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EAST BAY
RENTAL HOUSING ASSOCIATION
Volume XXXVIIII Number 32 | Sept/Oct 2024
EBRHA OFFICE
3664 Grand Ave., Suite B, Oakland, CA 94610
TEL 510.893.9873 | FAX 510.893.2906
ebrha.com
CHIEF EXECUTIVE OFFICER
Derek Barnes
aemail@ebrha.com | 510.893.9873 ext. 407
COMMUNICATIONS AND MEDIA RELATIONS
Chris Tipton
communications@ebrha.com | 510.893.9873 ext. 404
ADVERTISING AND MEMBERSHIP SALES
Danielle Baxter
sales@ebrha.com | 510.893.9873 ext. 403
MEMBER SERVICES AND SUPPORT
membership@ebrha.com | 510.893.9873 ext. 414
BILLING AND ACCOUNTING
Ken Lam
accounting@ebrha.com | 510.893.9873 ext. 405
EBRHA OFFICERS
PRESIDENT Wayne C. Rowland
FIRST VICE PRESIDENT Luke Blacklidge
TREASURER Chris Moore
SECRETARY Fred Morse
EBRHA BOARD OF DIRECTORS
Francisco Acosta, Luke Blacklidge, Maya Clark, Carmen Madden, Chris Moore, Courtney Morse, Fred Morse, Joshua Polston, Wayne C. Rowland, Jack Schwartz, Maria Recht, Aaron Young
PUBLISHED BY East Bay Rental Housing Association
PUBLISHER Derek Barnes
EDITOR Michelle Gamble
ART DIRECTOR Bree Montanarello
Rental Housing (ISSN 1930-2002-Periodicals Postage Paid at Oakland, California. POSTMASTER: Send address changes to RENTAL HOUSING, 3664 Grand Ave., Suite B, Oakland, CA 94610.
Rental Housing is published bimonthly for $9.95 per issue by the East Bay Rental Housing Association (EBRHA), 3664 Grand Ave., Suite B, Oakland, CA 94610.
NO ON PROP 33 Protect Costa-Hawkins 2024 Contribution Campaign
UNDER ATTACK...AGAIN
To help stop the so-called "Justice for Renters" initiative, which will be Proposition 33 on the ballot in November, the East Bay Rental Housing Association is asking for your support. We need to fight this third attempt to repeal Costa-Hawkins, led by the same anti-housing activists who failed twice with Propositions 10 and 21 in 2018 and 2020. We are helping our state affiliate, CalRHA, raise $5 million towards this campaign, so we are all in this together.
Protect Vacancy Decontrol
Protect New Construction, Single-Family
Homes, and Condos from Rent Control
WHAT IS COSTA-HAWKINS?
The Costa-Hawkins Rental Housing Act is a California state law that It also protects VACANCY DECONTROL - a policy that allows rental housing providers to reset the rental rate on any rent-controlled apartment after a renter moves out. Costa-Hawkins is extremely important because it exempts single-family homes, condominiums, and new construction built after 1995 from RENT CONTROL.
To learn more AND determine out how much you could lose on your rental property after 5 years if Costa-Hawkins gets repealed, scan the QR code.
Welcome
A LETTER
FROM EBRHA CEO DEREK BARNES
As we enter fall 2024, we find ourselves navigating a dynamic and rapidly evolving housing landscape in the East Bay. In the past few months, we’ve witnessed pivotal developments that directly impact our community of rental property owners. We must remain vigilant, engaged, and united as we face these challenges head-on. EBRHA’s September-October issue of Rental Housing focuses on the value of building alliances and providing education to strengthen our community.
One of the most pressing matters this fall is the November election, which carries significant implications for our industry. Nationally, presidential candidate and East Bay native Vice President Kamala Harris wants to address housing affordability (costs up over 40% since 2020), the country’s unhoused crisis (over 650,000 nationally), and big corporate investors buying up over 25% of all homes in the fourth quarter of 2023. As part of an ambitious platform, VP Harris has made a commitment to build three (3) million more homes across America in the next four (4) years, impose federal rent control (a 5% cap), create a $25,000 down payment assistance program, and produce a $40 billion housing innovation fund.
On a state level, all eyes are on Proposition 33 (Justice for Renters Act), which seeks to repeal Costa-Hawkins and opens the door for local municipalities to impose more housing complexity, rent control, and renter protections. The proposition is backed by Michael Weinstein, who made his fortune selling HIV-AIDS medications and investing in real estate. EBRHA and its eight (8) other CalRHA affiliates are raising $5 million dollars to defeat the measure. The stakes are incredibly high, as this proposition threatens the very foundation of property rights in California.
Upon deeper analysis, there is something more insidious afoot with big money supporters, institutional investors, and pseudo-progressives who are backing the measure. Passing Proposition 33 will also give local municipalities the authority to pass laws that would deter the develop-
ment of new housing and discourage housing density in areas that need housing the most. This wolf in sheep’s clothing tactic will ensure a NIMBY (not in my backyard) agenda prevails by limiting housing production and greater density, increasing housing scarcity, elevating rents, and ultimately displacing communities of color. If “rent is too damn high,” as Prop 33 backers claim, then we must add more units of below-market-rate housing to address the lack of inventory in the market.
In August, commissioners removed the nine-county Bay Area Housing Finance Authority (BAHFA) regional bond measure (RM4) from the November ballot. The measure aimed to raise $20 billion and create over 70K new homes. Amid the errors and miscalculations in projections and tethering RM4 to another proposition (Prop 5), which would lower the voter threshold to pass bond measures (from 66.7% to 55%), the measure faced a significant uphill climb to gain overwhelming support from the public.
Alameda County housing staff continue their efforts to implement stronger renter protections beyond what AB1482 provides. Despite years of discussions, stakeholders remain divided, but EBRHA continues to work closely with property owner groups and District Supervisors to maintain rental property owner interests. Meanwhile, EBRHA supports the advancement of Supervisor Nate Miley’s Mediation-First agenda, and we are also thrilled to announce the launch of the Alameda County Rental Housing Resource Center (ACHRC) in partnership with BPOA and RHASAC, which is set to begin rolling out in October. This pilot program is a significant step toward providing much-needed education and support to small rental property owners with rental property in the unincorporated areas, with the potential for broader expansion across the county in 2025.
More locally, Albany City Council proposed a business tax targeting rental property owners that will be on the November ballot. The tax is intended to fund emergency rent payments and legal assistance programs to address what the council reports as an eviction and displacement crisis in Albany — although there is no data to support this claim. This measure could set a precedent for similar initiatives across the region. We must voice our concerns and advocate for fair policies that protect property rights.
Derek Barnes
“One of the most pressing matters this fall is the November election, which carries significant implications for our industry.”
After more than a year of attempts, the City of Antioch passes a Rent Stabilization Ordinance with the backing of Mayor Thorpe and Councilmembers Torres-Walker and Wilson (Councilmembers Barbanica and Ogorchock dissenting). Without a plan to adequately produce more below-market-rate housing to keep up with the city’s growing population, Antioch will see increased rental scarcity, higher rents, and the further displacement of its working class and communities of color – following similar impacts in cities like Berkeley, Oakland, and San Francisco.
We urge all EBRHA members to stay informed, engage in our advocacy efforts, and use our resources to understand how new housing policies will impact your rental business. Your active involvement is crucial in the fight to protect the rental housing market’s balance and stability.
In Oakland, the situation remains more ominous with a looming recall election for Mayor Sheng Thao and District Attorney Pamela Price amidst ongoing investigations into city mismanagement and corruption. These developments underscore the complex interplay of political governance, safety, and economic stability. EBRHA is deeply involved in rooting out these issues, including our longstanding legal battle over the contentious waste management contract awarded to California Waste Solutions, which has seen renewed scrutiny in light of recent FBI investigations.
Sometimes, cities with similar issues can take divergent paths when adopting policy and engaging legislative leadership when it comes to city planning. San Leandro, Oakland’s neighboring city, faced many of the same historic urban challenges as Oakland: housing shortages, traffic congestion, and a need for sustainable development. However, their approaches to city planning and housing are significantly different and were engaged much earlier – pulling ahead in creating a more livable, safe, and sustainable urban environment that includes the following:
• Mixed-Use Development and Transit-Oriented Planning
• Pedestrian and Cyclist-Friendly Infrastructure
• Green Spaces and Community Engagement
• Public Transportation and Connectivity
This issue also spotlights Thomas Liao, San Leandro’s Director of Community Development, who champions affordable housing and inclusive development. San Leandro has used innovative tools like inclusionary zoning and affordable housing mandates to ensure that new developments include a mix of market-rate and affordable units. This strategy has helped maintain a degree of affordability in the housing market, allowing for more inclusive growth. San Leandro has also managed its challenges with gentrification and displacement by having more cohesive policies, enforcement practices, and balanced incentives.
San Leandro’s success in mixed-use development, pedestrian-friendly infrastructure, green space expansion, and community engagement offers valuable lessons for other cities. By adopting a more integrated, people-centered approach to urban planning, cities can better address their current challenges and create a more inclusive, sustainable future for their residents. Meanwhile, San Leandro’s proactive strategies demonstrate the power of thoughtful, community-focused planning in shaping vibrant, resilient cities.
As we advocate for the rental housing community, remember that we cannot just focus on immediate challenges. We must also navigate broader shifts that require long-term strategy. The production, protection, and preservation housing pillars remain at the forefront of our mission. It’s about finding balance — ensuring a sufficient supply of rental housing, protecting property owners’ rights, and preserving the quality and habitability of existing housing stock.
In times of uncertainty, it’s easy to feel overwhelmed. Let’s examine what works in the wide array of Bay Area municipalities and adopt the best practices. Our resilience and adaptability as a community are what make us strong. When we work together, stay informed, and remain engaged, we can turn challenges into opportunities and create more prosperity for all in the rental housing community.
* SEPTEMBER 4 Labor day
SEPTEMBER 10
2-3:30PM The Roundtable Presented by Wayne Rowland
* SEPTEMBER 15
Hispanic heritage month begins
SEPTEMBER 17
2-3:30PM
Handling renter liability & how to get assets if the liability hits you Presented by Brad Barth, Steve Williams & Paul Hitchcock
SEPTEMBER 24
3-4:30PM Monthly Member Meeting
OCTOBER 5 9:00AM-3:00PM EBRHA 360 Trade Show Expo Rotunda Building (Oakland)
* OCTOBER 10 Indigenous people day
OCTOBER 15 3-4:30PM Monthly Member Meeting
OCTOBER 24 2-3:30PM The Forum Presented by Dan Lieberman
* OCTOBER 31
Halloween If you would like to submit an event, please send an email to editor@ebrha.com . * NON-EBRHA EVENTS
Late afternoon sun shines on the downtown welcome arches of San Leandro.
Out & About
EBRHA MEETINGS, SPECIAL EVENTS, AND MEMBER MIXERS
Annual Dist-1 BBQ, Supervisor David Haubert, EBRHA CEO Derek Barnes and friends at Alameda County Fairgrounds,Pleasanton.
Legal Fundraiser - special guest, Michael Mondavi, shared his delicious wine and his years of experience in winemaking at the event.
EBRHA Rental Realities YouTube Channel with Marketing & Communications Mgr Chris Tipton and EBRHA member Jorge Jimenez.
EBRHA Board member, Chris Moore, going for a strike!
EBRHA went bowling at Plank in Jack London Square: Marc Lipsett, Daria Walker, Jorge Jimenez, Chris Tipton, Mic Burns, Derek Barnes, Lisa Harless, and Krista Gulbransen.
Legal Fundraiser: EBRHA board member, Joshua Polston, Candidate for Oakland At-Large, LeRonne Armstrong, and event Host Luke Blacklidge.
Legal Fundraiser: Derek Barnes, Host Courtney Morse, Fred Morse, Vicente Ceron.
Legislation
BY RON KINGSTON
Did you ever wonder about reasons for astronomical rents? The legislature believes that it is due to the inability to build affordable new housing. But, is that the real reason?
Most of the rental woes,even when they have stayed past the end of their leases. Moving costs are required or waiver of the final months’ rent became the law. And, last year the legislature expanded that law to let renters sue rental property owners for treble damages and attorneys’ fees.
Eviction controls ended in hundreds of cities and counties in June 2022. Yet, the cities of Los Angeles and San Francisco kept them in place for another year.
There was no surprise that at the end of the statewide moratoria there were thousands of evictions, largely due to non-pay rent. When this occurred, the court calendars became flooded. The backlog and the difficult and numerous renter protection laws allowed squatters and renters to occupy rental properties without paying rent for many months.
And so goes the difficult series of laws that make it unprofitable to develop new rental housing or hold existing housing.
This year there were several extremely problematic bills that, if signed into law, would have further discouraged investment in rental housing.
8. AB 2216 (Haney) Pet owners right to keep as many dogs and cats as the city or county would allow- thankfully the author decided to “drop” forward progress on the bill ... we suspect that the current terms of
the bill and the amendments that were to be presented had too many issues for the author to resolve this year, for example the author temporarily agreed to exempt 15 or fewer units from the provisions of the bill. The overwhelming number of rental properties in the state are 15 or fewer units. Expect the issue to be re-introduced early next year.
2. SB 611 (Menjivar) At the very last minute the bill was essentially gutted and, in its place, would have required every rental property owner that “advertises” a prop-
erty for rent to provide detailed information about all of the costs associated with each unit. All rental property owners would be subject to THESE REQUIREMENTS or risk being sued. There is little question that this was the worst bill of the year. We kicked into high gear and OPPOSED this bill. Thankfully, we were successful. The bill was recently amended to address a non-controversial issue relating to the soldiers and sailors act on security deposits.
3. AB 2493 (Pellerin) is a bill that
would sharply curtail the use of application fees even when rental property owners deny tenancy due to creditworthiness. We believe the bill will be sent to the governor and he will sign Assembly Member Pellerin’s bill. Our contracts will need to be amended to address the critical changes in application fees.
4. AB 2187 (Bryan) would have established the Office of Tenants Rights in the state. The author justified his bill on the basis that a booklet on renters’ rights. The state has published a much broader booklet
on Landlord and Tenants legal obligations for more than 15 years. We believed that this bill was not about a new booklet, but a precursor to full statewide renter protections like you have never seen before.
5. AB 2230 (Bennett) would have established an unfair business practices act tailored to “landlord and tenant” matters. The bill is DEAD.
6. AB 2304 (Lee) proposes to further mask UD filings. Only litigants, courts and non-profits would have access to the records.
7. AB 2347 (Kalra) changes the time period in which UDs are litigated. Because CAA signed off on the bill, it became very difficult to continue to oppose and be successful.
8. Property tax and taxes in general: are under attack in several bills.
9. AB 2747 (Haney) Credit reporting: would have further curtailed the ability of rental property owners to report adverse credit-related information. DEAD
10. AB 2785 (Wilson) use of application-related information that was averse to the applicant. We killed the bill. DEAD
11. AB 2801 (Friedman) use of security deposits: originally the bill would have required rental property owners to account for just the amount of cleaning solutions used. The part that remains requires owners to photograph the rental unit just before renting, the pre-inspection, damage or repair, and the time the unit is vacated. Copies of the photos would be required to be available to
the renter or former renter.
12. AB 2881 (Lee) Social Housing Act. We opposed it again and killed it. DEAD
While the number of bills introduced by the Legislature this year, that relate to the residential rental housing, signifies it has no intention of lifting the boot from the industry’s neck, two bills with legs were recently chopped at the knees.
Some successes come as powerful flash floods wiping out illogical and offensive legislation and some successes are trickles that eventually erode the foundation.
A “pet bill” was introduced in February 2024 and would have prohibited rental property owners from limiting a common household pet (domesticated animal, including but not limited to, a dog or cat, that is commonly kept in the home for pleasure).
Additionally, the “pet bill” would have prohibited rental property owners or their agents from inquiring about whether the applicant intends on keeping a common household pet or pets in the dwelling unit. Moreover, there would have been no requirement of a renter to inform rental property owners or their agents of keeping common household pets after that renter had already entered into contract for tenancy.
Furthermore, the “pet bill” would have prohibited rental property owners or their agents from collecting additional rent from a renter who keeps common household pets in the dwelling unit during tenancy.
The “pet bill” did not consider a common household pet’s welfare, if its
“ The “pet bill” did not consider a common household pet’s welfare...”
owner works outside the home during a regular 40-hour work week, which would have confined a pet in the home for 8-10 hours without the ability to relieve itself; this could be considered animal cruelty.
The “pet bill” created a distinct notion that renters who are pet owners have superior rights over renters who are not pet owners, which would have undoubtedly affected the quiet enjoyment and resulted in constructive evictions.
The “pet bill” also conflicted with current law that already outlines adequate legal requirements pertaining to property owners’ prohibitions on renters’ ability to keep common household pets in a dwelling unit during tenancy.
Arguments trickled down to the legislature over a three-month period that first forced the author to make the following significant amendments:
• Properties with 15 or fewer units would have been exempt.
• Properties with 16 or more units were required to permit one pet. More pets than that can charge $50 per month.
• Property owners would have been permitted to collect an additional security deposit with a $1,000.00 cap
and a pet deposit for carpet cleaning.
• Property owners would have been permitted to demand proof of liability insurance with the property owner being added as an additional insured.
• Renters were prohibited from owning “restricted pets”.
Those amendments, however, were ultimately eroded and the bill’s foundation completely collapsed under the pressure from opposition. Thus, the bill is dead.
The second bill was introduced in 2023; amended in May 2023; sat on the shelf unchanged until June 10, 2024, when it was substantially amended. Essentially the bill was a gut amendment on the eve of policy hearing in the second house (the assembly) without any attempt to discuss amendments with stakeholders, constituents, or property owners of residential rental housing.
The “advertising bill” would have required rental property owners to advertise ALL fees prior to identifying and defining them at the time a rental agreement contract is negotiated between a rental property owner and a renter; including a maximum monthly utility amount based on household
utility consumption for the prior 12-month period, without considering the prior renter’s utility consumption habits or household size.
If a renter interpreted a rental property owner’s advertisements as not “clear”, or “conspicuous,” a renter would have been permitted to use that argument as an affirmative defense against an unlawful detainer action, which essentially would have given all renters an excuse to materially breach a residential rental contract. It also would have permitted renters to challenge the sufficiency of an executed residential rental agreement in the instance a property changed ownership or changed billing service.
The “advertising bill” would have permitted the attorney general, the district attorney, city attorney, or county counsel to seek injunctive relief against property owners based on not advertising fees related to a residential rental unit clearly and conspicuously.
The “advertising bill” would have also given renters or their representative the right to inspect records that relate to former renters to confirm an average amount of monthly utility fees. Because the term “representative” was not legally defined, the bill would have actively encouraged renters’ rights’ groups, being named a renter’s representative, to demand access to third party private information.
Sixteen days after the “advertising bill” was gutted and amended on June 10, 2024, and following a flash flood of arguments pertaining to the bill’s violation of public policy and constitutional rights to privacy, the author deleted ALL of her amendments. The bill however will be sent to the governor, and we do anticipate that he will sign it. A webinar that will train the members of the changes must be held in the very near term.
Local Leader
EBRHA MEMBER SPOTLIGHT: THOMAS LIAO
THOMAS LIAO
DIRECTOR, COMMUNITY DEVELOPMENT,
SAN LEANDRO
Thomas Liao has been in public service for 30 years, with the last 20 years in San Leandro. He has been overall supportive of state and federal initiatives related to affordable housing and increasing housing supply. He is sensitive and mindful of new state and federal legislation that place excessive or redundant administrative burdens on city staff and beneficiaries of public funding (e.g., nonprofit service providers, property owners, renters, etc.) such as onerous reporting or other paperwork requirements for funded activities.
Describe in general how Community Development works with the housing provider industry for the betterment of renters and owners in San Leandro. Whenever the city is exploring ways to amend existing city rental housing programs or creating new ones, the CD staff (particularly the Housing and Planning divisions) will seek public input from owners and renters. Effective public policy involves community input, especially from key stakeholders like owners and renters. The City Council and city staff cannot make laws or programs in a vacuum, so it is imperative the city hears from all potentially impacted stakeholders.
Community Development, especially the Housing Division, administers several rental housing programs such as Rent Review Program, Tenant-Landlord Counseling/Legal Services (thru nonprofits Centro Legal de la Raza and ECHO Housing), Tenant Relocation Ordinance, Mobile Home Park Rent Stabilization Program, and Inclusionary/Below Market Rate Housing Program. Housing staff and the contracted nonprofits communicate regularly with
Progress of the Centro Callan Apartments
affected renters and owners to ensure understanding and compliance under these programs.
Describe your role as director of community development. I oversee the Community Development Department which contains the following divisions: Building, Community Preservation/Code Enforcement, Economic Development, Housing, and Planning.
What makes San Leandro a desirable region to invest in rental properties?
San Leandro is a growing city that provides a safe, attractive and diverse community. It is centrally located within the SF Bay Area and near a lot of public transit, including AC Transit and two BART stations (Downtown and Bay Fair), access two major freeways (Interstate 580 and 880), and proximity to San Francisco Bay Oakland International Airport. Other City amenities include excellent public parks and library systems including the Main Library and good public schools. San Leandro is one of the most culturally diverse
cities in California, if not the United States with growing Asian and Hispanic populations. Consequently, there is a wide range of food/dining options that reflect the city’s diverse demographics and popular shopping/retail options.
What are some specific policies or regulations impacting the industry in San Leandro?
The City Council provided direction to staff over a year ago to explore stronger housing protections (rent control, just cause, rent registry, shoring up existing rental housing programs, etc) in San Leandro. This is still underway.
The state has also been very proactive the last few years in removing some local land-use controls (SB 9, SB 35, SB 330, AB 2011) preventing the creation of new housing for all income levels, but particularly for people and households with lower incomes given the high cost of living in much of the state. Therefore, property owners and developers interested in creating new housing have more streamlined zoning approval options to build. The state mandated streamlining approvals for
Rent Control: No
Just Cause Evictions: No
Special Ordinances: Tenant Protection Assistance Ordinance
Percentage of Renters: 42.7%
Average Rent for 1 or 2 Bedroom Housing: $2,254
accessory dwelling units (ADU) since 2017 have created a way for cities/ counties to build new housing in single family zoning districts and created new rental housing opportunities for owners and renters.
What policy or proposal related to housing do you feel strongly about and why?
Given the current housing crisis in California, the need to increase the housing supply for all income levels (especially lower to middle income households) in San Leandro, the Bay Area and California has been a major focus of my professional work and a policy issue that has been a priority for the current and recent City Councils in San Leandro. The two major growth areas in the city are centered around the two BART Stations in San Leandro (Downtown and Bay Fair), and the CD team has been working closely with developers, property owners, businesses, and residents to achieve the sustainable and high-density, mixed-use vision in both these transit-oriented development plan areas. These two areas will
be, and are becoming, centers for new housing, new retail/commercial, and recreational/open spaces.
What are your thoughts on rent control?
It is a highly complex public policy issue for any city/county to address as it is not a one-size-fits-all solution. Each city or county has its own unique demographics and housing market to take into account. Public participation, which impacts stakeholders such as owners and renters, is critical to understanding each jurisdiction’s issues and challenges.
How can you work with the state to shore up the housing shortage in California?
The City of San Leandro has worked closely with the state and the regional governments (MTC/ABAG). The city has applied for development funding from the state and TOD planning funding from MTC/ABAG over the last 20 years to increase housing in our two recognized and award-winning TOD Plan areas for Downtown and Bay Fair BART Stations that allow for streamlined and higher-density, mixed-use development to help address the housing shortage. In the last few years, three higher-density, new affordable rental housing developments totaling over 260 units were built across from the San Leandro BART Station downtown. A new, privately owned 196-unit apartment building with primarily market rate rental units (along with 10 moderate income units) with a Sprouts market on the ground floor is under construction in the heart of downtown and will be completed around Spring 2025.
A rendering of the completed Centro Callan Apartments
Spotlight
SAN LEANDRO
TONY KO PROPERTY OWNER, RENT ALAMEDA
I started my property business in 2018 when I purchased my first investment property in San Leandro. Today, I own and/ or manage more than 30 units of single and multi-family properties and several commercial properties across the East Bay. My focus is to provide quality housing and maintain a good renter relationship, while also generating a healthy return on my investments through Accessory Dwelling Unit (ADU) developments to my properties.
What kind of properties do you own/ manage?
I own and manage a mix of single and multi-family residences. I also manage several commercial industrial warehouses and office spaces in San Leandro.
Describe the business of owning properties in San Leandro and the pros and cons of renting in the region. Leasing activities remain very strong in San Leandro, and there is no shortage of potential high-quality renters, especially if the properties are well-maintained and managed. This is helpful to keep vacancy rates low across my properties.
The City of San Leandro also does not have as stringent local ordinances as some other cities. This is beneficial for both renters and property owners because it places less burden on the property owners, freeing up their time and efforts to focus on things that provide more direct benefits to the renters, such as making upgrades to the buildings.
Unlike some of its neighboring cities, the housing prices are comparably more affordable in San Leandro versus in cities such as Alameda, Berkeley or Fremont. This makes it a great place to own and develop properties. The City Permit Office has also been a great resource and have been very supportive to property owners who are seeking guidance and exploring development options on their properties.
What special rules, regulations or policies are specific to San Leandro that you must adhere to?
As a property owner in San Leandro, I need to make sure that I stay on top of new laws and regulations that are
applicable to the city. An obvious one is that property owners need to make sure that their renter screening criteria and policies, such as pet policies, are non-discriminatory. There is also a City of San Leandro Rent Review Program who acts as a mediator when there are disputes between the property owners and renters. One of things they review is when there is more than one rent increase in a 12-month period. To avoid having to go through a hearing, property owners should make sure that they stay within the criteria put forth by the program.
It is also always good practice to have a clear, written leasing contract between the property owner and renter. EBRHA provides forms and informational pamphlets that they recommend are best practices to share with renters. I have found their recommended forms and templates to be very helpful. With their partnership with Azibo, it has saved me tremendous administrative time.
In recent years, I have been developing my properties by adding ADUs. This helps contribute to the housing shortage in the area and also improves my return on investment. When making such capital improvements, it is important to go through detailed planning with the City Permit Office and obtain all the required approvals from the Building Department.
What do you think about rent control?
The intent of rent control is to help renters by limiting rent increases. However, it has been shown in many economic studies that rent control results in a negative consequence of reducing the supply of housing.
“ The housing prices are comparably more affordable in San Leandro.”
I personally believe in less stringent rent control and more focus on government providing subsidies. This allows renters to have more housing options and also allows property owners to receive fair market rent.
Strict rent control laws can disincentivize some property owners from making much needed upgrades to the property that ultimately results in rental homes with deferred maintenance. This can create a lose-lose situation for both parties.
Most property owners are not interested in drastically raising rent every year. Vacancy and renter turnovers can also be costly to property owners, too. Many news headlines are about extreme cases, whereas most property owners want to be fair and to keep a good renter happy. From my personal experience, if I have a good renter who makes timely rent payments, I have
gone years without raising rent. Even when I do, it is minimal and only done so due to rising costs for maintenance, upkeep and property taxes.
What can property owners do to get involved in shoring up the housing crisis/ shortage in the state and Bay Area?
There are several things property owners can do to help with the housing crisis/shortage. First, property owners can review their own portfolios and consider the possibility of additional development on their existing properties. ADU rules have become more relaxed over the years to make it easier for property owners to build an ADU. Another option is for property owners to explore SB9, which allows for building additional housing on lots zoned in single family zoning.
Secondly, property owners can also be more involved in local city coun-
cil meetings, offering their feedback to council members about adopting new legislation that would encourage investors and property owners to develop and provide more housing. For example, AB1033 is a new legislation enacted in 2024, which allows homeowners to buy and sell ADUs as condominiums, separate from the main house. Although enacted by the state, it is up to each city to adopt AB1033. San Leandro currently does not have plans to adopt AB1033. San Jose has recently become the first city in California to adopt AB1033, and I hope this will motivate the city of San Leandro to adopt it soon as well.
Relaxing the rules with respect to building and selling ADUs is a triple win. Property owners have increased property value. The city has increased tax revenue. Renters have more options and higher quality of housing.
Industry Partner
US SUPERIOR STONE & TILE
USSuperior Stone & Tile is a retail supplier of home improvement products for kitchen and bathroom, such as kitchen cabinets, bathroom vanities, countertops, tiles, flooring, shower doors, faucets, and more. Founded in 1999, we have more than 20 years of experience working with property owners and developers all around the Bay Area. We are a factory direct supplier that offers competitive prices to property owners who are looking to remodel their kitchen and bathroom. Our San Leandro showroom and warehouse spans over 100,000 square feet and offers a wide selection of products for projects of any size and budget. Most of our products are stocked in inventory and available for immediate pickup from our warehouse. Our dedicated staff will follow through with each project from start to finish
to ensure everything is delivered on time and with the utmost quality and customer satisfaction.
At US Superior Stone & Tile, our goal is to achieve the best results for property owners who are looking to remodel their properties. Construction and remodeling can be stressful for property owners, and we are here to help reduce that mental load. The key to a successful project is clear and effective communication between our staff and the customer.
We help design a layout based on the customer’s measurements of their kitchen. We talk through what features, style and budget the customer is aiming for so that we can achieve all fronts. With our experience and expertise, we are able to be attentive to the details, such as ensuring there is enough clearance for appliances, paying attention to the clearance between countertop and upper cabinets, and
keeping at least 36” for walkways. We help gauge the style a property owner is striving for.
Our staff is also very thoughtful in designing a kitchen by balancing style and functionality and are also mindful of each project’s budget and timeline. We have an extensive team from sales and design to warehouse, from cabinet assembly to installation. Our fully stocked warehouse means that we can deliver products to the property owners quickly rather than having them wait for months. This helps property owners complete projects quickly, which in turn means that they are able to put a property on the market sooner to see a return on their investment. We make it easy for property owners by streamlining the processes. Rather than having to coordinate with multiple vendors and contractors, we provide a one-stop shop with design, products, and installation in one place.
HANDS-ON EXPERTISE
Our team recently assisted a property owner of a multi-family residence with a renovation project for six kitchens in Sacramento. The property owner visited our showroom with an interest in getting an estimate for kitchen cabinets. She provided a general layout with measurements of each kitchen, and our sales and design staff sat down with her and went over the design and budget of the project together.
Some revisions were made to the owner’s original design to make more storage space and add more functionality. The property owner walked through our showroom which showcases our collection of cabinets, such as shaker-style and slab-door cabinets. The property owner wanted a timeless
“Our staff is also very thoughtful in designing a kitchen by balancing style and functionality...”
kitchen, so our team suggested a couple of options including our Farmington White cabinets, which the property owner ultimately chose.
Our team put together a quote for the cabinets based on the design layout. Since we were able to beat all the other quotes she received, she placed the order for all 6 kitchens with us, which included 50+ cabinets, accessories and hardware. Our team assembled and packaged all the cabinets within two weeks, and the cabinets were delivered to the job site in Sacramento.
During the renovation, the property owner and her contractor made some changes, which resulted in the need to exchange some cabinets for different sizes. Our hassle-free process for cabinet exchanges allowed the project to continue without delay. We were able to get the new cabinets assembled quickly and even delivered the cabinets to the customer so they could save a trip to the warehouse. Renovating 6 kitchens at the same time can be stressful for anyone, which is why our goal at US Superior Stone & Tile is to take the stress factor out and keep customers happy.
On another occasion, a property owner came to us looking to renovate the kitchen for a rental unit. A long-term renter had moved out, and the kitchen was in bad shape due to wear and tear and other damages over time. The property owner worked with a tight budget and felt eager to rent the unit back out to have a stream of rental income.
Our staff suggested a few ways to
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keep costs low for the project. One way to minimize cost was to opt for regular base cabinets to maximize storage space and reduce the amount of addons, such as pull-out drawers and other accessories. Another suggestion was to maximize the size of each cabinet, reducing the total number of cabinets needed to complete the kitchen.
With this property owner’s emphasis on the need for durability on a modest budget, our staff also suggested pairing the cabinets with a granite countertop, which are more renter-friendly and cost-effective than quartz or marble countertops. The property owner also wanted our installation team to do the installation after sharing that he did not have a contractor.
Before each installation job, our team would start by verifying the measurements of the project space. Our installation team spent one day for demolition and cabinet installation and one day for countertop installation and finishing touches (e.g., crown moldings, toe kicks, etc.). Not only were we able to help the prop-
erty owner stay within their budget, we also completed the job from start to finish in about 10 days, including design, cabinet assembly, and installation. The property owner listed the rental unit back on the market the following week and was able to find a new renter shortly after.
Updating a kitchen and/or bath-
room is a great way for property owners to increase the value of their property. It can make marketing easier, increase prospective renter inquiries, reduce vacancy time, and allow property owners to ask for a higher rent. Our products and services at US Superior Stone & Tile helps property owners achieve this goal with ease.
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Educate
UNCOVERING HIDDEN TAX BENEFITS OF PROPERTY OWNERSHIP
BY MICHELLE GAMBLE
As property owners you always look to ways to save money and leverage opportunities. Each year you pay taxes, but do you recognize all tax benefits available to you? Many tax write-offs exist that are property-specific that owners don’t realize apply to their business. You could be keeping thousands of dollars in your business instead of sending it to the IRS just by knowing some hidden tax advantages.
PROPERTY DEPRECIATION
Property owners typically know about property depreciation; however, they may not have thorough knowledge about how to leverage every aspect of it. “Over the last few years, property depreciation has become a widely known practice; however, many individuals still do not know how to apply it appropriately,” said Ariful Islam, finance expert at Sterlinx Global. “For example, the write-off allows homeowners to deduct the cost of their property over its useful life resulting in significant tax
savings over time. Even components such as appliances, carpets or improvements may be depreciated individually.”
“Understand depreciation rules and maximize allowed deductions annually,” said Scott Friedson, public adjuster, ICRS LLC. “Many owners miss available write-offs. The biggest mistake is not grasping tax implications of buying, owning or selling investment property. Failing to accelerate depreciation via cost segregation studies or use 1031 exchanges when selling to defer capital gains taxes.”
“One commonly overlooked deduction is the capital cost allowance, which allows you to claim depreciation on buildings and equipment,” said Ladislav Beganyi, founder of Beganyi Professional Corporation Law Firm. “Properly tracking expenses like utility bills, insurance and maintenance costs also reduces your tax burden. My top advice is to keep meticulous records of all property-related expenses. Understand the depreciation rules fully and claim all allowed deductions each year. Many owners miss out by not realizing the significant tax implications of buying, owning and selling investment property.”
ACCELERATED DEPRECIATION METHODS
Russell Rosario, a financial expert, CPA and AI software engineer, said, “Here are the least-known property tax advantages I’ve found in my experience assisting dozens of clients: accelerated depreciation methods like the Section 179 deduction for renting equipment. You can deduct up to $1.02 million in equipment costs this year instead of depreciating over time. Conservation
easements and donating development rights to land trusts provide huge tax deductions.
“I helped a rancher deduct $15 million last year. My top advice: work with a tax pro specializing in real estate. They know niche laws like depreciating rental improvements over 15-39 years. DIY software misses these. The biggest mistake is mishandling depreciation. I’ve seen $100Ks in missed deductions from using straight-line depreciation instead of accelerated methods. Track your cost basis and depreciation schedules closely.”
HOME OFFICE DEDUCTION
Do you have a brick-and-mortar office where you rent space? This deduction is obvious; however, many property owners also have home offices and often don’t realize the home office can be written off as well. “Home office deduction is a great benefit for those who use part of their home exclusively for business purposes,” said Islam. “That means that property owners can subtract some mortgage interest and property tax payments from their taxable incomes every year. Also included are repairs, utility bills and depreciation expenses among others.”
REPAIRS AND COST MAINTENANCE
“As a property owner, you likely already know that you can deduct repairs and maintenance costs for your rental property,” said Zach Shepard, principal at Braddock Investment Group Inc. “However, what you may not know is that this deduction includes any costs incurred for keeping your property in good condition. This can include any-
thing from painting and carpet cleaning to fixing a leaky faucet or replacing a broken window.”
COMMON MISTAKES
Finally, you can also avoid costly mistakes when it comes to understanding how to manage your taxes. No one wants an audit, which can be time-consuming and expensive to manage. So, what are some of the most common mistakes?
“Ignoring Professional Help: Many property owners attempt doing their own taxes but end up missing important deductions and credits. Working with a real estate tax professional may reveal additional benefits and guaran-
tee accurate returns preparation,” said Yosef Adde, owner, I BUY LA. Repairs vs. Improvements: “The most common mistake property owners make is failing to properly distinguish between repairs and improvements,” said Max Williams, founder/CEO, HeroBotApp. “Repairs are expenses that keep your property in good working condition and are deductible in the year they are incurred. Improvements, on the other hand, add value to the property and must be capitalized and depreciated over time. Misclassifying these expenses can lead to incorrect tax filings and potential issues with the IRS. Additionally, many property owners fail to take advantage
of depreciation, either because they don’t know about it or because they find the process too complicated.”
Expense Allocation: “The most common mistake I’ve observed is property owners failing to properly allocate expenses between personal use and rental use, especially in properties that serve both purposes,” said Firdaus Syazwani, founder, Dollar Bureau. “This misallocation can lead to significant issues with tax authorities, including audits. Property owners should ensure they correctly split these expenses and maintain detailed records to substantiate their claims.”
Michelle Gamble is the editor of Rental Housing Magazine.
Educate
BEST SOFTWARE FOR SMALL PROPERTY OWNERS
We asked industry experts what software applications worked best for small owners/ operators of 20 units or fewer. Here is what they shared.
APPFOLIO
“Appfolio has plans starting at just $50/month. It handles everything from listing and marketing rentals, to signing leases, collecting rent, and generating reports to optimize your business. I have several long-term clients who use Appfolio to efficiently manage their small commercial real estate portfolios. They love the mobile access, automated communications, and customizable features.”
– Joe Stance, Stance Real Estate
COZY
“As a property manager with over 15 years of experience, I highly recommend Cozy for small property owners. Cozy is an easy-to-use and affordable software custom for portfolios under 20 units. I have used Cozy to simplify rent collection, track expenses, and manage maintenance requests for many of my smaller clients. The platform is very intuitive, with helpful tutorials to get started quickly. Features like automatic late fee assessment, payment reminders and financial reporting reduce time spent on administrative tasks.”
– Daniel Rivera, NJ Property Manager
BUILDIUM
Buildium is built to handle all aspects of property management in one location, from renter screening to maintenance requests. Comprehensive features save time and reduce the headache of juggling too many properties at a time to manage, ensuring everything runs as efficiently as possible. The favorite feature would be renter and lease tracking. It provides very good, detailed information about all renters, terms of their leases, and their current status with regards to payments, so I know how everything stands in terms of renewals or when there might be any problems. Renter and lease tracking in Buildium provides organization and efficiency like no other, making the property management experience smooth.
reduce bookkeeping. Automatic late fees, payment reminders and reporting provide insights owners need to maximize profits and service. The mobile app gives visibility anywhere. For small owners, software should simplify work, not complicate it. OwnerRez achieves this through simplicity and automation. It handles the tedious so owners can focus on growing their business. While no software is perfect, OwnerRez comes close for small owners on a budget. The support is also top-notch, critical for new users.” – Garrett Ham, CEO, Weekender Management
TENANT CLOUD
– Yosef Adde, I BUY LA OWNERREZ
“As CEO of Weekender Management, a small property management firm, I recommend OwnerRez for owners with under 20 units. OwnerRez is affordable, easy-to-use, and automates many routine tasks like rent collection, maintenance requests and expense tracking. We’ve used OwnerRez for years to manage small portfolios. The simple interface and tutorials get owners up and running quickly. Integrations with accounting software
As a property owner, my experience has taught me to prioritize the satisfaction and comfort of my renters. However, I have also learned that my job would be a lot easier if an effective communication channel existed between my clients and myself. The truth is, as a property owner, collecting and managing vacancies and the financial aspects that have to do with collecting rent, isn’t exactly all there is to be worried about, because in the way that actually matters, it is the working relationship you are able to build and sustain with your renters that helps guarantee that you run a more profitable investment, and it is essentially for these reason that Tenant Cloud is my favorite property management software. Apart from the fact that this software allows for e-signature collection, my best feature on this software is the Notification center
which makes it easy for me to send automated messages to renters.
– Tim Hastings, Top-Rated Law
RENTEC DIRECT
“For property owners managing fewer than 10 to 20 properties, I recommend Rentec Direct. This software is particularly well-suited for smaller property managers due to its user-friendly interface and comprehensive features. Rentec Direct offers essential tools like online rent collection, renter and lease tracking, and maintenance management. It also provides financial reporting and integrated accounting features, which streamline operations without overwhelming the user. Its scalability
and affordability make it an excellent choice for those managing a smaller portfolio, allowing them to efficiently handle day-to-day tasks while still accessing robust functionality.”
– Samantha Waters, Property Management Consultant
FRESHBOOKS
“I would recommend FreshBooks for small property owners. It’s an affordable, user-friendly software perfect for managing a few rental properties. FreshBooks offers plans starting at $15/ month that provide tools for invoicing renters, tracking expenses and income, and generating financial reports. The
mobile app allows you to stay on top of things on the go, like approving maintenance requests or viewing real-time cash flow updates. For smaller portfolios, software should simplify your work, not complicate it. FreshBooks is designed specifically for small business owners and accountants, with an intuitive interface and helpful support resources. Integrations with services such as PayPal, Stripe and QuickBooks also reduce duplicate data entry. Examples of detailed reports in FreshBooks include rent payment histories, expense categorization, and year-end tax summaries. For a small property owner, insights into your financial and operational performance can help maximize profits and improve the tenant experience.”
– Russell Rosario, Profit Leap
Inform
MAINTENANCE STRATEGIES TO PREVENT PROPERTY DAMAGE
BY MICHELLE GAMBLE
Some things when it comes to property maintenance and upkeep can be uncontrollable (e.g., natural disasters). Other issues can be strategically managed and prevented before it turns into something not only big, but also costly. For property owners whose business operates on a thin net profit, any kind of major maintenance and repair can be expensive, which behooves owners to stay ahead of the problems. An investment in preventative maintenance pays off in the bigger picture.
Whether you own one or 100 properties, the overall success of your business, especially when you consider renter satisfaction, requires attention to the details of literally each unit you rent. This means you need two important things: good relationships with renters to report all issues within your units and effective annual inspections that don’t put off or overlook potential problems that can result in thousands of dollars in repairs.
WATER DAMAGE
A universally cited problem among property owners is water damage from plumbing, faulty roofing, or even sprinklers when you have houses involved. “Water damage can spread swiftly and seriously harm the furnishings, appliances, and foundation of the house,” said Rinal Patel, founder of Webuyphillyhome. “It may also result in the growth of mold, which is hazardous to health and difficult to get rid of.”
“An ounce of prevention is worth a pound of cure, especially with water damage,” said Paul Schneider, an insurance agency owner. “Staying on top of home maintenance and invest-
ing in smart technology solutions can help avoid insurance claims and expensive repair bills. Homeowners should also confirm their insurance covers water damage and provides enough coverage limits.”
“Water damage can be incredibly costly,” concurred Yosef Adde, an investor and real estate agent specializing in the Los Angeles market. “Minor repairs might only set a property owner back a few hundred dollars, but extensive damage – such as that requiring structural repairs or mold remediation – can run into the tens of thousands of dollars. The costs escalate quickly when the damage impacts
the foundation or requires significant reconstruction.”
“Repairing water damage can cost $10,000-$50,000 depending on severity,” added Schneider. “To prevent this, inspect plumbing and appliances regularly. Look for slow drips, leaks behind walls or under sinks, old water heaters, etc. Fix or replace anything questionable. We recently helped a customer catch a leak in his attic before it caused major damage. The $500 plumbing repair saved him over $25,000 in restoration costs.
“Another strategy is leak detection systems,” continued Schneider. “For example, water shutoff valves can
detect excess flow and automatically shut off water. Sump pumps prevent flooding from groundwater seepage. Installing these systems, especially in basements or attics, gives homeowners peace of mind.”
ROOF DAMAGES
Another area, which is also related to water damage, has to do with roof repair and upkeep. This requires property owners to include roof inspections as part of their annual routines. A roof can look just fine one year, but later during a particularly rough winter that experienced high winds and heavy rain, the whole situation can change.
“A working fire-alarm system can alert firefighters of a fire before it spreads.”
Not keeping a careful eye on the roof can lead to not only structural problems through issues like dry rot but also cause toxic mold to grow, which can be hazardous to renters’ health.
“We recommend routine inspections and maintenance like cleaning gutters, sealing around vents/chimneys, and repairing any cracks or damage right away,” said Jack Golini, Golini Rooftops. “For example, one client put off repairing a minor leak in their sunroom roof to save money. By the time they called us, the entire roof needed replacement due to extensive rot and water damage, costing $15,000 more than if they’d fixed the initial leak.
“To prevent costly damage, invest in high-quality, long-lasting materials and professional installation,” added Golini. “For instance, a metal roof costs more upfront but lasts 2-3
times longer than asphalt shingles and requires fewer repairs. We installed a metal roof for a client 10 years ago and it’s still performing like new. Whenever there’s an issue, address it promptly. Even small leaks or missing shingles can lead to bigger problems if left unfixed. With regular maintenance and prompt repairs using quality materials, most common property damage from roofs can be avoided.”
FIRE DAMAGE
Another commonly cited area of risk is fire damage. “The most common commercial property damage we see is from fire,” said Scott Friedson, CEO of ICRS LLC. “Fire damage can easily cost policyholders hundreds of thousands to millions of dollars in a single loss.”
“Fire damage is a common form of property damage,” said Steve Lockwood, owner of Mountain State Fire Protection. “According to FEMA, residential building fires accounted for $10 billion in losses in the United States in 2022, and fire damage in
nonresidential buildings accounted for over $3 billion in property losses. It is the most common form of property damage aside from wind and hail.”
“A fire on your property has the potential to destroy your property and the properties around it so the cost can be massive and insurmountable if the fire was due to negligence,” continued Lockwood. “It only takes one spark during a dry summer, a faulty electrical wire, or an out-ofcontrol grease fire to spread and cause massive amounts of fire damage. The distinction between wind damage and fire damage is you can actually be the cause of fire damage.”
To help prevent fire damage, install an automatic fire sprinkler system, especially in high-risk areas like kitchens, and integrated fire and smoke alarm systems. “It is important to make sure you have fire extinguishers in close proximity whenever needed on your property,” said Lockwood. “Inspect them every year. If you have a commercial sprinkler system, make sure it is operational by having it inspected once a year and make sure the system is clear of any obstructions. Doing this will ensure your sprinkler system will be able to neutralize any fires that may occur. If you have fire alarms on your property have them inspected and make sure that system
works properly. A working fire-alarm system can alert firefighters of a fire before it spreads.”
LESS COMMON DAMAGES
Fallen Trees – “Fallen trees are unfortunately pretty common,” said Jeremy Yamaguchi, CEO of LawnLove. “However, the severity of this damage can vary. In worst case scenarios, large trees can fall directly onto houses, causing major damage to the structure of the home. This kind of damage can cost tens or hundreds of thousands of dollars to fix, and it can displace homeowners for quite some time while repairs are being made. In lesser situations, fallen trees can break windows, cause damage to outdoor items (outdoor furniture, pools, grills, etc.), or lead to the ground tearing up with the roots of the tree.” Tree inspections need to be observed when examining properties with large, old growth trees.
Weather Damage – “I tend to see weather damage as one of the most frequent types of property damage, said Matt Balducci, Co-Owner and CEO of HomeHero Roofing. “High winds, hail and even heavy or severe rain can cause damage to the exterior of your home such as by damaging shingles, windows, gutters, and more.” This issue presents as difficult to predict just as much as it’s almost impos-
“Tree inspections need to be observed when examining properties with large, old growth trees.”
sible to predict the weather.
Infestations – “Pests and infestations are common property damage issues that can lead to significant costs and health risks,” said Josh Qian, the COO and Co-Founder of Best Online Cabinets. “Common culprits include termites, rodents, ants, and cockroaches. These unwanted guests can cause structural damage, contaminate food, and transmit diseases.” Sending out monthly pest control agents can bring this problem under control.
Vibration Damages – Most owners don’t think about this one, as it’s just not a consideration. “Vibrations from nearby construction, heavy traffic, or even frequent usage of heavy machinery can subtly impact foundations,” said Dave Roebel, property expert. “These vibrations might eventually cause cracks and destabilize your foundation, causing expensive repairs in the future. Such subtle but detrimental effects often go unnoticed until it’s too late in most traditional approaches.
“Place foundation vibration sensors in different parts of your home,” he continued. “They can recognize and gauge how much a certain vibration level exceeds and what it should not go beyond. This way, you can detect any problems early, such as neighboring construction affecting your foundation, and take preventive actions like reinforcing your building or negotiating schedules for building activities. This might sound like far-fetched technology, but foundation vibration sensors offer an effective way to recognize and manage damages before the property becomes severe.”
Michelle Gamble is the editor of Rental Housing Magazine.
Advocate
HELPING THE HOMELESS IN THE AFTERMATH OF THE SUPREME COURT RULING
BY MICHELLE GAMBLE
Alandmark U.S. Supreme Court ruling issue in June 2024 changed the state of American homelessness. The court issued a ruling on City of Grants Pass, Oregon v. Johnson in which the justices determined that under the U.S. Constitution that the “cruel and unusual punishment” clause of the Eighth Amendment does not prohibit the City of Grants Pass from enforcing criminal punishments against people who are homeless for camping outside in the city.
In regards to the ruling’s impact in California, CNN reported, “After California Gov. Gavin Newsom issued a directive ordering state officials to take down homeless encampments.”
It’s well and good to want to remove encampments and prevent our streets from looking like third-world countries, which is unacceptable in one of the wealthiest nations in the world; however, without a specific plan in place, where do Newsom and other leaders expect to put the homeless population?
Meanwhile, California faces a housing crisis for those individuals who can pay rent and yet cannot find a home. According to Element Homes, “California’s housing crisis has reached a critical point in 2024, affecting millions of residents and posing significant challenges to economic stability and quality of life. With median home prices soaring above $800,000 and rental rates skyrocketing, many
Californians struggle to find affordable housing. The housing shortage in California is exacerbating homelessness, pushing low- and middle-income families out of their communities, and creating widespread social and economic disparities.”
Now doing a deep dive on the issue, recent news came out about the wasteful spending of $20 billion, which was allocated toward solving the homelessness problem, resulting in virtually no resolutions or programs. Critics quickly jumped on the problem and asked for an audit to address where the billions of dollars went. The questions revealed malfeasance involved in irresponsibly spending the money with no accountability or results.
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According to a KQED story “California’s $20 Billion Effort to Combat Homelessness Fails to Curb Rising Unhoused Population” by Vanessa Rancaño, “California is not doing enough to track and evaluate efforts to address homelessness — despite billions of dollars spent to address the crisis, a state auditor found in a report released Tuesday.
“The audit looked at spending in fiscal years 2020 through 2023 across California, as well as within the cities of San José and San Diego. It found a revolving door of homelessness, with most people who access services placed in interim housing. Of those, just 13% ended up with a permanent place to live, while 44% returned to homelessness.”
WHAT CAN PROPERTY OWNERS DO?
Between the Supreme Court ruling and the wasteful spending, what can citizens and property owners alike do to resolve these problems? Now one might argue, why should property owners take the lead in resolving what some can suggest isn’t their responsibility as business owners?
It’s true that property owners didn’t cause the problem nor should they be responsible for fixing the problem; however, we’re all members of the collective community of humanity. It
behooves every citizen to care about the wellbeing of their fellow humans, including those down on their luck. Further, we pay taxes to help solve social issues. So, we should all be outraged that $20 billion got wasted on absolutely no solutions. Keep in mind, that is billions of dollars completely drained into nothing.
And consider for a moment the math. How many nice homes or units could be built for $20 billion? Let’s start with the current average home price in California. According to the California Association of Realtors, the median price of an existing single-family home statewide was $904,210, which is an extremely high amount for a house considering the national average price is $365,056. Divide that amount into $20 billion and how many houses could have been built? They could have constructed 2,212 homes, not apartments. Instead, the homeless got nothing and someone, somewhere received the money for nothing.
As owners and operators, you may wonder, how can I be a part of the solution so everyone wins? While property owners cannot help with the social problems (e.g., substance abuse and mental health issues), they can align themselves with organizations, associations and nonprofits dedicated
to applying government funding to real programs and solutions. Partnering with organizations to address the supply side of housing offers a winwin. Housing providers become active members of the community to solve the substantive matter of housing by providing actual domiciles supported by government funding.
Here is an excellent example. According to SFGov.org, “To help make homelessness in San Francisco rare, brief and one time, the San Francisco Department of Homelessness and Supportive Housing is partnering with community-based organizations seeking partnerships with property owners and property managers with available units. Help your community and house families and individuals looking for a stable home in the private rental market. We are interested in units of all sizes immediately available across the Bay Area.”
Property owners can research and identify how to engage with organizations whose mission is to contribute to solutions to get people off the streets. It helps no one in our communities to simply look away from a growing problem. Do we really want to see homelessness become a crime? People fall on hard times. Ticketing a homeless person for living on the streets when this population clearly has no money is a waste of time. It won’t change anything and it won’t get paid anyway. Reminder: these people are on the streets due to lack of resources and money. So, how can a ticket or financial punishment work?
As property owners, compassion, understanding and kindness boil down to those feelings that should compel property owners to step up, participate and become a part of the solution. After all, it’s our entire community impacted. Stand up and do the right thing to help our fellow citizens in need. We all live in our cities, towns and counties. We’re all human. We need to care and help when we can –that is what makes Americans great. Michelle Gamble is the editor of Rental Housing Magazine.
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RENTER SCREENING: BEYOND CREDIT SCORES
BY BREA HARPER
Major emphasis gets placed on credit scores when it comes to renter screening. Credit scores, three-digit numbers designed to suggest your ability to pay rent on time, give property owners assurance you’re a reliable renter. However, many people, who do reliably pay their rent and bills, may not have a great credit score due to life circumstances like a divorce or temporary job loss. These people still need to find housing, and they may be ideal renters
versus someone with a fantastic score, but makes a terrible renter or neighbor. Basing your decisions solely on the prospective renter’s credit score doesn’t always yield the best results, therefore, a combination of factors should be considered.
“Credit scores are an important factor in my decision-making process, but they are not the sole determinant,” said Itay Simchi, real estate investor and co-founder of Proven House Buyers. “I typically use credit scores as a baseline to assess financial
responsibility. For instance, I consider a score over 650 generally acceptable; however, my experience has taught me that context matters. A low credit score may signal potential risk, but it could also reflect a temporary setback, such as a job loss or divorce, unrelated to poor money management.”
“For property owners, look beyond scores,” said Daniel Cabrera, owner and founder of Sell My House Fast SA TX. “Meet applicants, verify what they tell you, and trust your instincts. While it may seem risky, giving
someone a chance despite bad credit can lead to a great, long-term renter. Make your criteria open and consistent, focus on the applicant today, not the past, but take proper precautions. Flexibility balanced with prudent policies works.”
OTHER FACTORS TO CONSIDER
Many experts suggest a list of other determinants to make their renter selection. Simchi added, “When screening renters, I take a holistic approach that includes several additional factors: Rental History: I look for patterns in past rental payments. Consistent on-time payments are a strong indicator of financial responsibility, regardless of a credit score.
Income Verification: It’s crucial to verify that a potential renter’s income is stable and sufficient to cover rent. I typically prefer a rent-to-income ratio of no more than 30%.
References: Contacting previous owners can provide valuable insight into a renter’s behavior, timely payments, and maintenance of the property.
Background Checks: A thorough background check can reveal more about an applicant’s history, such as criminal records, which may be crucial depending on the property and location.”
Additional documentation and co-signers: “Providing additional documentation, having a co-signer or guarantor, applying with a roommate, or paying a higher security deposit may help applicants with limited credit history or lower credit scores to get approved for a rental,” said Kim Wibbs, a high-risk payment consultant
“My advice for renters with bad credit is to be upfront in explaining your situation,” provide documentation of your current finances...”
and financial advisor at Emerchant Authority.
Sometimes property owners need to consider renters with compassion and understanding. “If a renter has a low score due to a past situation outside their control, I try to give them a chance,” said Matt Morgan, a licensed California real estate salesperson. “The most important things I look for are that they now have a steady income and solid references attesting to their reliability and responsibility. I may ask for a higher deposit or a guarantor in some cases. My advice for renters with bad credit is to be upfront in explaining your situation, provide documentation of your current finances, and come prepared to address any credit issues. Explain what happened to impact your score and your plan to rebuild credit. Also provide strong references from employers, former property owners, and longtime friends or neighbors.”
Simchi added, “For renters with lower credit scores due to unfortunate circumstances, I recommend the following:
Be Transparent: Honesty about past challenges can help build trust. Explain any issues upfront during the application process.
Provide a Guarantor: If possible, a relative or friend with a strong credit history can co-sign the lease, which can alleviate concerns about financial reliability.
Show
Proof of Income: Providing pay stubs, bank statements, or tax returns can showcase that you’re currently stable and capable of meeting rent obligations.
Offer a Larger Security Deposit: A higher upfront deposit can give property owners peace of mind, demonstrating commitment and reliability.”
ADVICE FOR RENTERS TO REBUILD CREDIT
Rebuilding credit can also help solve the overall problem. Most owners do weigh the importance of a good score, which can be 650 and above. “Renters with low credit scores can work on building their credit by using secured credit cards responsibly and exploring options like Experian Boost to establish a credit report and improve credit scores based on payment history for recurring expenses such as rent and utility bills,” explained Wibbs.
“In summary, while credit scores are an important consideration in the rental process, property owners also take into account various other factors such as rental history, income, employment status, and additional documentation provided by the applicant,” continued Wibbs. “For renters with low credit scores, building credit, providing additional documentation, and communicating effectively with the property owner can help improve their chances of securing a rental.”
Brea Harper is a Bay Area writer.
Inspire
AMENITIES THAT ATTRACT RENTERS
BY LYNN KREHER
Why do amenities matter when you’re providing rental housing to consumers? Isn’t renting a unit or house good enough to make your business thrive? No, and you might wonder why, and the answer is related to customer experience and satisfaction.
A negligent or disengaged property owner may find himself/herself attracting negative renter experiences that reflect negatively on often disinterested owners. Vacancy rates climb – and prolonged vacancies cause financial losses. However, more importantly, who wants negative experiences with their renters, the lifeblood of their businesses? Thus, going that extra mile to provide outstanding property experiences retains renters, creates positive word of mouth for future business, and makes life more pleasant for everyone.
An amenity is a desirable or useful feature or facility of a building or place. It’s not just a place to live with the basics, bedroom, kitchen, bathroom, etc. It’s the above-and-beyond connective places and things that actually build a united community of renters. The amenities that resonate and are valued most by renters reflect current interests and lifestyles, so consider your renter demographics before you add extras to ensure the investment pays off in use.
“The returns on amenities that enrich lives far outweigh the costs. Residents stay longer and refer others to an environment where they can thrive,” said Michael Kootchick, a respected real estate developer in San Diego with a leadership role at
OneStop ADU. “While some require capital, the intrinsic rewards of nurturing community keep residents wanting to call our properties home.”
“Investing in amenities shows potential renters that you understand their needs and are willing to go above and beyond to meet them,” said Alex Locklear, realtor and founder of NC Cash Homebuyers. “It also allows for higher rental rates and longer contracts, as renters are more likely to renew their lease when they are satisfied with the amenities provided. For instance, in my properties with co-working spaces, I have seen a 90% lease renewal rate compared to the average of 70% in the market. These amenities also contribute to the overall aesthetic and appeal of your property, making it stand out in a competitive market.”
AMENITIES TO CONSIDER
The common amenities, especially when you own a multi-unit complex, tend to be extras like communal spaces. However, as noted above, the demands of younger demographics such as Gen Z and Millennials require different, out-of-the-box brainstorming to come up with amenities that make these renters happy.
Many property owners start with the obvious and most basic extras. “I often prefer to rent out properties that offer unique amenities such as a rooftop garden, co-working space, or even pet-friendly features,” said Jonathan Faccone, managing member and the founder of Halo Homebuyers. “These amenities enhance the overall living experience for renters and help differentiate your property from others in the market. In my recent project, I
have seen a significant increase in demand for properties with these types of amenities.”
If you’re looking for some inspirational amenities, consider these innovative ideas:
Community herb and vegetable garden: “One of the most unique amenities our property offers is a community herb and vegetable garden,” said Faccone. “This promotes a healthy and sustainable lifestyle for residents that creates a sense of community and connection within the building. Residents can come together to tend to the garden, share fresh produce, and bond over a shared love for gardening. This feature has been highly praised by our current residents and has also drawn in potential renters who prioritize a green lifestyle.”
Hot tub and cold plunge: “A hot tub and a cold plunge, offers the ultimate
in contrast therapy, allowing rental owners to cater to more diverse guest preferences,” said Thomas Patrick, founder of Comfort Hot Tubs and Aquavoss. “Guests can alternate between the relaxing warmth of the hot tub and the invigorating chill of a cold plunge.”
Advanced Co-Working Spaces: “One of the standout amenities our renters will enjoy is the stateof-the-art co-working space,” said Yosef Adde, an investor and real estate agent. “This amenity will offer high-speed internet, private meeting rooms, ergonomic furniture, and multiple workstations accommodating the various ways people like to work. One of the significant target markets includes full-time remote workers and freelancers in search of a professional environment where they could work comfortably and be productive.”
The Zen Retreat: “One of our standout amenities is the ‘Zen Retreat’ — a serene, landscaped garden area with meditation pods and a water feature,” said Jolean Olson, CEO, Olson Home Buyers. “This space is designed to offer renters a tranquil escape from their daily routines. The Zen Retreat provides an outdoor sanctuary where residents can unwind, practice mindfulness, or simply enjoy the calming atmosphere. It’s a reflection of our commitment to enhancing the well-being of our renters and creating a peaceful living environment.”
Urban rooftop farm: “One standout feature is our urban rooftop farm, offering fresh produce and fostering a sense of community, said Miriam Joy Macalanda, editor in chief of Best Hardware Supply. “This amenity turns city rooftops into vibrant green spaces, adding value beyond the usual
perks. Choosing these amenities isn’t just for attraction; it’s about setting a new standard in urban development. We believe in the importance of sustainable and tech-forward living for a better future.”
Rooftop garden and lounge area: One of our standout amenities is the rooftop garden and lounge area,” said Nicholas McMillan, real estate broker and owner of Hire Realty LLC. “This space offers residents a peaceful retreat with panoramic city views, lush greenery, comfortable seating, and designated areas for yoga and meditation. The rooftop garden also features Wi-Fi access, allowing residents to work or relax outdoors, and hosts regular community events like movie nights and yoga classes. Natural elements combine with urban living to enhance the aesthetic appeal of our property and promote wellness and social interaction.”
WHY AMENITIES?
“It’s the little things,” a common cliché, yes, but true when it comes to many things in business and life. The little things can actually make or break businesses. “Our focus on innovative and thoughtful amenities underscores our dedication to enhancing the rental experience,” explained Olson. “We believe that investing in these unique features is not just about offering luxury but about creating spaces that cater to the diverse needs of our renters. We are committed to continuously improving and adapting our properties to provide exceptional living environments that resonate with the modern renter.”
Lynn Kreher is a Bay Area writer.
Fostering Strong Communities BUILDS SUCCESS
BY MICHELLE GAMBLE
“We organize regular events such as social gatherings, holiday celebrations, and community clean-up days.”
Taking actionable steps to build strong communities among your renters might seem like going the extra mile, but really it offers a pathway to overall success. Applying the same principles of customer service that any industry might use makes more sense in the big picture. So, if you want to promote powerful bonds with and among renters, reduce turnover rates and vacancies, create positive word of mouth to attract reliable renters, reduce crime rates (who wants to hurt neighbors they care about), and improve the overall quality of life – you will come out more profitable than ever with happy renters.
Building a great community for renters isn’t just about support, it’s a smart business move. “We have worked diligently to create a strong and supportive community among our renters,” said Shaun Bettman, director at Eden Emerald Mortgages. “We believe that fostering a sense of belonging and mutual respect is fundamental to the success and well-being of our properties.”
“Community matters because happy, connected renters tend to stay longer,” said Matt Morgan, licensed California real estate salesperson. “They also often refer friends which then aids in filling vacancies. When people care about where they live and who surrounds them, the quality of life is improved for all.”
How can property owners and managers accomplish these positive goals? What strategies can be employed to create the desired results?
COMMUNITY-BUILDING
Many renters move into your units or houses and may or may not briefly nod at their neighbors or say hello. Social interactions tend to be informal and not necessarily promote connection or even friendship. People come and go, and they don’t often have much time to interact. If a property owner wants to be a catalyst to encourage connection, several key techniques can be employed.
“We implemented several measures to build and nurture this community,” explained Bettman. Those techniques included:
Regular Community Events: We organize regular events such as social gatherings, holiday celebrations, and community clean-up days. These events provide opportunities for residents to meet, interact and build relationships.
Resident Feedback and Involvement: We actively seek feedback from our residents through surveys and suggestion boxes. We also encourage their involvement in decision-making processes, such as choosing new amenities or planning events.
Effective Communication Channels: We maintain open and effective communication channels through newsletters, community bulletin boards, and a dedicated community app. These platforms keep residents informed about upcoming events, important updates, and ways to get involved.
Creating Shared Spaces: We invest in creating and maintaining shared spaces like gardens, playgrounds and community rooms where residents can gather and interact in a comfortable environment.
COMMUNITY EVENTS
A popular way, especially during the warm summer months, is to invite renters to a local BBQ. Food, drinks and fun go a long way toward creating social situations to gather, socialize, eat, and play games and sports. Apartment complexes and condos often have communal spaces both indoors and outdoors to be used. Owners, whose spaces do not have communal areas, can rent a community center or reserve park space to host a BBQ.
“One notable example is our annual Summer BBQ and Games Day,” said Bettman. “This event has become a cherished tradition among our residents. We organize various activities such as barbecuing, games for children and adults, and live music. The event is designed to bring everyone together in a fun, relaxed setting, fostering connections and building a sense of camaraderie. It’s a day that many residents look forward to and it has significantly contributed to the strong sense of community in our properties.”
“Everyone in my building knows each other, and since I live near the building, I like to have my renters over for dinner once a month to relax and hang out together,” said Andy Ellis, managing director, Posh UK. “Usually, it’s something fun like a summer BBQ so that everyone can chill in the garden and eat, drink and socialize for a little while. Everyone knows each other, and they tend to solve any issues between them fairly quickly and without the need for intervention. Most importantly? None of them are afraid to come to me when something is wrong or needs to be fixed.”
RESIDENT FEEDBACK
Renters who feel unheard or not cared about and left with a feeling of being another cog in the wheel, feel no loyalty to their property owner. Renters who feel like their property owner only cares about the rent and nothing more, are less likely to treat those properties with respect and consideration. Property operators who understand the benefits of not ignor-
ing their renters’ feelings or perspectives, will also reap the rewards of the renters investing the same loyalty in their properties upkeep and maintenance. Renters who feel appreciated will return that sentiment back to the owners; it’s a powerful, reciprocal relationship that builds in a positive direction.
Measure your renters’ feedback by using a survey and including an open-ended question asking, “How can we improve service?” Give it the personal touch by going directly to your renters and handing them the survey. If you don’t have time, use a staff member. Going door to door and handing out the survey will give you time to meet and greet your renters. Ask them how they are doing and can you be of assistance? Also, use the survey to ask marketing-related questions for improved communication and outreach. Knocking on doors and seeing renters face to face humanizes them – and it makes you human in their eyes too, which is how connections are forged.
GIVE-BACK PROGRAMS
Creating goodwill and positive renter relations means building relationships that give back and not just take. Not only will give-back programs make your renters feel appreciated and valued, but also it gives property owners a nice way to show generosity and kindness toward others. We live in an era where kindness goes a long way to making everyone feel good.
Here are some unconventional and unique ways to give back to your renters and help your community. Bettman recommended the following:
Education and Skill-Building Workshops: We offer workshops on various topics such as financial literacy, home maintenance and career development. These workshops help residents gain valuable skills and knowledge.
Community Support Fund: We have established a fund to assist residents facing temporary financial hardships. This fund can help cover essential expenses such as rent, utilities, and emergency repairs. “My biggest thing is that I have a community fund set up,” said Andy Ellis, managing
“I implemented a lot of little things that helped build my renter community into something bigger.”
director, Posh UK. “This means that a portion of everyone’s rent gets put into a savings account that can be used when a renter in the building is in need. Everyone falls on hard times, and that shouldn’t mean they risk losing their home because they have one month where they are legitimately struggling. It rarely gets used, but the money is always there if someone needs it, and I know the whole building is deeply grateful.”
Volunteer Opportunities: We organize volunteer activities where residents can give back to the broader community. These activities not only benefit local charities and organizations but also strengthen the bonds among our residents.
Giveaways to create goodwill and add some fun. “We offer quarterly giveaways like movie tickets or gift cards to local spots,” said Michael Kootchick, a real estate developer in San Diego. “Small gestures show thanks for choosing our home.”
Encouraging renter involvement and leadership in initiatives. “We’ve done so by targeting involved, active, long-term renters and encouraging them to take the lead on these initiatives,” said Martin Orefice, CEO, Rent To Own Labs. “We can provide basic amenities like bulletin boards and common spaces, but if renters aren’t involved, we aren’t going to get anywhere.”
SPECIAL IDEAS
Ellis went on to describe some different and unique community-building programs he has applied. “I implemented a lot of little things that helped build my renter community into something bigger. This is a list of the things I did to make everyone feel closer:
• Set up a community garden on the roof of the building (it’s a wild success).
• Developed a community app where everyone can stay in
touch, send out alerts, organize events, and generally stay in the loop.
• Organized fundraising and charity events that the whole building got involved in.
• Stayed proactive as a property owner and made sure everyone was always happy and comfortable, and everything was in working order.”
• A new bathroom for everyone. “One big thing I did was ensure that every apartment had a brand new bathroom that I provided. So many rented bathrooms are a mess, and I let every renter know that they would be able to choose what they wanted (within a specified budget), and I would have it installed courtesy of my business. It strengthened my bond with them, and it really gave everyone something to talk about when they all moved in. It was a nice conversational icebreaker.”
COMPASSIONATE OWNERSHIP
Community-focused property owners take on a fresh perspective about their relationship-building efforts with renters and feel passionate about forging connections. “I think it matters to my success as a property owner and a human being,” expressed Ellis. “So many property owners just want to bleed their renters dry and overcharge for rent so they can make a quick buck, but I’m not about the profit. I want people to have affordable places to live where they are secure, happy, and know they aren’t at risk of being thrown out or taken advantage of. Compassion is something so many people have lost, and I believe we need more of it in the world.”
Michelle Gamble is the editor of Rental Housing Magazine.
Creative Deals for
DESIRABLE PROPERTIES
BY GRANT CHAPPELL
Sunset view over Berkeley, California
As we close out 2024, the second consecutive year with interest rates as high as 7% and low sales volume compared to 2021/22, it’s important to understand how buyers and sellers are able to structure creative deals. We will detail a couple sales my team completed, along with examples from two active East Bay brokers, Joey Wang of KW Commercial and Tim Warren of NAI NorCal. I’ve closed several deals with both of them over the years and appreciate their insight as we adapt to higher interest rates remaining longer than forecasted. As we have discussed low multi-unit sales volume in prior articles, I am reminded of a quote from an old client at a lunch in 2009: “I’ve been in the business for 50 years, been through a few cycles, and this is the toughest we’ve seen. But you can make a buck in any market.” We are nowhere near the pain of 2008-2010 on the multi-family side, though high interest rates and adjustable loans are causing heartburn for property owners and brokers.
“Location, location, location…”, the timeless real estate cliche, still rings true as there is a “flight to quality” in investors’ mindsets. Location is a key driver, but we see a demand shift toward intrinsic value in seeking a lower price/unit and price/sq foot. The Oakland rental market is down 10% year over year and even Berkeley’s student housing market’s rent growth has stalled as a wave of new rentals come out. Consequently, buyers are seeking higher cap rates day one in the event the rental market continues to decline. Oakland continues to be a more challenging market to sell as supply and demand issues for rentals have many would-be buyers on the sidelines.
Aside from a 1031 exchange buyer, most buyers sitting on idle capital for a new purchase seek both higher cash-oncash returns going in and creative structures to account for risk that the rental and political situation will worsen before it improves in Oakland and surrounding East Bay markets. Buyers are often seeking creative options with the following: seller-carry financing, subject to the existing or assumable financing are common questions from buyers and brokers looking at properties. We also look at opportunities in which days on market exceed 60-plus days or whether the property has fallen out of contract a couple of times and contact the broker to feel out seller motivation/flex in price. Relationships with brokers from other firms are important as off-market opportunities materialize when there is trust between the two parties to share info and tour the property, even without an exclusive listing. While these options may vary, we’ve been encouraged by what we see transacting as cap rates are higher and, aside from properties in Berkeley with close proximity to campus, price/unit and per/foot, continue to trend lower.
Early in the summer, I pulled up MLS data for 5-plus unit properties in Oakland to discuss pricing and market activity
with a client for their property. The data was sobering as I wanted to see how many active, pending and sold properties came up with a listing or sold date of January 1, 2024. Of the 59 properties that came up, seven had sold, five were pending, and the remaining 47 were still active for sale. The excess supply and competition of properties, along with high interest rates, left us with a sinking feeling that we would need to price the property much lower than our expectations to really meet the market.
We often receive incoming calls from investors seeking “off market” or “pocket listings”, under the assumption that the deal may be sold cheaper since it’s not openly marketed. There are obviously two schools of thought here as fewer “eyes” on a property that is off the market versus openly marketed with more buyers viewing it, the final price should be more favorable for the buyer. This is not always the case as the seller holds a bit more leverage off market as their property is not openly marketed and can “hold firm” on price if they are not getting most of their target price/terms.
We will discuss a handful of examples in which a property was sold on and off market with notes on why the buyer and/or seller secured a “good deal”. While viewing what metrics are available from public records (price, price/unit and price/foot) can offer some insight to value, GRM (Gross Rent Multiplier) and cap rate (the return an investor receives if paying cash with no debt at purchase) and property conditions are not widely known. Most buyers have varying levels of risk with renter issues or needed capital improvements, what we call “pain tolerance”, in assessing whether to take on a property.
If you subscribe to the Efficient Market Theory in how equity and bond assets are valued, investment real estate tends to lag as property info may not be readily available from the listing broker/owner. The more challenging it is to secure basic info on rental and expense info from the listing agent,
it often makes me dig deeper as I am assuming most of the market is also facing similar hurdles from the gatekeeper. I am usually more excited about a property that has sat for months with inadequate financial info if there is a compelling element to the location and intrinsic value (low price/ foot or per unit).
In August 2023, I had a call with John Caronna, a former colleague, Oakland property owner and EBRHA Member, about a portfolio of properties in San Lorenzo that he had listed on behalf of a trust, but were not on the market yet. While the properties were professionally managed, there were a couple of non-paying renters and difficulty in accessing accurate rental and expense info. Due to challenges in gathering all financial information and securing access to show the property, they were not openly on the market yet.
After reviewing what limited financial info available, it turned out the properties could be sold at or above the appraised values from the trustee handling the assets. I was able to present an offer on the six-unit property in the portfolio from a local investor and East Bay property owner in the range we needed, even though there was a greater level of risk on non-payment after close of escrow, along with trying to secure estoppels from all of the current renters. It turns out the non-payment issues were very recent issues and not as severe as initially relayed. With all renters paying after close of escrow, the property performed near a 7% cap rate with room to push rents on turnover.
In Spring 2023, I had been tracking a 24-unit in Fruitvale that had started at a price of $3.3 million in the fall of 2022. The listing broker had reached out to me on a couple of other sales we had completed in the area and for my opinion of his listing and why it’s not selling. By mid-2022, the Federal Reserve had started raising interest rates and by early 2023, virtually all sub 5% loans for five-year fixed had vanished. Through additional calls with the broker, I had learned that the Fruitvale property was performing well with all renters current on rent and had been in escrow prior in which the buyer canceled over a soft-story retrofit and studio-unit mix.
I relayed, I could bring an offer around $200/foot and just under 100K/unit, with a cash buyer. Our offer was just over 10% off of current asking, but we provided high certainty of close of escrow and took on some issues that other buyers were unwilling to tackle. While it seemed like a great purchase at the time, the market has shifted and we are seeing more sales closing at lower price/foot, per/unit and higher cap rates.
Joey Wang shared an example of a well-located property on Hillegass, a few blocks away from UC Berkeley, that had sat on the market for nearly four months and had received two price reductions before going under contract with his client.
Wang explained, “As a broker, finding good deals for my clients is about recognizing opportunities others might overlook and leveraging relationships in the community.
“... Sometimes the best opportunities are those that everyone else passed over.”
For example, when I came across a 12-unit property at 2620 Hillegass Avenue, which had been sitting on the market for over 120 days despite its strong investment potential, I saw a chance others missed. I contacted the listing agent, who was familiar with my reputation and knew I was serious about closing deals. After some strategic negotiations, I secured the property for my client at a 6.6% CAP for a property that’s just blocks from UC Berkeley campus. Sometimes the best opportunities are those that everyone else passed over.”
Tim Warren relayed an example in Oakland with seller financing at 5% interest only with 20% down. He discussed how he’s been able to find properties in which the owner is willing to carry financing by reaching out to the listing broker and relaying other examples of seller financed properties he’s sold. It’s a win-win for both parties if the seller is not planning to 1031 exchange and is more price-sensitive. The lower down payment with lower interest rate helps the buyer reach a price the seller can live with and still receive passive income from the debt they hold after the close of escrow.
Warren said, “The Oakland market is ripe with opportunity. Savvy investors are capitalizing on deeply discounted prices and the limited buyer pool. We are seeing more and more that sellers are offering creative financing to help compensate for the current interest rate market. One recent example is a property we represented the buyer in Cleveland Heights, right off of Lake Merritt. The property had been on the market for more than two months and the listing agent related some flex in price and creativity to get a deal done. We negotiated a price at a below average price/unit, with 80% seller carry financing at 5% interest only.”
In summary, we continue to wade in uncharted waters in recent memory with the wave of foreclosures on institutional-sized assets in the greater Bay Area. While we have yet to see a wave of foreclosures for multi-family, the gap between buyers and sellers pricing expectations remains wide due to high interest rates and a weak rental market. Having solid relationships within the brokerage community and creative options to structure a deal based on buyer and seller needs are crucial. Even though it feels like we are approaching a bottom in the market, the glut of new construction and stubbornly high interest rates will continue to put downward pressure on the market for the foreseeable future. Challenging times, indeed, but as I stated in the first paragraph, “You can make a buck in any market.” Buckle up.
Grant Chappell is the principal at NAI Norcal.
Industry Partners
PARTNERS THAT ARE OFFERING SPECIAL OFFERS TO EBRHA MEMBERS VISIT: EBRHA.COM/INDUSTRY-PARTNERS TO LEARN MORE
SEISMIC ENGINEERING Quake Brace Manufacturing Company 510.495.1575 quakebracing.com
WASTE & RECYCLING Bay Area Bin Support 888.920.2467
bayareabinsupport.com
California Waste Solutions 510.836.6200
Thermostat Care 510.224.5086 thermostatcare.org
WEALTH MANAGEMENT
First Foundation Bank 510.250.8133
firstfoundationinc.com
King Hou Lam, Home Mortgage 510.517.3253 kinglamloans.com
City of Oakland Rent Adjustment Program
Moratorium on Rent Increases
Oakland's Moratorium on rent increases above the CPI on units covered under the RAP Ordinance ended June 30, 2024. Banking and petition-based rent increases resumed July 1. A new CPI rate takes effect each August 1 and remains in effect for rent increases through July 31 of the following calendar year. The current CPI is 2.3%. Banked rent increases are currently capped at 6.9% (up to 4.6% + the current CPI).
Questions? Contact a RAP Housing Counselor at 510-238-3721 or rap@oaklandca.gov.
Banking
"Banking" is any CPI-based rent increase that the owner delays, which can be imposed at a later date. Owners may bank up to ten (10) years of rent increases but, banked rent increases cannot exceed 3x the current CPI. Banked rent increases must also include the current CPI.
The RAP Notice
Owners of units covered under the RAP Ordinance must include the "Notice to Tenants of the Residential Rent Adjustment Program" form (i.e., "RAP Notice") with every rent increase. Tenants may challenge a rent increase based on an owners’ failure to provide the RAP Notice.
Upcoming Workshops
Owner and Tenant Workshop – Rent Control and Evictions in Oakland (Mandarin)
September 11, 2024, 5:30 pm- 7:00 pm
Owner and Tenant Workshop – Rent Control and Evictions in Oakland (Cantonese)
September 25, 2024, 5:30 pm- 7:00 pm
Security Deposits
October 9, 2024, 5:30 pm- 7:00 pm
Tenants Rights Workshop (Spanish)
November 6, 2024, 5:30 pm- 7:00 pm
To stay updated on the 2024 Workshop Calendar, visit our website at www.oaklandca.gov/RAP & join the RAP listserv at tinyurl.com/rapsignup.
Last Look
MIRACLE CLEANING PRODUCTS
We asked property owners and others to share their best cleaning products. They recommended the following.
WEIMAN STAINLESS STEEL CLEANER AND POLISH
One of my favorite cleaning products is the Weiman Stainless Steel Cleaner and Polish. When you have stainless steel appliances, they can unfortunately get pretty grimy and smudged. And, most standard cleaning solutions either aren’t supposed to be used on the stainless steel surfaces, or they leave crazy streaks. I’ve used all kinds of different products to clean stainless steel appliances, and I’ve found that the Weiman Stainless Steel Cleaner and Polish is hands-down the most effective. – Seamus Nally, CEO, Turbo Tenant
BONA HARDWOOD
As the owner of Romero Hardwood Floors Inc., my favorite cleaning product is Bona Hardwood Floor Cleaner. I’ve used it for years to clean and protect hardwood floors after installation and refinishing jobs. It’s a water-based solution that cleans effectively without dulling the finish or leaving streaks. The formula is non-toxic and safe for people and pets. – Francisco Romero, Romero Hardwood Floors
HYDROCIDE AND VIRUCIDE
I rely on professional-grade disinfectants like Hydrocide and Virucide to thoroughly sanitize rental properties between renters. These heavy-duty cleaners kill viruses, bacteria and pathogens on surfaces and in the air. They cut through built-up grime in air vents, coils, drip pans, and filters to provide maximum disinfection. For stuck-on messes, abrasive pads and scrubbing tools help speed up the cleaning process. For maintenance, NATE-certified HVAC filters with a high MERV rating are essential for trapping pollutants and allergens. High-quality filters reduce service calls by preventing dirt buildup in air conditioning units. They also improve indoor air quality and efficiency. As an Energy Star partner, we recommend programmable thermostats to automatically adjust temperatures for maximum comfort and energy savings. – Allen Chenault, owner AC’s Heating & Air LLC
FLEX SEAL
As the owner of Creative Edge Pools, my favorite product is Flex Seal. This strong, rubber sealant seals and protects swimming pools from leaks almost instantly. Once dried, Flex Seal expands into a durable rubber coating, preventing leaks and ensuring our customers have the best experience enjoying their new pool.
– David Brabant
MAGIC ERASER EXTRA DURABLE
During turnovers, I use Magic Eraser Extra Durable. The dense melamine foam pads are abrasive enough to scrub away years of built-up dirt and stains on walls and floors with minimal effort. Despite their abrasiveness, they won’t damage most surfaces. For stubborn marks, the extra durable version works wonders. – Matt Morgan, Commercial Property Manager
METHOD DAILY SHOWER CLEANER
As the owner of E.C. House Cleaning, one of my favorite products is Method Daily Shower Cleaner. I like that it’s non-toxic, cruelty-free and naturally derived. The eucalyptus mint scent leaves showers smelling fresh without harsh chemicals. Just spray it on after showering and your shower doors, tracks and seal stay clean with little effort. –Eliana Coca, EC House Cleaning
Acrisure
EAST
LOCAL KNOWLEDGE, LOCAL SUPPORT, LOCAL ADVOCACY, WHEN YOU NEED IT.
BAY RENTAL HOUSING ASSOCIATION (EBRHA) is a nonprofit trade organization representing rental owners and managers of apartment buildings and communities, small multi-unit properties (2-4 homes), condominiums, and single family homes. EBRHA members range in size from small investors with just one property to large property management companies that own or manage hundreds of units. Our membership consists of more than 1,500 rental housing owners, property managers, attorneys and other service contractors. Altogether, EBRHA represents over 43,000 rental units and serves over 25 cities throughout Alameda and Contra Costa counties.
EDUCATION, NETWORKING, & EVENTS:
• Monthly Mixers to meet other housing providers in our community
• Annual in-person events to learn about industry resources and trends
• Open Q+A sessions with board members, industry experts, and other seasoned providers
• Weekly Webinars featuring new services, products, laws, forms, and more!
INDUSTRY UPDATES:
• Subscription to bi-monthly Rental Housing magazine, monthly Rentrospect newsletter, and weekly digest.
• Newsflash, Red Alerts, and more virtual message updates from EBRHA
COMPLIANCE
• EBRHA RPM Certification Courses included with membership
• 1:1 support to help you navigate current laws
• The latest Rental Forms with optional 1:1 consultations (available 24/7 through our digital library)
• Reliable renter screening services through Intellirent
ADVOCACY
• Committees organized around our efforts and mission
• Legal & Political Action Funds
• Rallies, designated lobbyist efforts, and active bill tracking
WHY SHOULD YOU RENEW YOUR EBRHA MEMBERSHIP? ASK YOURSELF:
Has managing rental property expectations/ relationships been a challenge in recent months? Are there unit vacancies you need to fill right now?
Is it difficult to constantly navigate all the housing legislative changes?
Are you worried about the protection of your property rights?
Do you have at-risk renters who have been paying rent reliably this year? Have any of your renters not paid rent OR are they paying reduced rent?
Are you unsure who’s defending your business interests?
8. Why not join EBRHA?
Are you concerned about the health of your rental housing business in 2023?
If you answered “YES” to any of the questions above, then EBRHA is a partner that you can’t afford to be without. Membership provides endless benefits!
DID YOU KNOW? EBRHA SERVES ALAMEDA AND CONTRA COSTA COUNTIES
