“Opinion is like a pendulum and obeys the same law.” Arthur Schopenhauer

In June of this year, Attorney General Rob Bonta, finalized a settlement in the rent control case involving GREEN VALLEY CORPORATION, a Silicone Valley developer and multi family landlord. The settlement amount was $391,130. The majority of the funds ($331,130.) is being paid directly to tenants for back rent. This was a big company, but it paves the way for other lawsuits.

ARE YOU UNDER 1482? If you are in California and have multi unit properties over 15 years old, you probably are. You can check the law to make sure, but you most likely will come under this legislation. If you are renting out a single family home, a duplex or have a newer building you may be ok, but it is always a good idea to check with your city just to make sure.

WHAT SHOULD I DO? Make sure that your rent raises since 2020 have been within the approved percentage for AB 1482. Check every year with your Apartment Association so that you know that allowable percentage for the current year for your location. Be especially diligent if your buildings are on the City of Los Angeles, Santa Monica or West Hollywood. These municipalities have the most stringent regulations, and have a tendency to aggressively enforce rent control.

SHOULD I DO NOTHING? That could be even worse (for you). Don’t miss an opportunity to raise your rents yearly, as long as it is allowed. It is a “use it or lose it” situation. If you miss a rent raise you can’t double it next year. Not doing so will cost you monthly cash flow and could cause the refinance of sale of your property to result in a lower appraisal value, thus resulting in a lower price or less loan value from your refinance. Instead, make it your business to understand the laws so that you do not cheat yourself with underpayment nor you do you violate them, risking possible penalties.

KEEP GOOD RECORDS You most likely already do this, but it is a great idea to keep good records with copies of rent raises and any other correspondence with tenants in case you need it for taxes or if you sell or refinance. Any potential buyer will ask for such documentation and a lender will usually ask as well. Rent control is likely here for the duration, so our best bet is to know the rules of the game.

“Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.” – Michael Jordan

What we at PRS PROPERTIES CAN DO. We try to keep pending and proposed legislation regarding multi family properties in our newsletters. We are always available to chat. We can supply you with rent and sale comparables in the area of your property. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. 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.