most people would have with underlying financing.

If the investor had maintained market rents, the people inside would have been accustomed to paying those rents and when they moved on, they would be more financially prepared. Because the people who couldnt afford market rents would have long vacated.

Definitely a lesson here for me.

I don’t think I am going to say too much more because it really is sad and pitiful to read. I can’t believe the investor is being made out to be the criminal here.

200+ Families Evicted! Continued (3) - Posted by RT in CA

Posted by RT in CA on February 17, 2002 at 15:13:16:

Is Japanese tycoon cash poor?

By Steve Wiegand and Dale Kasler – Bee Staff Writers
Published 5:30 a.m. PST Saturday, Feb. 16, 2002

He might be a billionaire, but he still needs the money.

At least that’s why Japanese real estate investor Gensiro Kawamoto says he’s ordered the people in the 420 Sacramento-area homes he owns to get out.

In a press release issued Wednesday by his Hawaii-based attorneys, Kawamoto said he needs proceeds from the sales of the single-family houses for “tremendous investment opportunities both in the United States and Japan which are opportunities which present themselves only once every 20 to 30 years.”

Kawamoto, who has gained notoriety for being both bombastic and reclusive – and for being an investor who deals strictly in cash – has refused to say what those investments are, as have his attorneys.

But the suddenness of his announcement to sell the houses here, as well as properties he owns in Santa Rosa and Hawaii, has led to heaps of speculation as to why he is choosing to unload these particular assets – or why a billionaire would be forced to quickly unload assets at all.

Kawamoto “almost certainly experienced a downturn in his fortunes because of the past decade of stagnation in Japan,” said Franck Wiebe, chief economist for the Asia Foundation in San Francisco.

Kawamoto, who in 1988 bought all or most of the five developments in Rocklin, Citrus Heights, Antelope and Orangevale for a reported $60 million, has long been reputed to be among the richest men in Japan.

His fortune was once estimated by Fortune Magazine in 1993 to be as high as $2.7 billion. But in a subsequent list of the world’s billionaires, Forbes Magazine did not list him at all.

“It sounds obviously like he’s got a cash squeeze,” said Richard Katz, editor of The Oriental Economist, a New York-based newsletter. “A lot of people do.”

This includes a lot of rich Japanese real-estate investors.

The Japanese economy is in a 10th year of stagnation and is currently in its third recession in two years, according to Wing Thye Woo, a professor of economics at the University of California, Davis, and an expert on Asian economies.

Woo said the Japanese stock market is at half of its 1992 value, government programs to revive the economy have largely failed and banks that made huge low-interest loans with nothing but real estate as collateral are teetering.

“I think it’s safe to say that a lot of people in Japan who were very very wealthy 10 years ago are very, very not-wealthy today,” he said.

A need for cash, however, doesn’t explain why Kawamoto has decided to hold on to some properties he owns in Hawaii, where the real estate market has been severely depressed for years. Kawamoto, for example, is holding on to 147 acres he owns on Maui, where he plans to build 1,050 residential units.

“If he was in deep trouble, he probably would be selling everything, which we’re not seeing,” said James Hallstrom, a Hawaii real estate appraiser.

Neither Kawamoto nor his attorneys have explained why he wants his houses empty when he puts them on the market, although attorney Carol Asai-Sato said in an interview Thursday from Honolulu that the houses would be listed individually with brokers and not sold en masse to a single buyer.

But it’s generally accepted in real estate circles that an empty house is easier to sell than one with tenants.

And there are theories about Kawamoto’s sudden desire to sell that are based on issues other than cash.

The head of a local rental property management firm that worked for Kawamoto for part of last year feels that recent complaints from some tenants about problems with mold might have helped spark Kawamoto’s desire.

“The only guess I can make as to why they’re pulling out is that they were very concerned about the mold issue,” said Bob Muchado, owner of HomePointe Property Management. “Seeing some of these lawsuits building in the community probably would have made them a little nervous.”

Muchado was referring to a spate of high-profile, multimillion dollar jury awards in mold-related cases, including one in Sacramento where a young couple and their child won a $2.7 million award from their apartment landlord and the property manager.

Muchado, who said he canceled his contract with Kawamoto last year after working for the investor for about seven months, said Kawamoto was self-insured, meaning there’s no deep-pocketed insurance company to cover his court costs or any potential judgment against him.

Whatever his motive, local real estate experts say his timing is good – at least from his standpoint.

“His timing is about right,” said local real estate economist Robert Fountain. "If I were looking to liquidate, I wouldn’t hang on and make sure Sacramento doesn’t go into a recession. There’s always a long shot there might be a worse recession here a year from now.

“I think whatever money he’s made on these, he’s already made it.”

In addition, the local inventory of about 2,300 single-family houses now for sale is relatively low, real estate experts say.

An additional 420 “seems like a lot,” said Michael Lyon, of Lyon & Associates Realtors, “but we’re so deep into a seller’s market that adding 400 homes doesn’t change that. He’s going to do well – there’s probably a 20-30 percent return he’s looking at.”

That, however, is of small comfort to those being forced from their homes and neighborhoods.

Lyon pointed out that many of those facing a move are families, and that the seller’s market in single-family homes means there are relatively few to be rented in the area.

“(In) our housing market – this is probably the worst possible time for this to happen,” Lyon said. “(But) this is the American way, this is, unfortunately, his right.”

Re: 200+ Families Evicted! Continued (3) - Posted by Bryan in Cali

Posted by Bryan in Cali on February 17, 2002 at 21:31:08:

Don’t kid ourselves-this guy needs mucho dinero, and he needs it now. The Bee reported in the Sunday edition that Asian businessmen in fancy cars were touring the projects for several weeks before the eviction notices showed up. And now he says he wants to sell the houses individually. That tells me that he had plans to sell the homes as one (or five) big lots but that they all fell through, and that he’s selling the homes individually in hopes of getting more money quicker. But he’s not accounting for 15 years of deferred maintenance and the fact that that will lower final price per house, sometimes dramatically. I predict that he’ll be lucky to break even. As for keeping the land in Hawaii, I don’t think that decision is rational. Maybe he’s in love with Hawaii and hopes to build his dream subdivision there someday when values go back up. Maybe he thinks he can make it into an industrial park or something. But as for the rest, my bet is that his billions vanished in Japan’s economic collapse and that he needs money to prop up his Japanese investments.

Re: 200+ Families Evicted! Continued (3) - Posted by Larry In CA

Posted by Larry In CA on February 17, 2002 at 16:11:39:

So how do I find out about buying some of these houses?? Why wouldn"t he offer to sell to the tenents??
Somthing is missing in this story.

Re: 200+ Families Evicted! Continued (3) - Posted by Paul S

Posted by Paul S on February 17, 2002 at 15:19:17:

What is the point? Looks like a cut-n-paste post. Are we to see an opportunity, or a warning sign on the horizon in Sacremento? Is there any point whatsoever that you are trying to make in starting this thread? I’m just a little confused. Help us out.

It is irrelevant… - Posted by MatthewC

Posted by MatthewC on February 18, 2002 at 24:45:54:

The investor has every right to sell the house whether he needs the cash or not. This whole thing has turned into a socialistic tone. No wonder people keep saying California is referred to as the Socialist Republic of California.

Re: 200+ Families Evicted! Continued (3) - Posted by RT in CA

Posted by RT in CA on February 17, 2002 at 19:04:44:

According to the Sacramento Bee articles, he does offer tenants to purchase these homes. However, most of the tenants don’t have money, some have money but won’t have enough time to finish the loan process in time. You can go to www.sacbee.com and search under this landlord’s last name (Kawamoto?) to find out.

As for how to buy them? You can ask any real estate agent to find out. I doubt if they have any info now. And I think the price won’t be low enough for you to flip for a profit. But it will be another story if you buy it for your own use. They are in good area.

Hope this helps.

RT in CA

Re: 200+ Families Evicted! Continued (3) - Posted by RT in CA

Posted by RT in CA on February 17, 2002 at 18:59:38:

This article, as you can see from its title, is an on going issue and it’s part 3, in fact, the 4th that I posted on this website. You can search under 200+ families evicted to find other articles. Or You can go to www.SACBEE.com to read the articles yourself.

The point here is for those who are real estate investors, landlords, tenants, or even real estate attorneys, etc. to know the updates of this issue because this event will certainly affect the Sacramento, CA real estate market. It will affect CA market, and probably real estate markets in other states as well. This event has already triggered government attention, local level and state level. It amazes me, with tenants whining out loud, how all the fingers are pointing to this landlord while no one stands up for him. It also upset me on the government’s action. But I dont want to express too much of my own opinion because there are many aspects of this event, depending on how you slice it.

My previous posts on this issue had generaged several responses so I knew people were watching closely on this event. Therefore, I just post the message here to keep whoever is interested posted. I probably should have said something in the heading, but I didn’t have time to do it this morning. Therefore I apologize for confusing you.

If you ask me, I stand with this landlord. He does everything allowed by the law. These tenants don’t want to move because they knew they would lose a very good deal, which they have enjoyed a long time - below market rent. Everywhere they go now, they will have to double their rent in order to get something similar to what they have. That, you don’t hear them say it loud on the news.

Hope this explains it.

RT in CA

Re: 200+ Families Evicted! Continued (3) - Posted by Paul S

Posted by Paul S on February 19, 2002 at 22:03:59:

I’m with you. Now that you’ve clarified the issue somewhat- I agree. We ought to be able to do what we want (within the law) with our property. The legal trend, however, isn’t in our favor. We are inching towards socialism every day. As for investing- enjoy it while we can. That’s what I intend to do.