California State of Emergency

[Mike Alves]

Hi Everyone, What’s your take on the current “State of Emergency” declaration and the implications on your rental units? Here’s my situation and would love some feedback. We purchased a 5 unit in Orange Co., CA and started a rehab on the first unit (this place was neglected and rents were 30-40% under market). We invested about $30k into this first unit and went from a 2bd 1 ba to a 3bd 1 ba with brand new everything and fixing all deferred maintenance (took about 200sq ft from the neighboring unit to make it a 3bd). We are ready to put it on the market for rent, but are concerned about violating TITLE 10. OF CRIMES AGAINST THE PUBLIC HEALTH AND SAFETY [369a - 402c] that goes into effect during a state of emergency. The law is pretty clear about rent increases greater than 10% from the previous tenant, but is loose around the ability to justify or prove the increase’s validity because of increased costs. I feel that we can justify the increase based on the significant capital improvements and space increase, but would be interested your opinions. Going to have our lawyer provide his take on this and will share once we get that input.