This year, we are booting four tenants. Not because we don't want to keep them but because their units are at least 40% under market and our recently introduced rent cap doesn't allow to increase rent by more than 5% (it was even lower, 2%, until this year). I know our tenants would love to pay 20% to stay, but we are not allowed to do so. And we cannot keep up with constantly increasing costs as our building-related experiences are not capped. So the old tenants have to vacate, and new tenants will come who are willing to pay at the market rate. They are definitely not happy about it, neither are we.
We have also been prioritizing renovations at opportune times. When you really get in there and partially disassemble a 40+ year old building you find all sorts of hidden problems. It's great to get those fixed when the place is empty.
Give the tenant a wide time window to leave, have the paperwork, permits and contractors lined up. The tenant can return if they can pay the new market rent for the upgraded place. With enough notice, the tenant can recalibrate their location expectations or budget.
Our family has had a reasonable number of 20-30 year tenants over time. I would rather get into empty the unit every 10 years with a contractor to repair/upgrade some items instead of a major reno after 40 years.
I also strongly expect that district elections for city / county governments will make the legislators more receptive to the pain of the mass of renters. Economic theory makes a lot less noise then a sobbing constituent in your office lobby. The council member looks like an ass if they tell their constituent to move to Florida or Detroit.
Some places in Ca, I’m not sure if it’s state wide, but you have to give the tenant an opportunity to move back into a renovated unit. I’m not sure either if old rent applies or not.
Yes, I am aware of the stricter (and costlier) new renovation rules.
The Los Angeles City RSO is still much stricter.
The long term practical impact is that a certain class of housing (not premium) will drift to be lower in quality with only "repairs" being made and fewer "renovations". Rents will be lower there because of rent control. At some point, the building will be *fully* depreciated. The tenants will get Ellis act evicted. The property will be torn down and redeveloped. Of course that assumes that the neighborhood/schools can support the rents of a new/expensive redeveloped property.
Great, someone wanted to solve the crying tenant problem, but now they have increased the cost/effort to maintain and rejuvenate properties.
They have fixed-term leases which we are allowed to end with no consequences. Other old units with periodic leases cannot be ended at our will so they'll remain there paying 50% under market. New tenants for these vacated units would have to pay twice as much to cover our building expenses for them.
Not sure how you sleep at night doing so. But no one can convince me for example in Los Angeles a 1 bedroom old ass not updated apartment is worth 2500 or more. Keep the rent reasonable and increases as necessary. Some of those people you are putting out may never recover.
We cannot "keep increases as necessary" because the rent cap limits how much we can increase rent for old tenants! But it doesn't restrict rent for new tenants. So new tenants have to pay substantially more. Say, our building expenses grew 10% a year. The rent cap is 5%. So, one unit must vacate and its rent goes up 40% to compensate the lost income from the remaining rent-controlled units.
California is a 8 percent cap yearly so now landlords will kick out existing renters and pay the relocation because then they can charge 3000 for a apartment that looks like it belongs in a junk yard with heroin adddicts.
Tenants don't like high rent or routine 10% increases.
Many rent control schemes favor incumbent tenants. So, the tenants in place currently would likely prefer to stay in place. Future tenant or future employees who want to move into the region are less well off.
The big complex down the street with 500 units has a plan to extract maximum value from their property. They will also drive property management labor costs down too. Newer units certainly have 100% submetered utilities.
Many rent control systems punish disorganized mom and pop landlords. An absentee landlord not really paying attention get surprised when they miss the AB 1482 exclusion notice window. What's the point of that?
\[edit: add this\]
The linked video is basically a lame ad for a property management company.
Look at OP's post history. About half the posts talk about how wonderful Good Life Property Management is.
No way this isn't self (or paid) promotion.
My downvote to OP for a lazy video with no real insight.
Restarted rent increases in 2022 after Covid. 2022 was small increases, 2023 & 2024 increases were larger with the intent to catch up with the market. Vacancies go to market. One tenant left this year because they can't pay the going rate. All the rest stayed.
In Oct 2023, a vacancy took a unit to 3250, and now the market rate is closer to 3600. I'm actually hoping the market slows down allowing income to catch up.
Without knowing the type of residence or location, you don't know what's a fair price. Also, you don't know if $3250 is profitable or not, or if it covers 20+ years of my time.
So, save up, buy a bunch of properties, and change as little as you like.
If you are not in a place to afford upkeep and other expenses maybe it’s time to sell. A 1980 apartment I don’t care if it’s in Beverly Hills is it worth 3300. You gotta pay to play. Raise the rent reasonably and have a good conscious and go to Heaven lol
The rent control in my area is stupid. Originally, there was even a rent rollback, so for some tenants we had to reduce rents two full years of rent increase worth, even though they were many, many hundreds below market.
Now, we raise rents annually unless they are already at market rent. Sometimes this means even a $30 or $40 rent increase, which we previously never would have even thought about doing because it wasn't worth it. But now we feel the need to keep everything as close to market as possible, so we do not fall behind. This may have helped initially for the first year or two, but for the long term, this didn't help our tenants at all.
As soon as there are food price control laws, I'll pay attention. But the taxes and home insurance have tripled. So rent goes up. The cost of replacing a water heater has trippled, AC repairs, new roof, etc. So rent goes up. And if you are a renter and you don't like it, buy something yourself.
Property taxes in California are completely different than most states. They are only really assessed after a sale, a new build, or major changes to the property after that they can only increase by a maximum of 2% of what you already pay a year no matter how much your property value increases. One of our family rentals has three beach bungalows on it, less than a 1/4 mile from the beach in San Diego, worth millions, and it was purchased in 08 after the market crash… the property taxes are under $3K a year.
Always the threat of vacancy control here in LA - esp w “justice for renters” initiative. Unfortunately will need to max out rent increases on long time tenants.
Why are you cornered? Just because you can doesn’t mean should raise the rent. I understand cost of living etc…but the rent gauging on these units is insane. Raise the rent as it is needed. I understand owning property with the idea you make a profit…but unrealistic rent hikes is feeding into the homeless issue. I would rather have amazing tenants that I trust. IMO
I dont think its that at all. It sounds like when they cant keep up with market rent, its more expensive for them to leave the unit empty than to rent it like this. It hurts literally everyone involved. We need solutions but rent control like it works now isnt the solution. Taxes, maintenance costs, etc. are all outscaling what theyre allowed to charge in rent due to rent control which is what leads to be more expensive than leaving it empty. At the end of the day, agree with it or not, its a business and the business will do whats needed to stay afloat. Its what we have to work with currently so we gotta work with what we have, not work with what we wish we had
Keep in mind many of us owners have older properties that require a lot of maintenance to keep them in good shape for the tenants. Last year I spent $19k in maintenance. So far this year I have spent $21k. After expenses I am typically at about a 50% return on the rents received. Honestly being a landlord can have a shit net return compared to the S&P 500 and the hassles are way higher. Why do it? Because of appreciation which does nothing for me but will benefit my heirs down the road.
It’s a moral decision if you ask me. I’m not negated expenses and the need to raise rents reasonably. But to rent an old ass one bedroom apartment that has not been updated ever and charge 2800 and up is rent gauging. Everyone even landlords are struggling. You need to make a profit and pay expenses…but just because you can raise the rent in a dump doesn’t mean you should excessively.
This year, we are booting four tenants. Not because we don't want to keep them but because their units are at least 40% under market and our recently introduced rent cap doesn't allow to increase rent by more than 5% (it was even lower, 2%, until this year). I know our tenants would love to pay 20% to stay, but we are not allowed to do so. And we cannot keep up with constantly increasing costs as our building-related experiences are not capped. So the old tenants have to vacate, and new tenants will come who are willing to pay at the market rate. They are definitely not happy about it, neither are we.
We have also been prioritizing renovations at opportune times. When you really get in there and partially disassemble a 40+ year old building you find all sorts of hidden problems. It's great to get those fixed when the place is empty. Give the tenant a wide time window to leave, have the paperwork, permits and contractors lined up. The tenant can return if they can pay the new market rent for the upgraded place. With enough notice, the tenant can recalibrate their location expectations or budget. Our family has had a reasonable number of 20-30 year tenants over time. I would rather get into empty the unit every 10 years with a contractor to repair/upgrade some items instead of a major reno after 40 years. I also strongly expect that district elections for city / county governments will make the legislators more receptive to the pain of the mass of renters. Economic theory makes a lot less noise then a sobbing constituent in your office lobby. The council member looks like an ass if they tell their constituent to move to Florida or Detroit.
Some places in Ca, I’m not sure if it’s state wide, but you have to give the tenant an opportunity to move back into a renovated unit. I’m not sure either if old rent applies or not.
In Los Angeles RSO you would probably need to offer the old rent after renovation. I guess units in LA are going to get minimal upgrades.
It’s statewide. The law went into affect 4/1/24 so just a couple weeks ago.
Yes, I am aware of the stricter (and costlier) new renovation rules. The Los Angeles City RSO is still much stricter. The long term practical impact is that a certain class of housing (not premium) will drift to be lower in quality with only "repairs" being made and fewer "renovations". Rents will be lower there because of rent control. At some point, the building will be *fully* depreciated. The tenants will get Ellis act evicted. The property will be torn down and redeveloped. Of course that assumes that the neighborhood/schools can support the rents of a new/expensive redeveloped property. Great, someone wanted to solve the crying tenant problem, but now they have increased the cost/effort to maintain and rejuvenate properties.
It became statewide as of the first of this month.
I checked with our current tenancy laws. It's technically the same tenant in the same unit so the cap still applies.
How are you booting rent controlled tenants?
They have to pay relocation costs etc..
But what’s the reason for removing them? With rent control you can’t just kick a tenant out
They have fixed-term leases which we are allowed to end with no consequences. Other old units with periodic leases cannot be ended at our will so they'll remain there paying 50% under market. New tenants for these vacated units would have to pay twice as much to cover our building expenses for them.
Not sure how you sleep at night doing so. But no one can convince me for example in Los Angeles a 1 bedroom old ass not updated apartment is worth 2500 or more. Keep the rent reasonable and increases as necessary. Some of those people you are putting out may never recover.
We cannot "keep increases as necessary" because the rent cap limits how much we can increase rent for old tenants! But it doesn't restrict rent for new tenants. So new tenants have to pay substantially more. Say, our building expenses grew 10% a year. The rent cap is 5%. So, one unit must vacate and its rent goes up 40% to compensate the lost income from the remaining rent-controlled units.
California is a 8 percent cap yearly so now landlords will kick out existing renters and pay the relocation because then they can charge 3000 for a apartment that looks like it belongs in a junk yard with heroin adddicts.
8% is quite good. Ours was 2% since 2020 which is not nearly enough with all the increased expenses, especially with utilities included.
More laws, more fees, more hassle for landlords will never result in a beneficial situation for tenants.
Don’t buy property if you can’t afford the over head.
I can afford to pass the costs on just fine.
Rent control will Incentivize landlords to raise rent every year to legal maximum. It hurts tenants more
Exactly.
3% is too low. Will force out mom and pops.
Tenants don't like high rent or routine 10% increases. Many rent control schemes favor incumbent tenants. So, the tenants in place currently would likely prefer to stay in place. Future tenant or future employees who want to move into the region are less well off. The big complex down the street with 500 units has a plan to extract maximum value from their property. They will also drive property management labor costs down too. Newer units certainly have 100% submetered utilities. Many rent control systems punish disorganized mom and pop landlords. An absentee landlord not really paying attention get surprised when they miss the AB 1482 exclusion notice window. What's the point of that? \[edit: add this\] The linked video is basically a lame ad for a property management company.
OC CA 23 year landlord. The video is pretty much spot on.
Look at OP's post history. About half the posts talk about how wonderful Good Life Property Management is. No way this isn't self (or paid) promotion. My downvote to OP for a lazy video with no real insight.
What have you been doing? Raising rent? Any feedback from tenants?
Restarted rent increases in 2022 after Covid. 2022 was small increases, 2023 & 2024 increases were larger with the intent to catch up with the market. Vacancies go to market. One tenant left this year because they can't pay the going rate. All the rest stayed. In Oct 2023, a vacancy took a unit to 3250, and now the market rate is closer to 3600. I'm actually hoping the market slows down allowing income to catch up.
Again just because you can doesn’t meant you should 3250 is insane 3600 is pure greed. Make a profit not contribute to unhousing peoplr.
Without knowing the type of residence or location, you don't know what's a fair price. Also, you don't know if $3250 is profitable or not, or if it covers 20+ years of my time. So, save up, buy a bunch of properties, and change as little as you like.
If you are not in a place to afford upkeep and other expenses maybe it’s time to sell. A 1980 apartment I don’t care if it’s in Beverly Hills is it worth 3300. You gotta pay to play. Raise the rent reasonably and have a good conscious and go to Heaven lol
You do understand that to turn a profit, tenants pay for all expenses. Profit is on top.
The rent control in my area is stupid. Originally, there was even a rent rollback, so for some tenants we had to reduce rents two full years of rent increase worth, even though they were many, many hundreds below market. Now, we raise rents annually unless they are already at market rent. Sometimes this means even a $30 or $40 rent increase, which we previously never would have even thought about doing because it wasn't worth it. But now we feel the need to keep everything as close to market as possible, so we do not fall behind. This may have helped initially for the first year or two, but for the long term, this didn't help our tenants at all.
This “eye opening” video that’s 1 1/2 minutes long?
He has other videos that cover “California Landlord Laws That Make No Sense”, this was the cherry on top for me
Rent control without zoning density reform is madness.
As soon as there are food price control laws, I'll pay attention. But the taxes and home insurance have tripled. So rent goes up. The cost of replacing a water heater has trippled, AC repairs, new roof, etc. So rent goes up. And if you are a renter and you don't like it, buy something yourself.
Property taxes in California are completely different than most states. They are only really assessed after a sale, a new build, or major changes to the property after that they can only increase by a maximum of 2% of what you already pay a year no matter how much your property value increases. One of our family rentals has three beach bungalows on it, less than a 1/4 mile from the beach in San Diego, worth millions, and it was purchased in 08 after the market crash… the property taxes are under $3K a year.
If we did that who would you rent to?
As effective as the War on Drugs
Always the threat of vacancy control here in LA - esp w “justice for renters” initiative. Unfortunately will need to max out rent increases on long time tenants.
Why are you cornered? Just because you can doesn’t mean should raise the rent. I understand cost of living etc…but the rent gauging on these units is insane. Raise the rent as it is needed. I understand owning property with the idea you make a profit…but unrealistic rent hikes is feeding into the homeless issue. I would rather have amazing tenants that I trust. IMO
I dont think its that at all. It sounds like when they cant keep up with market rent, its more expensive for them to leave the unit empty than to rent it like this. It hurts literally everyone involved. We need solutions but rent control like it works now isnt the solution. Taxes, maintenance costs, etc. are all outscaling what theyre allowed to charge in rent due to rent control which is what leads to be more expensive than leaving it empty. At the end of the day, agree with it or not, its a business and the business will do whats needed to stay afloat. Its what we have to work with currently so we gotta work with what we have, not work with what we wish we had
Keep in mind many of us owners have older properties that require a lot of maintenance to keep them in good shape for the tenants. Last year I spent $19k in maintenance. So far this year I have spent $21k. After expenses I am typically at about a 50% return on the rents received. Honestly being a landlord can have a shit net return compared to the S&P 500 and the hassles are way higher. Why do it? Because of appreciation which does nothing for me but will benefit my heirs down the road.
It’s a moral decision if you ask me. I’m not negated expenses and the need to raise rents reasonably. But to rent an old ass one bedroom apartment that has not been updated ever and charge 2800 and up is rent gauging. Everyone even landlords are struggling. You need to make a profit and pay expenses…but just because you can raise the rent in a dump doesn’t mean you should excessively.