“Success is never accidental.” Jack Dorsey

There is another movement afoot to increase the restrictions of AB 1492, the Tenant Protection Act of 2019. This one, known as the Homelessness Protection Act (SB 567) affects taking units off the rental market, redefines what a property owner is and imposes some pretty high fines for non-compliance.

CHANGES TO RENT RAISES. This bill lowers the maximum allowable rent raise, which was already limited by 1482 from 10% to 5%. Under 1482, owners could raise rents 5% plus the cost of the consumer price index (CPI), up to 5% per year, For instance, if the CPI is 4% for a given year, you could raise 4% plus the given 5% for a total of 9%. If the CPI is over 5% you would not get additional credit because the maximum would be 10% total increase. If this bill were to pass, you will lose the 5% and have only the CPI, so if the CPI is 4%, that would be your total allowable annual raise.

REDEFINING A “PROPERTY OWNER”. Another significant change in this bill would include redefining a “property owner” as a natural person with at least 51% interest in the property. This would probably affect Family trusts, living trusts, LLC’s and corporations, as well as properties with several owners. If this comes to pass, it would be best to check with your real estate attorney to see if you would want to make any changes in the way you hold title to your buildings.

OTHER CHANGES The bill also proposes changes to “just cause” evictions, potentially making management more challenging.

Additionally, changes are proposed in the new law, making it more difficult to take units off the market, and to have an owner reside in the unit, even temporarily.

These types of legislation, cause investors to be more wary of investing in rental units. These laws also discourage builders considering financing the construction of new housing units, which is a critical need, especially in Southern California.

One more big negative in this legislation is the imposition of a fine of $17,200. in statutory damages, in addition to any other legal fees, which can be crippling for many investors.

YOU CAN HELP Talk to your Apartment owners association. Send letters to your State Senator and Assembly person. Many people think all multi unit properties are owned by

huge conglomerates, but most apartment owners are individuals who have less than 10 units and are trying to build a future for their family while providing an essential service to their tenants

“Yesterday’s home runs don’t win today’s games.” Babe Ruth

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.