Los Angeles Tenant Landlord Laws

12 Replies

I am interested in learning more about landlord and tenant rights before investing in income property. Does anyone have any good resources?

Some of the big issues I'm concerned about are; eviction, raising rent, legal remedy for someone who damages your property, etc.

Thanks!

Promotion
PropStream
Web + D4D Mobile App for you & the team!
Trusted Provider of Real Estate Data, Marketing, Skip Tracing & A
#1 Real Estate Software for Investors, Agents & Brokers to find leads and close deals nationwide.
7 Day Free Trial!

I recommend looking at past editions of the AOA (Apartment Owners Association) magazine on their website:

http://aoausa.com/magazine/index.php

You can scroll down, on the right side they have archived past magazines you can read.

AOA is very informative about CA landlord tenant laws, and changes to the laws, but it will be limited to whatever they write their articles about that month.  There are lots of changes to laws to keep track of as a CA landlord.

You can join AOA and get access to all their landlord forms (there are lots of forms you need as a CA landlord) and tenant screening service.

I also recommend reading the Landlord Tenant Handbook on the Department of Consumer Affairs site for CA laws:

www.dca.ca.gov/publications/landlordbook/catenant.pdf

Not sure if you're familiar with rent control, but that's a big issue in the LA area, and is one reason I won't buy there.  Basically, they only let you raise rent a certain amount each year, and you have to jump through a whole bunch of hoops all the time (extra forms, etc.), and it's tougher to get a tenant out.

Evicting in CA is not easy or quick in general, nor is it cheap.  Expect at least 6 weeks, and that's if the tenant doesn't fight it.  Took us 3 months to evict one.

If you think it sounds like I'm discouraging being a landlord in CA, you're right.  This state is very pro-tenant, and appears to only be heading further in that direction.  My husband and I have a triplex here (bought it 4 years ago), but we have since bought 2 fourplexes in AZ and love how much more pro-business that state is.  We will never buy a rental in CA again.

I don't mind rent control, raising rent 3% annually feels fair. It only sucks when landlords don't properly manage the property and rents fall below market value.

@Eric Zunkley 

Are you interested in investing in Los Angeles or still trying to decide a location to start investing? If you have decided to invest in Los Angeles then it sounds like you are getting stuck on analysis-paralysis. Most of the issues you brought up are simply tenant management issues. You are going to have to deal with these issues regardless so don't let not knowing the details get in the way of your goals. You can always learn these details or hire a competent property manager to help you with these issues.

I have heard many people echo comments similar to @Kimberly T. I agree with all her arguments and I still like to invest in Los Angeles because there are A LOT of renters here. Demand for good rental product is high and that makes it fairly easy to get vacancies filled and raise rents periodically. Also I want to see my properties periodically and prefer not traveling long distances to do so

If you are trying to decide where to invest, start with defining your criteria. Start with what is most important to you and that should help you decide on where to invest.

@Eric Zunkley  you don't mind rent control??? How is 3% increase fair when property values go 10-20% up? I have a small multi-family building in area that sales prices went up 19% within last year. I'm fine now but five years down the road when I decide to sell, these rents will be far too low and this will negatively impact my asking price. That is nowhere close to fair. At this point I'm looking outside CA as well.

The other issues is lack of control over your property. I've got  good tenant in one of my unit but he's paying $300 a month less than market value right now. And I can do nothing about it but increase the rent by $35 each 12 months. He's not moving and I'll never catch up to market rent.

This whole rent control drives all rentals into the ground. Landlords just can't maintain their properties. 

I'm saying 3% over a long period of time is possibly sustainable, 10% isn't. Do you expect your rent to appreciate 10% a year over a 30 year period?

I don't mind rent control that much.  Sure there are some crazy situations, like the tenant renting one of my units  for $106 per month which is about 1/20 of what it would go for on the market, or the other tenant in another building paying about $340 for a $1500 unit, but those are exceptions rather than the rule.  

And anyhow, the deals in LA that have made the most sense to me are rent controlled properties with upside -where the current owner cannot or will not deal with it, but I can.

Originally posted by @Josh Prince:

And anyhow, the deals in LA that have made the most sense to me are rent controlled properties with upside -where the current owner cannot or will not deal with it, but I can.

 I'm interested in what you're doing. 

@Josh Prince  have you tried to buy out those tenants?  $106 wow

I do agree with you for the most part.  I have one tenant that is about $200 - $250 under market.  If they leave, I'll rehab their unit and jack the rent.  If not, there is no turnover cost and their unit is basic with none of my appliances except a stove.  I'll just continue raising the rent 3% each year which slowly results in increased cash flow.  With Prop 13, you may be below market, but increased costs won't swamp you in this scenario and you'll get ahead, especially with a fixed rate loan.

The trouble is when you get somebody farther under the market.  If it is enough you are better off buying them out in most cases.

@Matt Mason  - in this situation I don't think she would take a buy out.  It is an old widow who is part of a tight ethnic community in the area.  Her husband used to own the property, and basically when her husband died and her relatives took control and tried to kick her out (as she had no rights to stay), but her lawyer was able to outmaneuver her relatives and have her declared a tenant at this ridiculous rent. Then the relatives were annoyed and decided to sell.  I bought knowing all this and that she would never leave.  I just figured it to be one unit smaller than it actually is for income purposes (it's a 15 unit building otherwise). 

@Josh Prince  

I suppose the moral of the story is just not to buy based on the pro-forma or market rent, but only what is currently being paid in rent.  Unfortunately, most brokers and agents put in their marketing packages the pro-forma rents trying to get a sucker excited to pay too much and in Los Angeles, someone is usually there to do just that.

Promotion
Sharestates
America's Private Lender
Receive Fix and Flip Funding Approval In As Little As 24 Hours!
Sharestates helps developers and brokers secure funding quickly with the most competitive terms.
Get Funded