By Frank Gallo, Member, Apartment Association of Greater Los Angeles

A recently published study by the University of San Francisco on the California homelessness crisis concludes that the inability to pay rent was a major contributor to homelessness. In my opinion, the study is a good start but seems to be incomplete since it does not indicate for what reasons did those individuals stop paying their rent.

The survey and interviews used for the study attempt to identify the causes of homelessness while trying to understand why people remain homeless. Unfortunately, the study fails to address some major issues that are the intrinsic causes of the problem. What life crisis resulted in the individuals becoming unhoused? More importantly, how can we prevent those life crises that resulted in people becoming homeless? Creating housing for the now homeless would not prevent them from going back to the streets or prevent others from becoming homeless, it would just make the problem popular with politicians and well-paid non-profit organizations that continue to perpetuate it.

By Christopher Miller, MBA

For over 20 years, I’ve helped investors lessen their landlord responsibilities through the use of 1031 Exchanges and Partial Interest Properties.  Many investors have asked me “Which of my properties should I sell first?”   I’ll answer that with a question: “Which are the lowest performing?”  Some investors may have owned several properties over many decades but can’t answer that question.   This month, we’ll review how to create a cash flow statement on your property, calculate your Return on Equity, and estimate your Property Value.

The Fun Part – Add Up Your Income

First, we’ll need to add up your gross receipts from the property.  This will include monthly rent payments and other income from laundry or parking.  It is important to note that Tenant Deposits do not count as income since you will need to pay that back at some point or use it for repairs.  Write down your annual monetary collections as A.  I’ll use $100,000 as an example.

By Ted Kimball, Esq., Partner, Kimball Tirey & St. John LLP

• Question:  I heard that VAWA was approved again by the government and that it applies all units.  Is that true?

• Answer:  VAWA (Violence Against Women Act) was reauthorized in 2022.  Most of the law only applies to “covered housing providers” which are tax credit properties, HUD funded programs, and properties with subsidies under the USDA program.  There is only one section that applies to all housing providers and that is the right of tenants to summon law enforcement. 

• Question:  The present rental agreement is for two tenants.  One has passed away.  Do I need to write a new rental agreement with the remaining tenant?

• Answer:  You are not required to write up a new lease; the current tenant is still responsible for the full rent and other lease terms.

Inspections of Balconies and Other Exterior Elevated Elements Under Senate Bills 721 and 326

By Omid Ghanadiof, “Dr. Balcony” and EEEadvisor Engineering

As a landlord or building owner in California, it is essential to stay informed about the latest legislative developments that impact your responsibilities and obligations. Two important bills, Senate Bill 721 (SB 721) and Senate Bill 326 (SB 326), have been enacted to enhance safety standards for multi-unit residential buildings. This article aims to provide a comprehensive guide to help you prepare yourself and your building in compliance with these important guidelines.

Max Glassberg

No one wants to feel after the fact that you could have done more to prepare for a natural disaster. Luckily, there’s a lot you can do to prepare your properties and protect your assets from natural disasters. We’ll start with the basic elements of natural disaster preparation. Then we’ll look at how to protect your property, residents and finances during several natural disasters: hurricanes, tornadoes, fires and earthquakes.

Natural disaster emergency checklist for multifamily

Below are a few simple safety precautions that apply to most natural disasters. Communicate emergency plans and procedures to your residents via email or by uploading them to the resident portal. Encourage your residents to:

• Have emergency food and water for three to seven days
• Put together emergency kits that include first aid
• Stock flashlights with extra batteries
• Invest in an emergency radio
• Ask an out-of-state friend or family member to be an emergency contact
• Prioritize assistance for your most vulnerable residents
• Keep carriers, water bowls, collar identification and extra food for pets (and get them microchipped)

By Kari Negri, Chief Executive Officer, SKY Properties, Inc.

• Dear Kari, I’m about at my wits end…One of my tenants is so demanding that it’s making me crazy? What should I do?

Karen (Slang / Noun):

A slang term originating from internet culture and popularized in the 2010s used to describe a stereotypical person, who exhibits entitled and demanding behavior. Typically associated with individuals who frequently complain, make unreasonable demands, and seek to assert authority over others in various scenarios; often characterized by an inflated sense of self-importance, a tendency to escalate minor issues into conflicts, and an expectation of receiving preferential treatment.

As property rent regulations continue to lean in the favor of tenants, dealing with tenants can get trickier. Now more than ever, tenants are savvier about what they are entitled to, and they are not afraid to speak up. At the very least, they expect proper living conditions and fair treatment, but sometimes entitlement creeps in and the requests surpass the basics. New air conditioning and heating, new flooring, extra parking, special privileges…the expectations from renters are higher than ever before. Many of today’s tenants will have no reservations about negatively hitting your social media or trying to rally city departments to get their way.

Weinstein / AIDS Healthcare Foundation Again Seek to Dismantle Costa-Hawkins Protections

A rent control ballot initiative very similar to past efforts under Propositions 10 (2018) and 21 (2020) has once again qualified to be on the ballot for the upcoming, November 2024 vote. On July 26^th, the California Secretary of State confirmed that the AIDS Healthcare Foundation initiative, the Justice for Renters Act, had gathered the required signatures to be eligible for the ballot. The initiative, if passed, would repeal the Costa Hawkins Rental Housing Act of 1995 and would allow local jurisdictions to impose the most extreme forms of local rent control on rental housing providers, including the placement of limitations on rent increases for new construction, single family homes and condominiums, and also vacancy “control” allowing cities and counties to dictate the rent that can be charged for a vacant unit.

This represents the third time in four election cycles that the AIDS Healthcare Foundation and its President, Michael Weinstein, has attempted to eliminate the Costa Hawkins Rental Housing Act through a ballot measure. Supporters of this latest effort had gathered more than 800,000 signatures in favor of the ballot measure while only needing 601,317, according to the Secretary of State’s Office.

While Propositions 10 and 21 were ultimately rejected by California voters, rental housing providers and realtor groups had raised $80 million to $90 million for each such opposition effort. According to Daniel Yukelson, Executive Director of the Apartment Association of Greater Los Angeles, “Like past Weinstein ballot measures, if this latest effort were to pass it would clearly be a “bankruptcy bill’ for rental housing providers across the state.” Yukelson further stated, “Anyone who provides rental housing or that even owns any type of residential real estate better get out their checkbook and support the opposition campaign before it’s too late.” Go to: www.aagla.org/issuespac. 

By David Crown, Chief Executive Officer, Los Angeles Property Management Group

I once knew someone who ignored a termite report, thinking the problem couldn’t really be that bad. They then had to completely reframe a four-unit building, replacing every single piece of wood in two of the units. Who was the foolish owner in that scenario? That was me. I was relatively lucky—it only ended up costing me about $50,000 to fix that quadruplex in Silverlake, but that’s still an expensive lesson, and believe me, I learned it. I’ve been in property management for three decades now, and in that time, I’ve seen the best and the worst of what this industry has to offer, ranging from impressive workmanship to a few tragic mistakes.

By Max Glassburg

In the world of independent rental owners (IROs), there are a few myths we need to bust. These falsehoods can negatively impact rental property owners who believe them and miss out on the full potential of their businesses.

This article is based off a panel discussion Yardi Vice President Chris Ulep took part in at the National Apartment Association’s (NAA) premier rental housing industry event, Apartmentalize, that took place June 2023. They discussed three myths:

1. IROs are all small businesses
2. Most IROs are too small to use technology or automation
3. IROs cannot impact communities as much as a large rental operators

Our industry is likely at a key strategic inflection point. An inflection point facing an industry is discussed by Andy Grove, founder, and former CEO of chip maker Intel, in his book Only the Paranoid Survive. He describes a key inflection point as a time in the life of a business when its fundamentals are about to change. He cites six categories of cataclysmic changes: competition, technology, customers, suppliers, complementors, and regulation (emphasis mine). He explains that strategic inflection points creep up on you gradually. “They are often not clear until you can look at the events in retrospect.” [1]

We face a tsunami of adverse regulation which is increasing in force and effect and is unlikely to abate in our lifetimes. How can I make such a bold statement?