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SCRHA is a strong and effective advocate for rental housing providers. We fight for favorable policies and laws at all levels of government
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HBuck Buchanan
2025 President Southern California Rental Housing Association
President’s Message: A Renewed Sense of Optimism!
appy New Year! After a busy year working to defeat rent control and defending the rights of rental housing providers, I hope you had a restful holiday season . Thanks to your hard work and generous contributions, we were able to defeat Proposition 33 and pass Proposition 34 . This was a particularly heavy lift and therefore, I want to personally thank each and every member for their tireless efforts and large contributions. Hopefully, this decisive message will drive the point home to Weinstein and prevent future attacks on CostaHawkins . The power of our industry is tremendous as we saw victories at the national, state, and local levels!
While we don’t know what the upcoming year has in store for us, we do know that housing will continue to be a pressing issue for all Californians . We expect that our elected representatives will continue to attempt to address the issue with new regulations and laws . As the trusted voice of the Rental Housing Industry, Southern California Rental Housing Association, will continue our robust advocacy efforts that ensure all stakeholders are heard and considered through the legislative process. Our foot is still firmly on the gas pedal .
As we move forward into the new year and the new legislative season, I encourage you to stay engaged and bring a friend with you! Building a network of rental housing colleagues is the easiest way to stay current on news and trends… and the easiest way to find colleagues is at the next SCRHA event! There are fun events happening every month so stay tuned to the @SoCalRHA socials for the latest and greatest in education and social events Also, mark your
calendars for the Rental Housing Conference and EXPO on May 8, 2025 .
I look forward to seeing you at the next event with a renewed sense of optimism for the future of housing in Southern California! I wish everyone a happy and prosperous new year!
Sincerely,
Buck Buchanan
AAlan Pentico, CAE
Executive Director
Southern California Rental Housing Association
Executive Director’s Message:
Happy New Year! Looking Forward to 2025.
s we step into 2025, I want to welcome our 2025 Board of Directors who were installed during the holiday party in December . I look forward to working closely with new SCRHA President Buck Buchanan, Buchanan Property Management, and the many other volunteers who generously share their time and talents with the Association . With their wisdom and guidance, SCRHA will continue our efforts to create a thriving rental housing community through advocacy, education, and collaboration .
With a full calendar of classes and events, now is a great time to save the dates for our most popular events Registration is already open for the 2025 Rental Housing Conference & EXPO on May 8 at Town & Country Resort . We’re also excited to announce that Maintenance Mania will be back! You won’t want to miss this exciting day .
We’re also bringing back our popular Lunch & Learn series to the region and kicking off with an event in Temecula on February 13 at Shadowridge Golf Club This event is a chance to enjoy lunch with rental housing colleagues and get a legal update from Attorney Todd Brisco, Todd A Brisco & Associates, APC . Can’t make it to Temecula? We’ll be hosting three different Lunch & Learn events throughout the region, so be sure to bookmark your calendar and subscribe to our emails for updates
While I hope that you join us for events and classes throughout the year, I want to take this opportunity to invite you to join one of the standing committees at SCRHA As a volunteer-driven organization, we depend on the guidance and leadership of our members to bring value-rich programming to our members Serving on a committee is a way to strengthen your relationship with rental housing colleagues and contribute to a successful event or class series If you’d like to learn more or submit an application, please visit our website or email info@ socalrha .org .
Together, let’s make 2025 a year of connection, growth, and achievement . I look forward to seeing you at these events and working alongside you to make them a success .
CE LE B R ATIN
CE LE B R ATIN G
Entrada | Greystar
El Pedregal | Cirrus
Hitching Post Motels, Inc
Whalen Properties
Limoncello
Jack Zolezzi Trust
Hitching Post Motels, Inc.
John Belanich Company
Whalen Properties
Creaser & Warwick, Inc .
Jack Zolezzi Trust
D & C Limited Partnership
GTF Properties
The Kevane Company, Inc .
Donna Webber Company
Elinor van den Akker Company
John Belanich Company
RG Investment Real Estate Services Inc
Yvonne Coover-Stone Company
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Scott Tallman Company
Yvonne Coover-Stone Company
Wilma H. Healey Company
Wilma H Healey Company
T1 PropertiesE
Legar Management
Legar Management
M C Contracting Service
M. C. Contracting Service
Kelly Ann Schneider Company
Josephine Cree Company
RJW Properties, Inc.
RJW Properties, Inc .
Laura Sperry Company
Laura Sperry Company
ATI Restoration, LLC
Wakeland Housing & Development
David Olson Company
Caesar Oriol Company
Creaser & Warwick, Inc.
ATI Restoration, LLC
Muraoka Enterprises Inc
DNC Limited Partnership
Fred and Shirley Salzer
David Olson Company
People Helping Others Prop . Mgmt .
Fleetwood Properties
The Kevane Company, Inc.
Muraoka Enterprises Inc.
Law Offices of Andrew C. Laubach
Rolf Steeve Company
Elinor van den Akker Company
People Helping Others Prop. Mgmt.
Walz Properties| Fortuna Investment Group
Kenneth Rundlett Company
RG Investment Real Estate Services Inc.
Laurence and Carolyn Kaiser
Caesar Oriol Company
Errol Tonsky Company
Fred and Shirley Salzer
Gregory Robinson Company
Fleetwood Properties
Richard Hancock Company
Rolf Steeve Company
Sierra Mar Properties LLC - Paul Hasley
Kenneth Rundlett Company
Mary Ann Tarantino Company
Law Offices of Andrew C. Laubach
Mark Marshall Company
Elizabeth Dammassa-Uglik Company
Walz Properties| Fortuna Investment Group
REC Properties| Penasquitos Point Apts
Mark Marshall Company
Debra Luckey, Owner
Elizabeth Dammassa-Uglik Company
REC Properties| Peasquitos Point Apts.
Dennis & Tina Daneri
Dennis & Tina Daneri
Mira Bella Apartments | Simpson Property Group
Laurence and Carolyn Kaiser
Terry Moore, CCIM, Inc
Errol Tonsky Company
Jerry Conway Company
IHA Partners Inc
Gregory Robinson Company
Jeffrey Malik Company
Richard Hancock Company
Sierra Mar Properties LLC - Paul Hasley
George and Celida Haddad
Mary Ann Tarantino Company
Al Smithson Company
Terry Moore, CCIM, Inc.
Longley Family Trust - Nancy Longley Trustee
Jerry Conway Company
Cobblestone Park Apartments
IHA Partners Inc.
El Conquistador Apartments
La Mesa Apartments
Jeffrey Malik Company
Los Olivos Apartments
G. Beit-Ishoo / SeaDate
Oro Park Apartments
George and Celida Haddad
Waltwood Properties
Al Smithson Company
Marilynn Nemeroff Company
Longley Family Trust - Nancy Longley Trustee
Nancy Mullins Company
Waltwood Properties
NLJ, LLC
Marilynn Nemeroff Company
Brothers II
Nancy Mullins Company
NLJ, LLC
Brothers II
Mira Bella Apartments | Simpson Property Group
Araz Yacoubian Company
Araz Yacoubian Company
Sherry Bird Company
Sherry Bird Company
Sciuto Properties
Tom Brady Company
Sciuto Properties
Axiom Real Estate
Tom Brady Company
Barry Treahy Company
Axiom Real Estate
Dennis and Marian Pierce
Barry Treahy Company
Betty Bark Company
Dennis and Marian Pierce
David M . Pierce
Jesus and Yolanda Arroyo
Tamra Fuller Fountas
Betty Bark Company
Buchanan Property Management Corp .
Brian Steer Company
David M. Pierce
DPV Real Estate LLC
Tamra Fuller Fountas
Eagle Property Management
Buchanan Property Management Corp.
Arbors at California Oaks Apartment Homes
Brian Steer Company
Eagle Property Management
JDS Security
SatisFacts Research
Arbors at California Oaks Apartment Homes
By Pat Moran, Aaron Read & Associates
C APIT O L N E W S California S
ESSION BEGINS: The California Legislature returned on December 3, 2024, for the start of the twoyear legislative session . Joining the Legislature for the first time are 29 newly elected Senators and Assemblymembers who were swornin at a ceremony at the State Capitol . When you couple the 29 new members that were sworn-in with the 30 new members from two years ago, half of the legislative members have two-years of experience or less as we enter this new session
After members were sworn-in, they got down to business and each respective house elected their leaders for the 2025-26 session . To no one’s surprise, Assembly Member Robert Rivas was reelected as Assembly Speaker and Senator Mike McGuire was reelected Pro Tem of the Senate . There may be some additional changes to their leadership teams and committees as members have termed out and been replaced by the newly elected . Once the changes are announced, we will let you know
SPECIAL SESSION: The Senate and Assembly also convened a special session called by the Governor, with a focus on bolstering California legal resources to protect civil rights, reproductive freedom, climate action, and immigrant families Both the Assembly and Senate gaveled in the special session — then quickly adjourned until January 6, 2025 — without taking any action .
Budget staff introduce initial bills including the Senate version that includes $25 million for deportation legal services and $10 million for cities and counties, on top of the $25 million sought by the Governor for the state Department of Justice .
NEW BILLS: The newly sworn in members did not waste any time introducing new legislation Approximately 100 bills have been introduced in the first two days of session with many more to follow. While the Legislature has adjourned until January 6, 2025, members will still be able to introduce legislation through the month of December
We expect to once again see a significant number of bills introduced that SCRHA will have to fight this year.
BILL LIMIT: Legislators will have to pick their bills more carefully . After decades of complaints that too many bills are introduced each year, legislative leaders proposed, and the rank and file approved, a limit of 35 bills each for the two-year session That’s down from 50 in the Assembly and 40 in the Senate . If past is prologue, we will still see a significant number of bills introduced as there will be exceptions to the rule
BUDGET: The Governor is constitutionally required to present his budget to the Legislature by January 10th of each year . You may recall, last year state leaders closed a roughly $47 billion General Fund shortfall across the three-year “budget window” (fiscal years 2022-23 through 2024-25) using a broad array of budget tools . The solutions in the 2024-25 budget package included:
• $16 BILLION in spending reductions
• $13.6 BILLION from a combination of additional revenue (which is mostly temporary) and internal borrowing from state special funds .
• $6 BILLION in fund shifts, which transfer certain costs from the General Fund to other state funds
• NEARLY $6 BILLION in withdrawals from two reserves: the Budget Stabilization Account (also known as the rainy-day fund) and the Safety Net Reserve
• $3.1 BILLION in funding delays and pauses . This includes delaying, for two years, an expansion of food assistance to undocumented Californians as well as postponing, for six months, a wage increases for people who provide services to Californians with intellectual and developmental disabilities
• $2.1 BILLION in deferrals, which postpone certain payments to later years . This includes shifting one month of state employee payroll costs from June 2025 (the last month of the 2024-25 fiscal year) to July 2025 (the first month of the 2025-26 fiscal year).
As a result of these budget actions, the Legislative Analyst’s Office (LAO) in its annual fiscal outlook, estimated that California will face a $2 billion deficit next year, a gap that could be resolved with some minor solutions However, they did warn that there is little to no room for new programs .
Both the Assembly Speaker Robert Rivas and Senate Pro Tem Mike McGuire also endorsed a cautious approach
“We need to show restraint with this year’s budget, because California must be prepared for any challenges, including ones from Washington,” Rivas said in a statement. “It’s not a moment for expanding programs, but for protecting and preserving services that truly benefit all Californians.”
FEDERAL FUNDS: While a small $2 billion deficit is welcome news (as opposed to what some had expected), the deficit could certainly grow depending on actions taken in Washington D .C . when the new administration takes over. A significant share of federal funding for California flows through the state budget.
The enacted state budget for 2024-25 includes $153 BILLION in federal funds . This is more than onethird (33.9%) of the total state budget. Any significant reductions would negatively impact the state’s budget .
The Legislature will begin budget related hearings sometime after the Governor presents his budget to the Legislature on or before January 10th
Southern California Rental Housing
Association is thrilled to invite you to the 2025 Rental Housing Conference & EXPO.
“Get in the Groove" with a day filled with exploration, connection, and education on Thursday, May 8 from 8:30 AM to 3:00 PM.
MAY 8, 2025 8:30 AM - 3:00 PM
SCRHA Owner or Property Manager Members: $25 Owner or Property Manager Non-Members: $40
Town & Country Hotel
500 Hotel Circle N San Diego, CA 92108
The Current State of Property Insurance in California
By Joe Nowarski, Managing Partner, Kern Insurance Associates
The market for commercial property insurance continues to be challenging, especially in regions like California that are highly susceptible to natural disasters As outlined below, several factors contribute to premium increases for commercial property coverage, and these are particularly pronounced in California due to its unique climate and geographical characteristics
FACTORS CONTRIBUTING TO PREMIUM INCREASES
• Catastrophe Losses California faces an array of natural disasters, including wildfires, earthquakes, and floods. The frequency and severity of these catastrophes have significantly stressed the insurance industry . Over the past four years, annual insured losses globally have exceeded $100 billion, with California
contributing substantially to these figures due to its wildfire seasons and seismic activity. In 2023 alone, total insured losses globally were a staggering $118 billion, with severe convective storms accounting for 58% of the losses globally
• Reinsurance . Although reinsurance capacity improved in 2023 and into 2024, the cost of available reinsurance capacity remains high . The continued impact of catastrophic events is a major factor driving up costs, along with the increasing cost of capital, financial market volatility, and inflation. These expenses inevitably get passed on to consumers . For California, which has a high exposure to natural disasters, reinsurance costs are a significant burden on insurance carriers
• Underinsurance . Due to the high cost of living and material costs in California, insured property replacement values continue to lag . Just 43%
of business owners nationwide have increased their policy limits to accurately reflect current replacement costs . In California, this issue is exacerbated by the high costs of construction and rebuilding, which can lead to significant gaps in coverage after a loss
• Property Replacement Costs . Nonresidential construction costs in California have soared, driven by a 65% increase in fabricated structural steel and a 37% increase in the price of concrete products over the past four years . Machinery and equipment costs have also risen by 22% These increases are compounded by a lingering supply chain disruption that continues to affect rebuilding efforts post-disaster.
• Skilled Labor Shortage Nearly half of construction costs are wages and salaries, which have increased by 22% over the past four years Despite higher wages, 77% of contractors are struggling to find skilled labor. This shortage results in higher rebuilding costs and longer delays, potentially increasing business interruption losses
• Property Rate Need . Escalating loss trends, particularly from catastrophes, severe weather, and large fires, have outpaced rate increases. Insurers are expected to raise rates again this year to close the gap between escalating costs and premiums .
CALIFORNIA: A HOTSPOT FOR BILLION-DOLLAR DISASTERS
2023 was a historic year for billion-dollar weather and climate disasters in the U S , with California bearing a significant brunt of these events. There were 28 weather and climate disasters costing at least $1 billion each, surpassing the previous record of 22 in 2020 . The total cost of these disasters was $92 .9 billion, with California experiencing notable impacts from wildfires and floods.
• Wildfires. Wildfires are a persistent threat in California, with the 2023 wildfire season being particularly devastating The historic town of Lahaina on Maui Island was destroyed by a
firestorm exacerbated by winds from Hurricane Dora, resulting in $5 .6 billion in damages and making it the deadliest wildfire in the U.S. in over a century. California’s vulnerability to wildfires is heightened by prolonged droughts, high temperatures, and strong winds, which create perfect conditions for fires to spread rapidly.
• Flooding. California also faced significant flooding events in 2023, particularly in areas that were unprepared for the deluge . Flooding in California and Florida accounted for substantial portions of the total disaster costs for the year . The state’s complex topography and variable climate make it susceptible to both coastal and inland flooding, which can cause widespread damage to properties and infrastructure
• Impact on Insurance Carriers and Rates The increasing frequency and severity of natural disasters have led some insurance carriers to withdraw from the California market, unable to sustain the high losses and claims payouts . This exodus reduces the competition in the insurance market, leading to higher premiums for consumers In some areas, property owners struggle to find any coverage at all, pushing them to rely on the state’s insurer of last resort, the California FAIR Plan, which often comes at a higher cost and with limited coverage options .
WAYS PROPERTY OWNERS CAN MITIGATE RISKS
Property owners can mitigate risks and protect their properties by focusing on proactive maintenance and safety protocols . Some key strategies include:
• Regularly updating electrical, plumbing, and HVAC systems to reduce fire and water damage risks
• Implementing fire prevention measures, such as installing fire-resistant materials, trimming vegetation, and creating defensible spaces around the property
• Installing advanced security systems, including alarms, cameras, and lighting, to deter theft or vandalism .
• Conducting regular property inspections to identify and resolve potential hazards such as roof damage or foundation cracks .
• Keeping insurance appraisals current and ensuring building valuations align with actual replacement costs, reducing the risk of underinsurance .
TOP CONSIDERATIONS IN PROPERTY INSURANCE FOR 2025
In 2025, the top issues facing property insurance will likely include continued premium hikes due to the increasing frequency of natural disasters, especially in high-risk areas like California Carriers may continue to pull out of certain regions, forcing more property owners into expensive, surplus lines Additionally, rising construction costs and inflation will further drive up the costs of rebuilding and replacement, making
accurate valuations more important than ever Lastly, regulatory changes could impact the market as state governments grapple with balancing consumer protection and insurer sustainability
The challenges facing the commercial property insurance market are multifaceted and particularly acute in disaster-prone areas like California With the increasing frequency of billion-dollar disasters, both insurers and property owners must adapt to a rapidly changing environment By understanding the factors driving premium increases and taking steps to mitigate risks, stakeholders can better navigate the complexities of the property insurance market and work towards a more resilient future .
Joe Nowarski is an accomplished insurance professional with 30+ years of experience in the industry . He has established himself as a trusted advisor for clients seeking expert guidance on insurance policies, underwriting, and risk management . His experience has been vital to his success as the Managing Partner at Kern Insurance Associates, a PCF partner For more information, call Mr Nowarski at (661) 835-4542 or go to www Kern com
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THREE LEASING KPIS EVERY PROPERTY MANAGER SHOULD TRACK TO OPTIMIZE THEIR BUSINESS
By Matthew Kaddatz
According to the NMHC Quarterly Survey of Apartment Conditions, 66% of businesses say that apartment market conditions in their local markets are looser than three months ago, which means this year’s leasing season will be more competitive than ever Between slowing rent growth, rising inflation, and new apartment construction developments entering the market, now is the time to evolve your leasing and retention strategy to make the most of demand Read on to find out the key performance indicators (KPIs) you should be tracking and how to optimize your leasing flow to turn leads into leases faster
WHAT IS AN OPTIMAL LEASING FLOW?
While each property management business’s leasing
flow may look slightly different, there are certain steps everyone should follow to successfully convert leads to leases An optimal leasing flow — one that fills vacancies quickly — should look like this:
To further optimize your leasing flow beyond these steps, you should monitor several KPIs . KPIs are
important to evaluate on a regular basis, as they help you to better understand the health of your business and how you stack up to your competitors and/or the previous year
Top three leasing KPIs property managers should track
KPI 1: LEASING PERFORMANCE
The first and arguably the most important KPI you should track is your leasing performance, with the goal of identifying which leasing agents are attracting the most leads and establishing the ROI of your leasing efforts . When measuring leasing performance, there are a few metrics you should keep in mind, including:
• Leasing activity: You need a tool that can show you the total number of leads, showings, applications, and leases Having technology that tracks this for you allows you and your staff to identify outliers and pinpoint areas for improvement to maximize your efforts .
• Inquiries by source: You need to be able to attribute the number of prospect inquiries for specific units, properties, or campaigns to their source (such as listing sites) so you can evaluate the ROI of your marketing efforts and ensure you’re getting the most out of your marketing spend .
• Future occupancy: You need to measure leases needed to reach your 95% occupancy metric with leasing conversions so that you can give your leasing teams tangible targets to meet occupancy goals and reduce days vacant
KPI 2: TURN PERFORMANCE
The second KPI you should track is unit turn performance, with the goal of turning each unit as quickly as possible . Unit turns can be challenging, as a lot of work goes into transitioning an apartment or single-family home from move-out to move-in ready . Some ways you can put technology to work are by using a single system that allows you to track turn tasks across units, coordinate vendors and timing, and manage turn-related documents If you’re relying on multiple tools to manage unit turns or are still
using paper-based processes, consider transitioning to a fully digital system so you can increase visibility and turn units more efficiently
For instance, with AppFolio Property Manager, you can post recurring work orders to a unit turn, generate unit turn detail reports, check the status of unit turns across properties, and communicate with vendors right in the platform .
KPI 3: RENEWAL PERFORMANCE
The final leasing KPI you should track is renewal performance, with the goal of removing friction in the renewal process Maintaining occupancy is essential for success . It is far easier and more profitable for your residents to stay, as this avoids vacancies, expensive and time-consuming turnovers, and the need to spend money on marketing to attract new renters Ideally, you want to make the renewal process as streamlined and easy as possible for your residents Below are five steps you can follow to strengthen your renewal strategy .
1 Provide flexible lease terms by allowing residents to choose the best offer for their needs .
2 . Consider flat rate renewals to decrease the risk of maintaining rent in order to maintain occupancy .
3 . Bring renewals to the renter — send, track, and countersign lease renewals online with an online portal .
4 Reach out to your residents before their lease ends to see if they’d like to renew . Automatic digital reminder emails can really help with this process .
5 Use data to your advantage by creating a renewal summary report so you can see your renewal performance over time
Leasing season is always a busy time of year for your teams; however, when you leverage automated and online tools, you can optimize your workflow to turn leads into leases faster A comprehensive leasing platform, like AppFolio, can help you and your team reduce the number of days your units are vacant
Matthew Kaddatz is the Sr . Director of Product at AppFolio Property Manager . Matthew has spent the past 15 years working in the property management industry with experiences including founding and operating a property management company, as well as building technology for property management companies In his current role, he is responsible for ensuring AppFolio is continually building innovative tools that help property management businesses grow and become more efficient
2025 Board Installation
JOIN SCRHA
Southern California Rental Housing Association is the trusted source of support for rental housing providers in San Diego, Imperial, and southern Riverside Counties
SCRHA Membership gives you access to a comprehensive resource hub so you can confidently face regulatory challenges and operational issues with expert guidance
ADVOCACY REPRESENTATION
SCRHA is a strong and effective advocate for rental housing providers We fight for favorable policies and laws at all levels of government
RENTAL FORMS & WHITE PAPERS
Ensure compliance with our comprehensive library of rental forms, notices, contracts, and white papers
OPERATIONAL ADVICE
Navigate landlord-tenant issues with confidence when you consult our seasoned professionals for expert guidance and advice
EDUCATIONAL RESOURCES
Keep informed on industry trends and best practices with classes and webinars that enhance your knowledge and skills
NETWORK
Do business with professionals who support the industry with our trusted network of Suppliers available online
Thinking of Buying Property in Southern California?
By Sasha Struthers, Esq , Struthers Legal APC
I’ve had a few consultations lately with first time buyers looking to acquire a duplex or triplex in the Los Angeles Area . What I learn (and the potential buyer learns) is that they have no idea what laws they are to be subjected to, more specifically what they CANNOT do with their property in many parts of the Los Angeles Area When looking to purchase residential rental real property in the Los Angeles Area for the first time, here are some things one needs to become educated on before deciding to submit an offer.
LIMITATIONS ON EVICTIONS
Let’s start from the state level and go down to the local level . California does have a form of rent control known as the California Tenant Protection Act of 2019 (a/k/a, Assembly Bill 1482 or “AB 1482”) . AB 1482 governs certain types of residential rental properties and gives tenants residing at a property subject to it two main protections: (i) a limit or “cap” on rent increases and (ii) “Just Cause” eviction protections, or in other words, as an owner you can’t just end a month-to-month lease at anytime
At a local level the laws are more restrictive . Many of the cities in the Los Angeles Area have their own rent control outside of AB 1482 . Many of these cities restrict or even prohibit evictions for things that AB 1482 does allow For example, not all cities within the Los Angeles Area allow property owners to evict a tenant in order
to substantially remodel their rental unit Those that do allow you to remove a tenant to substantially remodel usually make the right unilateral, as in under the control of the tenant who can opt for permanent relocation money if the owner wants to remodel the unit, or the tenant can have you pay for temporary relocation and can later move back in at their existing rental rate if they wish to do so .
The risk here is that you just invested a lot of money in temporary relocation and the remodel, and won’t be able to recapture that back in the form of market rent or any reasonable rent increase amount . Further, more cities are even throwing in properties that are exempt from AB 1482 into their “Just Cause” eviction restrictions, such as condominiums and and singlefamily houses .
Be aware of owner occupancies because those too are not set in stone . Some jurisdictions prohibit a landlord from evicting a tenant to “owner occupy” a rental unit when a tenant has resided there for a specified period of time and/or is past a certain age, disabled, or terminally ill . There may also be a limit to the number of units an owner or close family relative of an owner can occupy themselves Owners usually have to occupy the property for a minimum of one or two years, fill out a lot of paperwork, and provide personal information about the owner or family member that will be occupying the
Please turn to page 24
unit The eviction restrictions and regulations make the process of getting a unit back and even owner occupying very cumbersome and expensive .
NOT EVERY PART OF THE LOS ANGELES AREA IS THE SAME
Within Los Angeles County there are hundreds of local jurisdictions that are within its boundaries, but not all these jurisdictions are covered by the County’s laws and regulations . Los Angeles County’s unincorporated areas have their own regulations, and Los Angeles City, being the largest city within the county has it’s own set of regulations along with many other smaller cities
An address may go by “Los Angeles” but may actually be located within an area outside of the City of Los Angeles’ jurisdiction For example, for Culver City, part of it is Los Angeles and part of it is the City of Culver City . Sometimes people use Los Angeles, and sometimes people use Culver City for their address, and Culver City and Los Angeles city have two different rent controls
When looking to buy real estate you need to know the exact jurisdiction that a property is located in Otherwise, you are potentially making purchasing decisions based on the wrong laws and regulations . Each local jurisdiction has their own way of doing things, and are adopting new regulations all the time or even establishing rent control boards they did not have before .
ILLEGAL UNITS ARE NOT “BONUSES”
The illegal unit or “bootleg unit,” especially one that is tenant occupied, may be listed as a “bonus” but in reality it is a nightmare . You want to make sure the certificate of occupancy matches what is in place. An illegal garage conversion, guest house, or addition can be very cumbersome to deal with if it has a tenant in place . The process to get the unit vacant is not very straight forward, incredibly expensive, and comes with a substantial amount of liability .
NO, YOU CANNOT CONTRACT WITH TENANTS OUTSIDE OF THE LAW
So often buyers or landlords reach out to me asking if they can sign a contract with a tenant to raise rent in excess of allowable rent increase limits and the answers is a resounding NO! You cannot raise rent or otherwise have a tenant agree to waive their rights outside of the law . Even if a tenant signs a whole new lease and agrees to the increased rent amount and agrees to waive any of the “Just Cause” eviction restrictions, that contract is illegal, potentially void on its face, and certainly voidable The established housing and tenant protection laws are not waivable or optional, even if the tenant is month to month . That is the whole point of rent control and tenant protection regulations…to control the landlords ability to raise rents and evict tenants
THE ELLIS ACT IS NOT ALWAYS YOUR BEST BET
For those unfamiliar with the Ellis Act, in short, the Ellis Act is a law in California that allows land-lords to go out of the residential real estate business The Ellis Act carries with it the property, even when it is sold, and recorded on title The application of the Ellis Act can vary by local cities if they have local, additional rules . Under the Ellis Act, landlords who elect to go out of the rental housing business CANNOT rent their units out at all . You also have to
take ALL UNITS at the property off the rental market, and not just select units .
The Ellis Act to me, in my view, is a last resort You “Ellis Act” the property if you are unable to get units back legally through lawful eviction or tenant buyouts The Ellis Act comes with lots of strings attached . Many of these restrictions include giving tenants the right of first refusal to re-rent the unit if it goes back on the rental market within a specified period of time and at potentially the same rent or their rent at the time of enacting the Ellis Act plus applicable rent increases, civil penalties and liability in cases when a property owner “Ellis Acts” their property and then puts the units back on the market before expiration of a specified time period
While people may buy residential properties for owneroccupancy, life often changes . You may be in a position that you need to sell the property instead, but its value is drastically impacted by the Ellis Act because now the pool of potential buyers is smaller (e .g ., owner occupiers
only) rather than other landlords trying to grow their portfolio of income properties . This is especially true if you “Ellis Act” a property with three or more units because many buyers of those only need one unit to live in and would need the income from the other units to offset the mortgage and other costs but will not purchase it because the property is subject to the Ellis Act .
CONCLUSION
Some buyers are buying in the Los Angeles Area for the first time, relocating from out of the state or country, and they have no idea what rent control is nor the severity of it. Every real estate deal is different. There are certainly properties that one can buy and owner-occupy . But the real purpose of this article is to stress the importance of getting educated and doing your due diligence to become thoroughly informed on each property you are potentially looking to buy . It may behoove a buyer to hire an attorney to discuss the particular aspects of a property and what risks may exist based on information available from the seller and public records .
If you are interested in learning more about tenant buyout agreements and wish to have a one-on-one session to go over your specific situation, you can sign up for a consultation with Sasha. Sasha Struthers is a California licensed Attorney and Real Estate Broker with a law practice that focuses on ‘Cash for Keys’/ tenant buyouts and government agency complaints such as REAP, CRD, and Orders to Comply Sasha’s experience managing a 15-building real estate portfolio, including five apartments subject to LARSO has allowed her to help landlords strategically reposition their portfolios, maximize income, and reduce management stress You can check out her law practice at www struthers legal
Budgeting Success In Property Management
by Max glassburg, Yardi breeze
As a rental property manager, budgeting is a critical aspect of your responsibilities The success of your property management activities hinges on your ability to create an effective annual budget that accounts for market factors, inflation, legislation and other variables Simply copying and pasting last year’s budget won’t cut it . In this blog post, we’ll explore budgeting tips and strategies to help rental property managers prepare a comprehensive and forward-thinking budget for their properties .
UNDERSTANDING THE PURPOSE OF BUDGETING
A well-executed budget serves several purposes for property managers It helps forecast rental income, property upkeep expenditures and business expenses, allowing you to set attainable financial goals for growth
and investment A budget also enables you to predict fluctuations and pivot towards profitability . By defining what success means for your property management activities, you can align your budget with your overall objectives
COMPREHENSIVE BUDGET BASICS FOR PROPERTY MANAGERS
Budgeting for rental properties requires considering both day-to-day operations and long-term goals . The operating budget covers out-of-pocket expenses (OPEX) needed to maintain your properties, such as rent, maintenance, utilities, financial fees and insurance . On the other hand, the capital budget plans for future growth and investment, including funds for property acquisition, major maintenance and improvements .
BUILDING THE PROPERTY MANAGEMENT BUDGET
Start by creating a budget planning schedule well in advance, including fixed internal deadlines for tasks Consider changes in occupancy and engage with residents to understand their needs and preferences . Utilize work order data to predict equipment failures and assess staffing levels . Benchmark your operating expenses against competitor portfolios to identify areas for improvement and control costs . Stay ahead of resident trends by understanding their evolving needs and preferences, using technology to automate processes and compile data efficiently .
PRESENTING COMPELLING REASONS FOR BUDGET ITEMS
Don’t shy away from requesting items that may seem out of reach initially . Back up your requests with compelling evidence of how these investments will improve operations, enhance resident satisfaction and lead to cost savings in the long run . Building a strong case for budget items can persuade property professionals and regional managers to approve your requests
BUDGET FOR WORST CASE STAFFING SCENARIOS
The rental property management industry has been dealing with a 33% turnover rate, with thousands of dollars spent on recruitment, temporary staffing and
placements year after year, yet few budget for vacancy in their team, or for the what-ifs .
What if we get lots of snow and fall behind on turns in the winter? Will this impact leasing and occupancy? What about during the summer when everyone wants to take vacation, but this is also when you happen to be turning more apartments? It is always better to plan and budget for the worst, and if you don’t end up needing the staff, great, but if you do, you budgeted for it
Budgeting success in property management requires proactive planning, data analysis and a focus on aligning the budget with your property management objectives By using historical data, engaging with residents and staying updated on industry trends, rental property managers can create budgets that drive growth, improve efficiency and ensure the longterm success of their properties . Remember, a budget is a guide, not a rigid plan, so stay flexible and adapt to changes as needed .
By implementing these budgeting tips and strategies, rental property managers can better navigate budgeting seasons, set achievable financial goals, and make informed decisions for their properties’ success
HAPPY BUDGETING!
Max Glassburg is a senior marketing writer at Yardi He is usually found writing for Yardi Breeze and especially enjoys connecting with clients and sharing their successes with the real estate community In his spare time, he is probably working it on the guitar . Yardi Breeze is property management software designed for you . Our refreshingly simple platform puts you in charge of marketing and managing your entire portfolio, with support for residential, commercial, affordable, self storage, HOA/condo and manufactured housing properties . Rest easy knowing your reports are accurate with Yardi’s trusted, built-in accounting system to track your revenue and expenses And since Breeze is in the cloud, you can work from anywhere and get fantastic support when you need it
IS YOUR SAN DIEGO APARTMENT READY FOR THE BIG ONE? THE CASE FOR SEISMIC RETROFITTINGS
by Ali Sahabi, Optimum Seismic
The 7 .0-magnitude earthquake that struck Northern California in December 2024 serves as a sobering reminder of the seismic risks faced by all of California, including San Diego . While this recent quake caused limited damage, it highlights the urgent need for apartment owners and managers in San Diego to take action to protect their buildings and tenants from the devastating effects of earthquakes.
SEISMIC RISKS IN SAN DIEGO
Although San Diego is not as seismically active as Northern California, the region is still susceptible to significant earthquakes due to its proximity to major fault lines, such as the Rose Canyon Fault The 2010 El Mayor-Cucapah earthquake, which struck just south of the U S -Mexico border, reminded San Diegans that large quakes can occur closer to home than many realize This earthquake, with a magnitude of 7 2, caused widespread shaking and damage, particularly in areas along the U .S .-Mexico border . San Diego’s population is growing rapidly, with many
new residents choosing to live in older, affordable apartment buildings, many of which are soft-story structures . These buildings, often built before modern seismic codes were enacted, are particularly vulnerable to collapse during a major earthquake, putting tenants’ lives at risk and threatening the stability of neighborhoods
WHY SOFT-STORY BUILDINGS ARE AT RISK
Soft-story buildings, common in older parts of San Diego, feature a ground floor with little or no lateral support, typically used for parking or commercial spaces These structures lack the stability to withstand the lateral forces generated by earthquakes, making them highly susceptible to severe damage or collapse in the event of a major seismic event . For property owners in San Diego, ensuring the safety of tenants in these buildings is both a responsibility and a practical necessity .
THE ECONOMIC CASE FOR RETROFITS IN SAN DIEGO
Seismic retrofitting is a cost-effective solution to safeguard soft-story buildings. Retrofitting typically
costs between $5,000 and $10,000 per unit, depending on the building’s size and condition This is a far more economical option compared to the cost of rebuilding lost affordable housing units, which can exceed $575,000 per unit .
Additionally, retrofitting helps prevent the displacement of tenants, especially those in lowerincome communities, who are disproportionately affected by natural disasters. The Federal Emergency Management Agency (FEMA) reports that every dollar spent on disaster mitigation, including retrofitting, saves an average of $6 in recovery costs .
For apartment owners, seismic retrofitting not only protects the building but also lowers insurance premiums, reduces liabilities, and enhances the property’s resilience. Retrofitting provides peace of mind and helps avoid the financial impact of damage from a major earthquake, ultimately contributing to long-term stability and tenant safety
PROTECTING YOUR INVESTMENT
For San Diego apartment owners and managers, investing in seismic retrofits is not only an essential step in protecting tenants but also in preserving the longterm value of their buildings With earthquake risks still present, ensuring that your property is retrofitted will help safeguard against potential devastation and keep your tenants safe in the event of a disaster .
By taking action now, San Diego’s apartment owners can reduce future risks, protect their investment, and contribute to the overall safety of the community
Sources:
• Associated Press: “7.0 earthquake off Northern California prompts brief tsunami warning”
• Federal Emergency Management Agency (FEMA)
• San Diego Seismic Safety Initiative
The Optimum Seismic team has been making California cities safer
concrete, steel moment frame and unreinforced masonry (URM) buildings To arrange a complimentary assessment of your building’s earthquake resilience, contact Optimum Seismic at (833) 978-7664 or visit optimumseismic com
This Probably Never Happened to You, But...
By C. Finley Beven
The tenant from #3 left us a text message over the weekend, letting us know that she would be moving at the end of next month . Effectively, a 30-Day Notice of Intent to Move She had been with us for several years and had been a model tenant We will be sorry to see her go But back to the business- at-hand, this notice triggers a series of actions on our part . We promptly send her a confirming eMail, along with our cleaning instructions (subtitled “How to get back 100% of Your Security Deposit) The cleaning instructions give detailed advice on how to return the unit back to “move-in condition”, less ordinary wear and tear . Along with the cleaning instructions, we also send the tenant a copy of the move-in checklist that she signed when she moved in, indicating the move-in condition of each component of the unit .
OK, now the harder work begins … trying to find an equally fine replacement tenant . More to the point, how to ensure that a fine replacement tenant finds us
To this end, we have done the following .
Our tenant-applicants now also have access to our separate web-site, devoted specifically to our current vacancies: www .RentBandB .com/Vacancies
This website offers the following for our tenant applicants and owners:
1 . Easy to find . Applicants do not have to navigate through the corporate website .
2 . Easy vacancy search filters . By city, by price, by number of bedrooms, by whether pets are allowed, etc
3 Through this website, applicants can apply “online” before viewing . We require two forms of ID and their stated credit score We calculate the applicant’s rental budget, and accommodate showings based on the calculated rental budget
4 Only pre-screened applicants are given access to our rent-ready vacant units .
5 It has facilitated the creation of a pool of prescreened applicants . Once screened, our applicants can view any of our new listing as soon as they appear .
6 Email, Voice and Text Our staff can respond to eMail, voice, and text messages, daily, and through most evenings and weekends
This new website, www .RentBandB .com/Vacancies is working well for us and our owners
Dear Readers: This article is the 251st in a series based on the lessons we have learned the hard way. The contents of these articles are merely opinions of the writer. They are not intended as specific legal advice and should not be relied upon for that purpose. Our practice is in constant refinement as we adjust the way we operate in an ever- changing market. I appreciate your questions, comments, suggestions, and solutions.
C. Finley Beven has been involved in real estate, property maintenance and property management since 1975. He is a Certified Property Manager (CPM), Institute of real estate Management since 1987. He is also a Certified Community Association Manager (CCAM) and is a member of the California Association of Community Managers. He has a brokers License #00696626 in the State of California. He has a BA, USC; JD, Southwestern University Beven & Brock Property Management Co., Inc. 99 S. Lake Avenue, Pasadena. (626) 243-4145 Fin.Beven@BevenandBrock.com - www.BevenandBrock.com
The True Cost of Saying “NO” to Lower Rent
by David Crown, Los Angeles Property Management Group
I’ve always felt privileged that I get to manage properties in an environment like Los Angeles . It’s one of the most diverse, inventive, exciting and profitable real estate markets in the world . But with all that excitement comes an everchanging industry where the stakes are high and the decisions aren’t easy . One of the hardest decisions that I see owners have to make is whether to reduce or accept lower rent than they anticipated when leasing I’m not going to make an argument for dropping the price . I’m simply going to illustrate the actual costs of holding firm in two different scenarios .
OPPORTUNITY COSTS: LOST RENTAL INCOME
Obviously, the most immediate costs associated with holding an empty property is the lost rental income . As a property owner myself, I know there’s always a golden number in your head . The expectation . Many of us build empires out of expectations in our heads But there’s always a price to sticking to your price . Especially here . Some believe they understand this principle but many simply turn a blind eye to the actual costs . Let’s do that here with an example:
• Let’s say you pass on a rent that is $200 less than you expected to collect Your number was $2,500 Let’s then suppose you got the $2,500
but it took you four months That means you’ve lost $10,000 by not accepting the $2,300 that was offered initially To catch up and recoup that $10,000 it’ll take you exactly 50 months . That’s more than 4 years!
• Now let’s say you have a higher end property you want to rent at $5,000 per month You pass on a tenant offering $400 less per month and it takes you four months to fill it with a tenant that matches your original price . That $20,000 is losses over those 4 months that will take 50 months to make this up
If you’ve done this before, and I certainly have, did either of us actually figure the math on this? Let’s take a look at additional losses that are just as real .
FINANCIAL DRAIN OF MAINTENANCE COSTS
Sir Isaac Newton’s First Law of Motion states that an object at rest stays at rest . Well clearly, Newton never owned property It’s amazing how a property that just sits there and exists can require so much maintenance Properties are more like our bodies, they need constant nutrition, love and care or else things start to decline fairly quickly Vacant properties require ongoing upkeep to prevent deterioration You
know better than anyone else what these are for your property .
INCREASED RISK OF VANDALISM AND CRIME
I don’t wish it on anyone . The feeling of walking up to your property, putting the keys in the door but then the door just sways open You poke your head in and your worst fears are confirmed . The place has been sacked . That feeling is devastating No one thinks it’ll happen to them until it does . In my years in management, I’ve also seen the damage go beyond physical repairs Owners may face legal fees if they need to evict squatters or deal with other criminal issues .
REGULATORY COSTS AND COMPLIANCE ISSUES
For residential rental property owners in Southern California, so many cities now have a complex web of regulations regarding property ownership Residential owners may face fines for failing to maintain their properties, and there are specific ordinances that require registration for vacant buildings . Local municipalities are adding regulations designed to
minimize the negative impact of vacant properties . These can include maintenance requirements, safety inspections, and the necessity to keep the property secure .
EMOTIONAL COSTS
I had to put this one here at the end because it’s the one I actually relate to the most . Holding an empty property takes a psychological toll on an owner It’s the itch that can’t be scratched . The “To Do” list item that doesn’t get checked off the list There’s just an undeniable weight and ongoing stress to it all .
I work hard at my job to lift this weight off my client’s shoulders because I know just how heavy it can be . I know there are situations where you just need to hold firm and get your price . However it’s my job and the purpose of this article to make sure you count the cost accurately In my opinion, it’s critical to always weigh your golden price vs . the relief and cash flow that comes from lifting that weight sooner
David Crown is the Chief Executive Officer of Los Angeles Property Management Group and has more than 25-years of experience managing all types of income properties . He is a hands-on leader who has managed properties in 16 different states . For more information, Mr . Crown can be reached directly at (323) 433-5254 .
Argentina Ended Rent Control. Guess What Happened Next.
A free market for housing is one that benefits both renters and landlords.
By Steven Greenhut
It should go without saying, but the United States became the world’s most-prosperous large nation by generally allowing the market economy to work By contrast, Argentina has remained a poor backwater thanks in part to its far-reaching price controls . So it’s ironic that “free-market” America needs to learn a key economic lesson from down south, at least on the issue of rental housing
Argentina’s governments have since the 1940s reflected to some degree the Perón-ista worldview, named after Juan Domingo Perón and his authoritarianpopulist government . Last November, however, the country’s voters elected a flamboyant bushy-haired TV personality . The election was met with chagrin from most of the usual suspects .
“Javier Milei, a volatile far-right libertarian who has vowed to ‘exterminate’ inflation and take a chainsaw to the state, has been elected president of Argentina, catapulting South America’s second-largest economy into an unpredictable and potentially turbulent future,” reported Britain’s left-wing Guardian . There’s a lot of nonsense there to unpack .
For starters, Milei is a true market advocate and is nothing like the authoritarians to whom the newspaper compares him But at least the Guardian noted a key reason for his victory: Argentina faced 140 percent annual inflation rates, a collapsing economy, and poverty levels above 40 percent The Associated Press reported that Argentina’s government has spent
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recklessly and previously defaulted on its debt . These problems have persisted for decades
Since taking office, Milei imposed a policy of austerity (cutting public employment and pensions, paring social-service spending, etc .), which led to protests and economic convulsions, even though the president warned that fixing the economic mess required tough medicine While his overall policies have yet to turn the corner, Argentina has seen enormous benefits from one Milei policy: removing rent control .
Those of us who oppose such controls have for years pointed to reams of economic evidence proving that rent control reduces the amount of overall housing (by 15 percent in San Francisco, according to federal research) and reduces the quality of housing . While it reduces rent for some tenants, it creates scarcity in the housing market and dramatically increases prices for available units .
The way to fix California’s toughest housing markets is to remove—not increase—rent control . Argentina’s experiment confirms that conclusion.
Last fall, Milei eliminated what The Wall Street Journal termed one of the world’s “strictest” rent-control laws Per its report: “The Argentine capital is undergoing a rental-market boom . Landlords are rushing to put their properties back on the market, with Buenos Aires rental supplies increasing by over 170 percent While rents are still up in nominal terms, many renters are getting better deals than ever, with a 40 percent decline in the real price of rental properties when adjusted for inflation.”
With price controls, businesses flee the market because they cannot get a sufficient return on investment. As a result, supply for whatever is controlled falls even as demand stays steady or rises . That’s why price controls on gasoline lead to long lines at gas stations If prices can’t adjust to reflect supply and demand, then people simply can’t get the items they want .
Sure, removing controls initially raises prices—but then new businesses jump into the fray to capitalize on the market and the boost in competition then reduces prices . By contrast, tightening up government price
controls just leads to increasing levels of scarcity and misery .
Here’s another interesting fact from Argentina’s rent controls, per the Journal: “In Buenos Aires—a city dubbed the Paris of the South for its broad avenues and cafe culture—many apartments long sat empty, with landlords preferring to keep them vacant, or lease them as vacation rentals, rather than comply with the government’s rent law .” The newspaper said that owners of many of those 200,000 units are now putting them on the market .
“The way to fix California’s toughest housing markets is to remove—not increase—rent control. Argentina’s experiment confirms that conclusion.”
I’ve reported on a similar situation in San Francisco, which has more than 52,000 vacant units . Many owners would rather keep them empty than rent them out under the city’s rent-control terms—and they fear that once they allow strangers to rent their apartments that they’ll never be able to get them out given the city’s strict tenant laws . Instead of addressing economic reality, San Francisco acted like Perónistas and passed an Empty Homes Tax
Back in the United States, President Joe Biden proposed a national rent control, an idea that’s economically illiterate and probably unconstitutional . In California, the same progressive activist group that sponsored two failed ballot measures expanding rent control is back again with Proposition 33 .
California already has rent controls, but this would allow cities to pass extreme ones, including vacancy controls that forbid owners from raising rents between tenancies California voters have the evidence before them . They can head down a path of scarcity and misery . Or they can let the market work . And it does work, as renters suddenly found many competitively priced apartments in Buenos Aires
Steven Greenhut is the Western region director for the R Street Institute and an author, speaker, public commentator and coalition ally in venues where it is possible to move state and local policy in a free-market direction Steven is the author of three books, Abuse of Power: How the Government Misuses Eminent Domain (2004); Plunder! How Public Employee Unions are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation (2009); and Winning the Water Wars: California Can Meet its Water Needs by Promoting Abundance Rather than Managing Scarcity (2020)
Financial advisory Valuation of Net Leased Properties: It’s the Cash Flow!
BY CHRISTOPHER MILLER, MBA SPECIALIZED WEALTH MANAGEMENT
This month, we will explore how Net Leased (NN or NNN) properties are valued . Like all investment properties, their worth is strongly influenced by the amount of cash flow they generate. Net Leased Properties’ sales prices will additionally be affected by 1. The credit quality of the cash flow generated and 2. The length of time that cash flow will be generated.
CREDIT QUALITY OF CASH FLOW
The credit quality of your cash flow will come from the credit quality of your tenant Let’s consider two hypothetical 100,000 square foot warehouses that are next door to each other . One of these warehouses is occupied by Amazon while the other houses Crazy Joe’s electronics . Although I’ve never heard of Crazy Joe before, it turns out that he sells $200 million worth of electronics per year, a figure that is growing 10% annually, and his company earns $20 million of annual profit. Although Crazy Joe’s is indeed a successful business, Amazon earned $30 Billion of profit in 2023 on $574 Billion of sales If both tenants have 5 years remaining in their leases at the same terms (rental rate, increases, options), the Amazon property will be worth more due to credit quality: Although both are
substantial companies, the probability of receiving rent payments for the next 5 years is much higher with Amazon than with Crazy Joe’s .
DOES THE CASH FLOW INCREASE?
Inflation will always be a threat to cash flow producing investments. If a stream of cash flows is not growing, then the actual purchasing power of those income is shrinking as inflation decreases its real value. The vulnerability that a series of payments has to inflation can therefore negatively affect the value of those cash flows.
Apartments can have inflation protection built in. Inflation often leads to rising rents, which in turn leads to rising values through increased cash flows. Net leased properties, on the other hand, features rents set by contract. If inflation begins to rise, we as landlords can not raise rents to compensate, as we are bound by the terms of our contract
Rental increases built into leases can positively affect the value of a net leased property . Let’s alter our above example slightly and say that our two neighboring 100,000 sf warehouses are BOTH occupied by Amazon Both properties have 20 years remaining in their lease term Building A has annual 1% rent increases, while
Christopher Miller is a Managing Director with Specialized Wealth Management and specializes in tax-advantaged investments including 1031 replacement properties Chris’ real estate experience includes work in commercial appraisal, in institutional acquisitions for a national real estate syndicator and as an advisor helping clients through over five hundred twenty-five 1031 Exchanges Chris has been featured as an expert in several industry publications and on television and earned an undergraduate business degree and an MBA emphasizing Real Estate Finance from the University of Southern California . Chris began his real estate career in 1998 . Call him toll-free at (877)
.
seekers cite a company’s commitment to diversity as an factor in deciding not to accept an offer.” very important for a talk the talk and walk Diversity and inclusion be a phrase in your mission statement or that meets once a This dedication needs in initiatives like pronoun preference, accommodations for are differently-abled, ensure fair and equal
Site B has 10% increases every 5 years Because its series of cash flows is growing more, with the same credit quality, Site B will be more valuable .
HOW LONG WILL THESE CASH FLOWS CONTINUE?
feel if it’s a right fit, the offer should be made. “Nearly one in five Gen Zers expect a job offer one week from the initial phone screen. The majority expect an offer within two weeks.” Whether this expectation is realistic or not, companies that make an actionable change to speed up their hiring process will win top Gen Z talent.
Remaining Lease Term is an additional important number to consider when evaluating a Net Leased property . If our tenant Amazon’s lease expires in 2025, this could negatively affect our value. What if Amazon decides to move to another property? While 100,000 sf warehouses may be relatively easy to re-lease in our market; our value will likely decline if we can’t find a replacement tenant with Amazon’s high credit quality .
*Statistics pulled from Yello Generation Name Birth Years
If Amazon’s lease doesn’t expire for another 10 or 15 years, a buyer may feel more secure in that stream of income and therefore more willing to pay a higher purchase price .
an Offer, and They NOW HR procedures make to establish a hiring and follow the correct when extending an offer. no part of that. They
OPPORTUNITY TO ADD PROPERTY VALUE BY ENHANCING TENANT VALUE
Just as a replacement tenant with lower credit quality can negatively affect our value, we can increase value by upgrading our tenant quality – replacing our current tenant with a stronger one can increase our value without even raising rent!
For example, a real estate fund manager that we work with specializes in this kind of value creation . I’ll use a hypothetical example to illustrate this concept: This manager will look for a well-located “Bob’s Hamburgers” with a short remaining lease term and –upon expiration of this lease – attempt to replace that tenant with a McDonald’s franchised by an operator with 100 locations If our manager can successfully complete this plan, they have very likely greatly increased the value of a property – just by changing the tenant!
A series of cash flows is valued by 1. The dollar value of those cash flows 2. How long those cash flows are scheduled to continue and 3 . The likelihood that those cash flows will indeed continue and be collected. Similarly, our Net Leased Properties are valued by 1 . The rent they collect 2 The length of our lease terms and 3 . The credit quality of our tenant .
If you have any questions, please call my office tollfree at (877) 313-1868 .
Landlord Legal Questions &Answers
by Kimball, Tirey & St. John LLP
Question: A new tenant signed a six-month lease . Now, he claims he feels unsafe because of an incident at the property and wants to terminate the lease The tenant claims he has a 72-hour period to rescind the lease after it is executed . Is this true?
Answer: There is no 72-hour right of rescission for residential leases . Depending on the facts of the incident, there may be grounds to terminate based upon domestic violence laws
Question: Is there a law on the length of time a resident must reside in an apartment not to be charged for paint or carpet when they move out? What are the guidelines?
Answer: No, the tenant can always be charged for painting or carpet cleaning and/or replacement that is beyond ordinary wear and tear . They would be only charged for the remaining useful life of the item and again only if the damage is beyond normal wear and tear
Question: We have a one-year lease with a tenant that will expire in four months If we sell the house now, and the buyer wants to move in, would we be able to break the lease
Answer: No, the buyer “steps into the shoes” of the seller and the lease is binding upon the new owner .
Q
uestion: Is the procedure for evicting a tenant from a garage any different than for a tenant who lives in a residential unit? Is delivering a notice to a post office box legally acceptable?
Answer: A notice of termination of a month-tomonth tenancy may be given by (1) personal service, or (2) posting on the property and mailing a second copy, normal mail the same day . (3) substituted service by delivery to someone of suitable age and discretion and mailing a second copy, normal mail the same day, or (4) by certified or registered mail which method adds five days to the notice period Because no one “lives” at the garage, and because the garage may not have its own post office address and service, you may wish to utilize additional service methods and/or alternate addresses to increase the chances that the notice will be received by the tenant
AQuestion: Is there any way to impose a rent increase on tenants with a lease or do you have to wait until the lease is expired?
nswer: You have to wait until the lease expires unless the lease specifies a specific rent increase during the term
Q
uestion: I have a tenant who has been late with the rent on a number of occasions . I charge him a late fee and he pays it When his lease expires, do I have to renew?
Answer: Consult with an attorney There can be multiple layers of analysis necessary to determine whether the tenancy can be terminated Many just cause jurisdictions do not permit a termination of tenancy just because the lease expires Q
uestion: We want to give a notice to vacate to a renter of a garage who has been in occupancy for over one year . Can we give thirty-day notice or does the sixty-day notice rule apply for garages as well?
Answer: You can give thirty days’ notice Sixtyday notices are only required for residential property when the tenant has been in possession for one year or longer and the rental agreement is month-to-month
Question: Are the laws any different between “motels” and “apartments”?
Answer: If you operate a motel, consult with an attorney or the California Hotel & Lodging Association regarding applicable laws . Under Civil Code §1940, many landlord tenant laws (specified in Civil Code §§1940-1954 05) don’t apply to short term renters (30 days or less) or to hotel and motel residents if certain conditions are met
Question: I have been asked by another property manager if a former tenant of mine caused any problems and if I would rent to him again . I suspected that he was a drug dealer or at least a drug user but I cannot prove it . What can I tell her?
Answer: If you are unsure, you should remain silent . From a legal point of view, it is always safest to say nothing . However, if you choose to do so, you should only reveal information, if any, that you know to be true and can be documented . When making a recommendation, you are always running the risk that the person you are referring to believes you are defaming their good name Making timely notes of what you said and who you spoke to, will be valuable if you are questioned about the conversation in the future Discuss only facts that pertain to compliance with your lease or rental agreement .
Question: A tenant of three years recently vacated with only a verbal two-week notice . Can she be charged for unpaid rent? She did not have a lease agreement and never signed anything stating that she would give a thirty-day notice
Answer: If the rent is paid monthly and there is no term stated in the lease, written or verbal, the law presumes you are under a month-tomonth agreement which requires a thirty-day written notice to terminate . If no written notice was given, the former tenant owes rent up to thirty days minus any amounts that can be collected from a replacement tenant (and you must make reasonable efforts to find a replacement tenant)
A Tiny Oversight? Expect Catastrophe in California
By Kari Negri, Chief Executive Officer, SKY Property Management
Oh, so you want to be a Housing Provider? Well, buckle up because California has made sure it’s nothing short of a Herculean task. Just imagine—you overlook one little detail, and bam! Welcome to a whole new level of chaos.
KEEP THOSE “NONE-OF-YOUR-BUSINESS” QUESTIONS TO YOURSELF
California’s law is crystal clear: don’t even think about rejecting a tenant for anything if our current Assembly members get their way. If a tenant is curious about the number of kids or pets? Or how many seniors moved in last year? Congratulations, you’ve just hit “none of your business” territory. Not sure what counts as crossing the line? Consider signing up for a Fair Housing course to avoid, you know, lawsuits.
MAINTENANCE: NOT JUST A SUGGESTION
A rental agreement isn’t just paper—it’s your list of obligations. Let that leaky faucet linger, or leave that roof a bit “questionable,” and you might find yourself facing more than just annoyed tenants. Yes, that lawsuit waiting in the wings? It’s courtesy of neglecting “minor”
tenant requests. I highly recommend not letting your roof leak – mold is at the top of the lawsuits filed in the last couple of years. Be responsible, accessible and respond quickly to maintenance requests.
THE “NEGLIGENCE” UMBRELLA: GOOD LUCK DODGING IT
Turns out, your renters can hold you accountable for “unintentional” mishaps. All they need to do is prove that you skimped on safety. Missed a broken handrail or ignored burnt-out parking lights? Prepare for your “negligence” tour through California’s legal labyrinth.
PHYSICAL INJURY: FIX IT, OR PAY LATER
Your property might look fine, but a little oil spill here or a broken gate there, and voilà—your tenant’s slip is your liability. A light out? A trip hazard unmarked? Yeah, better handle it, or your bank account might.
IN SHORT
It’s simple: take care of your property’s quirks or get ready to watch a “small” mistake snowball into your next big headache. And if this all sounds overwhelming, maybe it’s time to call in a property management company.
ABOUT KARI NEGRI -- Name any aspect of the complex world of property management and Kari Negri has been at the forefront, forging new ground, fighting for the rights of property owners and tenants alike, adding value, and making a significant difference. With a strong background in management, Kari founded SKY Properties, Inc. in 1997 to offer hands-on, boutique-level property management at a competitive price for multitenant property owners. Do you have a question for me? Please send your questions and comments to me at Kari@SKYprop.LA.
CALENDAR
Register at socalrha.org
Register for events and classes online at socalrha.org. Please note, that all in-person classes require pre-registration. Walk-ins are not accepted. See confirmation email for details. Questions? Contact us at events@socalrha.org or 858.278.8070
January 9
Rental Criteria & the New Law
Stay up to date with best practices for resident screening with this class brought to you by Dan Firestone, CIC .
January 15
Legal Update
Don’t miss this opportunity to learn how new laws and regulations affecting your rental operations from Kimball, Tirey & St John LLP
Insurance Class
- 11:00A
- 10:00A
Join this important webinar led by Cameron Stewart, Crest Insurance Group, to gain essential knowledge on insurance requirements and best practices to protect your residents and your properties and tenants . January 23 10:00A - 11:00A
January 28 10:00A - 11:00A
Renter Reality Check
Explore the key features and paths that boost conversion in today’s market and take home tools to assess how your property truly performs with instructor Lindsey Martinez, Tourus
Property Management
Solution Series: Avoid Being Sued Beyond Leasing Certified Apartment Manager (CAM) Series March
Who Will Be the Next Generation of Multifamily Investors?
By Mercedes Shaffer, Realtor
As housing affordability challenges continue to intensify, a new generation of would-be homeowners is finding it harder than ever to purchase their first property Faced with soaring home prices and stagnant wages, many millennials and Gen Z individuals are remaining renters for much longer than previous generations . This growing segment of the population, unable to break into homeownership, is driving increasing demand for rental housing .
With so many people locked into renting, it seems logical that only a small percentage of this generation might eventually save enough to invest in real estate However, the reality is far more complex . While multifamily properties once offered individuals a path to building wealth, today’s climate has left many prospective investors hesitant The primary concern for many is: “What will I do if I get a bad tenant and can’t evict them?”
This fear is not unfounded . With increasingly stringent tenant protections and rent control measures, housing providers face growing challenges when dealing with difficult tenants. Eviction processes have become longer and more burdensome, leaving many would-be investors worried about the financial risks. For these individuals, the uncertainty and potential costs of being unable to evict a problem tenant make real estate investment feel more like a gamble than an opportunity .
So, who will be the next generation of multifamily investors? If young people are already struggling to buy their first homes and have become disillusioned with the idea of becoming landlords, how can they be expected to invest in rental properties?
The answer may be that they won’t The days of the “mom and pop” investor, who purchased rental properties as a means of securing their retirement, could be disappearing As government intervention in housing markets grows and tenants’ rights continue to
expand, the investment landscape is becoming more challenging . Smaller investors are either being priced out or turned off by the regulatory hurdles and the risks associated with tenant issues
In this climate, large corporations may be the only players with the appetite and resources to take on multifamily investments . Big institutional owners have the financial strength to weather the risks of problematic tenants, eviction delays, and costly legal battles . Unlike individual investors, they can absorb these costs while still maintaining profitability.
But there’s another possibility: government intervention in the form of taking over multifamily housing . In some places, local governments have broached the idea of purchasing multifamily buildings to offer affordable housing directly While this might sound like a solution to some, the downside is that government-run housing often struggles with inefficiency and poor management.
As multifamily housing becomes more regulated, we could be heading toward an era where the bulk of rental properties are owned either by large corporate landlords or by the government itself, leaving little room for smaller, individual investors This shift could have far-reaching consequences, including less diversity in ownership, fewer opportunities for individuals to build
wealth through real estate, and potentially lower-quality housing options for tenants .
Having spent over two decades investing in rental housing and passionately advocating for the industry, helping countless everyday Americans achieve the American Dream, it deeply concerns me to see the troubling direction the industry is heading
Government intervention and expanding tenant rights have created an environment where only large corporations or the government itself may have the resources to invest in multifamily housing The result? The American Dream of owning investment property is slowly slipping away, and with it, a critical path to financial independence for many families. This is not just an issue for investors—it’s an issue for anyone who believes in the power of real estate to transform lives and build long-term financial security.
Mercedes Shaffer is a multifamily real estate agent with REAL Broker, and If you have questions about buying, selling or doing a 1031 exchange, her team serves LA and Orange County and can be reached at 714 .330 .9999, InvestingInTheOC@gmail .com, or you can visit their website at InvestingInTheOC .com DRE 02114448
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