CA Landlords. What do you plan to do if the rent control initiative passes in November?

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Submitted by flu on June 20, 2018 - 12:06pm

As you probably already know, the rent control initiative made it on the November ballot...

https://la.curbed.com/2018/6/18/17475176...

What do you Landlords plan to do? I believe the way it works, you may not raise rent prices to market price after your tenant moves out... You are allowed to raise rent prices a maximum of 3% per year.

I never adjust rent prices for good tenants while the tenant stays...I just wait until they move out before I adjust them to market rates. But if this thing goes into effect, I think I will raise rent prices 3% each year regardless, just so if a long term tenant moves out, the rent I charge doesn't fall too far behind market price.

Submitted by ucodegen on June 20, 2018 - 1:41pm.

You can never fix a supply and demand problem through controlling prices. Why would any apartment builders risk building new units when they become at risk of not covering their costs?

Submitted by spdrun on June 20, 2018 - 1:55pm.

What will I do? Nothing. San Diego/SD Co doesn't have rent control for pre-1970s units, even though it's allowed. This measure doesn't create rent control, only allows passage of local laws. San Diego (County) is unlikely to pass any sort of rent control since it hasn't already.

Submitted by The-Shoveler on June 20, 2018 - 4:46pm.

There are a few parts of SD county that do have rent control (some trailer/RV parks etc..).

I am not sure why the above have not been sold already as some are in some prime locations for condos' etc...

My guess is that if SD implements rent control over a wider area it will create a lot of chaos and displacement as landlords desperately try to sell ASAP.

LA county rent control is a lot more prevalent so it could turn ugly IMO.

Submitted by flu on June 20, 2018 - 4:56pm.

I just don't see how this would solve the unaffordable housing issue. All I see is landlords jacking up rent more regularly so they make sure to keep as close to current market rates as possible. Maybe some people will motivate and sell.

Or exchange and convert to a primary/vacation home.

I wonder what the extra eviction rights for the tenant consists of.

I do think rent control would be adopted by certain places more readily than others. San Francisco, Los Angeles, Santa Clara, San Jose comes to mind as places they would adopt this immediately....San Diego, Irvine, most of Riverside...not so much....

Submitted by masayako on June 24, 2018 - 3:40pm.

Same here. I have some property. I usually don't increase rant for good/stable tenants 'cos I don't want the trouble to look for new tenants.

If they rent control initiative passes in November, I will automatically increase 3% per year just to keep up with market price. I am sure all landlords will do the same. So, take that.

Submitted by FlyerInHi on June 24, 2018 - 9:16pm.

Apartment complexes always increase rent annually.
You should do the same also, even if only 1%. Bad business practice not to increase rents. Tenants take is for granted and don’t appreciate anyway. Train them early.

Submitted by flu on June 25, 2018 - 6:19am.

FlyerInHi wrote:
Apartment complexes always increase rent annually.
You should do the same also, even if only 1%. Bad business practice not to increase rents. Tenants take is for granted and don’t appreciate anyway. Train them early.

completely disagree. there is an entire pain in the ass factor you are not considering. Maybe your rent pool is of lower quality, but I like to deal with tenants of higher quality that do not cause a lot of drama, who do not have a problem paying on time, and who do not like to move around. I have very low months of vacancy that I have to factor in as cost. And most of my tenants, when they do move out, it's because they have saved/invested enough to buy their own home or have relocated to a different part of the country.

The main reason I am more than happy to keep rents below market is I value my time rather than spending my time dealing with vacancy. it's extra days enjoying hobbies, spending time with family, going racing, or going to see a movie , going hiking, or traveling. Life is short...i am not trying to maximize my incoming funds if it means significantly increasing the pita factor. I don't "need" to squeeze every penny out of people at this stage in my life. Who wants turnover all the time? perhaps if İ have no one or nothing else to do....or because i needed more time to blog on on piggington frequently. As far as I am concerned, it pays the bills and as long as it doesn't inconvenience me, I dont mind cutting people a slight break.

Submitted by Hobie on June 25, 2018 - 3:23am.

I view annual increases in the higher end market ( or quality long term tenants) as nitpicking. I'm thinking contract builds in 3% increase with a 3% courtesy discount for on-time payment history or preferred tenant status, etc. Keeps good tenant happy. Now if you are renting to college kids, 3% auto increase ;)

Submitted by flu on June 25, 2018 - 6:20am.

Hobie wrote:
I view annual increases in the higher end market ( or quality long term tenants) as nitpicking. I'm thinking contract builds in 3% increase with a 3% courtesy discount for on-time payment history or preferred tenant status, etc. Keeps good tenant happy. Now if you are renting to college kids, 3% auto increase ;)

That's what I feel too. and I don't necessarily mean higher end market being expensive real estate too. just people with good quality financial backgrounds...

So is your idea something like an annual rebate program? I was thinking something like of an end of year rebate that would be discretionary, but generally reimbursed.

Submitted by spdrun on June 25, 2018 - 8:29am.

Why reimburse anything? Treat your tenant decently, but charge what the market (they) can bear. You're not a charity -- it's a business.

Submitted by flu on June 25, 2018 - 9:27am.

spdrun wrote:
Why reimburse anything?

Because if thsts what it take to keep my tenant for 5+years without bugging me versus your tenant that moves out every year leaving you with a month or two of vacancy each year and time spent on finding another tenant , time that I'd rather spend on a track, I'll take the easy tenant and the rebate for the win.That 3% is so miniscule it's only.purchase is an inflation hedge. won't even pay for tires and a days worth of e85

Submitted by Hobie on June 25, 2018 - 12:23pm.

No rebate. Do you do email billing? Monthly statement shows rent X less discount X = same rent. Statement would have +3% each Jan. Was thinking elaborating on reason for discount, but now think that would open you up to some kind of discriminatory claim.

Submitted by FlyerInHi on June 25, 2018 - 2:39pm.

Flu, to each his own. Each person runs his business differently.

The “luxury apartment homes” are the ones charging auto increases. And they keep security deposits.

Perhaps you’re projecting how you would feel because you’re biased to saving to buy a house. But people will pay for the convenience and a nice place. They know that moving costs money.

I don’t pay for many things or conveniences, but people do all the time.

Submitted by FlyerInHi on June 27, 2018 - 12:18am.

Hobie wrote:
No rebate. Do you do email billing? Monthly statement shows rent X less discount X = same rent. Statement would have +3% each Jan. Was thinking elaborating on reason for discount, but now think that would open you up to some kind of discriminatory claim.

You could give them 15 days or 1 month free rent as an inventive to renew the lease. But if they let it lapse to month-to-month, then rent increases apply.

Submitted by Escoguy on July 8, 2018 - 9:33pm.

I have five rentals, if I leave the rents flat for all 5, then compared with 5 years ago, my income would be $19400/year less or 97K over 5 years.

I had to cut the rent on one foreign property by 45% but fortunately the four in SD county were able to make up for this and then some.

I'm almost 50 and if I live another 30 years, that would be almost 600K of lost rent even if I don't increase any more going forward. So there may be cases were keeping the rent flat is justified but one needs to look at the big picture.

I didn't raise the rent on 3 this year for different reasons. One is a widow, one truly has an excellent attitude, one is outside the country and I don't want to deal with changing. One has an automatic escalation clause and will likely stay 3-4 more years. The one I did change didn't accept it and it appears I won't have any difficulty getting a new similar quality tenant at the higher rate.

Submitted by Hatfield on July 10, 2018 - 8:45pm.

Your math assumes that you'll be able to dovetail one tenant's move-in the day after the previous tenant leaves. In reality, you may have to patch and paint and do a bunch of other non-essential deferred maintenance that you wouldn't have had to do otherwise, and collect zero rent and consume a lot of your time looking for a new tenant, who may or may not turn out to be be a pain in the ass. I do pretty extensive tenant screening. It's time consuming.

I guess it all depends on what your time and sanity is worth. For me, I don't see the point in chasing an extra 3 percent per annum if it means I have tenants turning over every year or two. I'm making a solid return as it is. I'm fine with that. I don't need to chase every last penny.

Submitted by barnaby33 on July 11, 2018 - 8:06am.

What does, "fairly extensive tenant screening," mean? I would love to learn about techniques.
Josh

Submitted by poorgradstudent on July 27, 2018 - 5:46pm.

I don't think rent controls did much to help the housing markets in NYC, SF.

Really it comes down to getting pasty NIMBY, anti development people. Develop all the closed golf courses. Build high density housing, especially near the ocean. Develop mass transit to support housing without overloading the freeways.

When demand exceeds supply, you need to boost supply. Rent controls don't really do that.

Submitted by flyer on July 29, 2018 - 6:59pm.

After 20+ years of having rentals, we've found that careful initial screening of all of our tenants has saved us a lot of time going forward, and then we evaluate rent increases on a case by case basis.

Submitted by Myriad on July 31, 2018 - 9:58pm.

Wow... city council just made refusing to consider renting to Section 8 illegal.
https://fox5sandiego.com/2018/07/31/city...

Submitted by FlyerInHi on August 1, 2018 - 11:57am.

Myriad wrote:
Wow... city council just made refusing to consider renting to Section 8 illegal.
https://fox5sandiego.com/2018/07/31/city...

I think it's fair. landlords should consider total income.... not source of funds.

But in this hot market, section 8 won't fly because there is rent ceiling for them.

Submitted by Myriad on August 1, 2018 - 12:32pm.

well, it should almost be like getting a home loan. Assets, income, history.
So as a landlord, it's not just total income, it's quality of income and history of on-time payment. There's also more paperwork to do, at least in the past - not sure what the city is doing to reduce that.

Submitted by Myriad on August 1, 2018 - 12:32pm.

well, it should almost be like getting a home loan. Assets, income, history.
So as a landlord, it's not just total income, it's quality of income and history of on-time payment. There's also more paperwork to do, at least in the past - not sure what the city is doing to reduce that.

Submitted by FlyerInHi on August 1, 2018 - 12:57pm.

Myriad wrote:
well, it should almost be like getting a home loan. Assets, income, history.
So as a landlord, it's not just total income, it's quality of income and history of on-time payment. There's also more paperwork to do, at least in the past - not sure what the city is doing to reduce that.

Yes. Section 8 is 100% quality and on time.
What I worry about is quality of tenant. How clean and respectul.

A friend just rented his 3br house on a 2 year lease to a single lady. No husband and kids to destroy the house. He’s so happy.

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