David have you ever tried managing a rooming house or rentals of the kind described in the article? Do you have any idea the legal hassles he has gone through over the years? It sounds like he is raking in money hand over fist but try it. Just try it and see how much you actually collect and what you have to go through to get it.
If he has made any serious money (net) over the years he doesn’t seem to have much to show for it. Just a few beat up rental houses which he is about to lose to the city.
His behavior is not that of a smart far sighted person. It is the behavior of a short sighted person who believes in gimmicks and slick tricks but does not look ahead to the long term.
FYI, Seattle RE prices are through the roof, even for old junkers like these. And this guy gets enough in rents (14-15 per house?!?!?) of 200-300 to pull in 250K/yr? wowee!
Interesting angles, from the city’s perspective. Entities, asset protection, increasing cashflow (!), providing much-needed low-income housing, etc.
Re: “LANDLORD FROM HELL” - good article - Posted by James Buster
Posted by James Buster on March 18, 2003 at 19:45:43:
Note it’s the bankruptcy judge, not a civil court judge, voiding the partnerships, presumably in order to include partnership assets in his bankruptcy estate. We don’t yet know if that will also happen as the result of any civil suits. I’d bet that the partnerships were voided because he took the cash and money orders and placed them directly into his personal bank accounts, an asset-protection no-no.
Re: “LANDLORD FROM HELL” - good article - Posted by Bryan-SactoCA
Posted by Bryan-SactoCA on March 18, 2003 at 16:15:42:
Rents everywhere along the West Coast have gone up so much in the last 5-7 years or so that people on fixed incomes are forced to take the housing that landlords like Hilton provide. Even here in Sacramento I’ve seen barely habitable buildings rented for $450/mo which is a lot when your income is $836/mo-AND the state is about to cut that by $50 in order to help solve its budget crisis. The only way I’ll ever find a decent place to live again is if I can make enough money from RE to plunk down $700 a month for a 1br. I’m planning on going into mobile home flipping (“Lonnie deals”) as soon as April once I find the cash to buy the MHs. (One suggestion on the MH forum: take cash advances from credit cards and pay them off with the note you create.)
By the way, doesn’t a certain RE guru from Florida have a book that suggests creating “rooming houses” out of SFHs by chopping up large rooms into small ones with dividers?
Re: “LANDLORD FROM HELL” - good article - Posted by Kristine-CA
Posted by Kristine-CA on March 18, 2003 at 15:46:20:
Interesting article.
I was interested in this guy’s financial “strategies”. Here is yet another case where a judge overruled a LLC/LLP status and declared the properties as his. In this case, a very good thing. So, little by little, this “hiding” and “shielding” assets is getting chipped away.
Thanks for sharing the article. Sincerely, Kristine
I called the guy in question (Eric Hilton) regarding some boarded up houses he had. Despite his controversial landlording, he was right there, in plain site in the phone book (never answered the phone). Yet he hid all his property via a corporation. And, in searching for him, there were plenty of DOT’s at the county web site with his parents name on them, and they were listed in the phone book!!
I’m not sure what the point was in all this, but the article made a big deal about how he attempted to hide his properties, but to me, he didn’t do a very good job of hiding at all. And given the rest of the artilce, I should be pretty glad I never got in touch with him!! Now his property is under control of the Bankruptcy court, so who knows, I may wind up getting lucky after all. Pretty freaky seeing the property I had my eye on in the paper!
Hi Kristine,
You always offer quality posts, thank you. Jealous you’re in California. I’m homesick.
I wonder if this guy really knew how to use his LLC/Asset Protection correctly.
I’m no expert, but if he really wanted to hide his assets, shouldn’t he have closed his property into an LLC or Trust or whatever in the first place? Plus, on his DOT’s (his parents name as Trustee), the trustees got the consideration for “love and affection”. I think that’s a big red flag right there
I’m no big government backer, dont’ get me wrong, but as the article attempts to point out, he was “working the system”. But not really, because he was very trace-able. I’m a complete beginner, and I found him!!
That $250,000 was an estimate. Let’s say it’s accurate. At $300 a month that represents about 70 tenants. Have you ever tried to collect rent from 70 tenants of slum properties like that? That is a full time job in itself and forget about ever collectiing all of it.
Plus after 20 years he has accumulated nothing in terms of equity. If his dilapidated junkers have gone up in value at all he’ll never see the money because his property is being siezed for unpaid fines etc. not to mention being generally disgusting and unsaleable.
If he had just put a down payment on a couple of apartment houses in 1981 and done NOTHING ELSE but keep them in repair and manage them properly he would be making more money with a lot less hassle and he would have several million in equity as the mortgages would be paid off now.
He’s another one of those sharpies who thinks it’s clever to kill the goose that lays the golden eggs. I’ve seen them come and go and so have you. The only unusual thing about this guy is that he is still fighting long after it is obvious that he has lost.
Re: “LANDLORD FROM HELL” - good article - Posted by Kristine-CA
Posted by Kristine-CA on March 18, 2003 at 16:21:09:
Kylee: I’m no expert on LLCs but I’ve read other cases where a judge has ruled in favor of the plaintiff and voided the protection of LLCs. In one recent case, the creation of the LLCs was at the beginning of a law suit and the judge ruled that creating the LLCs in order to hide/protect assets was a mis-use of LLC structuring.
Like I said, I’m just interested in when it doesn’t work–that’s what’s courts are for. But who knows, maybe the decisions end up overturned.
Posted by David Krulac on March 19, 2003 at 18:42:15:
but 70 tenants might not be that tough if 15 are in one house. He may have had 5 or 6 houses. He also may have socked the money away, off shore for example, in a mattress (which he had a lot of).
I heard of another sharpie who rented a house but didn’t have the water turned on. Instead he ran a garden house from the neighboring rental house (different owner) to his own house to get free water.
Another time there was a house with a Billco door on the front of the house, to get into the basement. I keept seeing people come and go through the Billco door. Turns out the owner was renting the basement, unfinished to a family of 4, no heat but apparently a toilet.
Another time I saw an owner occupied house, that appeared abandoned, and the electric meter was missing. The electric company usually reclaims their meter when the house is vacant for a year or more.
Well the owner was living in this house for several years without any of the utilities turned on.
Another time saw a house that didn’t have indoor plumbing and didn’t have an outhouse. this was in town not out in country. When I saw it it was vacant, but people had lived there shortly before. Apparently they were using plastic bags for their personal disposal,(if you get my drift) then put it out with the trash.
Kristine,
Thanks for the feedback. It seems like mis-using his LLC may have gone on here. I searched for him at two different times, and my initial letter went to some company (forgot the name. But when I re-approached, the homes were owned by a new corporation.
Just goes to show us all, from step one, do it right–start with your asset protection vehicle–it may be easier to cut corners, but in the long run alot more costly.
Just my two cents. I’ve been following these houses for half a year, so I had great interest in the article.
Kylee