Less than a year after California voters rejected rent control in a statewide ballot proposition, Governor Gavin Newsom has signed legislation imposing it. For rental units 15 years or older, rent increases will be limited to 5 percent annually. The negative consequences of the new law are extensive. Older buildings, likely to require the most maintenance, will fail to recover costs—leading to “shabbification.” New construction, desperately needed in a state with an estimated housing shortage of millions of units, will also dwindle. Developers confront a future with limited returns on investment. And, as always with rent control, incumbent renters—assured cheap housing, regardless of their income—will benefit, while newcomers see only “no vacancy” signs.
By Eric D. Jarvis, Esq. | Founder of ReassureRent
It’s every landlord’s nightmare: A tenant who can’t, or won’t, pay the rent. You’ve invested in your property. You are obligate to continue to pay taxes, insurance, a mortgage, and maintenance, and you depend on that income. You provided a home for your tenant and you have a right to expect that tenant to keep their end of the deal. Now you’re involved in a time consuming and emotionally draining eviction process. In the best situations, you will pay some legal fees and lose some rent. In the very worst situations, you could spend thousands in legal fees and lose half a year of rent before you get your property back.
On Tuesday, October 8th, California Governor Newsom signed into law Assembly Bill 1482 imposing rent control and just-cause eviction rules and fees across California. After a long battle within the state, rental properties not currently covered by stricter rent control provisions will need to adapt to the upcoming changes by January 1st, 2020.
The client has invested in real estate since 1987. After experiencing difficulties in renting an industrial property she owned for the past 13 years, it was time to sell. Having sold many properties in the past, the concept of doing a 1031 exchange was all too familiar to her. She questioned whether or not to do it this time. In consulting her financial advisor and CPA, she was informed of the tax consequences in selling this property. In hearing this information, she inquired into the best course of action for her tax situation. The advice was based on a simple question, “Do you want another rental property”? Emotionally, the client was tired of the responsibilities associated in being a landlord, in addition to everything involved in purchasing another rental. Logically, however, it was concluded that the best course of action was to purchase a replacement property and defer the taxes.
Another week, another lie about Proposition 13. The new narrative from the Prop. 13 opponents is that California’s high fees for building homes and commercial property is due to Proposition 13 denying local governments the ability to raise revenue.
A study just released by the University of California Center for Housing Innovation concluded that the “impact fees” that local governments charge developers are a big reason why it’s so expensive to build a home in California. The fees are not only costly, they’re also unpredictable, lack transparency and can kill a project’s viability, according to the study.
Real estate is a weird, weird world to work in. Being a landlord or rental property owner has its own challenges without trying to keep an eye on every single out-of-place law that there is. Most of the time, legislation can make sense, but some of the time, the “black sheep” of laws seems to come out of nowhere. Check out some of these nonsensical laws that seem difficult to explain.
One of the biggest disasters a property manager could face is a fire. According to FEMA, the cooling weather in fall and winter increases the number of fires and related accidents. It is crucial to inspect your properties for fire hazards now, and get acquainted with these tips to help prevent fires and keep residents safe and minimize damage if a fire does occur.
Things change: your perspective, your appetite for risk, and even your investment criteria. Sometimes the best thing you can do is move forward, and that can mean selling an investment property. When this time comes, you will have to pay off any existing liens before transferring title. For many investors, the biggest lien is their commercial mortgage. But just as you would do your research and preparation for the purchase of a property, you must also prepare to sell a property. That starts with organizing the paperwork. Are there any prepayment penalties that could cost you at closing? Do you have operating statements and rent rolls ready? Is the property in a condition fit to finance? Let’s take a closer look at potential hurdles to limit surprises.
Dear SKY, How Can We Change The Attitude of Landlord vs. Tenant?
The relationship between the landlord and the tenant is a professional and cordial one. The landlord or Housing Provider provides the property, and the tenant pays their rent and hopefully loves their apartment and community in return. The landlord and tenant relationship can be much more complicated than that if one of them does not fulfill their various obligations. As most of you know many relationships do not always remain steady. Problems and disputes arise with time, and things can go off track.