Articles Posted in Rental Properties

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Author: Staff

An apartment building can be a great investment for a California real estate investor, but it often requires a great deal of maintenance and attention. California law sets numerous standards and requirements for leased residential premises, particularly when a property includes multiple residences. These include ongoing responsibilities for maintenance and management of the property. Rather than duties owed to individual tenants, these are duties owed to all tenants as a group. Here, we offer a general overview for apartment building owners in California.

Minimum Standard of Habitability

A California landlord is bound by the implied warranty of habitability, which holds that a landlord, merely by offering an apartment for lease, is warranting that it is suitable for residential use. California law defines this duty in very general terms, requiring a landlord to “repair all deteriorations…occasioned by his want of ordinary care,” and to “put it into a condition fit for such occupation, and repair all subsequent dilapidations thereof.”

This implied warranty also means ensuring that the premises meet legal requirements under local building codes, state and federal laws regarding accessibility, and laws involving hazardous substances like lead paint. If a landlord fails to meet their obligations under this warranty, a tenant can get out of a lease by claiming constructive eviction.

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Commercial-Property-300x200

Author: Staff

When it comes to choosing an investment property in California, real estate investors have a vast array of options. They can purchase a single-family dwelling and rent it to a tenant, or renovate it and flip it. They can purchase a multi-family dwelling or an apartment building for rental purposes. Commercial real estate offers even more possibilities, such as buying an existing office or retail building, renovating a commercial building, or purchasing raw land to develop from the ground up. Commercial investments often carry greater possibilities for revenue and profit, but they also often involve more risk, and more up-front work. The following is a general overview of the steps in a commercial real estate transaction. This hypothetical transaction involves the purchase of a property with the intention of renovating or developing it for commercial use.

Step 1: Find a Property and Build Your Team

Before you look at a single property, you should identify your goals and make a plan. Do you want to purchase a property that you can sell at a short-term profit, or do you intend to derive income from the property through rent payments? How much risk can you take on? How much time, effort, and capital are you willing and/or able to invest? Do you have investment partners? Are you putting together a real-estate syndicate? Do you need investment partners to contribute money or expertise? And so forth.

Next, you should visit many properties. Whether a property is “right” for you depends on your investment goals and your budget for both purchasing and maintaining a commercial property, among many other factors. Consider the current uses of these properties, and whether they fit your intended use or could be adapted to that use. Determine whether there are any uses that are prohibited for a property because of zoning or deed restrictions. Find out what permits you will need from multiple levels of government. Investigate each property’s potential for rent income, and the economic conditions of the surrounding areas. Above all else, find out why the owner is selling.
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San-Diego-Vacation-rental-300x168

Author: Staff

San Diego’s City Council spent much of 2018 arguing over proposed vacation rental regulations. In July, the City Council passed two ordinances imposing strict limits on “short term residential occupancy” (STRO). Opponents of the ordinances circulated a petition that received enough signatures to put the matter before voters. The City Council repealed the ordinances in October. Arguments for and against the ordinances brought up the interests of homeowners who live among STRO properties, homeowners who use their homes as STROs for income, investors who own STRO properties but do not live in them, and lodging businesses (hotels and motels) that view STROs as competition. Even though the ordinances have been repealed, the issue is currently under debate in Los Angeles, and is likely to come up again in San Diego. California real estate investors should be aware of new developments.

Short-Term Rental, Defined

The city defines STRO as occupancy of a residential-zoned property for less than one month. The ordinances made a distinction between short-term rental of a property by an homeowner who also lives at the property, known as “home sharing,” and “whole home STRO,” in which the owner makes the entire property available for rent and does not reside there. It specifically targeted whole home STRO, declaring it to have the “most negative impacts to neighborhood communities.”

The Ordinances

The City Council adopted two ordinances in mid-July, and formalized them on August 2. The first ordinance, O-20977, addressed enforcement STRO restrictions. The second ordinance, O-20978, established the actual restrictions.
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Author: Staff

When considering an investment in California real estate, prospective investors should carefully consider how much of their time and attention the investment will require. Properties that generate rental income require management in order to ensure that the stream of rental income continues unabated. Investors who are willing and able to take on this responsibility may do so, but they should also consider retaining a property manager to handle the day-to-day operations. Property managers in California must have a real estate license to perform functions like soliciting tenants or negotiating and enforcing lease agreements. Otherwise, they are not required to have a specific license.

Types of Property Managers

Author: Staff

Investing in California commercial real estate requires extensive planning and research. A prospective buyer must consider potential legal, financial, structural, and environmental issues. This process of research and review is commonly known as “due diligence.” Since every real estate investment is unique, the precise due diligence process will be different each time. The following is a very general checklist, which may apply to a wide range of properties.

1. Investigate both the property and the seller

Due diligence for a commercial real estate investment is about more than the property itself. An investor should also look into the seller’s reputation and their track record for similar transactions. Even if the property is spotless, an investment might not be worth the risk of an unscrupulous seller.

2. Title and Survey

Inaccurate identification of a property is a common complication. An investor should obtain the full legal description of the property, to compare to official real estate records.
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Author: Staff

For California real estate investors, rental property can produce reliable revenue streams, but these come with responsibilities. Landlords leasing residential properties in California have numerous obligations under various implied warranties. Leases for commercial property have far fewer built-in obligations for landlords. A commercial landlord’s obligations are often limited to the specific terms of the lease contract. Commercial tenants, on the other hand, may have many additional obligations beyond paying rent. While this might appear to benefit landlords, it can also mean significant losses if a commercial tenant breaches their lease. California investors should know the remedies available to them.

Commercial vs. Residential Leases

As mentioned earlier, commercial leases are subject to fewer requirements under California law than residential leases. A commercial lease, for example, does not include the implied warranty of habitability, which obligates a landlord to maintain leased premises in liveable condition for the benefit of tenants. By contrast, maintenance of the property, or even construction of improvements on the property, could be a tenant’s obligation under a commercial lease. Commercial landlords could lease a property on an “as is” basis, as long as the tenant has given informed consent to this arrangement.

Commercial landlords in California are usually bound by the covenant of quiet enjoyment, which protects the tenant’s right to use the property for the purposes expressed in the lease. Unlike residential leases, this covenant can be waived in commercial leases, with the agreement of both parties.
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Author: Staff

California’s coastline is one of the state’s greatest assets. It offers some of the best scenery in the world, draws countless tourists, and boasts some of the highest property values in the state. Coastal property offers many opportunities for California real estate investors, but a unique set of rules may apply. The California Coastal Act (CCA) regulates an area known as the Coastal Zone. Back in the 1970’s, the state created the California Coastal Commission (CCC) to enforce the CCA. An issue that has caused controversy recently in cities and towns up and down the coast involves vacation rental homes, commonly known as short-term rentals (STRs). The CCC must approve municipal regulations affecting coastal STRs. It recently rejected an ordinance in Del Mar that would have limited the duration of time STRs could be rented to the public.

A voter initiative in 1972 first established the CCC, and it became a permanent part of the state government when the California Legislature enacted the CCA in 1976. It has jurisdiction over the Coastal Zone, and a significant part of its purpose is to preserve access to the coastline and public beaches. According to state law, the Coastal Zone extends from the U.S.-Mexico border to the California-Oregon state line. It begins at the “state’s outer limit of jurisdiction” in the Pacific Ocean, and extends inland “generally 1,000 yards from the mean high tide line of the sea.” The inland extent may be less than one thousand yards in urban areas, and more in undeveloped areas. Beachfront properties almost everywhere in the state are located within the Coastal Zone. Continue reading

Author: Staff

Apartment buildings can be an excellent investment for California real estate investors. Factors like the size and style of the building, the type of units available, and of course, the location are all important. An apartment building owner can manage the property directly or delegate this role to a manager, but liability for breaches of a lease agreement, or for violations of California landlord-tenant law, will ultimately fall on the owner rather than the manager. California apartment building owners’ legal obligations include making accommodations for accessibility and, under a new law that applies to new construction, providing individual water meters or submetering for each unit. Real estate investors looking into apartment buildings should be aware of the financial risks and legal obligations.

What Is an “Apartment Building” Under California Law?

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Author: Valerie Kriss, Digital Marketing Specialist for Real Estate Experts, a full service real estate firm in Chapel Hill, North Carolina

Trends in San Diego real estate have proven to present ample opportunities for investors. The National Association of Realtors (NAR) ranked the city fifth on its list of hottest real estate markets in America and recently moved it to fourth. And in September, San Diego rent prices reached a record high. Lastly, homes have a much shorter listing life than the average for the country. However, this doesn’t necessarily mean that finding the right property is easy for investors who are looking for the right move. To capitalize on San Diego real estate, it’s important to find an investment property that is most likely to yield a profit.

Location, Location, Location

There’s much more to the location of a property than the city it’s in. As investors, you need to be able to understand what’s valuable in the area, and what nearby attractions you can leverage to your advantage.

Furthermore, when you purchase an investment property, you’re looking at the entire block, and not just the house. Each block has its own unique value; the property on one block can range from one on the next for this reason alone. This emphasis on highly specific location isn’t just unique to San Diego communities. Whether you’re in the Pacific Beach neighborhood of San Diego, or checking out Hillsborough realty in North Carolina, you need to understand your surroundings just as good as any other local.

Rather than just glance at the numbers and neighborhood statistics, do some field work. Drive around the neighborhood, and then walk on foot to visit some of the local stores, restaurants, and other businesses. This will give you a much better feel of the community vibe, and you may even learn about things you didn’t have previous knowledge of, like upcoming developments in the area.

Search For The Right Realtor

Not all realtors are created equal, and the realtor that you choose to help you during your search can easily make or break your experience. Your realtor should have highly relevant experience that aligns with your goals. For example, if you’re looking to invest in and run a bed and breakfast, a realtor with luxury home experience isn’t exactly best-suited. Or, if you’re looking to invest in a major condo project, a realtor that specializes in smaller apartment buildings won’t exactly fit the bill. It may be best to work with a local San Diego brokerage to get the best deals and most relevant agents.

Dig Deep Into Details

The age-old saying goes, “the devil is in the details,” and when it comes to real estate investments, this much can be true. Real estate tycoon Barbara Corcoran told Good Morning America that she once bought a 12-unit motel that had a great rent roll, and after the purchase was finalized, discovered that those tenants hadn’t paid any rent in nine months.

You’ll also need to consider property taxes. It’s not uncommon for property owners to discover that property taxes skyrocket after a buy. For example, if you bought a property from previous owners who had a homestead exemption for many years, you could be looking at a huge chunk of taxes.

Determine Realistic Maintenance Costs

The larger the property, the more maintenance it requires. When investing in any property, you need to be able to determine realistic maintenance costs of that property.  Many landlords have gone bankrupt because they failed to properly calculate their future expenses and grossly underestimated the cost of owning an investment property. If you don’t already own a property in the area, start by asking local San Diego property managers. Most will be more than willing to help you better understand what to expenses to expect in the area. You can also reach out to companies who issue the expenses to look for a previous average expense prices on the property (or comparable properties).

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Author: Staff

Real Estate News is a new feature at Titles & Deeds. We will periodically address new developments in the real estate world that matter to real estate investors. 

Update: Read here to find out what has happened more recently involving San Diego Vacation Rental regulation.