Dilapidation for Dummies A convicted slumlord ventures into how-to publishing.

When David Nuyen started his real-estate empire, he didn’t have a guidebook to rely on. “By yourself, with no experience, it’s tough,” he says. “You have to really get your hands dirty in order to get it.”

As Nuyen’s portfolio grew, his hands got plenty dirty. Beginning in 1982 with a small residential building in Takoma Park, Md., Nuyen steadily increased his holdings, doing repairs and maintenance in the evenings and on weekends, all the while working a full-time job with a Baltimore defense contractor. At his peak, Nuyen owned 15 rental buildings in Maryland and the District. But he eventually fell badly behind on those repairs.

In 2001, Nuyen was charged by District and federal authorities with obstruction of justice, lead-paint violations, and more than 2,000 other housing-code violations. Calling him the “archetype of a slumlord,” federal prosecutors said his was the first criminal prosecution of its type.

In a plea agreement with the feds, Nuyen admitted to falsifying lead-paint disclosure forms, obstructing justice, and making false statements to investigators. He was sentenced to two years in a federal prison camp and given a $50,000 fine. With the District, Nuyen pleaded guilty to 10 housing-code violations; he was fined $10,000, and he agreed never to own rental properties in D.C. again. In exchange, another 2,368 charges were dropped.

While in prison, Nuyen didn’t just sit back and reflect on his crimes. Instead, he set out to produce the how-to guide he’d never had. The result is The Tao of Real Estate, a self-published tome available on Amazon and eBay. It’s a book so thorough it needs two subtitles: Investing With Confidence and An Easy Road to Wealth. The book charts Nuyen’s own descent into slumlorddom and offers helpful tips and detailed strategies to hopeful real-estate magnates.

“Everything is in there,” the 69-year-old Vietnam native says with a grin.

Tao Lesson No. 1:

If you agree to stay out of the rental market, don’t.

“In 2002, due to my need of cash to take care of my business while I serve my time in the prison camp, I sold the building to one of my friends for $2.2 million. One year later, my friend had a contract of $3.5 million from a developer. I wished my friend could wait for me and do the condo conversion with me when I get out.” (Chapter 11)

Nuyen made it clear in his book that he had no intention to quit playing the real-estate game once he was released. He still owns at least four rental buildings in the District himself, and, he says, “I still buy and sell,” though he does so with partners instead of going it alone.

That would put him in violation of his plea agreement, says Nick Majett, an assistant deputy attorney general for the District. “We wouldn’t allow him to get back in with partners and say, ‘Hey, I don’t own 100 percent, so it’s OK.’” A violation of the plea agreement could reinstate the 2,300-plus dropped charges.

There’s more than one way to get around the agreement. While in prison, property records indicate, Nuyen sold many of his properties to the same company, Northwest Properties LLC. In some instances, Nuyen or one of his companies is listed as selling the property in partnership with Northwest; in others, he is selling to Northwest. Its listed address, 2020 Pennsylvania Ave. NW, leads to a UPS Store. Majett, who deems the arrangement “definitely suspicious,” is investigating.

A second way around is to convert rental properties to condos, transfer them to friends who buy them with your money and leave you in control, and continue to rent them out. That’s what Nuyen is allegedly doing in two buildings in Brightwood, on Tuckerman Street and Tewkesbury Place NW, according to a lawsuit filed by Bread for the City, a D.C. nonprofit that is suing Nuyen with the help of the law firm Gibson, Dunn & Crutcher. According to the suit, he sold six units to one partner, Mariana Ascencio, who purchased them with a loan from Nuyen. The complaint alleges that Ascencio signed a form claiming all six apartments as her primary or permanent residence; the suit alleges she is renting some of them out.

Whether Nuyen is in legal violation of his plea agreement will be determined within the next month by the D.C. Superior Court, after a hearing to investigate whether he has made his required good-faith effort to leave the real-estate business. Nuyen says he is confident he will win.

Tao Lesson No. 2:

Don’t bother with repairs.

“If consistent with the long-term investment strategy, do not spend money on maintenance and repairs for items that do not contribute to the ultimate purpose of our investment.” (Chapter 11)

The experience of Reysa Luna, a former tenant in a Nuyen-owned building in D.C.’s Takoma neighborhood, confirms that Nuyen is true to his principles. She complained from the time she moved in, in 2000, about missing fire alarms, malfunctioning plumbing, a broken door and window, and rat and cockroach infestations. Most of all, she complained about a leaky ceiling that appeared as if it would collapse. In April 2001, it finally did, landing on her daughter, Reyna Gomez, who was hospitalized for injuries to her spine.

Out of prison, Nuyen’s lax attitude toward repairs continues. An inspection of a single Nuyen-owned building in Petworth, done on May 10 by the District’s Department of Consumer and Regulatory Affairs, uncovered 92 code violations.

Sandra Reyes, who lives in an adjacent Nuyen-owned building, has a 3-foot-long hole that allows rats into her kitchen. Behind her stove, the floor is covered with their droppings.

Marta Buruca lives in a basement apartment in the same building, with “APT No. B” scrawled across the door in orange paint. A leaky ceiling has destroyed much of what Buruca owns. The windows are broken, and pipes on the ground have leaked scalding hot water.

Tao Lesson No. 3:

“Rule with an iron fist.”

“Rule with an iron fist and discipline. Absolutely no compromise, no compassion, no weakness, no favor, no bending, no flexibility, and no delays. In the long run, it is good for the property and for all tenants. It is particularly good for the management, operation and business success.” (Chapter 1)

In order to set the proper tone, Nuyen’s book suggests a few clauses to be tucked into every lease:

“Landlord is not liable for damages caused by his actions or neglect in his duties to maintain, repair, clean the premises and/or the property....”

“Landlord has up to 45 days to repair damages that make premises uninhabitable or landlord can terminate the lease immediately at his sole discretion....”

“Tenant waives the right to be served a notice of the suit against tenant for non-payment of rent or any other reasons; agrees to pay landlord’s court costs and attorney fees; waives all rights for jury trial; waives all rights to appeal; waives all errors that might be made at trial; and consents to immediate eviction.”

Reyes and Buruca have both asked for repairs to their apartments, but their requests have met similar replies: Both claim that Nuyen has said he will evict them and rent their apartments at a higher rate if he makes the improvements.

Armando Sanchez, a Nuyen business partner, says Reyes and Buruca are “troublemakers” and that Reyes is “the leader of the Spanish people.” He says that they complain in order to avoid paying rent and that most of Nuyen’s tenants are very happy. Sanchez is listed as the registered agent of the building recently cited for 92 code violations.

Tao Lesson No. 4:

Represent yourself.

On second thought, don’t.

“I used to sue problem tenants myself and went to landlord-tenant and civil courts myself without an attorney....I did not like to buy liability insurance because it was expensive and encouraged ‘hungry’ attorneys to pursue the cases.” (Chapter 1)

Had Nuyen consulted counsel earlier during his last legal run-in, things might have turned out better for him. The book explains that “in a rush” he re-created and back-dated the federally mandated lead-paint-disclosure forms. Nuyen faults the feds for his obstruction-of-justice prosecution: “The government simply did not want to solve this sensitive issue in a more intellectual way.”

From behind prison walls, Nuyen qualified his dim view of counsel a bit: “[W]hen the situation is complicated, we may want to seek help from a lawyer in the early phase of the problem,” he wrote. “Late help obtained as a last resort, is often too late to be of any help.”

But it seems Nuyen’s feelings have rehardened since writing Tao: “Attorneys are crooks,” he says.

Tao Lesson No. 5:

Watch what you say to the media.

Regarding a visit he received from Washington Post columnist Marc Fisher before heading to prison:

“He talked gently and exuded, I thought, integrity and trust....To my great surprise, the article that appeared on the front page of the Metro Section was somewhat a distortion of the truth and more or less an assault on my personality.” (Chapter 1)

Fisher quoted Nuyen as saying, “The problem is that the tenants are so dirty. The black people, so dirty. Every bedroom has dog [feces], and they don’t care. They just walk over it. This is not human. This is animal.” When Fisher asked him if he would live in one of his own buildings, Nuyen, Fisher wrote, “looked at me like I was nuts.”

“You can’t live with these people,” he told Fisher.

“Probably, I thought, in my eagerness to defend myself, I had failed to manage my language properly during the interview,” says Nuyen’s book. “I learned my first painful media lesson.”

Apparently, Nuyen has since forgotten whatever public-relations lessons he once learned. During an interview with a Washington City Paper reporter in his immaculate Silver Spring split-level, his on-the-record candor includes explanations of how he evades his plea agreement: “They ask me to sell [my rental properties]. I say OK. I sell a few...to other people and have partnership with them....It is just a matter of sometimes you have to bend it so everything will work out fine.”

“We share profits together,” he says. “No way you lose.”

Nuyen also confirms using the techniques alleged in the Bread for the City lawsuit, though at other times he says he is not using them on the Brightwood properties cited in the suit. He says that he is converting his buildings to condos, that he’s providing financing to friends to buy them, and that his friends will continue to rent them out. If they can’t raise enough rent, he says, they don’t have to pay back the mortgage.

“That’s cool, huh?” he says. “In real estate you have to be very creative in order to solve the problems in different circumstances.”

Says Rebecca Lindhurst, a staff attorney for Bread for the City, “I can’t believe he admitted that.”

Bonus Tao Lesson:

Check out Vietnam, a slumlord’s paradise.

Since his release from prison, Nuyen has traveled to his home country to investigate real-estate opportunities, considering a semiretirement there.

He’s impressed by the less tenant-friendly environment. “It’s a different ballgame,” he says. “I was amazed what people are doing there.”CP

Art accompanying story in the printed newspaper is not available in this archive: Photograph by Sara Pomerance.

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