Proposed legislation to strengthen rent control DEFEATED!

“The wise know that foolish legislation is a rope of sand, which perishes in the twisting.” Ralph Waldo Emerson

Recently (May 31st) a measure known as SB 466 was defeated in the California State Senate in a close vote.(16-15 with 9 abstaining) This legislation would have weakened the 1995 Costa-Hawkins bill by including single family homes and condos in California rent control. It would also have allowed buildings built before 1995 to be included as well. The California Apartment Association as well as others mobilized housing providers to call their representatives, write letters to let their voices be heard.

L.A. RSO AND OTHERS
The City of Los Angeles’ RENT STABILIZATION ORDINANCE, which was passed in 1979, requires properties built before the ordinance to participate in rent control with properties built after that time being able to charge the going rate.Along with the Santa Monica and San Francisco rent control ordinances, which were also passed in 1979.

CURRENT DIRECTION
With the 2019 passage of AB 1492 rent raises were severely limited. It also adds extra protections for tenants and relocation fees on certain types of evictions. This bill partially ties allowable rent raises to the local CONSUMER PRICE INDEX (CPI). You can’t know your personal rent cap until the CPI comes out, making it more difficult to budget for major repairs,for example. All these along with the narrowly failed legislation mentioned earlier (SB 466) points to a search for artificial means to regulate rents, instead of the rental market itself. As I have mentioned before, this will cause potential developers (especially mom and pop’s) to rethink plans to build new housing. It will cause others to convert units to condos. What it will NOT do is incentivize the creation of badly needed new housing.

WHAT CAN YOU DO NOW
As a housing provider, it is important that you RAISE RENTS EACH YEAR IF ALLOWED. This will positively affect the value of your building as well as your monthly cash flow. Make sure that you stay aware of upcoming legislation that can adversely affect your position as a housing provider. Write letters, Call your representative.

Join your local Apartment Owners Association. They are fighting for you. They have monthly magazines, seminars and a staff that can assist you in keeping aware of the things that can diminish your position. Also you should have a good CPA and Real Estate attorney, who both specialize in rental properties. It is always a good idea to consult with both before making changes in the way you have been doing things.

“You miss 100% of the shots you don’t take.” Wayne Gretzky

What we at PRS PROPERTIES CAN DO. We can refer you to companies doing background checks. We can also refer you to eviction professionals if needed. If you should decide to sell, we can help you exchange into a larger or smaller property or properties, or we can help you move into something with fewer management responsibilities. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance, or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45-day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted, and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.

Remember – KNOWLEDGE IS POWER!