Rental Property Investor · Sacramento, CA · Member since 2016 · 93 posts · 85 votes
Why is no-none talking about this? It will cap increases to 5% plus inflation and you can no longer evict at no fault after the lease is up. This is a big deal
CA & NV · Member since 2019 · 215 posts · 378 votes
7y
It is a big deal but it is like pissing in the wind - nothing anyone can do about this.
AB 1482 (what you are talking about) coupled with the 2020 ballot measure to roll back prop 13 for commercial properties is a no-win for property investors and landlords in California. I am in the process of liquidating all my California holdings.
In reality, your property taxes and could annually go up over the 5% rent cap and expenses will go far beyond that. Your ROI will be negative - not a good business model.
But the good people of California elected these fools, now everyone will pay the price.
Rental Property Investor · Orlando, FL · Member since 2017 · 56 posts · 33 votes
7y
You know what's going to happen: more illegal airbnb. Investors will soon realized renting long term is not worth anymore. Like it is happening in Toronto.
I just sold my investment in Toronto, as they added a 2% increase rule. And that is 2% only. not 2% over inflation. So I was losing money after some years.
BC also added extra taxes for investments properties, and depending how the Canadian election goes this year, I dont doublet on such a thing rolling out nation wide.
Another reason we are move to Florida.
If the government is making harder for investment I hope they will provide house to the people as jnevstors will not want to lose money and will just move somewhere else.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
7y
WARNING: While I appreciate this guy’s enthusiasm, HE IS INCORRECT stating that you can simply remove a tenant without just cause by paying 1 month’s rent as compensation. You can only do a non just cause eviction if: 1- you or your family plans to move into the unit, or 2- if you will be doing substantial remodeling. Otherwise the law would have no teeth to it.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
7y
I think for LA they already have tighter rent controls than the state law, that LA RC will apply still. At 7% that doubles rent every 10 years. Not sure if that fixed rate is going to help renters. The rate is on par with free market best case if rent doubles every 10 years. There will be those who would have tripled rents in 10 years so they are the losers here albeit a very small percentage of those, and or only new builds get to triple rents now.
Real Estate Agent · Dallas, TX · Member since 2018 · 23 posts · 9 votes
7y
After 180+ posts, this is a hot topic and my points may have been maid. This should be a sign to investors. Wages don’t support rents for many, living in large cities (supply and demand). Rent control isn’t good for anyone, especially investors. Look for opportunities to invest in quality, low income housing. This serves a need, it’s profitable and may prevent rent control from coming to your City.
According to California Prop 13, property taxes cannot increase more than 2% in any given year, unless the property value falls and the assessed value is still below the Prop 13 cap.
If you bought at a lower price than assessed Prop 13 value, then you may be at a disadvantage in paying taxes but you saved money by buying low.
I will be closing on a Sacramento California single family home with studio rental property next week. Should i even continue on my purchase? It is at market rate and I want to increase rents next year. I am cashflowing. Both the house and the studio are rented out.
let's be real. How many of you increase rent by 5% per year plus 1.5 to 2% inflation?
some of you never increase rent on your tenants, and this would be a good time to keep up.
Let's take the average $2000 rental, you jack up the rent $100 every year, even on your existing tenants, and you come out ahead.
.
also, there are loopholes LLs can take advantage of, last I read. Your hands are not completely tied.
ab1482 proposes that you can get rid of tenants if you plan to move back in, but you need to cover a month of moving expenses.
so move back in, then jack up the rent to market rates.
"Cover a month of moving expenses" - I hope there are guidelines because that can be abused. Imagine picking up the moving expense from California to NYC with vehicle transport costs too.
let's be real. How many of you increase rent by 5% per year plus 1.5 to 2% inflation?
some of you never increase rent on your tenants, and this would be a good time to keep up.
Let's take the average $2000 rental, you jack up the rent $100 every year, even on your existing tenants, and you come out ahead.
.
also, there are loopholes LLs can take advantage of, last I read. Your hands are not completely tied.
ab1482 proposes that you can get rid of tenants if you plan to move back in, but you need to cover a month of moving expenses.
so move back in, then jack up the rent to market rates.
"Cover a month of moving expenses" - I hope there are guidelines because that can be abused. Imagine picking up the moving expense from California to NYC with vehicle transport costs too.
The landlord either pays a month rent or lets the tenant not pay rent the last month (My interpretation is that it is LL choice). This is compensation for moving but is not really the moving expenses which as you point out can vary greatly.
Definitely stay away from MFH, until the cap rate drop to a level where you can cash flow from Day 1.... You will be buying something that serves the same purpose of a bank saving account
Rental Property Investor · Ann Arbor MI · Member since 2018 · 58 posts · 43 votes
7y
Originally posted by @Account Closed:
@Jack Orthman I believe the “just cause” portion doesn’t take effect until Jan 1 2020. So you are much better off giving every tenant 60 days notice to vacate, getting the buildings empty, and re-renting at market rates.
Granted you’ll need do some renovations but at least this way you’ll be at market rent within a few months.
Saj Shah. Why don't you respond to my statement on this forum instead of spam reviewing my company's facebook page because you disagree with my thoughts on California?
Investor · Gardena, CA · Member since 2017 · 445 posts · 398 votes
7y
As states several times, I own several apartment buildings and most of my rents are $500 under the market, but I don't see that as a problem. Today, I terminated the tenancy of 5 tenants who keep their apartments in filthy condition. For the new tenants, I will raise the rents no less than $300 per unit. in the next few weeks, I will decide how many more tenants I want to terminate. May as well do it before January 2020.
I am sort of excited about rent control because the prices for apartment buildings was increasing so much it was bothering me that there are so many screwy and ignorant investors. I have a 25 unit apartment building next door to my office that changed owners 4 times in the past 10 years and every new owner was super ignorant about managing rental properties. The previous owner paid $3.6 million for the property 3 years ago and about 12 months ago another idiot purchased the building through a short sale for $1.7 million.
I give this new idiot credit for purchasing the building for $1.7 million, but rather than remodeling the building 2 or 4 units at a time this idiot thinks he is some sort of genius and he evicts all 25 tenants at the same time. Now, the building has been vacant for 1 year and he is losing $30k in rents every month. The way his remodeling is going I will bet it will be more than 1 year before he gets an occupancy permit making his rent losses to be more than $720k. So, he paid $1.7 million for the building, more than $1 million to remodel it and $720k in rent loss = $3.4 million.
San Francisco, CA · Member since 2015 · 23 posts · 10 votes
7y
Originally posted by @Account Closed:
As states several times, I own several apartment buildings and most of my rents are $500 under the market, but I don't see that as a problem. Today, I terminated the tenancy of 5 tenants who keep their apartments in filthy condition. For the new tenants, I will raise the rents no less than $300 per unit. in the next few weeks, I will decide how many more tenants I want to terminate. May as well do it before January 2020.
I am sort of excited about rent control because the prices for apartment buildings was increasing so much it was bothering me that there are so many screwy and ignorant investors. I have a 25 unit apartment building next door to my office that changed owners 4 times in the past 10 years and every new owner was super ignorant about managing rental properties. The previous owner paid $3.6 million for the property 3 years ago and about 12 months ago another idiot purchased the building through a short sale for $1.7 million.
I give this new idiot credit for purchasing the building for $1.7 million, but rather than remodeling the building 2 or 4 units at a time this idiot thinks he is some sort of genius and he evicts all 25 tenants at the same time. Now, the building has been vacant for 1 year and he is losing $30k in rents every month. The way his remodeling is going I will bet it will be more than 1 year before he gets an occupancy permit making his rent losses to be more than $720k. So, he paid $1.7 million for the building, more than $1 million to remodel it and $720k in rent loss = $3.4 million.
How high do you think cap rates are going to go and prices are doing to drop in Sacramento for single family with studio? Is this subject to rent control? It was built 1950.
2. Tenants - 15yrs reprieve for new builders may be revised to 10yrs when Newsome runs for reelection. Zero profits for investors = less builders = less available housing for tenants.
This was a meaningless add-on. Builders weren't building here before when there was no rent control. They sure aren't going to be building here now that they have a 15 year exemption from rent control.
Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes
7y
For the San Francisco area folks, it looks like our regional CPI from April, 2018 to April 2019 was 4%, so if you need to raise rents this year, you can go up to 9% if I'm reading the text correctly. I wouldn't wait if you are way behind.
Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
7y
Help interpreting the legalese:
(A) (i) Intent to occupy the residential real property by the owner or their spouse, domestic partner, children, grandchildren, parents, or grandparents.
(ii) For leases entered into on or after July 1, 2020, clause (i) shall apply only if the tenant agrees, in writing, to the termination, or if a provision of the lease allows the owner to terminate the lease if the owner, or their spouse, domestic partner, children, grandchildren, parents, or grandparents, unilaterally decides to occupy the residential real property. Addition of a provision allowing the owner to terminate the lease as described in this clause to a new or renewed rental agreement or fixed-term lease constitutes a similar provision for the purposes of subparagraph (E) of paragraph (1).
Does this mean I have to add this to our lease and get tenants to sign it if I want to preserve the right to terminate tenant occupancy to have my family occupy the unit? That is my interpretation. Our RE lawyer who wrote our lease died a while back. If my interpretation is correct, does anyone have appropriate wording they can provide?
Investor · Gardena, CA · Member since 2017 · 445 posts · 398 votes
7y
I just raised rents and figured the inflation at 3% for the Los Angeles area and raised 8%. I don't think a tenant is going to argue about 1/2 of a percent.
Rental Property Investor · San Francisco, CA · Member since 2013 · 1k+ posts · 1k+ votes
7y
@Dan H. yes I believe you need to add that language to preserve the right. Same thing if you're renting out an SFH or condo that's exempt. You must state that it's not subject to the rent restrictions, otherwise you are not exempt!
Non of this is relevant, I believe, until next year. So I’m sure that very soon you will be hearing all about lease revisions and clauses that every CA rental owner will want to add to their leases. The CA apartment associations, and LL lawyers will be all over this, I’m sure! Guess we need to wait until the bill 1- is officially signed and 2- there are no last minute changes or modifications to it.
@Thalia G. no idea on San Carlos condo conversation, but I’d call the city’s planning or building departments to make inquiries. Pro tip: be prepared for a lot of running around, going between departments, runaround, etc. Youll need to be patient!
@Diane G. you got it all backwards on cap rates. Lower cap rates mean more expensive buildings not less expensive. Dooh!