By Lauren Zumbach, Story by J.P. Morgan

With rents on the rise, some renters might be having a tougher time saving up for security deposits on top of initial rent and move-in costs. But reducing security deposits exposes property owners to additional risk. Here’s what to keep in mind if you’re asked for flexibility on a deposit.

How Large a Security Deposit Can a Property Owner Charge?

Security deposit laws vary by state, and cities can have their own rules, so it’s important to check regulations in your local area. Some states have no limits, while others may limit deposits to one to two months’ rent. Ann O’Connell, legal editor and attorney at Nolo, which has resources on security deposit laws, recommends property owners charge the largest security deposit the law or market conditions allow to reduce their risk if left with damage, or unpaid rent or fees at the end of a lease. If a property owner wants to reduce the up-front amount collected, they could consider dropping the last month’s rent requirement, because security deposits can be used to cover unpaid rent, O’Connell says.

By Austin Bowlin, CPA, Partner at Real Estate Transition Solutions

Owning investment real estate can be an effective way to build wealth and create financial security. Done properly, it can even generate stable, predictable income without significant management responsibility. However, often property owners need to rebalance their investments to achieve their objectives.

Selling investment real estate to acquire different properties better suited to meet an investor’s objectives sounds like a great idea until the taxes due upon the sale are considered. Unfortunately, the tax rate applied to sales proceeds can be as high as 42.1% at the Federal level, plus state income tax of up to 13.3%. However, one way to reposition real estate investments without taking a hefty haircut due to taxes is the strategic use of a 1031 Exchange. By performing a 1031 Exchange, property owners can sell investment property without paying capital gains tax or depreciation recapture tax, provided the sales proceeds are reinvested into “like-kind” investment real estate of equal or greater value and the conditions of the IRS tax code are followed.

How Rent Control Contributes to the Accessibility Crisis in Berkeley

By Miya Rosenthal, Student, University of California at Berkeley

California’s “housing crisis,” characterized by the unavailability and unaffordability of housing, has magnified the appeal of rent control policies. Rent control aims to set a price ceiling on rent increases and restrict evictions, ideally with the goal of providing affordable housing, stabilizing rents, protecting tenants, and promoting economic diversity.

Berkeley became the first city in California to implement contemporary rent controls in 1972 and established permanent rent controls in 1980, enforced by the Berkeley Rent Stabilization Board.^1,,2 However, over the past half-century, Berkeley’s rent control policies have failed to adequately address residents’ need for sufficient affordable housing. Instead, a long-term housing shortage has only exacerbated the crisis of affordability.

By Gideon Kramer, Small Property Owners of San Francisco Institute (SPOSFI)

In 1980, the City of Berkeley passed a comprehensive strict rent control ordinance considered “strict” because it included vacancy control. Under vacancy control, city-mandated price controls continue to apply even after a voluntary vacancy occurs. This all changed in 1995 when the Costa-Hawkins Rental Housing Act (Assembly Bill 1164) (“Costa-Hawkins”) became state law, mandating that no local rent control could be passed on properties built after its date of passage.

Costa-Hawkins also abolished vacancy control. Berkeley took steps to comply. But it didn’t change its own ordinance. Only too ready to dust it off and bring it back to life, Berkeley prepared to automatically revert to the old rules if Costa-Hawkins was repealed. Opponents of Costa-Hawkins have spared no effort to enable Berkeley and other cities to do just that. Proposition 10 failed on the November 2018 ballot, again in November 2022 (Proposition 21), and a third attempt, the “Justice for Renters Act,” is in the works and gathering signatures for the November 2024 ballot.

Oh, the irony. San Francisco is perhaps the most progressive city in the United States, although Portland and Seattle might put up an argument. So how is it that the one thing that might save the City by the Bay from the fiscal abyss is Proposition 13, the iconic tax-cutting initiative backed by conservative Howard Jarvis and approved by voters in 1978?

No one disputes that San Francisco is in crisis. The city’s profligate spending and poor management has led to a myriad of ancillary problems. That the city planned to spend $1.7 million for a bathroom in a park may be the source of humorous derision, but it is an example of seriously dysfunctional governance. (Private donations for the restroom subsequently reduced the cost to the city).

Like many others, we were intrigued to learn about a case that will assuredly impact cities that have blanket “ban the box”-type laws prohibiting housing providers from inquiring about a rental applicant’s criminal history.

Bornstein Law has always maintained that while people deserve a second chance, landlords should have the opportunity to evaluate the character of rental applicants in order to ensure a safe community for everyone.

Although efforts to repeal or amend the law have failed, it has been increasingly subject to interpretation in the courts.

All eyes have been on the First District Court of Appeal after weighing the arguments made in NCR Properties, Inc. v. the City of Berkeley. The justices have spoken, and their ruling doesn’t bode well for owners looking to invest in unlivable buildings and then exempt units from rent control.

After purchasing two derelict single-family homes that were red-tagged, the landlords rehabilitated them, converted them into triplexes, and rented them out. A dispute arose as to whether the tenants were protected by the Rent Ordinance. The landlords contended that the units were exempt from the city’s rent control under Costa-Hawkins and the Rent Board took exception with four of the six units.

By Max Glassburg

If improving renter retention feels a bit like chasing your tail, you might just need a few simple renter engagement ideas to keep people around, bring in positive property reviews and cultivate the apartment community of your dreams. The good news is that resident satisfaction is actually pretty high across the board. In fact, most U.S. residents are satisfied with where they live. Some are unhappy, but many sit somewhere in the middle.

What did we do to deserve it? For years, we worked two jobs, our real 9-5 job and our rental property owner job. We saved and sacrificed to invest in income property so that someday, with any luck, we will have more than just Social Security to retire on. Our ulterior motive is nothing more than to provide for ourselves and family, and to invest in and house members of our local community. Sometimes, our investments would house ourselves and our families. Nothing more, nothing less.

You’ve seen ads for rental insurance. But do you know what it covers OR if you can require tenants to get it? 

Rental insurance is a specific type of policy that covers possessions within the home as opposed to the home itself. It is highly beneficial to your residents in the event of flood or similar disaster since you are not responsible for damage to personal possessions – only the property itself. Some property owners may require tenants to obtain rental insurance. Even if you don’t require your residents to have renal insurance, you can advise them to get it.