“We live in the midst of alarms; anxiety beclouds the future. We expect some new disaster with every newspaper we read.” Abraham Lincoln

Recently, but before the wildfires ravaged California, Insurance commissioner, Ricardo Lara, made some changes to the rules for California Fair Plan Insurance. This is the insurance you get when you have been cancelled and can’t find a new insurer for your property. The new rules will require insurers to write policies in fire prone areas at the rate of 85% of that insurers market share of the state. In other words, insurers will need to take on higher risks.

CURRENT SITUATION. Commercial policies, which cover all 5 or more unit buildings, are up more than 464% in the last four years. This is BEFORE the wildfires. The fires have made it much more difficult to find insurance, whether it is for a single family residence, two to four units or for multi family and commercial.. Regardless of the situation with California Fair Plan, it is hard to imagine the insurance premiums for housing providers not increasing sharply.

WHAT TO DO. Maintain your property. Build or remodel with flame retardant materials whenever possible. Install sprinklers if possible. Clear any vegetation close to your building. Keep your fire extinguishers charged. I have a service that charges my fire extinguishers once a year. They call me and take care of any needed repairs and send me a bill. When you make visits to your units, look for fire hazards and make changes as necessary.

AVOID SMALL CLAIMS IF YOU CAN. Not talking about lawsuits here. Avoid minor claims on your property if possible., The smallest insurance claim can put you in the Fair Plan so be very judicious about turning a small item in to your insurer, especially if it is something you can repair reasonably, You have insurance for a very good reason and you are entitled to be compensated, but sometimes you have to weigh your options. Is it worth it to risk increased fees or cancellation? Do everything you can to keep your building clean, fire resistant and well kept. In a major fire there is very little you can do, but you can do your best to remedy smaller issues. We are all in this together.

EATON FIRE. My attorney is currently working on a class action lawsuit regarding the EATON FIRE. If you are interested, I can give you his contact information.

“A good half of the art of living is resilience.” Alain de Botton

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business or you may want to move into a more passive real estate investment, such as a triple net or a DSL.. 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 comparable 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 are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also 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.

We look forward to a prosperous 2025 and we look forward to be of any help we can to buyers and sellers of multi unit properties.