“It isn’t hard to make rules, especially for other people.” Nancy Rockwell

On October 11th, Governor Newsome signed AB 12 (Haney) which will reduce the amount of security deposits that housing providers can charge on rental properties in California.

The maximum will be equal to one months rent.

WHAT IS CHANGING? Legislators believe that this change will make it easier for tenants to move into rental housing, because some providers are currently charging an amount equal to two months rent. This change takes effect in July of 2024 and is not retroactive.

ANY EXCEPTIONS? There are exceptions for properties with no more than 2 rental units, or mixed use properties with no more than 4 rental units. Exceptions require the tenant to be a NATURAL PERSON, which includes family trusts but not LLC’s or Corporations.

WHAT SHOULD WE DO? We all know that the days of doing your own evictions are long gone. These days you need a good attorney who is competent in landlord tenant law to proceed with an eviction. Evictions have become more complicated and there are new requirements coming frequently, so it is much better to hire a professional. I believe it is more risky than it has been in the past to rent to a new tenant because of the difficulty in removing a bad tenant. Risks include sheriff lockouts taking months, and potential damages to your units. Now is the time to make sure you screen your applicants very diligently. Your Apartment Owners Association can help with that process. Don’t be in a hurry, there is limited inventory of good rental units, lots of advertising venues available, and if you do a good job of screening you will be more likely to find a good tenant at a fair rental amount.

“Nothing will work unless you do. ” John Wooden

What we at PRS PROPERTIES CAN DO. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparables in the area of your properties, so that you know what rental values are in your area. 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.