Things California Landlords Can Do About Rent Control
Watch out California landlords, rent control for the whole state of California is coming! Assembly Bill 1482 (AB 1482), otherwise known as the Tenant Protection Act of 2019, is on the Governor’s desk as I write this. In this article, you will learn what you can do about the upcoming rent control.
While economic experts have done studies on how rent control will affect the markets, there are still a lot of unknowns of how people (especially California landlords) will respond to rent control. One thing is certain though: Rent control will certainly affect cash flow profits, meaning landlords will be making less money on their rentals. Some experts have suggested that rent control may even worsen asset values but only time will tell if this is true.
California Landlords have a few “non-political” options of what they can do about rent control. Here they are for you to consider:
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Live with the ramifications of AB 1482
AB 1482 will certainly have negative effects on California landlords. Something you can do is bring your rents up to current market rates the next time it is vacant. This is known as vacancy decontrol and is still allowed. Other than that, there is not much that can be done about rent control besides just living with it and adhering to the regulations. Surely there will be less money to be made and stricter regulations to adhere to, but hopefully, you can still cash flow positive.
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Sell your rental property and invest elsewhere
We already starting to see this shift happen. Large corporations are selling off apartment buildings and local California landlords are selling their rental units. For those who don’t want to see their rental income get cut and don’t want to deal with the negative effects of rent control are deciding to sell their rental properties and invest in more promising opportunities, whether in real estate in other states or in other types of investments. I have created a program for landlords who don’t want to deal with the negative effects of rent control and want to cash out now. This program has helped landlords sell their property easily and quickly. If this interests you, please call me at 760-970-8236. I won’t waste your time, I promise.
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Qualify for a rent control exemption
There are some exemptions that will exist with AB 1482, such as converting your property to a condo or redeveloping the property so it can be considered “new construction,” both of which are exempt from rent control. However, remember that if you have to evict a tenant to do the renovation, then you are liable to pay them one month’s rent for relocation assistance.
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Take your property off of the rental market
The provisions of the Ellis Act allow you to evict tenants if you are taking your property out of the rental market. In the past decade, loopholes in this law allowed many California landlords to get around rent control by utilizing the Ellis Act and then putting it back in rental service with higher rents. However, another bill that will also most likely be signed soon, AB 1399, will prevent landlords from exercising these loopholes. AB 1399 places ample restrictions on landlords trying to put it back on the rental market.
About the Author:
Ethan Alexander owns a real estate investment company called Wisemount Property that purchases houses throughout San Diego and Riverside County. In 2019, he created a program for California landlords wanting to sell their rentals in order to escape the negative effects of California rent control. He does not list homes like a real estate agent would, he purchases homes himself with cash. This program has helped landlords sell their property on their own timeframe without having to pay the typical 6% commission in selling your house with an agent. If you are considering selling your house, give Ethan a call at 760-970-8236 and see what he can do for you.
