“The time to repair the roof is when the sun is shining.” John F. Kennedy

I recently changed insurance companies on an apartment building I own. My old insurer decided my building was too old, so I needed to find a new company. According to the Apartment Owners Association, insurance rates have gone up 70-90% recently because of catastrophic storms and fires that have taken place across the country. When I was completing the paperwork, I was given the choice of coverage limits for “habitability coverage”. Since some large judgements have come down in the last few years, due to properties lacking suitable habitability, this has become a part of our multi family insurance policies.

HABITABILITY ISSUES The types of things that can be included in a habitability claim would include: windows, doors, roofs, hot /cold water, HVAC, plumbing, electrical, smoke detectors, mailboxes, trash cans, gas and sanitation among many others.

TENANT RECOURSE Tenants may be able to withhold rent, repair and deduct, if the issue involves less than one months rent all the way to abandonment if the unit is deemed uninhabitable. This could involve fines, moving costs or even a lawsuit. A lawsuit was awarded against a single owner for 1.6 million dollars, involving bedbug complaints. Implied warrant of habitability is covered in California Civil Code 1941.2. In most cases, we have a maximum of 30 days to repair the problem.

BE PROACTIVE This gives us another reason for inspections of your building bi-annually or at least annually. When you deliver those rent raise notices, this is a great time to check for any habitability issues. It is also a great time to ask the tenant if there is anything that needs repair. I know some tenants always have a laundry list of items, many of which are beyond our responsibility, it is good to know if there is anything that we need to repair immediately. Use your list of vendors, or make repairs yourself, but let your tenants know that you are going to quickly take care of any problems. After all, we all want to maintain our buildings, because we want the best tenants to want to live there and we want to maintain the value of our assets.

I decided, in my case, NOT to get the habitability insurance. If anything, it has caused me to be even more vigilant of my property’s condition, and make more frequent inspections.

“My attitude is that if you push me towards a weakness, I will turn that weakness into a strength.” Michael Jordan

What we at PRS PROPERTIES CAN DO. We are always available to chat. We can supply you with rent and sale comparables in the area of your properties. 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.