Oakland Triplex Tenant Eviction for Renovation

[Account Closed]

I'm going through the process of assessing and making an offer on a multi-tenant building in Oakland.

My main concern is that all the tenants are paying well under market rate ($800 for 1br, $700 for 1br, and $900 for a 2br).

If purchase happens, I would like to do renovations on all of the units, progressively. I would also like to owner-occupy one of the units.

The owner's agent says that the tenants have handshake-agreements with the current owner, and they are all "month to month". 

One of the tenants (1br) is actually moving out in October (which is great).

Ultimately, I'm trying to avoid cash-for-keys, but raise their rent on the 1br from $800->$1200, and the 2br from $900 to $1500 min.

Does anyone here have advice/experience with this kind of situation? I am also reaching out to an Oakland tenant law lawyer.

[Katie P.]

Hi @Account Closed, 

I tried to make a similar move a few months ago on bank-owned triplex in Fruitvale, and I got mixed information about what I could do. That said, I'm pretty sure this is the rule: your 3 - unit property is NOT exempt from rent control until you have occupied the property for two years.  After two years, you have to get a certificate of occupancy and petition the rent board. 

A certain local law firm (will PM you) sent some information that made it seem like I could evict the other tenants simply because I was owner occupying one of the units, but I doubt that's the case...Unless of course you have just cause to evict them. I'll have to brush up on the capital improvements section of this document concerning your plan to renovate the units (I think you can evict them to make major renovations, but then you have to offer it back to them after you're done?), but here is the link to the document:  http://www2.oaklandnet.com/oakca1/groups/ceda/docu...

There are also quite a few other posts in the forums that talk about rent control in Oakland, allowed rent increases, and cash for keys: 

https://www.biggerpockets.com/forums/52/topics/451...

And here's some more info about the amount you could raise the rents from the first forum link listed above: 

Originally posted by @Alex Capozzolo:

Rent Control for Oakland:

- Starting July 1st, 2017: You can raise your rent 2.3%. This has been increased 0.3% from the previous year. Great news for landlords.

- Frequency: This can only be done ONCE every 12 months. Even if you don't use the entire 2.3% (i.e. you raise the rent 1.0% to start out) it still freezes your ability to raise the rent for the next 12 months after that.

- Rent raises do rollover ! However, only up to 3x the current CPI amount. For example, if you haven't raised the rent in 37 years - like the real life example above (although that took place in SF, not Oakland) - you can only raise the rent a total of 6.9% if you do this after July 1st of 2017.

- Important: Also, make sure to give your tenants at least a 30 day written notice of any rental increase!

You can read more up on the specifics of the regulations here!

Also, check out this link for some information on Fees!

Anyway, like I said, I'll PM you with the info from that law firm I mentioned. If you're getting into the property below ARV and you can take the low rents for two years, I'd do it.